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B2B ecommerce can help improve the supplychain management and save costs

http://www.essindia.com/about-us/resources/articles/252-how-b2b-ecommerce-can-help-improve-the-supply-chain-and-save-costs

A B2B ecommerce takes place when large numbers of buyers andsellers meet at a common virtual market place. Here, both the seller andbuyer are business enterprises and not end consumers. A B2B initiative

needs a robust infrastructure to support the supply chain process ofmultiple businesses. A typical supply chain includes activities such asproduction planning, purchasing, material management, distribution,customer service and sales forecasting. These functions are important toall the entities involved in a B2B ecommerce, whether it is amanufacturer, a wholesaler, a service provider and so on.The introduction of internet technologies in supply chain has helpedbusinesses in reducing costs, improving data accuracy, streamliningbusiness processes, accelerating business cycles, and enhancing

customer service. For instance in the transport sector, shippers, freightforwarders and trucking firms can exchange documents electronicallythereby omitting the monetary and time investment required by thetraditional document delivery systems.B2B e-commerce enables businesses to manage the complexmovement of products and information between businesses, theirsuppliers and customers, with more flexibility. E-commerce allowscustomers to access information on product, prices, delivery orders,shipments, payment of freight bills etc.

With the information available on a B2B ecommerce website, customersget detailed information about the products a company offers and alsowhere they can actually conduct business with the company. Hence,these B2B ecommerce web sites provide a global, self-driven system forcustomers.

With e-commerce companies are taking a substantial step forward by providing customers

with a faster and easier way to do business. E-commerce allows users to establish an

account and obtain real-time information about their order and due shipments. Facilities to

create and submit bills of lading, a cargo order, analyze charges, submit a freight claim, and

carry out many other functions can be provided in a B2B ecommerce. In critical cases, E-commerce even allows customers to track shipments to the individual product and perform

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other supply chain management and decision support functions. All these supply chain

functions and transactions performed over a network are secured by encryption.

B2B Ecommerce indirectly helps in building companies' business and enhancing

shareholder value. Thus, adapting to the ecommerce in supply chain can actually accelerate

the business growth.

Supply Chain Management: Setting UpB2B Where It MattersByPerspectives| Nov 18, 2010, 10.00am | 0 Comment

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management-setting-up-b2b/#.UN5nv-Q3u1Y

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Supply Chain Management: Setting Up B2B Where It Matters

Good supply chains arent always dynamic.Supply chains for businesses with unique products are very different fromsupply chains for businesses based on unique processes. The twoapproaches cant coexist. In fact, some business models thrive onefficient, not dynamic, supply chains.This article explores how business models impact supply chainmanagement, focusing on either the demand side or the supply sidenotboth, which is ineffective.

New Rules for the Supply ChainUntil recently, Nokia epitomized supply chain excellence. Nokias modularproducts are designed so that suppliers can be swapped on the fly. AMRhad awarded Nokia the best supply chain three times in a row. However,in 2011, Nokia was no longer even ranked among the top 25 companies,

and a very different example of supply chain management is leading thepack.

http://sites.tcs.com/insights/perspectives/entrepreneurial-cio-supply-chain-management-setting-up-b2b/http://sites.tcs.com/insights/perspectives/entrepreneurial-cio-supply-chain-management-setting-up-b2b/http://sites.tcs.com/insights/perspectives/entrepreneurial-cio-supply-chain-management-setting-up-b2b/http://www.tcs.com/http://www.tcs.com/http://www.tcs.com/perspectives/http://www.tcs.com/perspectives/http://sites.tcs.com/insights/perspectives/wp-content/uploads/2012/04/titleImage.jpghttp://www.tcs.com/perspectives/http://www.tcs.com/http://sites.tcs.com/insights/perspectives/entrepreneurial-cio-supply-chain-management-setting-up-b2b/

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For the last few years, Apple has been recognized as having the bestsupply chain, even though its supply chain is not as intricate as Nokias.Apple has dedicated suppliers because its products are designed to beunique. This article shows that a companys optimal supply chain dependson how it differentiates itself in the marketplace.

Identity CrisisThe dichotomy of Apples captive supply chain and Dells dynamic supplychain highlights the fact that companies focused on products andcompanies focused on cost have different supply chains and differentbusiness models. Apple has fewer suppliers, and its supply chain is tunedto a very different business strategy. It will never emulate Dell. And Dellwill not survive if it tries to be Apple.

