Chapter 5

Company-Centric B2B and

Collaborative Commerce

Prentice Hall, 2003

 Learning Objectives

• Describe the B2B field

• Describe the major types of B2B models
• Describe the characteristics of the sell-side
marketplace
• Describe the sell-side intermediary models
• Describe the characteristics of the buy-side
marketplace and e-procurement

Prentice Hall, 2003

 Learning Objectives (cont.)

• Explain how forward and backward auctions work in

B2B
• Describe B2B aggregation and group purchasing models
• Describe collaborative e-commerce and
interorganizational systems
• Describe infrastructure and standards requirements for
B2B

Prentice Hall, 2003

 General Motors’ B2B Initiatives

• The Problem
– EC initiatives—build-to-order project to be in
place by 2005 reducing inventory of finished cars
– What to do with manufacturing machines that are
no longer sufficiently productive (assets problem)
– Resource problem relating to procurement of
commodity products

Prentice Hall, 2003

 General Motors’ (cont.)

• The Solution
– TradeXchange (now part of Covisint) online
auctions of items like used machines for
manufacturing
• Significantly decreases time for sales
• Increases dollar amount of the sales
– EC initiatives at TradeXchange
• Capital assets problem—implemented its own electronic
market to conduct forward auctions
• Procurement problem—automated the bidding, creating
online reverse auctions on its e-procurement site
Prentice Hall, 2003
 General Motors’ (cont.)

• The Results
– Within just 89 minutes after the first forward
auction opened, eight presses were sold for
$1.8 million
– In the first online reverse auction, GM
purchased a large volume of rubber sealing
packages for vehicle production at a
significantly lower than the price GM had been
paying through negotiated by manual
tendering

Prentice Hall, 2003

 Concepts, Characteristics,
and Models of B2 EC
• Basic B2B Concepts
– Business-to-business e-commerce (B2B EC)—
transactions between businesses conducted
electronically over the Internet, extranets,
intranets, or private networks; also known as eB2B
(electronic B2B) or just B2B
• Market Size and Content
– Expected to grow from $1.1 trillion in 2003 to $10
trillion by 2005, the percentage of Internet-based
B2B from 2.1% in 2000 to 10% in 2005
Prentice Hall, 2003
 Concepts, Characteristics,
and Models of B2 EC (cont.)
• B2B EC Characteristics
Parties to the transaction
Online intermediary—an online third-party that brokers a
transaction between a buyer and a seller; can be virtual or click-
and-mortar; buyers; sellers
– Types of transactions
• Spot buying—the purchase of goods and services as they are
needed, usually at prevailing market prices
• Strategic sourcing—purchases involving long-term contracts that
are usually based on private negotiations between sellers and
buyers
Prentice Hall, 2003
 Concepts, Characteristics,
and Models of B2 EC (cont.)
– Types of materials
• Direct materials—materials used in the production of
a product (e.g., steel in a car or paper in a book)
• Indirect materials—materials used to support
production (e.g., office supplies or light bulbs)
• MROs (maintenance, repairs, and operations)—
indirect materials used in activities that support
production

Prentice Hall, 2003

 Concepts, Characteristics,
and Models of B2 EC (cont.)

– Direction of trade
• Vertical marketplaces—markets that deal with one
industry or industry segment (e.g., steel, chemicals).
• Horizontal marketplaces—markets that concentrate
on a service or a product that is used in all types of
industries (e.g., office supplies, PCs)

Prentice Hall, 2003

 Concepts, Characteristics,
and Models of B2 EC (cont.)

