E-Business

1. (Buying) Selling to
Businesses Online
6. E-Business
B2B
SCM

2. Volume Vs Variety
Transaction amount (Single transaction)
Delivery Complexity
Interaction- EDI
Order, delivery, payment ...
Pran
Agora
NSU
GP
B2B
B2C
Agora
PranF
Agora

3. Kachchi
Biryani
KBhai/
S.Dine
spices
Meat
rice
Potatoes
Farmer
Dealer
Aus. Kangaroo
& Cattle Co.
SriLanka Spice Co.
Shaan
Radhuni
International
Orders/Complex
- Quantity
- Quality
- Time
- Payment- L/C
- Shipping
- Monitoring
Solution
- Info. System
- SCM
- eBusiness Process
Brazil Spice Co.
BenglMeat
C

4. Compare to a paper-based purchasing process

7. Job of managing
integration of company supply management and
logistics activities across multiple participants in a
particular product’s supply chain
Supply chain management
-- GOAL --
Achieve higher-
quality, on-time and
lower-cost product
at the end of the
chain

8. Typical business purchasing process ...
Complex?

9. Purchasing ...
• Direct materials (part of finished product)
– Contract purchasing, Spot purchasing
• Indirect materials (MRO)
– Standard items- Engine oil, parts, ...
Purchasing, Logistics, and ...
Purchasing cards (p-cards)
● SCM
○ Procurement
■ Purchasing
■ Supplier Mgt
○ Logistics

10. Why? e-Purchasing ...
• E-business for
– Cost reductions
– Process improvements
– Flexibility
– Synergy
• Consider suppliers
– Cost? Quality? Delivery time ……
– Monitoring, relationship
– Manage a complex process
SCM
Intelligent
Agents

11. Hundreds of thousands of product
Maintenance, repair and operation supplies
Grainger.com Web store (B2B)
MRO
EDI

12. https://www.youtube.com/watch?v=iALiS4FBB6E
Interest cost, Garage, Insurance, Cleaning …

13. Logistics- movement
• Both sales and purchasing
– Outbound, Inbound
• Goal
– right goods, right quantities
– right place, right time, cost …
• Web, Internet, GPS … technologies
– Opportunities to better manage activities
• Integrate Third-party logistics (3PL) provider
• Location tracking with GPS
• Notification
EDI

14. Support Activities
• Training
– Distribute using company intranet
• Knowledge management
– Collection, classification, dissemination
SCM
ERP
CRM

15. E-Government

16. G2C- Government to Citizen

17. Electronic Data Interchange
• Standard format & Compatibility/translators
• Most B2B e-commerce has adapted EDI
• EDI Payments
– Clearing House
– EFT
EDI
Protocol

21. Direct
Indirect
VAN-Value Added Network

22. Value Added Networks ...
• Receives, stores, (translates), forwards electronic
messages containing EDI transaction sets
• Support a variety of protocols, fast setup, support
• Transaction cost!
• Companies providing VAN services
– Advanced Data Exchange, Behr Technologies …
• Nonrepudiation
– Establish that a particular transaction occurred
– VAN’s audit logs
– Vs. Comparison of trading partners’ message logs
(direct connection EDI)
22

23. Network Model of Supply Chain
• Other firms perform various support activities
• Supply Web: term replacing “supply chain”
– Due to an interconnected network configuration
• Trend in SCM
– Shift from hierarchical structures to network structures
– To negotiate with suppliers and form strategic alliances
Non-Value Added
Intermediaries!
Economic Organization in Purchasing Vs. Marketspace

24. Value Creation in a Supply Web
• A network form of organization within a supply chain
– A holistic view of the entire supply chain
• Reaching Beyond The Organization
Concerns- Trust, Information sharing
Advantage- Competitive
– Increase process speed,
reduce costs, increase
manufacturing flexibility,
response to market change
– Ultimately value added to end consumer

25. Advantages of using technologies
in supply chain management

26. Classmates Friend BFF Life Partner
I don’t want to
know you

27. Building and Maintaining Trust
• Leveraging Internet and the Web
– Provide excellent ways to communicate and share
– Offer new avenues for building trust
• Stay in contact with their customers
• Buyers get instant access to their sales representatives
• Can provide comprehensive information quickly
Continual communication
and information sharing Service

28. Materials Tracking Technologies
• Tracking materials as they move is a challenge
– Expensive, time consuming, customer waiting
– Integration of bar coding and EDI: prevalent
• Second wave of electronic commerce
– Integration of new types of tracking into Internet-
based materials-tracking systems
• Radio Frequency Identification Devices (RFIDs)
• Optical scanners, QR Codes and bar codes
• GPS?

