E-Commerce: Fundamentals and Applications

1. E-Commerce: Fundamentals and Applications Chapter 12 : Business-Oriented E-Commerce

2. Outline • Features of B2B E-commerce • Business Models • Integration

3. 7297 3949 2188 953 403 145 45 1998 Projection Growth of B2B E-Commerce Billons of dollars 1999 2000 2001 2002 2003 2004

4. Main features of B2B EC • high volumes of goods traded • high net value of goods traded • multiple forms of electronic payment • other payment methods permitted • prior agreements or contracts between the partners • higher level of information exchange between the different trading partners

5. B2B Business Models Three basic types of models: 1. A buyer-oriented e-commerce system; 2. A seller-oriented e-commerce system; 3. A virtual market place (VMP) with multiple buyers and multiple sellers.

6. E-Procurement and Buy side EC Systems • Buyer-oriented e-commerce business models: • suitable for large corporations • they include: • Intra-company activities • Inter-company activities • Next slide shows the schematic diagram of a Buy-side EC system

7. Legend: RFPs : Requests for proposals RFQs: Requests for quotations Catalog of RFPs and RFQs Browsing & selection facility Purchase order generation approval workflow & submission Catalog of Bid Information Goods receiving, electronic payment Supplier n …. Supplier 2 Supplier 1 Buyer’s firewall Buyer Schematic of Buy Side E-Commerce System

8. Corporation Supplier Yes Ascertain if acceptable Purchase requisition Submit purchase order Process order No Ship & Invoice Submit for approval Approved Receive order Payment Purchasing Using a Buy Side E-Commerce System

9. E-Procurement and Buy side EC Systems • Buy Side E-commerce system: • corporation does not have to physically go out there searching for suppliers • they come to the corporation once it has signaled its potential needs. • all transactions are electronically handled.

10. Sell side EC Systems • Sell Side E-commerce systems: • producing or marketing products to a large number of small and large corporations. • one (supplier) to many (buyers) system. • example: Dell and Cisco -- permit customization by the configuration which the buyer wishes to purchase.

11. Sell side EC Systems • The Sell Side E-commerce system should provide: • product catalog • product configuration (if applicable) • business roles to allow automation of approval and ordering • customer service • fulfillment and shipping • accounts receivable/invoicing and electronic payment • monitoring of order status and account history

12. XML XML Internet XML Supplier Catalog Buyer’s firewall E-commerce Application Browsing, Selection & Configuration Buyer 1 Order Requisition & Submission Order Status & Account listing monitoring Buyer 2 Fulfillment, Shipping & Invoicing Buyer 3 Seller’s firewall Electronic payment Sell-Side E-commerce System

13. Web Server Internet Customer Customer portal Catalog DB E-commerce Application Server Web Server Customer Information System Business Connector Connections in Sell-Side E-Commerce Systems

14. Virtual Markets • Provides a meeting place for many vendors and many buyers • Digital Marketplaces, Infomediaries, Vertical Portals, Intermediary Oriented Marketplaces and Digital Exchanges • The most successful virtual markets are highly focused and address a specific sector of industry. • Examples of these include: • Boeing’s PART System • Chemdex.com (gone) • IPowerB2B.com (made-in-china.com) • Enron (gone)

15. Place Orders Database Receiving Order & Catalog Maintenance Virtual Market System Virtual Market Application Server Database Server Web Server Customer Buyer Vendor Vendor Architecture of a Typical Virtual Market System

16. Collaborative Supply Chain Management (SCM) • Information is exchanged is between two partners to allow a purchase to take place. • For corporations • it is important to not only optimize a single purchase segment between two parties • interaction between parties upstream of the purchase.