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E-commerce 2013E-commerce 2013
Kenneth C. LaudonKenneth C. Laudon
Carol Guercio TraverCarol Guercio Traver
business. technology. society.
ninth edition
Copyright © 2013 Pearson Education, Inc.
Chapter 12Chapter 12
B2B E-commerce: Supply ChainB2B E-commerce: Supply Chain
Management and CollaborativeManagement and Collaborative
CommerceCommerce
Copyright © 2013 Pearson Education, Inc.
Volkswagen Builds Its B2B
Net Marketplace
 Why didn’t Volkswagen want to use a more open or
public electronic exchange for its parts supply?
Why didn’t it join an industry consortium such as
Covisint?
 What kinds of services are provided by
VWGroupSupply?
 What is eCAP and who benefits from its use?
 Do you think suppliers are disadvantaged by this
B2B marketplace?
Copyright © 2013 Pearson Education, Inc. Slide 12-3
Trends in B2B E-commerce
 Mitigation of global supply chain risks
 Regional manufacturing
 Flexibility
 Cost of using B2B systems has fallen, allowing
smaller firms to participate
 Big data
 Growing emphasis of business analytics
 Sustainable supply chains
 B2B firms using social networking platforms
 Growing use of mobile platform
Copyright © 2013 Pearson Education, Inc. Slide 12-4
Defining B2B Commerce
 Before Internet:
 B2B transactions called trade or procurement process
 Total inter-firm trade:
 Total flow of value among firms
 B2B commerce:
 All types of computer-enabled inter-firm trade
 B2B e-commerce:
 The portion of B2B commerce enabled by the Internet
Copyright © 2013 Pearson Education, Inc. Slide 12-5
The Evolution of B2B Commerce
 Automated order-entry systems
 Seller-side solution
 Electronic data interchange (EDI)
 Buyer-side solution
 Hub-and-spoke system
 Serve vertical markets
 B2B electronic storefronts
 Net marketplaces
 Private industrial networks
Copyright © 2013 Pearson Education, Inc. Slide 12-6
Evolution of the Use of
Technology Platforms in B2B Commerce
Figure 12.1, Page 762
Copyright © 2013 Pearson Education, Inc. Slide 12-7
The Growth of B2B E-commerce
 2012–2016: B2B e-commerce will grow
from 40 to 42% of total inter-firm trade
 Private industrial networks continue to
play dominant role in B2B
 Non-EDI B2B e-commerce most rapidly
growing type of e-commerce
 EDI still large but will decline over time
Copyright © 2013 Pearson Education, Inc. Slide 12-8
Growth of B2B Commerce 2000–2016
Figure 12.2, Page 765
Copyright © 2013 Pearson Education, Inc. Slide 12-9
SOURCES: Based on data from U.S. Census Bureau, 2012a; authors’ estimates.
Industry Forecasts
 Not all industries similarly affected by B2B
e-commerce
 Not all industries would benefit equally
 Factors influencing move to e-commerce
 Significant utilization of EDI
 Large investments in IT and Internet infrastructure
 e.g., aerospace and defense, computer
 Market concentrated on purchasing or selling
 e.g., energy, chemical industries
Copyright © 2013 Pearson Education, Inc. Slide 12-10
Potential Benefits of B2B E-commerce
 Lower administrative costs
 Lower search costs for buyers
 Reduced inventory costs
 Increasing competition among suppliers
 Reducing inventory carried
 Lower transaction costs:
 Automation, eliminating paperwork
 Increased production flexibility by ensuring
just-in-time parts delivery
Copyright © 2013 Pearson Education, Inc. Slide 12-11
Potential Benefits (cont.)
 Improved quality of products by increasing
cooperation among buyers and sellers
 Decreased product cycle time
 Increased opportunities for collaboration
 Greater price transparency
 Increased visibility, real-time information
sharing
 However, some risk is posed by increased
globalization and consolidation
Copyright © 2013 Pearson Education, Inc. Slide 12-12
Insight on Society: Class Discussion
Where’s My iPad: Supply Chain
Risk and Vulnerability
 Why does concentrating production on
fewer suppliers also concentrate risk?
 How does globalization play a part in
increased risk?
 What types of procedures could be
implemented, given increased
globalization, to reduce risk?