30. B2B Marketplaces
Chaldal
Walton
Pran
1 3 5

31. B2B marketplaces ...
• Private Stores and Customer Portals
– Large sellers have customer portal B2B sites
• Independent Industry Marketplaces
– Industry marketplaces: Single industry
• Chemdex- Trade in bulk chemicals
– Independent exchanges: not controlled by
established buyer or seller in the industry
– Public marketplaces: open to new buyers and
sellers just entering the industry
Power?

32. B2B marketplaces ...
• Private Company Marketplaces
– Large companies vs. small vendors
– Exert power in purchasing negotiations
• Industry Consortia-Sponsored Marketplaces
– Buyer controlled- Covisint (2000) Consortium of
DaimlerChrysler, Ford, General Motors
• Seller Controlled Customer Portals
• Using e-procurement software:
– Allows companies to manage purchasing
function through Web interface
– Includes marketplace functions

33. ???

34. Segment Limited Large
Lead time Long Short
Interaction Electronic TX 1 to 1 preferred
Delivery Coordinated- Both organization Business managed

35. E- Business, Ninth Edition
Learning Objectives
• How businesses use the Internet to improve
purchasing, logistics, and other support activities
• Electronic data interchange and how it works
• How businesses have moved some of their
electronic data interchange operations to the
Internet
• Supply chain management and how businesses are
using Internet technologies to improve it
• Electronic marketplaces and portals that make
purchase-sale negotiations easier and more efficient

36. Summary
• Using Internet and Web technologies
– Improves purchasing and logistics primary activities
– Improves support activities
• Governments extending reach of enterprise
planning and control activities
– Beyond organization’s legal definitions
• Emerging network model of organization
– Describes growth in interorganizational
communications and coordination
E- Business, Ninth Edition

37. Summary (cont’d.)
• History of EDI and how it works
– Freight companies first introduced e-commerce
– Spread of EDI to virtually all large companies
• Requires smaller businesses to seek an affordable way
to participate in EDI
– Internet providing inexpensive communications
channel EDI lacked
• Important force driving supply chain management
technique adoption
37
E- Business, Ninth Edition

38. E- Business, Ninth Edition
Summary (cont’d.)
• Supply chain management
– Incorporates several elements
• Implemented, enhanced through Internet and Web use
• Industry electronic marketplaces led to B2B
electronic commerce models
– Private stores
– Customer portals
– Private marketplaces
– Industry consortia-sponsored marketplace
• Models coexist with industry marketplace model

39. E- Business, Ninth Edition
FIGURE 6-5 Commonly used ASC X12 transaction sets

40. E- Business, Ninth Edition
Emergence of Broader EDI Standards
• American National Standards Institute (ANSI)
– United States coordinating body for standards
– Accredited Standards Committee X12 (ASC X12)
• Develops and maintains EDI standards
– Data Interchange Standards Association (DISA)
• Administrative body coordinating ASC X12 activities
– Transaction sets: names of the formats for specific
business data interchanges
• EDI for Administration, Commerce, and
Transport (EDIFACT, or UN/EDIFACT)

41. E- Business, Ninth Edition
Using Materials-Tracking Technologies
with EDI and Electronic Commerce
(cont’d.)
• Example: 2003 (Wal-Mart)
– Tested RFID tag use on merchandise for inventory
tracking and control
– Initiated plan to have all suppliers install RFID tags in
goods they shipped
– Reduced incidence of stockouts
• Retailer loses sales because it does not have specific
goods on its shelves
• General acceptance of RFID tagging will not occur
in most industries until 20XX

42. E- Business, Ninth Edition
Creating an Ultimate Consumer
Orientation in the Supply Chain
• Ultimate consumer orientation
– Customer focus difficult to maintain
• Michelin North America
– Pioneered use of Internet technology
• To go beyond next step in its value chain
– 1995: launched electronic commerce initiative
• BIB NET extranet
– Allowed dealer access to tire specifications, inventory
status, and promotional information
• Through simple-to-use Web browser interface