• The Basic B2B Transaction Types

– Sell side—one seller to many buyers
– Buy side—one buyer from many sellers
– Exchanges—many sellers to many buyers
– Collaborative commerce—communication and
sharing of information, design, and planning
among business partners

Prentice Hall, 2003

 Exhibit 5.1
Types of B2B E-Commerce

Prentice Hall, 2003

 One-to-Many and Many-to-One:
Company-Centric Transactions

• Company-centric EC—e-commerce that

focuses on a single company’s buying needs
(many-to-one, or buy-side) or selling needs
(one-to-many, or sell-side)
• Private e-marketplaces—markets in which
the individual sell-side or buy-side company
has complete control over participation in
the selling or buying transaction

Prentice Hall, 2003

 Many-to-Many: Exchanges
• 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 exchanges
• Public e-marketplaces—third-party markets
that are open to all interested parties (sellers
and buyers)

Prentice Hall, 2003

 Concepts, Characteristics,
and Models of B2 EC (cont.)
• Supply chain relationships in B2B
– Interrelated subprocesses and roles
– B2B applications offer competitive advantages for
supply chain management (SCM)
• Virtual service industries in B2B
– Travel and tourism services
– Real estate Online stock trading
– Electronic payments Online financing
Prentice Hall, 2003
 Concepts, Characteristics,
and Models of B2 EC (cont.)
• Benefits of B2B
– Eliminates paper and reduces administrative costs
– Expedites cycle time
– Lowers search costs and time for buyers
– Increases productivity of employees dealing with buying and/or
selling
– Reduces errors and/or improves quality of services
– Reduces inventory levels and costs
– Increases production flexibility, permitting just-in-time delivery
– Facilitates mass customization
– Increases opportunities for collaboration

Prentice Hall, 2003

 Sell-Side Marketplaces:One-to-Many
• Sell-side e-marketplace—a Web-based
marketplace in which one company sells to
many business buyers, frequently over an
extranet
• 3 major methods for direct sale in the one-to-
many model:
– Selling from electronic catalogs
– Selling via forward auctions
– One-to-one selling under a negotiated, long-term
contract

Prentice Hall, 2003

 Sell-Side Marketplaces (cont.)

• Virtual sellers—sellers in the sell-side marketplace can be

click-and-mortar manufacturers or intermediaries, usually
distributors or wholesalers
• Customer service
Milacron, Inc.
• Site contains 55,000 products, easy to use, securely handles
selection, purchase, application
• Technical service—expanded to provide a higher level of service

Prentice Hall, 2003

 Buying from Virtual Seller Bigboxx.com

• Bigboxx.com.hk of Hong Kong

– B2B office supply retailer services
– Goal—sell products in various SE Asian countries
• Offers more than 10,000 items
• Uses more than 300 suppliers
– Company portal attractive, easy to use
• Browse online catalogs
• Use search engines
• Payments—cash or check upon delivery, automatic payments, credit
card, purchasing card
Prentice Hall, 2003
 Bigboxx.com (cont.)
– Delivery
• Owns trucks and warehouses
• Delivery scheduled online
• Ordering system integrated with SAP-based back-office system
– Value-added services
• Track status of order
• Check stock availability
• Promotions
• Customized prices
• Group accounts and central approval
• Standing orders automatically activated
• Large number of reports and data available
Prentice Hall, 2003
 Exhibit 5.2
Sell-Side B2B Marketplace
Architecture

Prentice Hall, 2003

 Direct Sales from Catalogs
• Companies may:
– Offer one catalog for all customers
– Customized catalog for each customer
– Facilitate the B2B direct sale by providing the
buyer with a buyer customized shopping cart
• Configuration and customization
– Efficient customization for direct sales
– Business customers customize products, receive
price quote, submit order

Prentice Hall, 2003

 Direct Sales from Catalogs (cont.)

• Benefits
– Lower order-processing costs
– Faster ordering cycle
– Fewer errors in ordering and product configuration
– Lower search costs for buyers
– Lower search costs for sellers
– Lower logistics costs

Prentice Hall, 2003

Direct Sales from Catalogs (cont.)

• Benefits (cont.)
– Ability to offer different catalogs and prices to
different customers and to customize products
and services efficiently
• Limitations
– Channel conflicts with distribution systems
– High cost when traditional EDI used
– Large number of business partners is needed to
justify system

Prentice Hall, 2003

 Selling Via Auctions
• Using auctions on the sell-side
– Revenue generation
– Increased page views
Stickiness—characteristic of customer loyalty to a Web
site, demonstrated by the number and length of visits to
a site
– Member acquisition and retention—bidding
transactions result in additional registered
members

Prentice Hall, 2003

 Selling Via Auctions (cont.)