Copyright © 2013 Pearson Education, Inc. Slide 12-13
The Procurement Process and
the Supply Chain
 Procurement process:
 The way firms purchase materials they need to make
products
 Supply chain:
 Firms that purchase goods, their suppliers, and their
suppliers’ suppliers, relationships and processes
involved
 Steps in procurement process
 Deciding who to buy from and what to pay
 Completing transaction
Copyright © 2013 Pearson Education, Inc. Slide 12-14
The Procurement Process
Figure 12.3, Page 769
Copyright © 2013 Pearson Education, Inc. Slide 12-15
Types of Procurement
 Firms purchase two types of goods
 Direct goods: Integrally involved in production process
 Indirect goods: All goods not directly involved in
production process (MRO goods)
 Firms use two methods to purchase
 Contract purchasing:
 Involves long-term written agreements to purchase specified
products, with agreed-upon terms and quality
 Spot purchasing:
 Involves purchase of goods based on immediate needs in larger
marketplaces that involve many suppliers
Copyright © 2013 Pearson Education, Inc. Slide 12-16
Types of Procurement (cont.)
 Procurement is highly information
intensive and labor intensive
Requires managing information among many
corporate systems
Involves 1.2 million U.S. workers
 Multi-tier supply chain
Complex series of transactions between firm
and thousands of suppliers, supplying
thousands of goods
Copyright © 2013 Pearson Education, Inc. Slide 12-17
The Multi-tier Supply Chain
Figure 12.4, Page 771
Copyright © 2013 Pearson Education, Inc. Slide 12-18
The Role of Existing Legacy
Computer Systems
 Legacy computer systems
 Generally, older mainframe and minicomputer systems
used to manage key business processes within firm
 Enterprise systems
 Corporate-wide
 Support/control all aspects of production, including
 Procurement
 Finance
 Human resources
Copyright © 2013 Pearson Education, Inc. Slide 12-19
Trends in Supply Chain Management
 Supply chain management (SCM)
 Activities used to coordinate key players in the procurement
process
 Major developments in SCM
 Just-in-time and lean production
 Supply chain simplification
 Adaptive supply chains
 Accountable supply chains
 Sustainable supply chains
 Electronic data interchange
 Supply chain management systems
 Collaborative commerce
Copyright © 2013 Pearson Education, Inc. Slide 12-20
Just-in-Time and Lean Production
 Just-in-Time production
Method of inventory cost management
Seeks to eliminate excess inventory to bare
minimum
 Lean production
Set of production methods and tools
Focuses on elimination of waste throughout
customer value chain, not just inventory
Copyright © 2013 Pearson Education, Inc. Slide 12-21
Supply Chain Simplification
 Reducing size of supply chain
 Working with strategic group of suppliers to reduce
product and administrative costs and improving
quality
 Essential for just-in-time production models
 May involve:
 Joint product development and design
 Integration of computer systems
 Tight coupling
 Ensuring precise delivery of ordered parts at specific times
Copyright © 2013 Pearson Education, Inc. Slide 12-22
Adaptive Supply Chains
 Reducing centralization
Reduce risks caused by relying on single
suppliers who are subject to local instability
 e.g., European financial crisis, Japanese earthquake
 Creating regional or product-based
supply chains
Allowing production to be moved to temporary
safe harbors in case of local manufacturing
disruptions
Copyright © 2013 Pearson Education, Inc. Slide 12-23
Accountable Supply Chains
 Labor conditions in low-wage, under-
developed producer countries are acceptable
to consumers
 Slave/forced labor
 Child labor
 Routine exposure to toxic substances
 More than 48 hrs/week
 Harassment and abuse
 Sexual exploitation
 Adequate compensation
Copyright © 2013 Pearson Education, Inc. Slide 12-24
Sustainable Supply Chains
 Taking social and ecological interests
into account
e.g., water usage, air pollution
 Using most efficient environment—
regarding means of production,
distribution, logistics
Good business, over long-term
Create value for consumers, investors,
communities
Copyright © 2013 Pearson Education, Inc. Slide 12-25
Electronic Data Interchange (EDI)
 Broadly defined communications protocol for
exchanging documents among computers
 Stage 1: 1970s–1980s—Document automation
 Stage 2: Early 1990s—Document elimination
 Stage 3: Mid-1990s—Continuous
replenishment/access model
 Today:
 EDI provides for exchange of critical business
information between computer applications supporting
wide variety of business processes
Copyright © 2013 Pearson Education, Inc. Slide 12-26
The Evolution of EDI as a B2B Medium
Figure 12.5, Page 777
Copyright © 2013 Pearson Education, Inc. Slide 12-27
Supply Chain Management Systems
 Continuously link activities of buying, making, and
moving products from suppliers to purchasing firms
 SAP and Oracle Mobile apps for smartphones, tablets
 Integrates demand side of business equation by
including order entry system in the process
 With SCM system and continuous replenishment,
inventory is eliminated and production begins only
when order is received
 Hewlett Packard’s SCM system: Elapsed time from
order entry to shipping PC is 48 hours
Copyright © 2013 Pearson Education, Inc. Slide 12-28
Supply Chain Management Systems
Figure 12.6, Page 779
Copyright © 2013 Pearson Education, Inc. Slide 12-29
Insight on Technology: Class Discussion
RFID Autoidentification:
Giving a Voice to Your Inventory
 Why is RFID an improvement over bar
codes?
