Business to Business EC

Evolution of Business Software Solutions
Collaborative Commerce is at the Top of the Value Chain

B2B EC Types

Electronic Data Interchange (Private One-Many) Supply chain management systems (Private One- Many)

supply chain encompases all the actvities from procurement of raw materials to making the end product available to the customer) /Collaborative Commerce

B2B Electronic Marketplaces/B2B Exchanges: (Private/Public Many to many)

Entities of B2B EC
      

Sellers/Suppliers Buyers/Customers Electronic Intermediary Logistics service provider Network platform – Internet, VAN Protocols Back end information system such as ERP

B2B Characteristics

Types of B2B transactions:

Spot Buying: Buyers and sellers do not know each other, stock and commodities such as oil, sugar are traded in this way. Public exchanges are suitable. Strategic Sourcing: involves long term contracts between the parties for purchases. Ex: automotive components. More suitable through private marketplaces and collaborative commerce

B2B Characteristics

Types of Materials Traded

Direct materials:

used in the making of the product. The characteristics of the product are planned. They are usually not shelf items and are frequently purchased in large quantities after extensive negotiation and contracting Are items that support production such as office supplies/light bulbs. They are usually used in MRO (Materials , Repair and Operations) activities.

Indirect materials

Business Models in B2B EC

Supplier/ Seller oriented B2B Buyer/ Customer oriented B2B Intermediary oriented B2B

Supplier oriented B2B

 

B2B with a marketing management perspective Manufacturer or seller driven electronic store to with an intention to sell products and services to business organizations Examples: Dell, Intel, IBM, Cisco May not be suitable for repetitive buyers, need to provide buyer owned shopping cart

Cisco’s Cisco Connection Online

 

Enables corporates to buy routers, switches and other network equipments. Over 70% of cisco’s sales take place at this site Integrates its back end system to manage inventory and production Allows vendors such as HP,Peoplesoft and IBM to exchange design data Customised web support, Delivery tracking through fedex alliance

Key reasons for success
 

Buyers/ users of b2b interface are from tech community Variety of service offerings in purchasing process apart from catalogs – personalised interfaces for buyers, customer support section with technical documents, software updates, product configuration tools, online training and certification courses Post sale support

Large Organizations- A/c management, dedicated support representatives for troubleshooting, aid in network design Small- installation, recommended configurations

Buyer Oriented B2B

Buyer sets up electronic marketplace and invites potential suppliers to bid on announced RFQs Eg: GE’s Trade Processing Network(TPN) Buyer needs to provide suppliers with order advantage to have interest in the marketplace Bidding must be closed to ensure supplier interests

Intermediary-Oriented B2B
   

Emarketplace is an interorganisational system that allows the participating buyers and sellers to exchange information about prices and product offerings Eg: Boeing, Procurenet, Manufacturing.net, Industry.net, Freemarkets.com, Verticalnet.com, Alibaba.com Indian: indiamart.com, indiamarkets.com, tradeindia.com Types

 

Vertical (industrialproductsfinder.com, fibre2fashion, esugarindia.com) and Horizontal (indiamart.com, indiamarkets.com, tradeindia) Consortium owned (Covisint)/Intermediary owned Public/Private marketplaces

Revenue models: transaction based, advertising, subscription fees

B2B E-marketplace
Internet

Buyer Buyer 1 Buyer 2 Buyer 3

Auctions
Transaction processing

RFQ
Electronic Catalogue

Seller Seller 1 Seller 2 Seller 3

Credit Verification

Consulting and E-business solutions

Internet

Horizontal E-marketplace

Vertical E-marketplace

Intermediary oriented B2B: Electronic Marketplaces

Should provide benefit to both the participants Services provided
  


     

Catalogues Postings on orders Trading functions such as auctions(buyers bid), reverse auctions (sellers bid) etc Transaction processing and fulfillment Logistic services Project based Consultancy Technology consultancy Software packages and integration of software Credit verification and trust services Quality check and inspection

Why should an Small and Medium Enterprise go for a e-marketplace

Look for new suppliers (purchase manager perspective) or search for new or used investment goods Find new leads/customers or offer used products for sale (marketing manager perspective) Large buyer may want you to exchange data electronically to save costs Low technical know how required to start with

Some Indian Sme’s that have made it big using B2B platforms
Vendor
Geneva Fine Punch NP Solders

What it supplies
High precision sheet metal Lead free solder wire

To Whom B2B Platform
GE Motors GE Motors Maruti Indiamarkets Trade2gain Trade2gain

Shivam Sales Linen for Corp. Industries

Home fit exports

Brass fittings

Korean & Hungarian Companies

Indiamart

Uses of E-marketplace for Large Companies
     

Automate procurement process Reduce procurement and inventory costs Get competitive prices from several suppliers Streamline distribution process Outsource procurement process Enhanced efficiency of logistics

Indiamarkets.com case: eprocurement enabler

e-Procurement Framework
Negotiation Management
Efficiencies in Managing Complete Spend Through a Balance between Negotiation Management & Contract Management

Contract Management

SPEND MANAGEMENT • Price Discovery through Reverse Auctions / Catalog Based Purchase • Maximize the scope of Negotiation at each instance of buy

TRANSACTION & FULFILLMENT • Digitizing the transactions with Suppliers • Complete procurement workflow • Integration to backend ERP systems

Market Efficiencies-Supplier & Price Discovery

Benefits

Process Efficiencies-Automation of transactions Collaborative Efficiencies-Integration of suppliers

Procurement process – Critical factors essential for Reverse Auction
• Judicious Selection of the product for procurement which will go for reverse auctions • Market making methodology

• Vendor validation
• Deciding on the correct auction methodology • Conduct of the reverse auction • Post auction follow up and supporting in contract finalization

Judicious Selection of the product Criteria to select the right products are:
 

Where there is a large base of suppliers available Well defined product specifications

Select product where cost of shift to a new vendor
is low

Products which are critical and have limited suppliers , the procurement happens on closed user group methodology

Market making
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Availability of supplier base Capability to identify and tap this supplier base

Techno – commercial discussion with vendors

Vendor validation & enablement
Vendor validation based on:
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Organizational capability – financial strength Technical capability – Skill set of people, manufacturing technology Process and manufacturing capability : capacity utilization, capability to handle high volume, capability of source raw materials Product capability : product need to get approved after testing as per buyers requirement Service capability – networking and servicing capability

Conducting the auction

Bring vendors at par on techno- commercial issues and train them for the event

 

Set the reverse auction engine
Conduct the auction

Post auction support

Post auction support - contract finalization with
the vendors

Contingency management in case of default by vendors

Contract Management for successful deployment

& compliance to ensure max. benefits

Supply Chain and Reverse Auctions

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