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WWWWWW
Chapter 13
Web-Based Business-to-Business
E-Commerce
2WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
OBJECTIVES
• What is B2B E-Commerce?
• B2B Models
• B2B Building Blocks
• B2B Integration Challenges
• B2B Tools –EDI
• Beyond B2B
Web-based B2B E-Commerce: Objectives
3WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
WHAT’S B2B E-COMMERCE?
• B2B– Both sellers and buyers are business
organizations– Involves complex procurement, manufacturing,
planning collaboration, payment terms & performance agreements
Web-based B2B E-Commerce: What’s B2B E-Commerce?
4WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
B2B ENTITIES
Web-based B2B E-Commerce: What’s B2B E-Commerce?
Selling Company
ERP
Buying Company
Order Fulfillment
Deliverer
5WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
B2B ENTITIES
• Purchasing Company– Focus on procurement in terms of reduced purchase
prices and cycle time
• Selling Company– Focus on marketing & sales
• Intermediating Service Provider– Focus on ensuring order fulfillment
• JIT Deliverer– Focus on just-in-time delivery
Web-based B2B E-Commerce: What’s B2B E-Commerce?
6WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
B2B ENTITIES
• Web-based Platform– Focus on Internet, intranet, & extranet
• Tools of B2B– Focus on Electronic Data Interchange and
software agents
• Back-End Technical Support– Focus on Enterprise Resource Planning
Web-based B2B E-Commerce: What’s B2B E-Commerce?
7WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
B2B VS. B2C
Web-based B2B E-Commerce: What’s B2B E-Commerce?
B2C B2B
How connection is set up
Consumer-to-system Business-to-business
Types of relationship •Placing orders
•Executing payments
•Fulfilling orders
•Browsing of merchant’s catalog
•Sending feedback
•Online procurement
•Tracking order status
•Executing payments
•Managing promotions, returns, and catalog info
•Fulfilling orders
8WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
B2B VS. B2C (Cont’d)
B2C B2B
Nature of control Unidirectional Unidirectional to peer-to-peer
Level of needs-based segmentation
Moderate to low Sharper than B2C
Sales complexity Moderate Complex
Web-based B2B E-Commerce: What’s B2B E-Commerce?
9WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
ADVANTAGES
• Save money on purchases that are negotiated instantly
• Replacing earlier purchasing bureaucracy with online links improves efficiency
• Just-in-time environment minimizes inventory sitting in the warehouse
Web-based B2B E-Commerce: What’s B2B E-Commerce?
10WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
DRAWBACKS
• Suppliers have to work with big technology integration issues with the rest of suppliers in the exchange
• Antitrust violations may result
Web-based B2B E-Commerce: What’s B2B E-Commerce?
11WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
SUPPLY CHAIN
• Process of moving goods from customer order through the raw materials, supply, production, and the distribution of products to the customer
• Benefits– Reduced inventory, higher sales, improved
ability to customize products for different business buyers, and reduced production cost
Web-based B2B E-Commerce: What’s B2B E-Commerce?
12WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
B2B MODELS
• Buyer-oriented B2B– A buyer uses the Internet by opening a
marketplace on its own server & opening the window for suppliers to do the bidding
• Supplier-oriented B2B– A supplier invites customers to order product
via its electronic market store
Web-based B2B E-Commerce: B2B Models
13WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
ELECTRONIC AUCTIONS
• Reduce procurement costs
• Maximize return on excess merchandise
• Types– Forward auction– Reverse auction– Internet exchange
Web-based B2B E-Commerce: B2B Models
14WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
FORWARD AUCTION
• One seller entertains bids from many buyers• Allows the seller to post products or services they
want to sell via its auction website• Payment & fulfillment is handled through normal
electronic channels• Ideal where demand & supply are unpredictable,
and there is a timing factor to unload the merchandise
Web-based B2B E-Commerce: B2B Models
15WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
REVERSE AUCTION
• Used to solicit bids where lowest bidder wins
• Typical of large corporate buying
• Tends to drive down prices & expand buyer’s zone of choice among suppliers
Web-based B2B E-Commerce: B2B Models
16WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
INTERNET EXCHANGE AUCTION
• Involves many buyers & sellers who trade bids and offers until there is an agreement to exchange product for payment
• A third party operates the exchange– Responsible for quality assurance & prompt
delivery of the goods
Web-based B2B E-Commerce: B2B Models
17WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
B2B MODELS (Cont’d)
• Revolves around an electronic intermediary company that establishes an exchange market where buyers and sellers can make deals
Web-based B2B E-Commerce: B2B Models
18WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
B2B BUILDING BLOCKS
• Application Server
• B2B Integration Server
• Personalization Software
• Content Management Facility
• E-Commerce Package
• Security
• Quality of Service
Web-based B2B E-Commerce: B2B Building Blocks
19WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
B2B INTEGRATION CHALLENGE
• B2B Integration– Deals with spanning independent businesses, each
with its own set of applications and users– Interoperates with heterogeneous systems without
being tied to one specific system technology
Web-based B2B E-Commerce: B2B Integration Challenge
20WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
B2B INTEGRATION
• Solutions– Via a website as a front-end for information
sharing among partners– Extract information from one partner’s
application and convert it into a format amenable for transmission via EDI
– For two companies to use common technology to coordinate data exchange
Web-based B2B E-Commerce: B2B Integration Challenge
21WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
B2B TOOLS – EDI
• Allows one computer system to communicate business information with another computer system in a standardized electronic form
• Computer-to-computer transfer of business information
Web-based B2B E-Commerce: B2B Tools - EDI
22WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
COMPONENTS OF EDI
• Interbusiness– Transmission of data between businesses
• Computer-to-computer– Data communication from one computer to
another
• Standard transactions– Replace standard business forms
• Standard format
Web-based B2B E-Commerce: B2B Tools - EDI
23WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
ADVANTAGES
• Cost reduction & time saving
• Improved B2B problem resolution
• Accuracy with integrity
Web-based B2B E-Commerce: B2B Tools - EDI
24WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
DRAWBACKS
• Unpopular
• Expensive
• Point-to-point
• Requires expensive VAN networking
• Not easy to use, learn, or implement
Web-based B2B E-Commerce: B2B Tools - EDI
25WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
EDI JUSTIFICATION
• Volume of data
• Frequency of document transmission & reception
• Content sensitivity
• Time sensitivity
Web-based B2B E-Commerce: B2B Tools - EDI
26WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
FINANCIAL EDI
• Electronic transmission of payments between a payee and a payer via their respective banks
• Allows businesses to replace labor-intensive activities of collecting, disbursing & processing payments
• Improves certainty of payment flows
Web-based B2B E-Commerce: B2B Tools - EDI
27WWWWWW Awad –Electronic Commerce 1/e© 2002 Prentice Hall
BEYOND B2B
• A2Z Approach– Connect all the links of value chain via
partnership– The link would be turned from physical
connections to digital ones– Clear visibility of each stage of business
process
Web-based B2B E-Commerce: Beyond B2B
WWWWWW
Chapter 13
Web-Based Business-to-Business
E-Commerce
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