Neither Apple nor Dell needs to choose a strategy; their business models

chose it for them. However, businesses in the middle need to make achoice to move toward either concentration of labor (uniqueness) ordivision of labor (standardization). Companies that attempt to stay in themiddle have an identity crisis.

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Figure 1. How companies differentiate has implications for the supplychain

Demand Side or Supply Side?With companies that compete on cost, products are typically price takers(the market sets the price), and they respond to market prices using aflexible cost structure. They are not price makers (who set their ownprices with little or no regard for the market). Price takers need standardcomponents that can be supplied by multiple sources. Manufacturers canswap suppliers with every assembly to hedge price pressures.

With a differentiated product that can dictate its price in the market (e.g.,the Apple iPhone), the supply chain model is very different. Apple gets its

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iPhone multi-touch screen controllers from Broadcom, which makes themto Apple specifications. This type of supply chain strives for just-in-timedelivery through demand and inventory management, but withoutchanging suppliers frequently. Such companies differentiate on high brandequity. Typically, such a company uses B2B to extend brand merchandise

using affiliate products. iPhone apps and iTunes are examples.

Boeing has B2B exchanges to sell merchandise under the Boeing brand,connecting suppliers directly to its customers and channels. In somemodels, B2B integration with distribution is core to the business. Nestle,for example, sells products to cafs by connecting kiosk-brandedfranchises to their B2B service, selling 94 billion cups of coffee annually.

Figure 2. Business model drives application of B2B

Any business that tries to focus on all of the roles shown in Figure 2 islikely to have an ambiguous business strategy.

Aligning IT with the Right Process

Today, every supply management system is pursuing a just-in-time (JIT)philosophy. Manufacturers try to increase inventory turnover anddecrease inventory levels. No matter how simple it may sound, in reality,those two metrics (turnover and level) are a function of factors likeavailability of supplies and the opportunity cost of missed demand.

As buyers pursued JIT, suppliers learned to support it. Modern supplychains are looking at suppliers to drive JIT within the buyers business.Inventory replenishment shifts to the vendor. Events tell the vendor whento replenish. Suppliers capture the events to determine the delivery

quantity and time. It is like a managed service in procurement, with thevendor functioning as the buyer. This practice, called Vendor-Managed

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Inventory (VMI), plays an important role in shaping the two supply chainstrategies weve discussed.

In fact, VMI is currently the most common form of B2B, with a tightlinkage between buyer and supplier. The other form of B2B, which

involves dynamic aggregation of multiple suppliers through an exchange,has yet to evolve outside of a few industries, such as steel. Because VMIis being adopted so rapidly, well take a look at VMI in its simplest form.

VMI offers two types of process integration: forward and backwardintegration. To select an approach, decide whether the business intendsto engage VMI vendors or become one. A firm might become a VMIvendor so that its distribution channels keep minimum stock of products.Its a choice between lean procurement and lean distribution. You mayask why they cant coexist. We argued earlier that companies

differentiating on uniqueness of product are more likely to find B2B usefulin distribution and merchandising. On the other hand, companies thatcompete on cost find B2B more effective for sourcing. The former isdemand side (lean procurement) while the latter differentiates on thesupply side (lean distribution).

Forward Integrate if You Are a Demand Side PlayerLean distribution means a firm is responsible for replenishing stocks of itsdistribution channels in a timely fashion. It should put triggers in thechannels system to pull stock from its own inventory. Nestle serving 94billion cups of coffee annually through its Kiosk franchises is one example.Such a system makes the firm act as a VMI vendor to its distributionchannels.

To replenish stocks in a timely way, there needs to be a sufficientquantity of finished goods as a buffer (for example, the Root mean squareof all Minimum Order Quantities in each channel outlet). The business hasto keep a minimum buffer at a minimum and align its capacity tocompensate for the buffer quickly.

Typically, the bottleneck in this model lies in the connection between

procurement planning and inventory in distribution.

Backward Integrate if You Are a Supply-Side PlayerConversely, if youre a supply-side player, creating a system using VMIvendors is important. As explained earlier, VMI vendors manageprocurement on your behalf; your systems should support that throughevents that notify vendors when inventory levels need to be replenished.

The VMI model on the supply side usually has the problem of settingtriggers not closely connected to demand forecasts. The bottleneck existsbetween the VMI vendors estimate of demand and the buyers.

