Chapter 5Company-Centric B2B and Collaborative Co

1PrenticeHall,2003Chapter5Company-CentricB2BandCollaborativeCommerce2PrenticeHall,2003LearningObjectivesDescribetheB2BfieldDescribethemajortypesofB2BmodelsDescribethecharacteristicsofthesell-sidemarketplaceDescribethesell-sideintermediarymodelsDescribethecharacteristicsofthebuy-sidemarketplaceande-procurement3PrenticeHall,2003ExplainhowforwardandbackwardauctionsworkinB2BDescribeB2BaggregationandgrouppurchasingmodelsDescribecollaborativee-commerceandinterorganizationalsystemsDescribeinfrastructureandstandardsrequirementsforB2BLearningObjectives(cont.)4PrenticeHall,2003GeneralMotors’B2BInitiativesTheProblemECinitiatives—build-to-orderprojecttobeinplaceby2005reducinginventoryoffinishedcarsWhattodowithmanufacturingmachinesthatarenolongersufficientlyproductive(assetsproblem)Resourceproblemrelatingtoprocurementofcommodityproducts5PrenticeHall,2003GeneralMotors’(cont.)TheSolutionTradeXchange(nowpartofCovisint)onlineauctionsofitemslikeusedmachinesformanufacturingSignificantlydecreasestimeforsalesIncreasesdollaramountofthesalesECinitiativesatTradeXchangeCapitalassetsproblem—implementeditsownelectronicmarkettoconductforwardauctionsProcurementproblem—automatedthebidding,creatingonlinereverseauctionsonitse-procurementsite6PrenticeHall,2003GeneralMotors’(cont.)TheResultsWithinjust89minutesafterthefirstforwardauctionopened,eightpressesweresoldfor$1.8millionInthefirstonlinereverseauction,GMpurchasedalargevolumeofrubbersealingpackagesforvehicleproductionatasignificantlylowerthanthepriceGMhadbeenpayingthroughnegotiatedbymanualtendering7PrenticeHall,2003Concepts,Characteristics,andModelsofB2ECBasicB2BConceptsBusiness-to-businesse-commerce(B2BEC)—transactionsbetweenbusinessesconductedelectronicallyovertheInternet,extranets,intranets,orprivatenetworks;alsoknownaseB2B(electronicB2B)orjustB2BMarketSizeandContentExpectedtogrowfrom$1.1trillionin2003to$10trillionby2005,thepercentageofInternet-basedB2Bfrom2.1%in2000to10%in20058PrenticeHall,2003Concepts,Characteristics,andModelsofB2EC(cont.)B2BECCharacteristicsPartiestothetransactionOnlineintermediary—anonlinethird-partythatbrokersatransactionbetweenabuyerandaseller;canbevirtualorclick-and-mortar;buyers;sellersTypesoftransactionsSpotbuying—thepurchaseofgoodsandservicesastheyareneeded,usuallyatprevailingmarketpricesStrategicsourcing—purchasesinvolvinglong-termcontractsthatareusuallybasedonprivatenegotiationsbetweensellersandbuyers9PrenticeHall,2003Concepts,Characteristics,andModelsofB2EC(cont.)TypesofmaterialsDirectmaterials—materialsusedintheproductionofaproduct(e.g.,steelinacarorpaperinabook)Indirectmaterials—materialsusedtosupportproduction(e.g.,officesuppliesorlightbulbs)MROs(maintenance,repairs,andoperations)—indirectmaterialsusedinactivitiesthatsupportproduction10PrenticeHall,2003Concepts,Characteristics,andModelsofB2EC(cont.)DirectionoftradeVerticalmarketplaces—marketsthatdealwithoneindustryorindustrysegment(e.g.,steel,chemicals).Horizontalmarketplaces—marketsthatconcentrateonaserviceoraproductthatisusedinalltypesofindustries(e.g.,officesupplies,PCs)11PrenticeHall,2003Concepts,Characteristics,andModelsofB2EC(cont.)TheBasicB2BTransactionTypesSellside—onesellertomanybuyersBuyside—onebuyerfrommanysellersExchanges—manysellerstomanybuyersCollaborativecommerce—communicationandsharingofinformation,design,andplanningamongbusinesspartners12PrenticeHall,2003Exhibit5.1TypesofB2BE-Commerce13PrenticeHall,2003One-to-ManyandMany-to-One:Company-CentricTransactionsCompany-centricEC—e-commercethatfocusesonasinglecompany’sbuyingneeds(many-to-one,orbuy-side)orsellingneeds(one-to-many,orsell-side)Privatee-marketplaces—marketsinwhichtheindividualsell-sideorbuy-sidecompanyhascompletecontroloverparticipationinthesellingorbuyingtransaction14PrenticeHall,2003Many-to-Many:ExchangesExchanges—many-to-manye-marketplaces,usuallyownedandrunbyathirdpartyoraconsortium,inwhichmanybuyersandmanysellersmeetelectronicallytotradewitheachother;alsocalledtradingcommunities,ortradingexchangesPublice-marketplaces—third-partymarketsthatareopentoallinterestedparties(sellersandbuyers)15PrenticeHall,2003Concepts,Characteristics,andModelsofB2EC(cont.)SupplychainrelationshipsinB2BInterrelatedsubprocessesandrolesB2Bapplicationsoffercompetitiveadvantagesforsupplychainmanagement(SCM)VirtualserviceindustriesinB2BTravelandtourismservicesRealestateOnlinestocktradingElectronicpaymentsOnlinefinancing16PrenticeHall,2003Concepts,Characteristics,andModelsofB2EC(cont.)BenefitsofB2BEliminatespaperandreducesadministrativecostsExpeditescycletimeLowerssearchcostsandtimeforbuyersIncreasesproductivityofemployeesdealingwithbuyingand/orsellingReduceserrorsand/orimprovesqualityofservicesReducesinventorylevelsandcostsIncreasesproductionflexibility,permittingjust-in-timedeliveryFacilitatesmasscustomizationIncreasesopportunitiesforcollaboration17PrenticeHall,2003Sell-SideMarketplaces:One-to-ManySell-sidee-marketplace—aWeb-basedmarketplaceinwhichonecompanysellstomanybusinessbuyers,frequentlyoveranextranet3majormethodsfordirectsaleintheone-to-manymodel