Company-Centric B2Band E-Procurement

國立中央大學、資訊管理系范錚強

Tel: (03)426-7250

http://www.mgt.ncu.edu.tw/~ckfarn2007 (update)

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Concepts, Characteristics,and Models of B2B EC

Basic B2B Conceptsbusiness-to-business e-commerce (B2B EC)

Transactions between businesses conducted electronically over the Internet, extranets, intranets, or private networks; also known as eB2B (electronic B2B) or just B2B

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美國 B2C 電子商務市場

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美國 B2B 電子商務市場

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美國電子商務市場的成長趨勢

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2000 2001 2002 2003 2004 2005

B2C

B2B

Billion

US

$

Sources ： eMarketer, February 2002Source: eMarketer, April 2003

單位(

十億美

元)

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電子市集支持的商務活動

資訊流商流金流物流

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商務活動 2

賣方買方

資訊流：資訊處理、產品型錄傳達、訂單處理

商流：促銷、詢議價、訂單管理、對漲、所有權轉移

金流：支付、融資、風險承擔

物流：實體流通、實體持有

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Key business drivers for B2B

The availability of a secure broadband Internet platform and private and public B2B e-marketplaces;

The need for collaborations between suppliers and buyers;

The ability to save money, reduce delays, and improve collaboration; and

The emergence of effective technologies for intra- and interorganizational integration.

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速度和範圍

打破時間侷限過去未有的速度能處理更多的事成本結構改變

打破空間侷限全球化能和更遠地方的伙伴進行交易

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能見度

水平能見度看到更多的可能交易對象瞭解更多的交易相關信息

垂直能見度上下游之間能相互的瞭解生產條件、交期、庫存等串聯價值鏈上下游，透過上下游的透明度，爭取更大的顧客價值

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企業之間的交易發展趨勢

去中間化？再中間化？Disintermediation vs. Reintermediation

上下游解構？上下游緊密結合？

如何追求價值？

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整合或分解？

Coupling OR uncoupling?供應鏈走向兩極化發展價值網絡：上下游企業整合、緊密的價值鏈

虛擬整合、上下游長期伙伴關係動態市場：上下游企業分散、市場交易

電子交易市集，降低交易成本什麼狀況之下，會發生這兩類變動？

垂直能見度 <> 水平能見度標準化產品 <> 特用產品

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電子交易市場 eMarkets

封閉、私領域的電子交易市場Private market, private hub

買方、賣方

公開的市場Public exchange

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Exhibit 5.2 Types of B2E EC

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Concepts, Characteristics, and Models of B2B EC (cont.)

B2B characteristicsParties to the transactions

Types of transaction

Types of goods sold

Direction of trade

Number and form of participation

Degree of openness

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Private B2B E-Marketplaces

One-to-Many and Many-to-OneCompany-centric EC

E-commerce that focuses on a single company’s buying needs (many-to-one, or buy-side) or selling needs (one-to-many, or sell-side)

Private e-marketplacesMarkets in which the individual sell-side or buy-

side company has complete control over participation in the selling or buying transaction

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Intermediaries

Intermediaries are frequently usedConducting auctions

Aggregating buyers

Complex transactions

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Many-to-Many: Exchanges

Exchanges (trading communities or trading exchanges)

Many-to-many e-marketplaces, usually owned and run by a third party or a consortium, in which many buyers and many sellers meet electronically to trade with each other; also called trading communities or trading exchanges

Public e-marketplacesThird-party exchanges that are open to all interested parties (sellers and buyers)

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Many-to-Many: Exchanges

B2B2CA business sells to a business, but delivers small quantities to individuals or business customers

online intermediaryAn online third party that brokers a transaction online between a buyer and a seller; may be virtual or click-and-mortar

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Types of B2B transactions

Spot buyingThe purchase of goods and services as they are needed, usually at prevailing market prices

Strategic sourcingPurchases involving long-term contracts that are usually based on private negotiations between sellers and buyers

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Types of goods

Direct materialsMaterials used in the production of a product (e.g., steel in a car or paper in a book)

Indirect materialsMaterials used to support production (e.g., office supplies or light bulbs)

MROs (maintenance, repairs, and operations)Indirect materials used in activities that support production

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Marketplaces : Direction of trade

Vertical marketplacesMarkets that deal with one industry or industry segment (e.g., steel, chemicals)

Vortal: Vertical Portal

Horizontal marketplacesMarkets that concentrate on a service, material, or a product that is used in all types of industries (e.g., office supplies, PCs)

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Marketplaces : Direction of trade

