1、Chapter 6Company-Centric B2Band E-Procurement2General Motors B2B InitiativesThe ProblemBecause the automotive industry is very competitive,GM is always looking for ways to improve its effectiveness GM expects to custom-build the majority of its cars by 2005The company hopes to use the system to save
2、 billions of dollars by reducing its inventory of finished cars(why inventory?)3General Motors B2B Initiatives(cont.)GM sells custom-designed cars online through its dealers sites avoiding channel conflict 通路衝突：主要的產品提供者與其通路之間的競爭This collaboration requires sharing information with dealers and supplie
3、rsOperational problemsdisposing of manufacturing machines that are no longer sufficiently productive procurement of commodity products 4General Motors B2B Initiatives(cont.)The SolutionGM established an extranet infrastructure called ANX(Automotive Network eXchange)ANX has evolved into the consortiu
4、m exchange supported by other automakers台灣：TANX 計畫5General Motors B2B Initiatives(cont.)Capital assets problem GM implemented its own electronic market from which forward auctions are conducted Resource procurement problemGM automated the bidding process using reverse auctions on its e-procurement s
5、ite6General Motors B2B Initiatives(cont.)The ResultsWithin just 89 minutes after the first forward auction opened,eight stamping presses were sold for$1.8 million Off-line method,a similar item would have sold for less than half of its online price,and the process would have taken 4 to 6 weeks 7Gene
6、ral Motors B2B Initiatives(cont.)Online reverse auction prices are significantly lower than the prices the company had been paying for the same items previously negotiated by manual tendering Administrative costs per order have been reduced by 40%Most GM dealers and thousands of GMs suppliers are co
7、nnected on a common extranet platform 8General Motors B2B Initiatives(cont.)What can we learnInvolvement of a large company in three EC activities:1.connecting with dealers and suppliers through an extranet2.electronically auctioning used equipment to customers3.conducting purchasing via electronic
8、bidding9General Motors B2B Initiatives(cont.)B2B transactionsCompany can be a seller,offering goods or services to many corporate buyersCompany can be a buyer,seeking goods or services from many corporate sellers(suppliers)A company can employ auctionsuse electronic catalogsuse other market mechanis
9、ms10商務活動資訊流商流金流物流11商務活動2賣方買方資訊流：資訊處理、產品型錄傳達、訂單處理商流：促銷、詢議價、訂單管理、對漲、所有權轉移金流：支付、融資、風險承擔物流：實體流通、實體持有12Concepts,Characteristics,and Models of B2B EC Basic B2B conceptsBusiness-to-business e-commerce(B2B EC):Transactions between businesses conducted electronically over the Internet,extranets,intranets,or
10、private networks;also known as eB2B(electronic B2B)or just B2B13Concepts,Characteristics,and Models of B2B EC(cont.)B2B characteristicsParties to the transactionOnline intermediary:An online third party that brokers a transaction online between a buyer and a seller;can be virtual or click-and-mortar
11、14Types of B2B transactionsSpot buyingThe purchase of goods and services as they are needed,usually at prevailing market pricesStrategic sourcingPurchases involving long-term contracts that are usually based on private negotiations between sellers and buyers15Types of materialsDirect materialsMateri
12、als used in the production of a product(e.g.,steel in a car or paper in a book)Indirect materialsMaterials used to support production(e.g.,office supplies or light bulbs)MROs(maintenance,repairs,and operations)Indirect materials used in activities that support production16Direction of tradeVertical
13、marketplacesMarkets that deal with one industry or industry segment(e.g.,steel,chemicals)Horizontal marketplacesMarkets that concentrate on a service,material,or a product that is used in all types of industries(e.g.,office supplies,PCs)17Basic B2B transaction typesSell-sideOne seller to many buyers
14、Buy-sideOne buyer from many sellersExchangesMany sellers to many buyersCollaborative commerceCommunication and sharing of information,design,and planning among business partners18Models of B2B EC19company-centric transactionsOne-to-many and many-to-one:Company-centric ECE-commerce that focuses on a
15、single companys buying needs(many-to-one,or buy-side)or selling needs(one-to-many,or sell-side)Private e-marketplacesMarkets in which the individual sell-side or buy side company has complete control over participation in the selling or buying transaction20Many-to-many:exchangesExchanges(trading com
16、munities or trading exchanges)Many-to-many e-marketplaces,usually owned and run by a third party or a consortium,in which many buyers and many sellers meet electronically to trade with each other;also called trading communities or trading exchangesPublic e-marketplacesThird-party exchanges that are
17、open to all interested parties(sellers and buyers)21Supply chain relationships in B2BSupply chain process consists of a number of interrelated subprocesses and rolesacquisition of materials from suppliersprocessing of a product or servicepackaging it and moving it to distributors and retailerspurcha
