Ch. 11: B2B E-Commerce: Supply Chain Mgmt & Collaborative Commerce Flashcards
total inter-firm trade
the total flow of value among firms
B2B commerce
all types of inter-firm trade to exchange value across organizational boundaries
B2B e-commerce (digital commerce)
the portion of B2B commerce that is enabled by the Internet
supply chain
the links that connect business firms w/one another to coordinate production
Describe the 4 phases in the evolution of B2B commerce.
mid 1970s: automated order entry systems
late 1970s: electronic data interchange
mid 1990s: B2B electronic storefronts
late 1990s: net marketplace
automated order entry systems
involve the use of telephone modems to send digital orders
(1980s: PCs using private networks
(1990s Internet work stations accessing electronic online catalogs)
electronic data interchange (EDI)
a communications standard for sharing business documents and settlement info among a small number of firms
B2B electronic storefronts
online catalog of products made available to the public marketplace by a single supplier (like Amazon)
net marketplace
brings suppliers and buyers into a single Internet-based environment to conduct trade
private industrial networks/private trading exchange (PTX)
Internet-based communication environments that extend far beyond procurement to encompass truly collaborative commerce
Name 10 potential benefits and challenges of B2B e-commerce.
- lower administrative costs
- lower search costs for buyers
- reduce inventory costs by increasing competition among suppliers (increasing price transparency) and reducing inventory to minimum
- lower transaction costs by eliminating paperwork and automating parks of the procurement process
- increase production flexibility by ensuring delivery of parts “just in time”
- improve quality of products by increasing cooperation among buyers & sellers and reducing quality issues
- decrease product cycle time by sharing designs and production schedules w/suppliers
- increase opportunities for collaborating w/suppliers and distributors
- create greater price transparency
- increase the visibility and real-time info sharing among all participants in the supply chain network
What is the main challenge with B2B e-commerce?
changing existing procurement process
procurement process
how firms purchase goods they need to produce for consumers
currently: firms purchase from suppliers who purchase from suppliers
What are the 7 steps in the procurement process?
- searching for suppliers of specific products
- qualifying seller and products
- negotiating prices, credit, escrow, quality and delivery
- purchase orders issued
- buyers is sent an invoice
- goods are shipped
- buyer sends a payment
What are 2 distinctions that are important in understanding how B2B e-commerce can improve?
- firms make purchase of 2 kinds of goods from suppliers (direct and indirect)
- firms use different methods for purchasing goods (contract and spot)
in/direct goods
good in/directly involved in the production process
MRO goods
products for maintenance, repair and operations
contract purchasing
involves long-term written agreements to purchase specified products, under agreed upon terms and quality, for an extended period of time (general for direct goods ~ 80%)
spot purchasing
involves the purchase of goods based on immediate needs in larger marketplaces that involve many suppliers (generally for indirect goods ~ 20% of trade)
multi-tier supply chain
the chain of primary, secondary and tertiary suppliers
(SCM) supply chain management
refers to a wide variety of activities that firms and industries use to coordinate the key players in their procurement process
Name 2 recent developments in SCM
- just-in-time production
2. lean production
just-in-time production
a method of inventory cost mgmt. that seeks to eliminate excess inventory to a bare minimum: parts arrive just before they are needed and payment doesn’t occur until parts are used
lean production
a set of production methods and tools that focuses on the elimination of waste throughout the customer value chain
supply chain simplification
reduce size of supply chains and work more closely w/smaller groups of “strategic” supplier firms to reduce product and administrative costs while improving quality
tight coupling
a method for ensuring that suppliers precisely deliver the ordered parts, at a specific time and particular location, to ensure the production process is not interrupted for lack of parts
centralized supply chains
adopting a single, global supply chain system that integrates all the firm’s vendors and logistics info into a single enterprise-wide system
adaptive supply chains
breaking up single supply chain systems into regional or product-based ones w/some level of centralization but substantial autonomy for the smaller systems
What are 4 benefits of adaptive supply chains?
- can move production around the world to temporary safe harbors
- shift to optimal-cost not low cost supply chains
- more distributed manufacturing and flexible supply chains that can shift from high to low risk area
- shorter supply chains = rapid response
accountable supply chains
the labor conditions in low-wage, under-developed producer countries are visible and morally acceptable to ultimate consumers in more developed industrial societies
(FLA) Fair Labor Association
a coalition of business firms w/offshore production and global supply chains
sustainable business
a call for businesses to take social and ecological interests (not just just in corporate profits) in all decisions
= balance profits, social community development and minimal impact on the world environment
Why was EDI developed?
to reduce costs, delays and errors inherent in the annual exchanges of documents
How does EDI differ from unstructured messages?
its messages are organized w/distinct field for each of the pieces of info in a commercial transaction
What are the 3 stages of development of EDI?
- attempted to automate the flow of documents
- attempted to eliminate documents like purchase orders by sharing production schedules w/their suppliers that described exactly when and where supplies would be needed
- supplier firms were given online access to production schedules and responsibility was on them
(SCM) supply chain management systems
continuously link the activities of buying, making and moving products from suppliers to purchasing firms, and well as integrating the demand side of the business equation by including the order entry system in the process
collaborative commerce
the use of digital technologies to permit organization to collaboratively design, develop, build and manage products through their life cycles
–>move from transaction to relationship focus among supply chain participants
What are 4 ways in which social networks have affected B2B commerce (the extended social enterprise)
- more personal relationship based on conversations w/participants in the supply chain using social networks
- sharing of ideas more unstructured, situational and personal
- able to respond to fast moving developments that affect supply chains
- can provide intimate connections among customers, suppliers and logistics partners that are needed to keep the supply chain functioning and based on current conditions
What are the 2 types of Internet-based B2B commerce systems?
- net marketplaces (public)
2. private industrial networks
frictionless commerce
- suppliers compete w/one another on rice
- transactions are automated and at a low cost
- make money on transaction fees
e-distributor
provides an electronic catalog that represents the products of direct manufacturers (an Amazon for the industry)
-independently owned intermediaries that offer industrial customers a single source from which to order indirect goods on a pot, as needed basis
e-procurement
an independently owned intermediary that connects online suppliers offering maintenance & repair parts to business firms who pay to join the market
(VCM) value chain management services
automation of a firm’s entire procurement process on the buyer side and selling business processes on the seller side
exchange
an independently owned online marketplace that connects suppliers and buyers in a dynamic, real-time environment
industry consortium
industry-owned vertical market that enables buyers to purchase direct inputs (goods and services) from a limited set of invited participants
What is the ultimate objective of industry consortium?
unification of supply chains within entire industries, across many tiers, through common data definitions, network standards, and computing platforms
What are 3 examples of private industrial networks & collaborative commerce
- collaborative resource planning, forecasting and replenishment (CPFR)
- demand chain visibility
- marketing coordination and product design
trans-organizational business process
requires at least 2 independent firmest to perform; focus on the voluntary coordination of suppliers and manufacturers
(CPFR) collaborative resource planning, forecasting and replenishment
involves working w/network members to forecast demand, develop production plans, and coordinate shipping, warehousing and stocking activities to ensure that retail and wholesale shelf space is replenished w/just the right amount of goods
demand chain visibility
know where excess capacity or supplies existed in the supply and distribution chains