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The system integration for such an operating model is quite the oppositeof the demand-side players model. Instead of forward integrating, thefirm should work backward. The information needs to be pulled from CRManalytics systems into procurement systems to set accurate triggers.

These two integration approaches have numerous contrasts, assummarized in Table 1. These approaches cannot coexist; you have tochoose between them. When a company has a demand-side businessmodel and chooses a backward integration approach, business and ITalignment fails right there.

Table 1. Positioning VMI

Setting your B2B strategy can be as simple as deciding whether youdifferentiate on product uniqueness or cost. Both are valid approacheswith real implications for how you optimize your supply chain.

What Is the Role of the Internet in Supply-Chain

Management in B2B?http://smallbusiness.chron.com/role-internet-supplychain-management-b2b-

32705.html

by Bert Markgraf, Demand Media

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The Internet makes supply chains more transparent.

Related Articles What Are the Four Elements of Supply Chain Management?

Importance of Forecasting in Supply Chain Management

Supply Chain Management Vs. Customer Relationship Management

APICS Basics of Supply Chain Management

About Supply Chain Management Systems

The Advantages of the Supply Chain Management for Small CompaniesB2B supply chains have partially migrated to the Internet, as online marketplaces reduce the

cost of both supply-chain management and the carrying out of supply-chain functions. A key

to the reduced cost is Internet-based, generally available information that increases the

transparency and speed of transactions. Members of supply chains can quickly and reliably

find the specific information they need to complete an exchange of goods or services, and

receive rapid payment.Sponsored Link

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For Asian Family Owners & Leaders. 6-8 Mar. NUS Faculty. Apply!

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ProcurementThe Internet reduces the cost of purchases by giving supply-chain partners quick access to

information about sources, availability, pricing and technical data. Members of the supply

chain must cooperate in making this information available online, possibly in secure folders

only accessible to account holders who are supply-chain partners. Once information required

to make a purchase is available online from several sources, procurement is more efficient

because the best source can be identified more quickly. While the actual prices paid do not

necessarily diminish, the cost of the procurement transactions is lower.

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llbusiness.chron.com/role-internet-supplychain-management-b2b-32705.html%26gl%3DIN%26hl%3Den%26client%3Dca-pub-3235755782694080%26ai0%3DC1lV-YEneUJvRF-2_igen-4CQAufAvcQCx9z3-FnZ59HSHxABIN2PkBhQgc-A0wRg5crlg7QOoAHlrs_uA8gBAakCu5Y8E6Rrqz6oAwGqBJwBT9DIacLpxk-6OJ75cs9hvScwBbYc_FgfDuXjlqOgqJUXE4LrcOHhYrWDJ3HuC5CwBsAFNhtlhFBFhZu2hRwJKJ9V_NCQD4eFDVO1TEctkU98ewOcKnTf4J6oYNjFh1KxzN1wW_KNJBos-shh6ZVxco0Kdy8IKJq64SNQMmKo5ub0gP0jqtzH_bZ3nvG84MOuenavGgqGO4wDQVqYiAYBgAeD0bAR&usg=AFQjCNEnAHHJ_jL9X2Ag00S_wse-clyI0ghttp://smallbusiness.chron.com/advantages-supply-chain-management-small-companies-20595.htmlhttp://smallbusiness.chron.com/supply-chain-management-systems-43344.htmlhttp://smallbusiness.chron.com/apics-basics-supply-chain-management-41462.htmlhttp://smallbusiness.chron.com/supply-chain-management-vs-customer-relationship-management-10231.htmlhttp://smallbusiness.chron.com/importance-forecasting-supply-chain-management-46181.htmlhttp://smallbusiness.chron.com/four-elements-supply-chain-management-52355.htmlhttp://smallbusiness.chron.com/managers/

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SupplyOn the supply side, the most important role of the Internet is to greatly increase the size of the

accessible market. Suppliers using the Internet to market their goods and services can sell

world-wide. With the Internet's greater transparency regarding pricing, suppliers have lost

some of the strategic levers that allowed them to cultivate preferred accounts with higher

margins. The ability of competitive suppliers to achieve greater sales volumes balances this

disadvantage. Once the supplier has found a customer, he benefits from similarly reduced

transaction costs as the purchaser, because completing the transaction is quicker and more

efficient.

