Chapter 5
Selling to Businesses Online
Objectives
In this chapter, you will learn about:
• Strategies that businesses use to improve purchasing,
logistics, and other support activities
• Electronic data interchange and how it works
• How businesses have moved some of their electronic
data interchange(EDI) operations to the Internet
• Supply chain management and how businesses are
using Internet technologies to improve it
• Electronic marketplaces and portals that make
purchase-sale negotiations easier and more efficient
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5.1 Purchasing, Logistics, and Support Activities
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5.1 Purchasing, Logistics, and Support Activities
• The potential for cost reductions and business process
improvements in purchasing, logistics, and support activities
is tremendous. P207
• As Internet technologies become commonplace in
businesses, the potential for synergies(协同) increases. P208
• An emerging necessary characteristic of purchasing, logistics,
and support activities is flexibility.
• Economic organizations are evolving from the hierarchical
structures used since the industrial revolution to new, more
flexible network structures.
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5.1.1 Purchasing Activities
• Purchasing activities(采购)
– Include identifying vendors（供应商）,
evaluating vendors, selecting specific
products, placing orders, and resolving any
issues that arise after receiving the ordered
goods or services.
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5.1.1 Purchasing Activities
• Supply chain
– The part of an industry value chain that precedes a
particular strategic business unit.
– The flow of materials, information, money, and services
from raw material suppliers through factories and
warehouses to the end customers (for understanding)
– A company’s supply chain for a particular product or
service includes all the activities undertaken by every
predecessor(前任) in the value chain to design, produce,
promote, market, deliver and support each individual
component of that product or service.
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5.1.1 Purchasing Activities
– Supply chain parts
• Upstream supply chain
– activities of a manufacturing company with its suppliers
• Internal supply chain
– in-house processes for transforming the inputs from the
suppliers into the outputs
• Downstream supply chain
– activities involved in delivering the products to the final
customers
– E-supply chain: A supply chain that is managed
electronically, usually with Web technologies
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5.1.1 Purchasing Activities
• Procurement
– The broader range of responsibilities
– Generally includes all purchasing activities, plus the monitoring of all
elements of purchase transactions, also includes managing and
developing relationships with key suppliers.
– E-procurement
• Use of Internet technologies in procurement activities
• Supply management
– Term used to describe procurement activities
• Sourcing (供应)
– The part of procurement activity devoted to identifying suppliers and
determining their qualifications
– E-sourcing
• Use of Internet technologies in sourcing activities
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5.1.1 Purchasing Activities
• The business purchasing process is usually much more
complex than most consumer purchasing processes.
• The business purchasing process also requires a number of
people to coordinate their individual activities as part of the
process.
• In large companies, the Procurement Department supervises
the purchasing process.
• Spend
– The total dollar amount of the goods and services that a company
buys during a year
– Managing the spend is an important function and can be a key
element in a company’s overall profitability.
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采购基本目标的5R
Overall Objectives is the acquisition of
material/services
of the right quality,
in the right quantity,
at the right price,
at the right time,
from the right source.
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2013年供应商会员收费政策公告
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5.1.2 Direct vs. Indirect Materials Purchasing
• Direct materials
P210
– Materials that become part of the finished product in a
manufacturing process
– The procurement process for direct materials is an important part of
any manufacturing business because the cost of direct materials is
usually a very large part of the cost of the finished product.
– Large manufacturing companies engage in two types of direct
materials purchasing:
• Replenishment purchasing ( contract purchasing)
– The company negotiates long-term contracts for most
of the materials that it will need
– By negotiating the contracts in advance and
guaranteeing the purchase, the manufacturer obtains
low prices and good delivery terms.
• Spot purchasing(现货采购)
– Buying in spot market
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5.1.2 Direct vs. Indirect Materials Purchasing
• Indirect materials
– Other materials that the company purchases, including factory
supplies
– Most companies include the purchase of nonmanufacturing goods
and services- such as office supplies, computer hardware and
software, and travel expenses- in the responsibilities of the indirect
materials Procurement Department.
– MRO: the indirect materials items are often called Maintenance、
Repair and Operating (MRO) supplies.
– P-cards: one way the Procurement Departments control MRO
spending is by issuing purchasing cards (usually called p-cards) .