• Selling from own site when:

– Large companies that conduct auctions
frequently don’t benefit from using
intermediaries
– E-marketplace already in use, cost of adding
auction not too high
• Intermediary-oriented e-marketplace—an
e-marketplace in which intermediaries
operate
Prentice Hall, 2003
 Selling Via Auctions (cont.)

• Using intermediaries when:

– No resources required
– Own and control auction information
– Fast time to market
– Searching and reporting
• Search and report all auction activities
• Standard reports available
• Additional analysis of complex information

Prentice Hall, 2003

 Selling Via Auctions (cont.)
• Billing and collection
– Automatic calculation of shipping weights and
charges
– Payment—encrypted credit card data
– Billing information—easily downloaded into existing
systems
– Successful if:
• Sufficient number of loyal customers
• Products well known
• Price not major purchasing criteria
Prentice Hall, 2003
 CISCO Connection Online (CCO)

• Benefits—saves the company $363 million per year in

technical support, human resources, software
distribution, marketing material
• Customer service—Cisco Connection online
• Online ordering—Internet Product Center builds
virtually all products to order
• Order status—customer tools for finding answers to
order status inquiries

Prentice Hall, 2003

Cisco Connection Online (CCO) (cont.)
• Benefits to Cisco
– Reduced operating costs for order taking
– Enhanced technical support and customer service
– Reduced technical support staff cost
– Reduced software distribution costs
– Lead times reduced fro 4-10 days to 2-3 days
• Benefits to customers
– Quick order configuration
– Immediate cost determination
– Collaboration with Cisco staff
Prentice Hall, 2003
 Marshall Industries

• Marshall Industries—(a subsidiary of

AvnetMarshall—avnet.com) multinational distributor
of electronic components known for its innovative uses
of IT and the Web
– Products and services
• MarshallNet
• Marshall on the Internet (portal)
• Strategic European Internet
• Electronic Design Center
• PartnerNet
• NetSeminar
• Education and News Portal
Prentice Hall, 2003
 Marshall Industries (cont.)

– Survival strategy
• Continuous improvement programs and innovations
• Team-based organization, flat hierarchy, decentralized
decision making
• Profit sharing compensation for salespeople
• CRM highly promoted
• Web-based services create value between suppliers
and customers
• EC initiatives supported by:
– Changing internal organization
– Changing internal procedures

Prentice Hall, 2003

 Boeing’s PART Marketplace

• Acts as an intermediary between the airlines

and parts’ suppliers
Provides a single point of online access for airlines
and parts’ providers to access the data needed
• Goal: provide its customers with one-stop
shopping for online parts and maintenance
information and ordering capability
Prentice Hall, 2003
Boeing’s PART Marketplace (cont.)

– Spare parts business using traditional EDI

• Mechanic tells purchasing department parts are
needed, purchase is approved, purchase is made
• Large airlines connect to Boeing's VAN
• Boeing finds parts and delivers
– Debut of PART on the Internet
• Encourages customers to order parts electronically—
cheap, easy, fast
• 50% of customers using Internet within first year
Prentice Hall, 2003
Boeing’s PART Marketplace(cont.)

• Benefits of PART online

– Improved customer service
– Significant operating savings
– New sales opportunities
– Customer service online reduced
– Portable access to technical drawings/support
– Portable Maintenance Aid (PMA)—solves
maintenance problems
Prentice Hall, 2003
 Boeing’s PART Marketplace (cont.)