產業垂直市集

商品

水平市集

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Supply Chain Relationships in B2B

B2B private e-marketplace provides a company with high supply chain power and high capabilities for online interactions

A public e-marketplace provides a business with high buying and selling capabilities, but results in low supply chain power

Using an intermediary results in low supply chain power and buying/selling capabilities

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Supply chain relationships in B2B

Supply chain process consists of a number of interrelated subprocesses and roles

acquisition of materials from suppliers

processing of a product or service

packaging it and moving it to distributors and retailers

purchase of a product by the end consumer

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Benefits of B2B

Creates new sales (purchase) opportunitiesEliminates paper and reduces administrative costsExpedites processing and reduces cycle timeLowers search costs and time for buyers to find products and vendorsIncreases productivity of employees dealing with buying and/or sellingReduces errors and improves quality of servicesMakes product configuration easier

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Benefits of B2B (continued)

Reduces marketing and sales costs (for sellers)Reduces inventory levels and costsEnables customized online catalogs with different prices for different customersIncreases production flexibility, permitting just-in-time deliveryReduces procurement costs (for buyers)Facilitates mass customizationProvides for efficient customer serviceIncreases opportunities for collaboration

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Limitations of B2B

Channel conflict

Operation of public exchanges

Elimination the distributor or the retailer

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Benefits of B2B

Eliminates paper and reduces administrative costs.Expedites cycle timeLowers search costs and time for buyersIncreases productivity of employees dealing with buying and/or selling Reduces errors and improves quality of services.Reduces inventory levels and costsIncreases production flexibility, permitting just-in-time deliveryFacilitates mass customizationIncreases opportunities for collaboration

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One-to-Many: Sell-Side Marketplaces

Sell-side e-marketplace: A Web-based marketplace in which one company sells to many business buyers from e-catalogs or auctions, frequently over an extranet

Three major direct sales methods:1. selling from electronic catalogs2. selling via forward auctions 3. one-to-one selling

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One-to-Many: Sell-Side Marketplaces (cont.)

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One-to-Many: Sell-Side Marketplaces (cont.)

B2B sellersclick-and-mortar manufacturers or intermediaries, usually distributors or wholesalers

Customer serviceonline sellers can provide sophisticated customer services

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One-to-Many: Sell-Side Marketplaces (cont.)

Configuration and customizationcustomize products

get price quotes

submit orders

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One-to-Many: Sell-Side Marketplaces (cont.)

Major benefits of direct sales are:Lower order-processing costs and less paperworkA faster ordering cycleFewer errors in ordering and product configurationLower search costs of products for buyers Lower search costs of finding buyers for sellersSellers can advertise and communicate onlineLower logistics costs Ability to offer different catalogs and prices to different customers

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Selling via Auctions

Using auctions on the sell side

Revenue generation

Cost savings

Increased page views

Member acquisition and retention

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Selling via Auctions (cont.)

Selling from the company’s own siteThe company will have to pay for infrastructure and operate and maintain the auction site

If then company already has an electronic marketplace for selling from e-catalogs, the additional cost may not be too high

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Using intermediaries

An intermediary may conduct private auctions for a seller, either from the intermediary’s or the seller’s site

A company may choose to conduct auctions in a public marketplace, using a third-party hosting company

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Benefits of using intermediaries

no additional resources are requiredauction set up to show the branding (company name) of the merchant rather than the intermediary’s nameintermediary does the work of:

controlling data on Web traffic, page views, and member registrationsetting all the auction parameters (transaction fee structure, user interface, and reports)integrating the information flow and logistics

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One-from-Many: Buy-Side Marketplaces and E-Procurement

Buy-side e-marketplace: A corporate-based acquisition site that uses reverse auctions, negotiations, group purchasing, or any other e-procurement method

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Procurement methods

Buy from manufacturers, wholesalers, or retailers from their catalogs, and possibly by negotiation

Buy from the catalog of an intermediary that aggregates sellers’ catalogs or buy at industrial malls

Buy from an internal buyer’s catalog in which company-approved vendors’ catalogs, including agreed upon prices, are aggregated

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E-Procurement

e-procurement: The electronic acquisition of goods and services for organizations

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E-Procurement

Conduct bidding or tendering (a reverse auction) in a system where suppliers compete against each other

Buy at private or public auction sites in which the organization participates as one of the buyers

Join a group-purchasing system that aggregates participants’ demand, creating a large volume

Collaborate with suppliers to share information about sales and inventory, so as to reduce inventory and stock-outs and enhance just-in-time delivery

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Inefficiencies in traditional procurement management

Procurement managementThe coordination of all the activities relating to purchasing goods and services needed to accomplish the mission of an organization

Maverick buyingUnplanned purchases of items needed quickly, often at non-pre-negotiated, higher prices

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Benefits of e-procurement

Increasing the productivity of purchasing agents

Lowering purchase prices through product standardization and consolidation of purchases

Improving information flow and management

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Benefits of E-Procurement (cont.)