– By using a web site to process orders, the vendors in this market
can save the costs or printing and shipping catalogs and handling
telephone orders.
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5.1.3 Logistics Activities
• The classic objective of logistics has always been to
provide the right goods in the right quantities in the right
place at the right time.
• Logistics management is an important support activity for
both the sales and the purchasing activities in a company.
– The products they sell to customers are delivered on time
– The raw materials they buy and use to create their products arrive
when needed
– The management of materials as they go from the raw materials
storage area through production processes to become finished goods
• Logistics activities include managing:
– Inbound movements of materials and supplies
– Outbound movements of finished goods and services
– receiving、warehousing、controlling inventory、scheduling and
controlling vehicles and distributing finished goods are all logistics
activities.
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5.1.3 Logistics Activities
• Third-party logistics (3PL)
– When transportation and freight companies engage in the
business of operating all or a large portion of a customer’s
materials movement activities, the company is called thirdparty logistics provider.
– FedEx
– UPS
• Forth-party logistics(4PL)
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5.1.4 Support Activities P213
• Support activities
– Finance and administration
• Making payments, processing payments received, planning capital
expenditures, budgeting and planning
• The operation of the computing infrastructure
– Human resources
• Hiring, training, evaluating employees
• Administering benefits
• complying with government record-keeping regulations
– Technology development
• A wide variety of activities, depending on the nature of the
business or organization.
• It can include networking research scientists into virtual
collaborative workgroups, posting(记录) research results,
publishing research papers online, and providing connections to
outside sources of research and development services.
See Figure 5-3 P213
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5.1.4 Support Activities
• Knowledge management
– Intentional collection, classification, and dissemination of
information about a company, its products, and its
processes.
– This type of knowledge is developed over time by
individuals working for or with a company and is often
difficult to gather and distill（提取）.
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5.1.5 E-Government
• Use of electronic commerce by governments and
government agencies to Perform functions for their
stakeholders.
– Such as : Employ people, buy supplies from vendors, and
distribute benefit payments
– Collect taxes and fees from constituents
• Offers an opportunity to improve the efficiency and
effectiveness of the functions of government and to
make governments more transparent to citizens and
businesses by providing access to more of the
information generated by government.
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5.1.5 E-Government-categories
• Government-to-citizens (G2C):
E-government category that includes all the
interactions between a government and its citizens
– Major areas of G2C activities:
•
•
•
•
•
•
tourism and recreation
research and education
downloadable forms
discovery of government services
information about public policy
advice about health and safety issues
补充
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5.1.5 E-Government-categories
• Government-to-business (G2B): E-government category
that includes interactions between governments and
businesses (government selling to businesses and providing
them with services and businesses selling products and
services to government)
• Government-to-government (G2G):
E-government category that includes activities within
government units and those between governments
• Government-to-employees (G2E):
E-government category that includes activities and services
between government units and their employees
补充
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5.1.5 E-Government
• National governments are finding that e-government can
reduce administrative costs and provide better service to
stakeholders.
• State governments are creating websites for conduction
business and interactive with their stakeholders. The most
common service offered by states and similar regional
governments (provincial or regional government)
•
•
•
•
•
•
•
Access to the text of state laws and regulations
Renewal of licenses
Promotion of the state to businesses considering new locations
Job listings
Promotion of tourism in the state
Tax forms and filing information
Information for companies that want to do business with the state
• Smaller cities, towns, and villages are using the web to
communicate with residents.
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5.1.６Network model of economic organization
• One trend that is becoming clear in purchasing, logistics, and
support activities is the shift away from hierarchical structures
toward network structures
• The Web is enabling this shift from hierarchical to network
forms of economic organization.
• Some researchers who study the interaction of firms within
an industry value chain are beginning to use the term
“supply web” instead of “supply chain” because many
industry value chains no longer consist of a single sequence
of companies linked in a single line, but include many parallel
lines that are interconnected in a web or network
configuration.