• Benefits to Boeing’s customers

– Increased productivity—less time searching for
information
– Reduced costs—delays at gate reduced because
all information is available
– Increased revenues—faster service provides time
savings

Prentice Hall, 2003

 Buy Side Marketplaces:
One-from-Many

• Procurement methods
– Buy from manufacturers, wholesalers, or
retailers at their storefronts, from catalogs,and
by negotiation
– Buy from the catalog of an intermediary
– Buy from an internal-buyer’s catalog
– Conduct a bidding or tendering system
– Buy at private or public auction sites
– Join a group-purchasing system
Prentice Hall, 2003
 Buy Side Marketplaces:
One-from-Many (cont.)
• Procurement management—the coordination of all the
activities relating to purchasing goods and services
needed to accomplish the mission of an organization
• Inefficiencies in procurement management
– Purchasing personnel spend time and effort on procurement
activities
– Qualifying suppliers
– Negotiating prices and terms
– Building rapport with strategic suppliers
– Carrying out supplier evaluation and certification

Prentice Hall, 2003

 Buy Side Marketplaces:
One-from-Many (cont.)
– Buyers are sometimes too busy with the details
of the smaller items
– Organizations address this imbalance by
implementing new purchasing models
• Potential inefficiencies:
– Delays
– Paying too much for rush orders
– Maverick buying—unplanned purchases of
items needed quickly, often from non-
approved vendors or at higher prices

Prentice Hall, 2003

 Exhibit 5.4
Traditional Procurement Process

Prentice Hall, 2003

 Buy Side Marketplaces:
One-from-Many (cont.)
• Goals of e-procurement
– Increase purchasing agent productivity
– Lower purchasing prices of items
– Improve information flow and management
– Minimize maverick (unplanned) buying
– Improve payment process
– Streamline purchasing process to make it simple
and fast
Prentice Hall, 2003
 Buy Side Marketplaces:
One-from-Many (cont.)

• Goals of e-procurement (cont.)

– Reduce administrative processing cost per order
– Find new suppliers and vendors to provide
faster/cheaper goods and services
– Integrate procurement process with budgetary
control in an efficient and effective way
– Minimize human errors in buying or shipping
process
Prentice Hall, 2003
 Buy Side Marketplaces:
One-from-Many (cont.)

• Implementing e-procurement
– Fit e-procurement into company EC strategy
– Review and change procurement process itself
– Provide interfaces between e-procurement
with integrated EIS
– Coordinate buyer’s information system with
the sellers

Prentice Hall, 2003

 Buy Side E-Marketplaces:
Reverse Auctions

• Buy-side e-marketplace—a Web-based

marketplace in which a buyer opens an
electronic market on its own server and
invites potential suppliers to bid on the items
the buyer needs; also called the reverse
auction, tendering, or bidding model
• Request for quote (RFQ)—the “invitation” to a
buy-side marketplace (reverse auction)
Prentice Hall, 2003
 Exhibit 5.6
Buy-Side B2B Market Architecture

Prentice Hall, 2003

 Conducting Reverse Auctions
• Reverse auctions administered from a company’s Web
site
– Bidding process lasts a day or more
– Bidders may bid only once or view the lowest bid and rebid
several times
• Increasing number of reverse auction sites makes it
impossible for suppliers to monitor all of them
– Online directories list open RFQs
– Use software search-and-match agents to reduce the human
burden in the bidding process

Prentice Hall, 2003

 Bidding Through a Third-Party
Auctioneer: Freemarkets.com

• United Technologies Corp. needs

suppliers to make $24 million worth of
circuit boards
– 2,500 suppliers are identified as possible
contractors
– List is submitted to FreeMarkets
(freemarkets.com)

Prentice Hall, 2003

 Freemarkets.com (cont.)

• FreeMarkets reduced the list to 50,

based on considerations including:
– Plant location
– Size of supplier
– Plant capacity
– Customer feedback
– Detailed evaluation of the candidates

Prentice Hall, 2003

 Freemarkets.com (cont.)
• 3-hour auction conducted of online
competitive bidding:
– First bid was seen by all bidders
– Using reverse auction approach, the bidders
reduced their bids
• Comprehensive analysis of several of the
lowest bidders
• Then recommended the winners and
collected its commission fees

Prentice Hall, 2003

 Procurement Revolution at GE

• TPN (now part of gxs.com)

– Purchasing was inefficient—too many administrative
transactions
• Process for each requisition took 7 days
• Complex and time-consuming
• Could only send out bids for 2 or 3 suppliers
– Trading Process Network (TPN)—electronic bids
• Entire process takes 7 days (for suppliers to bid)
• 2 hours to send information to suppliers
• Evaluate and award bids same day
Prentice Hall, 2003
Procurement Revolution at GE (cont.)