 How does RFID work?
 How is Walmart utilizing RFID?
 What impact will widespread adoption
of RFID have on B2B e-commerce?
Copyright © 2013 Pearson Education, Inc. Slide 12-30
Collaborative Commerce
 Use of digital technologies for organizations to
collaboratively design, produce, and manage
products through life cycles
 Moves focus from transactions to relationships
among supply chain participants
 Unlike EDI, more like an interactive teleconference
among members of supply chain
 Use of Internet technologies for rich
communications environment
 Sharing designs, documents, messages, network meetings,
videconferencing
Copyright © 2013 Pearson Education, Inc. Slide 12-31
Elements of a Collaborative Commerce
System
Figure 12.7, Page 783
Copyright © 2013 Pearson Education, Inc. Slide 12-32
Social Networks and B2B
 Social networks can provide personal
connections that can help decision
making in supply chain
 TradeSpace
UK-based; buying and selling products
 Dell’s YouTube channel
 Cisco’s Facebook pages for product
campaigns for business clients
Copyright © 2013 Pearson Education, Inc. Slide 12-33
Two Main Types of Internet-based
B2B Commerce
1. Net marketplaces:
 Bring together potentially thousands of sellers and buyers in
single digital marketplace operated over Internet
 Transaction-based
 Support many-to-many as well as one-to-many relationships
1. Private industrial networks:
 Bring together small number of strategic business partner firms
that collaborate to develop highly efficient supply chains
 Relationship-based
 Support many-to-one and many-to-few relationships
 Largest form of B2B e-commerce
Copyright © 2013 Pearson Education, Inc. Slide 12-34
Two Main Types of Internet-Based B2B
Commerce
Figure 12.8, Page 785
Copyright © 2013 Pearson Education, Inc. Slide 12-35
Net Marketplaces
 Ways to classify Net marketplaces:
 Pricing mechanism, nature of market served, ownership
 By business functionality
 What businesses buy (direct vs. indirect goods)
 How businesses buy (spot purchasing vs. long-term
sourcing)
 Four main types
 E-distributors
 E-procurement
 Exchanges
 Industry consortia
Copyright © 2013 Pearson Education, Inc. Slide 12-36
Table 12.2, p. 786
Copyright © 2013 Pearson Education, Inc. Slide 12-37
Pure Types of Net Marketplaces
Figure 12.9, Page 787
Copyright © 2013 Pearson Education, Inc. Slide 12-38
E-distributors
 Most common type of Net marketplace
 Electronic catalogs representing products of
thousands of direct manufacturers
 Typically, independently owned intermediaries
 Offer industrial customers single source to purchase
indirect goods on spot basis
 Typically, horizontal
 Usually, fixed price—discounts for large customers
 e.g., W.W. Grainger
Copyright © 2013 Pearson Education, Inc. Slide 12-39
E-distributors
Figure 12.10, Page 788
Copyright © 2013 Pearson Education, Inc. Slide 12-40
E-procurement Net Marketplaces
 Independently owned intermediaries
 Connect hundreds of suppliers of indirect goods
 Firms pay fees to join market
 Long-term contractual purchasing of indirect goods
 Revenues from transaction fees, licensing
consultation services and software, network fees
 Offer value chain management (VCM) services
 Many-to-many market
 e.g., Ariba
Copyright © 2013 Pearson Education, Inc. Slide 12-41
E-procurement Net Marketplaces
Figure 12.11, Page 789
Copyright © 2013 Pearson Education, Inc. Slide 12-42
Exchanges
 Independently owned online marketplaces
 Connect hundreds to thousands of suppliers and
buyers in dynamic, real-time environment
 Vertical markets, spot purchasing in single industry
 Charge commission fees on transaction
 Variety of pricing models
 Tend to be buyer-biased
 Suppliers disadvantaged by competition
 Many have failed due to low liquidity
Copyright © 2013 Pearson Education, Inc. Slide 12-43
Exchanges
Figure 12.12, Page 791
Copyright © 2013 Pearson Education, Inc. Slide 12-44
Industry Consortia
 Industry-owned vertical markets
 Purchase of direct inputs from set of invited