*
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5.2 Electronic Data Interchange
P217
• EDI is the computer-to-computer transfer of
business information between two businesses
• EDI-compatible firms are firms that exchange data
in specific standard formats
– Business information exchanged is often transaction
data：
•
•
•
•
•
Invoices
Purchase orders
Requests for quotations
Bills of lading
Receiving reports
• Most B2B electronic commerce is an adaptation of
EDI or based on EDI principles
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5.2.1 Early Business Information Interchange
Efforts
• 1950s-Companies began to use computers to store and
process internal transaction records
• 1960s -Businesses that engaged in large volumes of
transactions with each other had begun exchanging
transaction information on punched cards（穿孔卡片） or
magnetic tape（磁带）, later over telephone lines.
– Smaller or lower-volume trading partners could not afford to
participate in the benefits of these paper-free exchanges.
• 1968-A number of freight and shipping companies formed the
Transportation Data Coordinating Committee (TDCC)
– which was charged with exploring ways to reduce the paperwork
burden that shippers and carriers faced.
– TDCC created a standardized information set
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5.2.2 Emergence of Broader EDI Standards
• American National Standards Institute (ANSI)
– Has been the coordinating body for standards in the
United States since 1918.
– Does not set standards itself
– Has created a set of procedures for the development of
national standards
– Accredits committees that follow those procedures
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5.2.2 Emergence of Broader EDI
Standards (continued)
• Accredited Standards Committee X12 (ASC X12)
– Chartered(受特许的) in 1979 by ANSI to develop uniform
EDI standards
– Includes information systems professionals from over 800
businesses and other organizations
• ASC X12 includes specifications for several hundred
transaction sets.
– Transaction sets
• Names of formats for specific business data interchanges
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5.2.2 Emergence of Broader EDI
Standards (continued)
• 1987
– United Nations published its first standards under the title EDI
for Administration, Commerce, and Transport (EDIFACT, or
UN/EDIFACT)
• Late 2000
– ASC X12 organization and UN/EDIFACT group agreed to
develop one common set of international standards
– No date for implementation of the common standards has been
set
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美国
ALAG
WINS
汽车业
仓储业
ANSI X12
TDCC
UCS
运输业
零售业
全球性EDI 标准
UN/EDIFACT
欧洲
ODETTE
DISH
海运
汽车业
TDAIDACOMS
TDI
零售业
1970
专用标准
1980
产业标准
1985
国家标准
国际标准
5.2.3 How EDI Works
• Although the basic idea behind EDI is
straightforward, its implementation can be
complicated, even in fairly simple business
situations.
• Example:
– Consider a company that needs a replacement for
one of its metal-cutting machines
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– Paper-based purchasing process
• Each information processing step results in the production of
a paper document that must be delivered to the department
handling the next step.
• Information transfer between the buyer and vendor is also
paper-based and can be delivered by mail, courier(快递), or
fax.
– EDI purchasing process
• The mail service has been replaced with the data
communications of an EDI network, and the flows of paper
within the buyer’s and vendor’s organizations have been
replaced with computers running EDI translation software.
• The departments are exchanging the same messages
among themselves, but EDI reduces paper flow and
streamlines the interchange of information among
departments within a company and between companies.
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5.2.4 Value-Added NetworksP224
• Trading partners can implement the EDI network
and EDI transaction processed in several ways,
each of these ways uses one of two basic
approaches:
– Direct connection EDI
• Requires each business in the network to operate its own
on-site EDI translator computer
• EDI translator computers are connected directly to each
other using modems and dial-up telephone lines or
dedicated leased lines(专线)
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Value-Added Networks (continued)
– Indirect connection EDI
• VAN (value-added network) - A company that provides
communications equipment, software, and skills needed to receive,
store, and forward electronic messages that contain EDI
transaction set.
• To send an EDI transaction set to a trading partner:
– VAN customer connects to the VAN then forwards an EDIformatted message to the VAN
– VAN logs the message and delivers it to the trading partner’s
mailbox
– Trading partner then dials in to the VAN and retrieves its EDIformatted messages
• The trading partners pass messages through the VAN instead of
connecting their computers directly to each other.
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Advantages of Using a VAN
Ｐ226
• Users need to support only the VAN’s one communications
protocol instead of many possible protocols used by trading
partners.
• The VAN records message activity in an audit log. This log
becomes an independent record of transactions, and this
record can be helpful in resolving disputes between trading
partners.
• The VAN can provide translation between different
transaction sets used by trading partners (for example, the
VAN can translate an ASC X12 set into a UN/EDIFACT set).
