E-business ModelBy Assoc. Prof. Dr. Siriluck pptx

9/18/2012 1
By
Assoc. Prof. Dr. Siriluck Rotchanakitumnuai
Department of Management Information Systems
Faculty of Commerce and Accountancy
Thammasat University
E-business Model
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B2B Models
 Company-centric models
 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.)
 Virtual service industries in B2B
 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
 Forward auctions—quick disposal of items

 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.)
 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
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Buy Side: One-from-Many,
E-Procurement
 Purchasing agents (buyers)
 Direct purchasing
 Use of material is scheduled
 Not a shelf item
 Indirect purchasing
 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.)
 Innovative procurement management
 Innovative purchasing as strategic approach to
increase profit margins
 Web facilitation includes:
 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.)
 Goals of procurement reengineering
 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
 Fast
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Buy Side: One-from-Many,
E-Procurement (cont.)
 Goals of procurement reengineering (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
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Buy-Side B2BMarketplace
Architecture
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Buy Side: One-from-Many,
E-Procurement (cont.)
 Direct vs. indirect sourcing
 Tools to automate purchasing goods
 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
 Pre-Internet Reverse auction process
 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:

 Laws
 Expensive
 Errors
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Buy Side: Reverse Auctions (cont.)
 Web-based reverse auction process
 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.)
 Web-based reverse auction process
 Benefits:
 Electronic process is faster
 Administratively much less expensive
 Enables location of cheapest possible products
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Group Purchasing
 Group purchasing—orders from several
buyers are aggregated
 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
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Collaborative Commerce (C-
Commerce)
 Web-based systems used between and
among suppliers for:
 Communication
 Design
 Planning
 Information sharing
 Information discovery
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Collaborative Commerce
(C-Commerce) (cont.)
 Reduce design cycle time by connecting
suppliers: Adaptec, Inc.
 Microchip manufacturer supplying electronic
equipment makers
 Outsources 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
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Collaborative Commerce
(C-Commerce) (cont.)
 Suppliers

 Distributors
 Overseas
 Factories
 Customers
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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Practical categories of E-business
 Brokerage model
 Are market-makers: they bring buyers and sellers together and facilitate
transaction e.g. auction broker, marketplace exchange
 Merchant model
 Wholesalers of goods and services. Sales may be made based on list prices
or through auction
 Manufacturing (Direct model)
 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
 The affiliates provide purchase/service-point-click through to the merchant
e.g. banner exchange, revenue sharing
 Community model
 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
 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)
 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.)
 Business ethics
 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
 Benefits are substantial
 Implementation is relatively simple
 Considerable flexibility in implementation