E-business ModelBy Assoc. Prof. Dr. Siriluck Rotchanakitumnuai Department of Management pot

E-business Model
By
Assoc. Prof. Dr. Siriluck Rotchanakitumnuai

Department of Management Information Systems
Faculty of Commerce and Accountancy
Thammasat University

9/18/2012

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B2B Models
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Company-centric models
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Sell-side marketplace (one-to-many)
Buy-side marketplace (many-to-one)

Many-to-many marketplaces—the exchange
Collaborative commerce

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Models of B2B E-Commerce

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B2B Models (cont.)
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Virtual service industries in B2B
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Travel and tourism services
Real estate
Electronic payments
Online stock trading
Online financing
Other online services

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Sell-Side Marketplace Architecture

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Selling Side: Auctions and Other
Models
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Forward auctions—quick disposal of items
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Revenue generation
Increased page views
Member acquisition and retention—bidding
transactions result in additional registered
members

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Selling Side:
Auctions and Other Models (cont.)
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Using intermediaries when:
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Searching and reporting
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No resources required
Own and control auction information
Fast time to market
Search and report all auction activities
Standard reports available
Additional analysis of complex information

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Buy Side: One-from-Many,
E-Procurement

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Purchasing agents (buyers)
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Direct purchasing
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Indirect purchasing
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Use of material is scheduled
Not a shelf item
MROs
Nonproduction materials

Inefficiencies in procurement management
of indirect materials

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A Traditional Purchasing Process Flow

Source: ariba.com, February 2001.

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Buy Side: One-from-Many,
E-Procurement (cont.)
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Innovative procurement management
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Innovative purchasing as strategic approach to
increase profit margins
Web facilitation includes:
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Electronic tendering
Volume purchasing

Aggregating supplier catalogs at buyer’s site
Group purchasing
Others
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Buy Side: One-from-Many,
E-Procurement (cont.)
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Goals of procurement reengineering
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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:
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Simple

Fast
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Buy Side: One-from-Many,
E-Procurement (cont.)
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Goals of procurement reengineering (cont.)
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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
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Buy-Side B2BMarketplace
Architecture

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Buy Side: One-from-Many,
E-Procurement (cont.)
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Direct vs. indirect sourcing
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Tools to automate purchasing goods
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Direct or mission critical
 80% of manufacturer’s expenditure
 Long-term relationship with vendor of known quality
goods
 Tight integration with suppliers along supply chain
Indirect—use of public exchanges for indirect sourcing

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Buy Side: Reverse Auctions
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Pre-Internet Reverse auction process
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Prepare description of product to be produced
Announce project via ads, mail, telephone
Send detailed information to interested vendors
Vendors prepare proposals
Bidders submit document proposals
Proposals evaluated
Problems:
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Laws
Expensive
Errors
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Buy Side: Reverse Auctions (cont.)
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Web-based reverse auction process
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Buyers prepare bidding project information
Buyers post project on portal
Identify potential suppliers
Invite suppliers to bid
Suppliers download project information
Suppliers submit electronic bid
Reverse auction in real-time, or it can take a few
days
Buyers evaluate and award contract
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Buy Side: Reverse Auctions (cont.)

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Web-based reverse auction process
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Benefits:
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Electronic process is faster
Administratively much less expensive
Enables location of cheapest possible products

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Group Purchasing
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Group purchasing—orders from several
buyers are aggregated
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Internal aggregation
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External aggregation
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Economy of scale
Reduced transaction processing cost
Aggregating demand online
Putting together orders from multiple buyers to make
large volumes/lower costs
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Collaborative Commerce (CCommerce)
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Web-based systems used between and
among suppliers for:
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Communication

Design
Planning
Information sharing
Information discovery

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Collaborative Commerce
(C-Commerce) (cont.)
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Reduce design cycle time by connecting
suppliers: Adaptec, Inc.
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Microchip manufacturer supplying electronic
equipment makers
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Solution to the problem
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Outsources manufacturing tasks

Delivery times exceeded their competitors
Extranet and enterprise-level supply chain integrated
software
Significantly reduced order-to-product delivery time
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Collaborative Commerce
(C-Commerce) (cont.)
Reduce product development time by connecting
suppliers: 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
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Suppliers
Distributors
Overseas

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Factories

Customers
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Practical categories of E-business
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Brokerage model
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Merchant model
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It is predicated on the power of the web to allow a manufacturer
(suppliers/service providers) to reach buyers directly and thereby compress
the distribution/service delivery channel)

Affiliate model
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Wholesalers of goods and services. Sales may be made based on list prices
or through auction

Manufacturing (Direct model)

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Are market-makers: they bring buyers and sellers together and facilitate
transaction e.g. auction broker, marketplace exchange

The affiliates provide purchase/service-point-click through to the merchant
e.g. banner exchange, revenue sharing

Community model
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The Internet is inherently suited to community business models and today
this is one of the more fertile areas of delvelopment

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Managerial Issues
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B2B marketing—sell-side marketplaces require
advertisement and incentives

Which models to use and when—need for
implementation strategies and prioritization
Purchase process reengineering (BPR)
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Establish buy-side marketplace on its server if
volume is big enough to attract major vendors
Join third-party intermediary-oriented marketplace if
volume is small

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Managerial Issues (cont.)
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Business ethics
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Accessing unauthorized areas in the tracing
system should not be allowed
Privacy of partners should be protected

technically and legally

Auctions—both forward and reverse
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Benefits are substantial
Implementation is relatively simple
Considerable flexibility in implementation
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