lecture 10

Transactions between businesses conducted electronically over the Internet, extranets, intranets, or private networks; also known

as eB2B (electronic B2B) or just B2B.

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B2B is a relationship between 2 businesses interacting through digital/on-line channels

More regular and in larger quantities than a business to consumer interaction.

Think of it as selling wholesale because it is.

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US Census Burea, 2010 RportIn 2009, Total B2B trade: $12.2 trillion DollarsB2B e-commerce: $3.6 trillion DollarsIn 2014, will growB2B e-commerce: $5.1 trillion Dollars

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http://www.insitesoft.com/blog/b2b-ecommerce-is-bigger-than-retail-ecommerce/

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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

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paper work, approving purchase decisions, using the telephone and fax machines Searching for products Purchasing & Payment Arranging for shipping, receiving the goods.
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The process of conducting trade among business firms is complex and requires significant human intervention, and therefore, it consumes significant resources. Some firms estimate that each corporate purchase order for support products costs them, on average, at

least $100 in administrative overhead. Administrative overhead includes processing paper, approving purchase decisions, spending time using the telephone and fax machines to search for products and arrange for purchases, arranging for shipping, and receiving the goods. Across the economy, this adds up to trillions of dollars annually being spent for procurement processes that could potentially be

automated. If even just a portion of inter-firm trade were automated, and parts of the entire procurement process assisted by the Internet, literally trillions of dollars might be released for more productive uses, consumer prices potentially would fall, productivity would increase, and the economic wealth of the nation would expand. This is the promise of B2B e-commerce. The challenge of B2B e-commerce is changing existing patterns and systems of procurement, and designing and implementing new Internet-based B2B solutions.

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Across economy, overheads add up to trillions of dollars annually (overheads) manual processes can be fully or partially automatedtrillions of dollars can be saved will bring down consumer pricesCan be invested in R&D and other productive use

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Across the economy, this adds up to trillions of dollars annually being spent for procurement processes that could potentially be

automated. If even just a portion of inter-firm trade were automated, and parts of the entire procurement process assisted by the Internet, literally trillions of dollars might be released for more productive uses, consumer prices potentially would fall, productivity would increase, and the economic wealth of the nation would expand. This is the promise of B2B e-commerce. The challenge of B2B e-commerce is changing existing patterns and systems of procurement, and designing and implementing new Internet-based B2B solutions.

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B2B is worth

TRILLIONS

of revenue dollars annually!

Shouldnt YOU benefit from using this marketplace?

Electronic Data Interchange is the computer-to-computer exchange of business data and documents between companies using standard formats recognized both nationally and internationally. The information used in EDI is organized according to a specified format set by both companies participating in the data exchange.
http://www.x12.org/x12org/about/faqs.cfm#a1

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Electronic Data Interchange is the computer-to-computer exchange of business data and documents between companies using standard formats recognized both nationally and internationally.

The information used in EDI is organized according to a specified format set by both companies participating in the data exchange.

This allows for computer transactions that require no human involvement.

For the most part, all information in a transaction set is the same as it would be on a printed document


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Business-to-business e-commerce refers to the commercial transactions that

occur among business firms. Increasingly, these transactions are flowing

through a variety of different Internet-enabled mechanisms. About 80 percent

of online B2B e-commerce is still based on proprietary systems for electronic

data interchange (EDI). Electronic data interchange enables the computer-tocomputer

exchange between two organizations of standard transactions such as

invoices, bills of lading, shipment schedules, or purchase orders. Transactions

are automatically transmitted from one information system to another through

a network, eliminating the printing and handling of paper at one end and the

inputting of data at the other. Each major industry in the United States and

much of the rest of the world has EDI standards that define the structure and

information fields of electronic documents for that industry.

EDI originally automated the exchange of documents such as purchase orders,

invoices, and shipping notices. Although some companies still use EDI for document

automation, firms engaged in just-in-time inventory replenishment and continuous

production use EDI as a system for continuous replenishment. Suppliers

have online access to selected parts of the purchasing firms production and delivery

schedules and automatically ship materials and goods to meet prespecified

targets without intervention by firm purchasing agents (see Figure 10-6).

Although many organizations still use private networks for EDI, they are

increasingly Web-enabled because Internet technology provides a much more

flexible and low-cost platform for linking to other firms. Businesses are able to

extend digital technology to a wider range of activities and broaden their circle

of trading partners.

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Lower operating costsSaves time and moneyLess Errors = More AccuracyNo data entry, so less human errorIncreased ProductivityMore efficient personnel and faster throughputFaster trading cycleStreamlined processes for improved trading relationships
http://www.edi-guide.com/edi-benefits.htm

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Lowering Operating Cost - EDI replaces paper transactions with electronic transmissions, saving time and reduced cost of business transaction and enabling the automatic processing of documents.

Reduced Error and Increases Business Information Accuracy - With the implementation of EDI, there is no need for re-entering data, thus, reducing the risk for human error. Each re-entry of data is a potential source of error.

Increase Productivity - Making personnel more efficient and it improves business capabilities by speeding up throughput.

Faster Trading Cycle - EDI allows faster and streamlining trading cycle between organizations leading to improved relationships between trading partners.

High Dependence on the participation of trading partnersCostly for smaller companiesDifficult to agree on standard to be used
http://www.edi-guide.com/risks-of-edi.htm

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Trading Partners Involvement

Highly dependence on the participation of trading partners. You need to be confident that they will do their part. EDI will be meaningless if your trading partner didn't get involved using EDI system effectively.

Costly for smaller companies

Many small companies are facing resources problems in getting starter with the initial implementation of EDI system. It is beyond the resources these companies to invest tens or hundreds of thousands of dollars in setting and implementation costs, as well as weeks of personnel training, to get an EDI system running.

Difficult to agree on standard to be used

Even though there are widely-accepted and used standards, there are no ways to force trading partners to accept these standards. Cooperation between trading partners is needed in order to develop a common rules to avoid differences in interpretation.

And now Laura will more about EDI models and the use of VANs in these models


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A Web-based marketplace in which one company sells to many business buyers from e-catalogs or auctions, frequently over an extranet.Case StudyCISCO CONNECTION ONLINE

A corporate-based acquisition site (buy-side e-marketplace) that uses reverse auctions, negotiations, group purchasing, or any other e-procurement method.This is also called e-ProcurementCase Study
THE PROCUREMENT REVOLUTION AT GENERAL ELECTRIC

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E-Procurement at NUST
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Complexity of Contract eCommerce

Logistics

Sell-side Requirements

Sales

Legal

Engineering

Manufacturing

Management

Finance

Info

Services

Buy-side Requirements

Procurement

Finance

Logistics

Manufacturing

Engineering

Management

Legal

Info

Services

Business Rules

Inter-enterprise Data

Valid Commerce and Non-Repudiation

International

Trade Practices

and System

Requirements

Inter-enterprise Requirements

Banking

Contract negotiations and transactions

Financing

Escrow

Factoring

Schedule, Delivery Terms, Returns

Form, Fit, Function, Quality

Credit, Payment Terms

Ts & Cs

Warranties, Schedule, Quality

Service Level Agreements

Contract

Document

Contract

Document

TradeAccess, Inc. 2000 Confidential

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lecture 10

Documents

challenge of b2b ecommerce

promise of b2b ecommerce

total b2b trade

procurement processes

eb2b electronic b2b

pearson education

systems of procurement

automatedtrillions of