participants
 Emphasize long-term contractual purchasing, stable
relationships, creation of data standards
 Ultimate objective:
 Unification of supply chains within entire industries through
common network and computing platform
 Revenue from transaction and subscription fees
 Many different pricing mechanisms
 Can force suppliers to use consortia’s networks
Copyright © 2013 Pearson Education, Inc. Slide 12-45
Industry Consortia
Figure 12.13, Page 793
Copyright © 2013 Pearson Education, Inc. Slide 12-46
The Long-term Dynamics of
Net Marketplaces
 Pure Net marketplaces moving from “electronic
marketplace” vision toward more central role in
changing procurement process
 Consortia and exchanges beginning to work
together in selected markets
 E-distributors joining large e-procurement systems
and industry consortia as suppliers
 Movement from simple transactions for spot
purchasing to longer-term contractual relationships
involving both direct and indirect goods
Copyright © 2013 Pearson Education, Inc. Slide 12-47
Net Marketplace Trends
Figure 12.14, Page 796
Copyright © 2013 Pearson Education, Inc. Slide 12-48
Private Industrial Networks
 Private trading exchanges (PTXs)
 Web-enabled networks for coordination of trans-
organizational business processes (collaborative
commerce)
 Direct descendant of EDI; closely tied to ERP systems
 Manufacturing and support industries
 Single, large manufacturing firm sponsors network
 Range in scope from single firm to entire industry
 e.g., Procter & Gamble
Copyright © 2013 Pearson Education, Inc. Slide 12-49
P&G’s Private Industrial Network
Figure 12.15, Page 797
Copyright © 2013 Pearson Education, Inc. Slide 12-50
Characteristics of Private
Industrial Networks
 Objectives include:
 Efficient purchasing and selling industry-wide
 Industry-wide resource planning to supplement enterprise-wide resource
planning
 Increasing supply chain visibility
 Closer buyer-supplier relationships
 Global scale operations
 Reducing industry risk by preventing imbalances of supply and demand
 Focus on continuous business process coordination
 Typically, focus on single sponsoring company that
“owns” the network
Copyright © 2013 Pearson Education, Inc. Slide 12-51
Insight on Business: Class Discussion
Walmart Develops a
Private Industrial Network
 What is Walmart’s Retail Link system and
how has it changed since the early 1990s?
 Why is Walmart still using EDI-based
systems?
 Why won’t Walmart join in an industry-
backed system?
 How can other companies compete with
Walmart?
Copyright © 2013 Pearson Education, Inc. Slide 12-52
Private Industrial Networks and
Collaborative Commerce
 Forms of collaboration:
 Collaborative resource planning, forecasting, and
replenishment (CPFR):
 Working with network members to forecast demand, develop
production plans, and coordinate shipping, warehousing and
stocking activities to ensure that retail and wholesale shelf
space is replenished with just the right amount of goods
 Demand chain visibility
 Marketing coordination and product design
 Can ensure products fulfill claims of marketing
 Feedback enables closed loop marketing
Copyright © 2013 Pearson Education, Inc. Slide 12-53
Pieces of the
Collaborative
Commerce
Puzzle
Figure 12.16, Page 802
Copyright © 2013 Pearson Education, Inc. Slide 12-54
Implementation Barriers
 Concerns about sharing of proprietary,
sensitive data
 Integration of private industrial networks
into existing ERP systems and EDI networks
difficult, expensive
 Requires change in mindset and behavior of
employees and suppliers
All participants lose some independence
Copyright © 2013 Pearson Education, Inc. Slide 12-55
Copyright © 2013 Pearson Education, Inc. Slide 12-56

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Chapter 12

  • 1. E-commerce 2013E-commerce 2013 Kenneth C. LaudonKenneth C. Laudon Carol Guercio TraverCarol Guercio Traver business. technology. society. ninth edition Copyright © 2013 Pearson Education, Inc.