• Benefits to GE
– Labor declined 30% and material costs declined
5%-50%--wider base of suppliers online
– Redeployment of 50% of the staff
– Takes half the time to identify suppliers, prepare a
request for bid, negotiate a price, and award the
contract
– Invoices automatically reconciled reflecting
modifications
Prentice Hall, 2003
Procurement Revolution at GE (cont.)
• Benefits to buyers
– Worldwide supplier partnerships
– Current business partners
• Strengthen relationships
• Streamline sourcing process
– Rapid distribution of information
– Transmit electronic drawings to multiple suppliers
– Decrease sourcing cycle time
– Quick receipt and comparison of pricing bids
Prentice Hall, 2003
Procurement Revolution at GE (cont.)

• Benefits to suppliers
– Increased sales volume
– Expanded market reach, finding new buyers
– Lowered administration costs for sales and
marketing activities
– Shortened requisition cycle time
– Improved sales staff productivity
– Streamlined bidding process
Prentice Hall, 2003
 Aggregating Catalogs
• Aggregating suppliers’ catalogs: an internal
marketplace
– Maverick buying to save time leads to high prices
– Aggregating all approved suppliers’ catalogs in
one place
• Reduced number of suppliers
– Buyers at multiple corporate locations
• Fewer and remote suppliers
• Larger quantity/lower costs
Prentice Hall, 2003
 Buying from MasterCard
International’s Internal Catalog

• Online buying program at MasterCard:

– Allows corporate buyers to select goods and services
from company’s electronic catalog
– Goal is to consolidate buying activities from multiple
corporate sites, improve processing costs, reduce the
supplier base
• Procurement department defines:
– Scope of products or projects to buy
– Invites vendors to bid or negotiate prices
Prentice Hall, 2003
 MasterCard International (cont.)

• Contract prices are stored in the internal electronic

catalog
• Final buyer at MasterCard compares available
alternatives
– Organizational purchasing decision coupled with an internal
workflow management system
– Internal electronic catalog is updated manually or by
software agents
– Payments are made with MasterCard’s corporate
procurement card
– By 2002, the system was being used by more than 2,500
buyers
Prentice Hall, 2003
 Group Purchasing

• Group purchasing—aggregation several

buyers into volume purchases, so that better
prices can be negotiated
– Internal aggregation
• Economy of scale
• Reduced transaction processing cost
– External aggregation
• Aggregating demand online
• Putting together orders from multiple buyers to make
large volumes/lower costs

Prentice Hall, 2003

 Exhibit 5.7
Group Purchasing Process

Prentice Hall, 2003

 Electronic Bartering

• Bartering exchange—an intermediary that links

parties in a barter; a company submits its surplus
to the exchange and receives points of credit,
which can be used to buy the items that the
company needs from other exchange participants
– Exchange of goods or services without the use of
money
– Exchange a surplus for other need
– Benefits:
• Faster than manually
• Easier to match
Prentice Hall, 2003
Collaborative Commerce (C-Commerce)

• Collaborative commerce (c-commerce)—

commerce consisting of activities between
business partners in jointly planning, designing,
developing, managing,and researching products
and services
• Web-based systems used between and among
suppliers for:
– Communication Design
– Planning Information sharing
– Information discovery
Prentice Hall, 2003
 Collaborative Commerce (cont.)

• Varieties of c-commerce:
– Joint design efforts
– Forecasting
– Between and within organizations
• Aids communication and collaboration between
headquarters and subsidiaries, franchisers and
franchisees
• C-commerce platform provides e-mail, message
boards, chat rooms, online corporate data
access around the globe, no matter what the
time zone Prentice Hall, 2003
 Webcor Construction
Goes Online with Its Partners
• Webcor suffered from too much paperwork
and poor communication with its:
– Architects
– Designers
– Building owners
– Subcontractors
• Webcor’s goal: to turn its computer-aided
design (CAD) drawings, memos, and other
information into shared digital information
Prentice Hall, 2003
 Webcor (cont.)
• Webcor uses ASP that hosts its projects
on a secured extranet
• Major problem was getting everyone to
accept software:
– Complex
– User training is necessary
• Webcor was in a strong enough position to
choose not to partner with anyone who
would not use ProjectNet

Prentice Hall, 2003

 Webcor (cont.)