Direct TransactionsFor supply chains in general, the role of the Internet has been to reduce the power of

intermediaries. Suppliers can offer their products and services directly to customers, and

purchasers can find what they need directly from producers. This disintermediation has

simplified supply-chain management by making real time data on changes in demand and

supply available to the markets, rather than having the information filtered through re-sellers.

This trend has been especially pronounced in B2B transactions, while intermediaries remainmore important in retail.

CollaborationWhile supply-chain management through the Internet is still in its infancy, the possibilities

exist for even closer integration of supply and procurement functions. Suppliers are interested

in having a high, predictable sales volume, while purchasers are looking for a reliable, low-

cost source. Companies can satisfy both goals by providing data on production and on

procurement needs to each other under long term relationships. The resulting high, steady

volume allows the supplier to offer his products at lower cost, while the purchaser benefits

from this cost reduction and receives a reliable supply.

B2B eCommerce and Supply

Chain Managementhttp://www.clarity-ventures.com/articles/article/499/b2b-ecommerce-and-

supply-chain-management-integrating-erp-crm-for-supply-chain

http://www.clarity-ventures.com/articles/article/499/b2b-ecommerce-and-supply-chain-management-integrating-erp-crm-for-supply-chainhttp://www.clarity-ventures.com/articles/article/499/b2b-ecommerce-and-supply-chain-management-integrating-erp-crm-for-supply-chainhttp://www.clarity-ventures.com/articles/article/499/b2b-ecommerce-and-supply-chain-management-integrating-erp-crm-for-supply-chainhttp://www.clarity-ventures.com/articles/article/499/b2b-ecommerce-and-supply-chain-management-integrating-erp-crm-for-supply-chain

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In a B2B eCommerce transaction, the buyers and suppliers are enterprise

businesses. This often means that certain parts of the B2B infrastructure, like

the supply chain management process, must be even more robust than a

business-to-consumer eCommerce store. Read below for an introduction to

supply chain management from ourB2B eCommerce development company.

Supply Chain Management for B2B eCommerce

The supply chain process for multiple businesses can be quite difficult tomanage. Challenges inherent in supply chain management for B2B eCommerce

include production planning, purchasing, material management, distribution,

and more. From wholesalers to manufacturers, every point of the supply chain

management process is a critical one for successful B2B eCommerce.B2B

eCommerce technology solutionsare a critical component of this process.

Integrating ERP, CRM, and Supply Chain

Management

By automating the processes used for sales, support, order tracking, shipping integration,

and more, you can reduce the likelihood that important information or details will be lost

along the supply chain management process.

One of the easiest ways to ensure a smooth and flawless B2B eCommerce

supply chain management process is tointegrate your ERP, CRM, and supply

chain management systems. By automating the processes used for sales,support, order tracking, shipping integration, and more, you can reduce the

http://www.clarity-ventures.com/Services/e-Commerce-Catalogs/B2B-e-Commercehttp://www.clarity-ventures.com/Services/e-Commerce-Catalogs/B2B-e-Commercehttp://www.clarity-ventures.com/Services/e-Commerce-Catalogs/B2B-e-Commercehttp://www.clarity-ventures.com/Resources/Business-ECommerce/Business-to-Business-E-commercehttp://www.clarity-ventures.com/Resources/Business-ECommerce/Business-to-Business-E-commercehttp://www.clarity-ventures.com/Resources/Business-ECommerce/Business-to-Business-E-commercehttp://www.clarity-ventures.com/Resources/Business-ECommerce/Business-to-Business-E-commercehttp://www.clarity-ventures.com/Resources/ERP-CRM-Integrationhttp://www.clarity-ventures.com/Resources/ERP-CRM-Integrationhttp://www.clarity-ventures.com/Resources/ERP-CRM-Integrationhttp://www.clarity-ventures.com/Resources/ERP-CRM-Integrationhttp://www.clarity-ventures.com/Resources/ERP-CRM-Integrationhttp://www.clarity-ventures.com/Resources/ERP-CRM-Integrationhttp://www.clarity-ventures.com/Resources/Business-ECommerce/Business-to-Business-E-commercehttp://www.clarity-ventures.com/Resources/Business-ECommerce/Business-to-Business-E-commercehttp://www.clarity-ventures.com/Services/e-Commerce-Catalogs/B2B-e-Commerce

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likelihood that important information or details will be lost along the supply

chain management process. While supply chain management and customer

relationship management relate to two different processes, they are actually

very similar; and integrating the two will maximize the functionality of your

B2B services.