  • 2. Chapter 12Chapter 12 B2B E-commerce: Supply ChainB2B E-commerce: Supply Chain Management and CollaborativeManagement and Collaborative CommerceCommerce Copyright © 2013 Pearson Education, Inc.
  • 3. Volkswagen Builds Its B2B Net Marketplace  Why didn’t Volkswagen want to use a more open or public electronic exchange for its parts supply? Why didn’t it join an industry consortium such as Covisint?  What kinds of services are provided by VWGroupSupply?  What is eCAP and who benefits from its use?  Do you think suppliers are disadvantaged by this B2B marketplace? Copyright © 2013 Pearson Education, Inc. Slide 12-3
  • 4. Trends in B2B E-commerce  Mitigation of global supply chain risks  Regional manufacturing  Flexibility  Cost of using B2B systems has fallen, allowing smaller firms to participate  Big data  Growing emphasis of business analytics  Sustainable supply chains  B2B firms using social networking platforms  Growing use of mobile platform Copyright © 2013 Pearson Education, Inc. Slide 12-4
  • 5. Defining B2B Commerce  Before Internet:  B2B transactions called trade or procurement process  Total inter-firm trade:  Total flow of value among firms  B2B commerce:  All types of computer-enabled inter-firm trade  B2B e-commerce:  The portion of B2B commerce enabled by the Internet Copyright © 2013 Pearson Education, Inc. Slide 12-5
  • 6. The Evolution of B2B Commerce  Automated order-entry systems  Seller-side solution  Electronic data interchange (EDI)  Buyer-side solution  Hub-and-spoke system  Serve vertical markets  B2B electronic storefronts  Net marketplaces  Private industrial networks Copyright © 2013 Pearson Education, Inc. Slide 12-6
  • 7. Evolution of the Use of Technology Platforms in B2B Commerce Figure 12.1, Page 762 Copyright © 2013 Pearson Education, Inc. Slide 12-7
  • 8. The Growth of B2B E-commerce  2012–2016: B2B e-commerce will grow from 40 to 42% of total inter-firm trade  Private industrial networks continue to play dominant role in B2B  Non-EDI B2B e-commerce most rapidly growing type of e-commerce  EDI still large but will decline over time Copyright © 2013 Pearson Education, Inc. Slide 12-8
  • 9. Growth of B2B Commerce 2000–2016 Figure 12.2, Page 765 Copyright © 2013 Pearson Education, Inc. Slide 12-9 SOURCES: Based on data from U.S. Census Bureau, 2012a; authors’ estimates.
  • 10. Industry Forecasts  Not all industries similarly affected by B2B e-commerce  Not all industries would benefit equally  Factors influencing move to e-commerce  Significant utilization of EDI  Large investments in IT and Internet infrastructure  e.g., aerospace and defense, computer  Market concentrated on purchasing or selling  e.g., energy, chemical industries Copyright © 2013 Pearson Education, Inc. Slide 12-10
  • 11. Potential Benefits of B2B E-commerce  Lower administrative costs  Lower search costs for buyers  Reduced inventory costs  Increasing competition among suppliers  Reducing inventory carried  Lower transaction costs:  Automation, eliminating paperwork  Increased production flexibility by ensuring just-in-time parts delivery Copyright © 2013 Pearson Education, Inc. Slide 12-11
  • 12. Potential Benefits (cont.)  Improved quality of products by increasing cooperation among buyers and sellers  Decreased product cycle time  Increased opportunities for collaboration  Greater price transparency  Increased visibility, real-time information sharing  However, some risk is posed by increased globalization and consolidation Copyright © 2013 Pearson Education, Inc. Slide 12-12
  • 13. Insight on Society: Class Discussion Where’s My iPad: Supply Chain Risk and Vulnerability  Why does concentrating production on fewer suppliers also concentrate risk?  How does globalization play a part in increased risk?  What types of procedures could be implemented, given increased globalization, to reduce risk? Copyright © 2013 Pearson Education, Inc. Slide 12-13
  • 14. The Procurement Process and the Supply Chain  Procurement process:  The way firms purchase materials they need to make products  Supply chain:  Firms that purchase goods, their suppliers, and their suppliers’ suppliers, relationships and processes involved  Steps in procurement process  Deciding who to buy from and what to pay  Completing transaction Copyright © 2013 Pearson Education, Inc. Slide 12-14