18、se of a product by the end consumer22Benefits of B2BEliminates paper and reduces administrative costs.Expedites cycle timeLowers search costs and time for buyersIncreases productivity of employees dealing with buying and/or selling Reduces errors and improves quality of services.Reduces inventory le
19、vels and costsIncreases production flexibility,permitting just-in-time deliveryFacilitates mass customizationIncreases opportunities for collaboration23One-to-Many:Sell-Side MarketplacesSell-side e-marketplace:A Web-based marketplace in which one company sells to many business buyers from e-catalogs
20、 or auctions,frequently over an extranetThree major direct sales methods:1.selling from electronic catalogs2.selling via forward auctions 3.one-to-one selling24One-to-Many:Sell-Side Marketplaces(cont.)25One-to-Many:Sell-Side Marketplaces(cont.)B2B sellersclick-and-mortar manufacturers or intermediar
21、ies,usually distributors or wholesalersCustomer serviceonline sellers can provide sophisticated customer services26One-to-Many:Sell-Side Marketplaces(cont.)Configuration and customizationcustomize productsget price quotessubmit orders27One-to-Many:Sell-Side Marketplaces(cont.)Major benefits of direc
22、t sales are:Lower order-processing costs and less paperworkA faster ordering cycleFewer errors in ordering and product configurationLower search costs of products for buyers Lower search costs of finding buyers for sellersSellers can advertise and communicate onlineLower logistics costs Ability to o
23、ffer different catalogs and prices to different customers28Selling via AuctionsUsing auctions on the sell sideRevenue generationCost savingsIncreased page viewsMember acquisition and retention29Selling via Auctions(cont.)Selling from the companys own siteThe company will have to pay for infrastructu
24、re and operate and maintain the auction siteIf then company already has an electronic marketplace for selling from e-catalogs,the additional cost may not be too high30Selling via Auctions(cont.)Using intermediariesAn intermediary may conduct private auctions for a seller,either from the intermediary
25、s or the sellers siteA company may choose to conduct auctions in a public marketplace,using a third-party hosting company31Benefits of using intermediariesno additional resources are requiredauction set up to show the branding(company name)of the merchant rather than the intermediarys nameintermedia
26、ry does the work of:controlling data on Web traffic,page views,and member registrationsetting all the auction parameters(transaction fee structure,user interface,and reports)integrating the information flow and logistics32One-from-Many:Buy-Side Marketplaces and E-ProcurementBuy-side e-marketplace:A
27、corporate-based acquisition site that uses reverse auctions,negotiations,group purchasing,or any other e-procurement method33Procurement methodsBuy from manufacturers,wholesalers,or retailers from their catalogs,and possibly by negotiationBuy from the catalog of an intermediary that aggregates selle
28、rs catalogs or buy at industrial mallsBuy from an internal buyers catalog in which company-approved vendors catalogs,including agreed upon prices,are aggregated34E-Procuremente-procurement:The electronic acquisition of goods and services for organizations35E-ProcurementConduct bidding or tendering(a
29、 reverse auction)in a system where suppliers compete against each otherBuy at private or public auction sites in which the organization participates as one of the buyersJoin a group-purchasing system that aggregates participants demand,creating a large volumeCollaborate with suppliers to share infor
30、mation about sales and inventory,so as to reduce inventory and stock-outs and enhance just-in-time delivery36Inefficiencies in traditional procurement managementProcurement management:The coordination of all the activities relating to purchasing goods and services needed to accomplish the mission of
31、 an organizationMaverick buying:Unplanned purchases of items needed quickly,often at non-pre-negotiated,higher prices37Benefits of e-procurementIncreasing the productivity of purchasing agentsLowering purchase prices through product standardization and consolidation of purchasesImproving information
32、 flow and management38Benefits of E-Procurement(cont.)Minimizing the purchases made from noncontract vendors.Improving the payment processEstablishing efficient,collaborative supplier relationsEnsuring delivery on time,every timeReducing the skill requirements and training needs of purchasing agents
33、Reducing the number of suppliersStreamlining the purchasing process,making it simple and fast39Benefits of E-Procurement(cont.)Reducing the administrative processing cost per orderImproved sourcingIntegrating the procurement process with budgetary control in an efficient and effective wayMinimizing