Minimizing the purchases made from noncontract vendors. Improving the payment process

Establishing efficient, collaborative supplier relations

Ensuring delivery on time, every time

Reducing the skill requirements and training needs of purchasing agents

Reducing the number of suppliers

Streamlining the purchasing process, making it simple and fast

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Benefits of E-Procurement (cont.)

Reducing the administrative processing cost per orderImproved sourcingIntegrating the procurement process with budgetary control in an efficient and effective wayMinimizing human errors in the buying or shipping processMonitoring and regulating buying behavior

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Implementing E-Procurement

Implementing e-procurement—major e-procurement implementation issues

Fitting e-procurement into the company EC strategyReviewing and changing the procurement process itselfProviding interfaces between e-procurement with integrated enterprisewide information systems such as ERP or supply chain management (SCM)

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Implementing E-Procurement (cont.)

Coordinating the buyer’s information system with that of the sellers; sellers have many potential buyers

Consolidating the number of regular suppliers to a minimum and assuring integration with their information systems, and if possible with their business processes

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Buy-Side E-Marketplaces: Reverse Auctions

One of the major methods of e-procurement is through reverse auctions (tendering or bidding model)

request for quote (RFQ): The “invitation” to participate in a tendering (bidding) system

The reverse auction method is the most common model for large MRO purchases as it provides considerable savings

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Reverse Auctions (cont.)

Conducting reverse auctionsThousands of companies use the reverse auction model

They may be administered from a company’s Web site or from an intermediary’s site

The bidding process may last a day or more

Bidders may bid only once, but bidders can usually view the lowest bid and rebid several times

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Reverse Auction: The Process

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Other E-Procurement Methods

Internal marketplace: The aggregated catalogs of all approved suppliers combined into a single internal electronic catalog

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Benefits of internal marketplaces

corporate buyers quickly find what they want, check availability and delivery times, and complete an electronic requisition form

reduce number of regular suppliers

easy financial controls

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Other E-Procurement Methods (cont.)

Industrial mallsDistributors that aggregate products from hundreds or thousands of suppliers in one place

Horizontal—carrying MRO (nonproduction) materials for use in a variety of industries

Vertical—carrying products used by one industry but at various segments of the supply chain

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Other E-Procurement Methods (cont.)

E-auctionssellers are increasingly motivated to sell surpluses and even regular products via auctions

e-auctions provide an opportunity to buyers to find inexpensive or unique items fairly quickly

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Other E-Procurement Methods (cont.)

Group purchasing: The aggregation of orders from several buyers into volume purchases so that better prices can be negotiated

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Exhibit 5.8 The Group Purchasing Process

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Other E-Procurement Methods (cont.)

Internal aggregation—companywide orders are aggregated using the Web and replenished automatically

External aggregation—provide SMEs with better prices, selection, and services by aggregating demand online and then either negotiating with suppliers or conducting reverse auctions

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Other E-Procurement Methods (cont.)

Purchasing direct goodsE-purchasing direct goods allows buyers to:

get them faster

reduce the unit cost

reduce inventories

avoid shortages of materials

expedite their own production processes

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Other E-Procurement Methods (cont.)

Electronic barteringBartering exchange: An intermediary that links parties in a barter; a company submits its surplus to the exchange and receives points of credit, which can be used to buy the items that the company needs from other exchange participants

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Infrastructure for B2B

Major infrastructures needed for B2B marketplaces

Telecommunications networks and protocols

Server(s) for hosting the databases and the applications

Software for various activities for executing the sell-side activities, buy-side activities, PRM, and building a storefront

Security for hardware and software

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Other E-Procurement Methods (cont.)

IntegrationIntegration with existing internal infrastructure and applications

EC applications of any kind need to be connected to the existing internal information systems

Integration with business partnersEC can be integrated more easily with internal systems than with external ones

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Managerial Issues

1. Can we justify the cost of B2B applications?

2. Which vendor(s) should we select?

3. Which B2B model(s) should we use?

4. Should we restructure our procurement system?

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Managerial Issues (cont.)

5. What restructuring will be required for the shift to e-procurement?

6. What integration would be useful?

7. What are the ethical issues in B2B?

8. Will there be massive disintermediation?