  • 15. The Procurement Process Figure 12.3, Page 769 Copyright © 2013 Pearson Education, Inc. Slide 12-15
  • 16. Types of Procurement  Firms purchase two types of goods  Direct goods: Integrally involved in production process  Indirect goods: All goods not directly involved in production process (MRO goods)  Firms use two methods to purchase  Contract purchasing:  Involves long-term written agreements to purchase specified products, with agreed-upon terms and quality  Spot purchasing:  Involves purchase of goods based on immediate needs in larger marketplaces that involve many suppliers Copyright © 2013 Pearson Education, Inc. Slide 12-16
  • 17. Types of Procurement (cont.)  Procurement is highly information intensive and labor intensive Requires managing information among many corporate systems Involves 1.2 million U.S. workers  Multi-tier supply chain Complex series of transactions between firm and thousands of suppliers, supplying thousands of goods Copyright © 2013 Pearson Education, Inc. Slide 12-17
  • 18. The Multi-tier Supply Chain Figure 12.4, Page 771 Copyright © 2013 Pearson Education, Inc. Slide 12-18
  • 19. The Role of Existing Legacy Computer Systems  Legacy computer systems  Generally, older mainframe and minicomputer systems used to manage key business processes within firm  Enterprise systems  Corporate-wide  Support/control all aspects of production, including  Procurement  Finance  Human resources Copyright © 2013 Pearson Education, Inc. Slide 12-19
  • 20. Trends in Supply Chain Management  Supply chain management (SCM)  Activities used to coordinate key players in the procurement process  Major developments in SCM  Just-in-time and lean production  Supply chain simplification  Adaptive supply chains  Accountable supply chains  Sustainable supply chains  Electronic data interchange  Supply chain management systems  Collaborative commerce Copyright © 2013 Pearson Education, Inc. Slide 12-20
  • 21. Just-in-Time and Lean Production  Just-in-Time production Method of inventory cost management Seeks to eliminate excess inventory to bare minimum  Lean production Set of production methods and tools Focuses on elimination of waste throughout customer value chain, not just inventory Copyright © 2013 Pearson Education, Inc. Slide 12-21
  • 22. Supply Chain Simplification  Reducing size of supply chain  Working with strategic group of suppliers to reduce product and administrative costs and improving quality  Essential for just-in-time production models  May involve:  Joint product development and design  Integration of computer systems  Tight coupling  Ensuring precise delivery of ordered parts at specific times Copyright © 2013 Pearson Education, Inc. Slide 12-22
  • 23. Adaptive Supply Chains  Reducing centralization Reduce risks caused by relying on single suppliers who are subject to local instability  e.g., European financial crisis, Japanese earthquake  Creating regional or product-based supply chains Allowing production to be moved to temporary safe harbors in case of local manufacturing disruptions Copyright © 2013 Pearson Education, Inc. Slide 12-23
  • 24. Accountable Supply Chains  Labor conditions in low-wage, under- developed producer countries are acceptable to consumers  Slave/forced labor  Child labor  Routine exposure to toxic substances  More than 48 hrs/week  Harassment and abuse  Sexual exploitation  Adequate compensation Copyright © 2013 Pearson Education, Inc. Slide 12-24
  • 25. Sustainable Supply Chains  Taking social and ecological interests into account e.g., water usage, air pollution  Using most efficient environment— regarding means of production, distribution, logistics Good business, over long-term Create value for consumers, investors, communities Copyright © 2013 Pearson Education, Inc. Slide 12-25
  • 26. Electronic Data Interchange (EDI)  Broadly defined communications protocol for exchanging documents among computers  Stage 1: 1970s–1980s—Document automation  Stage 2: Early 1990s—Document elimination  Stage 3: Mid-1990s—Continuous replenishment/access model  Today:  EDI provides for exchange of critical business information between computer applications supporting wide variety of business processes Copyright © 2013 Pearson Education, Inc. Slide 12-26
  • 27. The Evolution of EDI as a B2B Medium Figure 12.5, Page 777 Copyright © 2013 Pearson Education, Inc. Slide 12-27