• Webcor’s business partners can post

send, or edit CAD drawings, digital photos,
memos, status reports, project histories
– Partners have instant access to new building
drawings
– Central meeting place where users can both
download and transmit information to all
parties, all with a PC

Prentice Hall, 2003

Retailer–Supplier Collaboration: Target
Corporation

• Target Corporation is a large retail

conglomerate:
– Conducts EC activities with about 20,000
trading partners
– 1998—established an extranet-based system
for those partners that were not connected to
its VAN-based EDI.

Prentice Hall, 2003

 Target Corporation (cont.)

• The extranet enabled the company to:

– Reach many more partners,
– Use many applications not available on the
traditional EDI
– Streamline its communications and
collaboration with suppliers
– Business customers to create personalized Web
pages
Prentice Hall, 2003
Continuous Replenishment: Warner-
Lambert

• Warner-Lambert (WL) served as a pilot site for a

program called Collaborative Planning, Forecasting,
and Replenishment (CPFR)
– Shared strategic plans, performance data, and
market insight with Wal-Mart
– Trading partners collaborate on making
demand forecasts
• WL increased its products’ shelf-fill rate from 87
percent to 98 percent
Prentice Hall, 2003
 Warner-Lambert (cont.)

• WL is involved in another collaborative

retail industry project—Supply-Chain
Operations Reference (SCOR):
– Divides supply chain operations into parts
– Gives a framework with which to evaluate the
effectiveness of their processes along the same
supply chains to:
• Manufacturers
• Suppliers
• Distributors
• Retailers

Prentice Hall, 2003

Reduction of Design Cycle Time: Adaptec,
Inc.
• Microchip manufacturer supplying electronic
equipment makers
– Outsourced manufacturing tasks
– Delivery times exceeded their competitors
• Solution to the problem
– Extranet and enterprise-level supply chain
integrated software
– Significantly reduced order-to-product delivery
time
Prentice Hall, 2003
 Reduction of Product Development
Time: Caterpillar, Inc.
• Heavy machinery manufacturer uses
extranet
– Request for customized component directly to
designers and suppliers ship to buyers
– Connect engineering and manufacturing division
with worldwide
• Suppliers Factories
• Distributors Customers
• Overseas

Prentice Hall, 2003

 Barriers to C-Commerce
• C-commerce is moving ahead fairly slowly
because:
– Technical reasons involving integration, standards,
and networks
– Security and privacy concerns over who has access
control of information stored in a partner’s
database
– Internal resistance to new models and approaches
– Lack of internal skills to conduct c-commerce

Prentice Hall, 2003

 Interorganizational Collaboration at
Nygard of Canada
• Nygard has become a leader in adopting IT and e-
commerce in the apparel industry
– Company stays competitive by using EC to control costs of
labor and manufacturing
– Developed an ERP and supply chain management that
controls all internal operations, purchasing, product
development, accounting, production planning, sales
• This enabled the company to develop tight
integration with its trading partners

Prentice Hall, 2003

 Nygard of Canada (cont.)
• The moment that a customer buys a pair of pants at
a partner’s retail store:
– Information moves from the POS terminal
– Automatically generates a reorder at Nygard
• SCM:
– Matches customers’ orders with the right fabrics
– Searches the market pool for the most efficient combinations of
other material for use with those fabrics

Prentice Hall, 2003

 Nygard of Canada (cont.)
• Sales trigger orders
• Manufacturing automatically industries, and global
manufacturers are willing to operate with razor-thin
margins as fabrics, zippers, and buttons
• The moment that raw material is used, an automatic
reorder of the material is generated
– Allows just-in-time production
– Quick order delivery (sometimes same day)

Prentice Hall, 2003

 Nygard of Canada (cont.)