34、human errors in the buying or shipping processMonitoring and regulating buying behavior40Implementing E-ProcurementImplementing e-procurementmajor e-procurement implementation issuesFitting e-procurement into the company EC strategyReviewing and changing the procurement process itselfProviding inter
35、faces between e-procurement with integrated enterprisewide information systems such as ERP or supply chain management(SCM)41Implementing E-Procurement(cont.)Coordinating the buyers information system with that of the sellers;sellers have many potential buyersConsolidating the number of regular suppl
36、iers to a minimum and assuring integration with their information systems,and if possible with their business processes42Buy-Side E-Marketplaces:Reverse AuctionsOne of the major methods of e-procurement is through reverse auctions(tendering or bidding model)request for quote(RFQ):The“invitation”to p
37、articipate in a tendering(bidding)systemThe reverse auction method is the most common model for large MRO purchases as it provides considerable savings43Reverse Auctions(cont.)Conducting reverse auctionsThousands of companies use the reverse auction modelThey may be administered from a companys Web
38、site or from an intermediarys siteThe bidding process may last a day or moreBidders may bid only once,but bidders can usually view the lowest bid and rebid several times44Reverse Auction:The Process45Other E-Procurement MethodsInternal marketplace:The aggregated catalogs of all approved suppliers co
39、mbined into a single internal electronic catalog46Benefits of internal marketplacescorporate buyers quickly find what they want,check availability and delivery times,and complete an electronic requisition formreduce number of regular supplierseasy financial controls47Internal Marketplace:Desktop Pur
40、chasingDesktop purchasing:Direct purchasing from internal marketplaces without the approval of supervisors and without intervention of a procurement department Desktop purchasing systems:Software that automates and supports purchasing operations for nonpurchasing professionals and casual end users48
41、Other E-Procurement Methods(cont.)49Other E-Procurement Methods(cont.)Industrial mallsDistributors that aggregate products from hundreds or thousands of suppliers in one placeHorizontalcarrying MRO(nonproduction)materials for use in a variety of industriesVerticalcarrying products used by one indust
42、ry but at various segments of the supply chain50Other E-Procurement Methods(cont.)E-auctionssellers are increasingly motivated to sell surpluses and even regular products via auctionse-auctions provide an opportunity to buyers to find inexpensive or unique items fairly quickly51Other E-Procurement M
43、ethods(cont.)Group purchasing:The aggregation of orders from several buyers into volume purchases so that better prices can be negotiated52Other E-Procurement Methods(cont.)Internal aggregationcompanywide orders are aggregated using the Web and replenished automaticallyExternal aggregationprovide SM
44、Es with better prices,selection,and services by aggregating demand online and then either negotiating with suppliers or conducting reverse auctions53Other E-Procurement Methods(cont.)54Other E-Procurement Methods(cont.)Purchasing direct goodsE-purchasing direct goods allows buyers to:get them faster
45、reduce the unit costreduce inventoriesavoid shortages of materialsexpedite their own production processes55Other E-Procurement Methods(cont.)Electronic barteringBartering exchange:An intermediary that links parties in a barter;a company submits its surplus to the exchange and receives points of cred
46、it,which can be used to buy the items that the company needs from other exchange participants56Infrastructure for B2BMajor infrastructures needed for B2B marketplacesTelecommunications networks and protocolsServer(s)for hosting the databases and the applicationsSoftware for various activities for ex
47、ecuting the sell-side activities,buy-side activities,PRM,and building a storefrontSecurity for hardware and software57Other E-Procurement Methods(cont.)Electronic data interchange(EDI):The electronic transfer of specially formatted standard business documents,such as bills,orders,and confirmations s
48、ent between business partners58Other E-Procurement Methods(cont.)Value-added networks(VANs):Private,third-party managed networks that add communications services and security to existing common carriers;used to implement traditional EDI systems59Other E-Procurement Methods(cont.)Internet-based(Web)E
49、DI:EDI that runs on the Internet and is widely accessible to most companies,including SMEs60Other E-Procurement Methods(cont.)IntegrationIntegration with existing internal infrastructure and applicationsEC applications of any kind need to be connected to the existing internal information systemsInte
50、gration with business partnersEC can be integrated more easily with internal systems than with external ones61Other E-Procurement Methods(cont.)The role of standards and XML in B2B integrationXML(eXtensible Markup Language):Standard(and its variants)used to improve compatibility between the disparat