  • 28. Supply Chain Management Systems  Continuously link activities of buying, making, and moving products from suppliers to purchasing firms  SAP and Oracle Mobile apps for smartphones, tablets  Integrates demand side of business equation by including order entry system in the process  With SCM system and continuous replenishment, inventory is eliminated and production begins only when order is received  Hewlett Packard’s SCM system: Elapsed time from order entry to shipping PC is 48 hours Copyright © 2013 Pearson Education, Inc. Slide 12-28
  • 29. Supply Chain Management Systems Figure 12.6, Page 779 Copyright © 2013 Pearson Education, Inc. Slide 12-29
  • 30. Insight on Technology: Class Discussion RFID Autoidentification: Giving a Voice to Your Inventory  Why is RFID an improvement over bar codes?  How does RFID work?  How is Walmart utilizing RFID?  What impact will widespread adoption of RFID have on B2B e-commerce? Copyright © 2013 Pearson Education, Inc. Slide 12-30
  • 31. Collaborative Commerce  Use of digital technologies for organizations to collaboratively design, produce, and manage products through life cycles  Moves focus from transactions to relationships among supply chain participants  Unlike EDI, more like an interactive teleconference among members of supply chain  Use of Internet technologies for rich communications environment  Sharing designs, documents, messages, network meetings, videconferencing Copyright © 2013 Pearson Education, Inc. Slide 12-31
  • 32. Elements of a Collaborative Commerce System Figure 12.7, Page 783 Copyright © 2013 Pearson Education, Inc. Slide 12-32
  • 33. Social Networks and B2B  Social networks can provide personal connections that can help decision making in supply chain  TradeSpace UK-based; buying and selling products  Dell’s YouTube channel  Cisco’s Facebook pages for product campaigns for business clients Copyright © 2013 Pearson Education, Inc. Slide 12-33
  • 34. Two Main Types of Internet-based B2B Commerce 1. Net marketplaces:  Bring together potentially thousands of sellers and buyers in single digital marketplace operated over Internet  Transaction-based  Support many-to-many as well as one-to-many relationships 1. Private industrial networks:  Bring together small number of strategic business partner firms that collaborate to develop highly efficient supply chains  Relationship-based  Support many-to-one and many-to-few relationships  Largest form of B2B e-commerce Copyright © 2013 Pearson Education, Inc. Slide 12-34
  • 35. Two Main Types of Internet-Based B2B Commerce Figure 12.8, Page 785 Copyright © 2013 Pearson Education, Inc. Slide 12-35
  • 36. Net Marketplaces  Ways to classify Net marketplaces:  Pricing mechanism, nature of market served, ownership  By business functionality  What businesses buy (direct vs. indirect goods)  How businesses buy (spot purchasing vs. long-term sourcing)  Four main types  E-distributors  E-procurement  Exchanges  Industry consortia Copyright © 2013 Pearson Education, Inc. Slide 12-36
  • 37. Table 12.2, p. 786 Copyright © 2013 Pearson Education, Inc. Slide 12-37
  • 38. Pure Types of Net Marketplaces Figure 12.9, Page 787 Copyright © 2013 Pearson Education, Inc. Slide 12-38
  • 39. E-distributors  Most common type of Net marketplace  Electronic catalogs representing products of thousands of direct manufacturers  Typically, independently owned intermediaries  Offer industrial customers single source to purchase indirect goods on spot basis  Typically, horizontal  Usually, fixed price—discounts for large customers  e.g., W.W. Grainger Copyright © 2013 Pearson Education, Inc. Slide 12-39
  • 40. E-distributors Figure 12.10, Page 788 Copyright © 2013 Pearson Education, Inc. Slide 12-40
  • 41. E-procurement Net Marketplaces  Independently owned intermediaries  Connect hundreds of suppliers of indirect goods  Firms pay fees to join market  Long-term contractual purchasing of indirect goods  Revenues from transaction fees, licensing consultation services and software, network fees  Offer value chain management (VCM) services  Many-to-many market  e.g., Ariba Copyright © 2013 Pearson Education, Inc. Slide 12-41
  • 42. E-procurement Net Marketplaces Figure 12.11, Page 789 Copyright © 2013 Pearson Education, Inc. Slide 12-42