• Web-based control system enables the

company to:
– Conduct detailed profitability studies
– Decisions are evaluated by impacts on the
bottom line
– Decision support systems (DSS) models are
used for this purpose

Prentice Hall, 2003

 Infrastructure for B2B
• Server to host database and applications
• Software for executing sell-side (catalogs)
• Software for conducting auctions and reverse
auctions
• Software for e-procurement (buy-side)
• Software for CRM
• Security hardware and software
• Software for building a storefront
• Software for building exchanges
• Telecommunications networks and protocols
Prentice Hall, 2003
 Extranet and EDI

• Value-added networks (VANs)—private,

third-party-managed networks that add
communications services and security
to existing common carriers; used to
implement traditional EDI systems
• Internet-based EDI—EDI that runs on
the Internet and so is widely accessible
to most companies, including SMEs
Prentice Hall, 2003
 Extranet and EDI

• Extranets—secured networks (by VPN),

usually Internet-based, that allow
business partners to access portions of
each other’s intranets; “extended
intranets.”

Prentice Hall, 2003

 Integration

• Integration with existing information systems

issues
– Intranet-based work flow
– Database management systems (DMBS)
– Application packages
– ERP
– Back-end sell-side integration works for sellers but
not buyers and vice versa
Prentice Hall, 2003
 Integration (cont.)

• Integration with business partners

– Easy integration with one company-centric side
– Not easy to integrate for many buyers or sellers
– Need buyer owned shopping cart that can
interface with back-end information systems

Prentice Hall, 2003

 The Role of XML in
B2B Integration
• Companies interact easily and effectively by
connecting to their servers, applications, databases
• Standard protocols and data-representation schemes
are needed
• Web is based on the standard communication
protocols useful only for displaying static visual Web
pages:
– TCP/IP
– HTTP
– HTML
Prentice Hall, 2003
 The Role of XML in
B2B Integration (cont.)

• XML (eXtensible Markup Language)—

standard (and its variants) used to
improve compatibility between the
disparate systems of business partners
by defining the meaning of data in
business documents
– Used to increase:
• Interactivity
• Accessibility with speech recognition systems
Prentice Hall, 2003
 XML Unifies
Air Cargo Tracking System

• B2B intermediary, TradeVan Information Services of

Taiwan provides information services about the cargo
flights of different airlines
– Different information systems have different
query results
– XML facilitates data exchange between
heterogeneous databases
– Information can be presented on wireless
application protocol (WAP)-based cell phones
Prentice Hall, 2003
Air Cargo Tracking System (cont.)

• System is expected to:

– Reduce delays significantly
– Benefit of all members of the supply chain
– Returns a standardized yet personalized
presentation for different airlines
– Enables customs brokers to reduce the cycle
time by preparing declarations of imports
faster
Prentice Hall, 2003
Air Cargo Tracking System (cont.)

• Buyers and other supply chain partners can schedule

production lines with precision and in advance
• Quality of door-to-door delivery companies is
improved through fast communication
– Answers to queries can be derived much faster
– Improves the supply chain by reducing:
• Delivery lead times
• Inventory levels

Prentice Hall, 2003

 The Role of Software Agents
in B2B EC

• Agent’s role in the sell-side marketplace

– B2C comparison-shopping
– B2B agents collect information from sellers’ sites
for buyers
• Agent’s role in the buy-side marketplace
– Assisting large number of buyers requesting
quotes from multiple potential suppliers in buy-
side
Prentice Hall, 2003
 Managerial Issues

• Can we justify the cost?

• Which vendor(s) should we select?
• Which model(s) should we use?
• Do we need B2B marketing?
• Should we reengineer our procurement system?
• What restructuring will be required for the shift to e-
procurement?
• What integration would be useful?
• What are the ethical issues in B2B?
Prentice Hall, 2003
 Summary
• The B2B field
• The major B2B models
• The characteristics of sell-side marketplaces
• Sell-side intermediaries
• The characteristics of buy-side marketplaces
• Forward and reverse auctions
• B2B aggregation and group purchasing
• Collaborative EC
• Characteristics of Internet-based EDI and the role of
XML
Prentice Hall, 2003