B2B E Commerce

•B2B commerce to describe all types of inter-firm trade to exchange value

across organizational boundaries, involving both the purchase of inputs and
the distribution of products and services. B2B commerce includes the
following business processes: customer relationship management, demand
management, order fulfillment, manufacturing management, procurement,
product development, returns, logistics/transportation, and inventory
management.
•the largest form of e-commerce
Firm ?
• A Firm is an association of individuals, who have
What’s organized for the purpose of making profits
a Firm? • The Firm organized the factors of production to
produce goods and services

Supply Chain or
Distribution
Procurement

Buy: inputs Sell: Outputs

Firm
Labor, Materials, Capital… Products and Services
 POTENTIAL BENEFITS AND CHALLENGES OF B2B E-COMMERCE
Regardless of the specific type, B2B commerce as a whole promises many strategic ben-
Why B2B ?
efits to firms—both buyers and sellers—and impressive gains for the economy. B2B
e-commerce can:
• Lower administrative costs
• Lower search costs for buyers
• Reduce inventory costs by increasing competition among suppliers (increasing price
H A P T E R 1 2 transparency)
B 2 B E - cand
o mreducing
m e r c einventory to the bare minimum
• Lower transaction costs by eliminating paperwork and automating parts of the pro-
curement process
• Increase production flexibility by ensuring delivery of parts just at the right time
(known as just-in-time production)
• Improve quality of products by increasing cooperation among buyers and sellers and
reducing quality issues
• Decrease product cycle time by sharing designs and production schedules with
suppliers
• Increase opportunities for collaborating with suppliers and distributors
EC2020G_CH12.indd 821 3/8/2020 4:43:36 PM
• Create greater price transparency—the ability to see the actual buy and sell prices in
a market
• Increase the visibility and real-time information sharing among all participants in the
supply chain network.
B2B e-commerce offers potential first-mover strategic benefits for individual firms as
 MAJOR
TRENDS IN B2B
E-COMMERCE
2019–2020
 MAJOR
TRENDS IN B2B
E-COMMERCE
2019–2020
 Net Marketplace
848 CHAPTER 12 B2B E-commerce

• an online marketplace that would bring thousands of fragmented suppliers into contact with hundreds of
major purchasers of industrial FIGURE
goods 12.10
for thePURE
purpose of NET
TYPES OF conducting frictionless commerce.
MARKETPLACES

Types of
Marketplace
e-distributor

•provides an online catalog that represents the products of thousands of direct manufacturers
•E-distributors are sometimes referred to as one-to-many markets, one seller serving many
firms.
e-procurement

•independently owned intermediary that

connects hundreds of online suppliers
offering millions of maintenance and
repair parts to business firms who pay
fees to join the market
•sometimes referred to as many-to-
many markets. They are mediated by an
independent third party that purports
to represent both buyers and sellers,
and hence claim to be neutral.
 exchange

•independently owned online marketplace

that connects hundreds to potentially
thousands of suppliers and buyers in a
dynamic, real-time environment
•referred to as many-to- many markets
because they have many suppliers serving
many buyer firms.
Industry consortia

•industry-owned vertical market that

enables buyers to purchase direct inputs
(both goods and services) from a limited
set of invited participants
•referred to as many-to-few markets,
where many suppliers (albeit selected by
the buyers) serve a few very large
buyers, mediated by a variety of value-
added services.
Private Industrial Networks
•Private industrial networks are the most prevalent form of B2B e-commerce in terms of
transaction volume, and are expected to continue to be so into the foreseeable future.
•Private industrial networks can be considered the foundation of the extended enterprise,
allowing firms to extend their boundaries and their business processes to include supply chain
and logistics partners.
•Objectives of Private Industrial Networks:
Developing efficient purchasing and selling business processes industry-wide Developing
industry-wide resource planning to supplement enterprise-wide resource planning
Increasing supply chain visibility—knowing the inventory levels of buyers and suppliers
Achieving closer buyer-supplier relationships,including demand forecasting, communications,
and conflict resolution
Operating on a global scale—globalization
Reducing risk by preventing imbalances of supply and demand, including developing financial
derivatives, insurance, and futures markets