  • 43. Exchanges  Independently owned online marketplaces  Connect hundreds to thousands of suppliers and buyers in dynamic, real-time environment  Vertical markets, spot purchasing in single industry  Charge commission fees on transaction  Variety of pricing models  Tend to be buyer-biased  Suppliers disadvantaged by competition  Many have failed due to low liquidity Copyright © 2013 Pearson Education, Inc. Slide 12-43
  • 44. Exchanges Figure 12.12, Page 791 Copyright © 2013 Pearson Education, Inc. Slide 12-44
  • 45. Industry Consortia  Industry-owned vertical markets  Purchase of direct inputs from set of invited participants  Emphasize long-term contractual purchasing, stable relationships, creation of data standards  Ultimate objective:  Unification of supply chains within entire industries through common network and computing platform  Revenue from transaction and subscription fees  Many different pricing mechanisms  Can force suppliers to use consortia’s networks Copyright © 2013 Pearson Education, Inc. Slide 12-45
  • 46. Industry Consortia Figure 12.13, Page 793 Copyright © 2013 Pearson Education, Inc. Slide 12-46
  • 47. The Long-term Dynamics of Net Marketplaces  Pure Net marketplaces moving from “electronic marketplace” vision toward more central role in changing procurement process  Consortia and exchanges beginning to work together in selected markets  E-distributors joining large e-procurement systems and industry consortia as suppliers  Movement from simple transactions for spot purchasing to longer-term contractual relationships involving both direct and indirect goods Copyright © 2013 Pearson Education, Inc. Slide 12-47
  • 48. Net Marketplace Trends Figure 12.14, Page 796 Copyright © 2013 Pearson Education, Inc. Slide 12-48
  • 49. Private Industrial Networks  Private trading exchanges (PTXs)  Web-enabled networks for coordination of trans- organizational business processes (collaborative commerce)  Direct descendant of EDI; closely tied to ERP systems  Manufacturing and support industries  Single, large manufacturing firm sponsors network  Range in scope from single firm to entire industry  e.g., Procter & Gamble Copyright © 2013 Pearson Education, Inc. Slide 12-49
  • 50. P&G’s Private Industrial Network Figure 12.15, Page 797 Copyright © 2013 Pearson Education, Inc. Slide 12-50
  • 51. Characteristics of Private Industrial Networks  Objectives include:  Efficient purchasing and selling industry-wide  Industry-wide resource planning to supplement enterprise-wide resource planning  Increasing supply chain visibility  Closer buyer-supplier relationships  Global scale operations  Reducing industry risk by preventing imbalances of supply and demand  Focus on continuous business process coordination  Typically, focus on single sponsoring company that “owns” the network Copyright © 2013 Pearson Education, Inc. Slide 12-51
  • 52. Insight on Business: Class Discussion Walmart Develops a Private Industrial Network  What is Walmart’s Retail Link system and how has it changed since the early 1990s?  Why is Walmart still using EDI-based systems?  Why won’t Walmart join in an industry- backed system?  How can other companies compete with Walmart? Copyright © 2013 Pearson Education, Inc. Slide 12-52
  • 53. Private Industrial Networks and Collaborative Commerce  Forms of collaboration:  Collaborative resource planning, forecasting, and replenishment (CPFR):  Working with network members to forecast demand, develop production plans, and coordinate shipping, warehousing and stocking activities to ensure that retail and wholesale shelf space is replenished with just the right amount of goods  Demand chain visibility  Marketing coordination and product design  Can ensure products fulfill claims of marketing  Feedback enables closed loop marketing Copyright © 2013 Pearson Education, Inc. Slide 12-53
  • 54. Pieces of the Collaborative Commerce Puzzle Figure 12.16, Page 802 Copyright © 2013 Pearson Education, Inc. Slide 12-54
  • 55. Implementation Barriers  Concerns about sharing of proprietary, sensitive data  Integration of private industrial networks into existing ERP systems and EDI networks difficult, expensive  Requires change in mindset and behavior of employees and suppliers All participants lose some independence Copyright © 2013 Pearson Education, Inc. Slide 12-55
  • 56. Copyright © 2013 Pearson Education, Inc. Slide 12-56