• The VAN can perform automatic compliance checking to
ensure that the transaction set is in the specified EDI format.
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Disadvantages of Using a VAN
• Cost
– Most VANs require an enrollment fee, a monthly
maintenance fee, and a transaction fee
• Using VANs can become cumbersome（麻烦的）
and expensive for companies that want to do
business with a number of trading partners, each
using different VANs
*
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5.3 EDI on the Internet
• As the Internet gained prominence as a tool for conducting
business, trading partners using EDI began to view the
Internet as a potential replacement for the expensive leased
lines and dial-up connections required to support both direct
and VAN-aided EDI.
• Companies that had been unable to afford EDI began to look
at the Internet as an enabling technology that might get them
back in the game of selling to large customers that
demanded EDI capabilities from their suppliers.
• Initial roadblocks to conducting EDI over the Internet included:
– Concerns about security
– The Internet’s inability to provide audit logs and third-party verification
of message transmission and delivery
• Nonrepudiation(认可、不可否认)
– Ability to establish that a particular transaction actually occurred
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5.3.1 Open Architecture of the Internet
• Internet EDI or Web EDI
– EDI on the Internet
• Open architecture of the Internet allows
trading partners unlimited opportunities for
customizing information interchanges
• New tools such as XML help trading partners
be even more flexible in exchanging detailed
information
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5.3.2 Financial EDI
• Financial EDI are the EDI transaction sets that
provide instructions to a trading partner’s bank
• Automated clearing house (ACH) system
– Service that banks use to manage accounts with each
other
• EDI-capable banks
– Equipped to exchange payment and remittance data
through VANs
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Financial EDI (continued)
• Value-added banks (VABs)
– Banks that offer VAN services for nonfinancial
transactions
• Financial VANs (FVANs)
– Nonbank VANs that can translate financial transaction
sets into ACH formats and transmit them to banks that
are not EDI capable .
*
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5.4 Supply Chain Management Using
Internet Technologies
• Supply chain management
– When companies integrate their supply management
and logistics activities across multiple participants in a
particular product’s supply chain, the job of managing
that integration is called supply chain management.
– The ultimate goal of supply chain management is to
achieve a higher-quality or lower-cost product at the end
of the chain.
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5.4.1 Value Creation in the Supply Chain
P229
• Supply chain management was originally
developed as a way to reduce costs. It focused on
very specific elements in the supply chain and tried
to identify opportunities for process efficiency.
• Today, supply chain management is used to add
value in the form of benefits to the ultimate
consumer at the end of the supply chain. This
requires a more holistic(整体的) view of the entire
supply chain than had been common in the early
days of supply chain management.
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5.4.1 Value Creation in the Supply Chain
• Tier one suppliers
– Develop long-term relationships with a large number of suppliers that provide
components and raw materials to them.
• Tier two suppliers
– Manage relationships with the next level of suppliers
• Tier three suppliers
– Provide tier two suppliers with components and raw materials
• Supply alliances
– Long-term relationships created among participants in the supply chain
– A key element of these relationships is trust between the parties.
– The level of information sharing that must take place among the supply chain
participants can be a major barrier to entering into these alliances.
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5.4.1 Value Creation in the Supply Chain
P229
• All supply chain participants share information and
work together to create value. Ideally, the supply
chain coordination creates enough value that each
level of supplier can share the benefits of reduced
cost and more efficient operations.
• Key element of successful supply chain
management
– Clear communications and quick responses
– Technologies, and especially the technologies of the
Internet and the web, can be very effective
communications enhancers.
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5.4.1 Value Creation in the Supply Chain
• Advantages
• Major disadvantage of using Internet technologies in supply chain
management P230
– The cost of the technologies
– In most cases, the advantages provide value that greatly exceeds the
cost of implementing and maintaining the technologies.
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5.4.2 Increasing Supply Chain Efficiencies
• Many companies are using Internet and Web technologies to
manage supply chains in ways that yield increases in
efficiency throughout the chain.
• These companies have found ways to increase process
speed, reduce costs, and increase manufacturing flexibility so
that they can respond to changes in the quantity and nature
of ultimate consumer demand.
• Examples:
– Boeing Corporation & Boeing PART
– DELL
• All of these attributes combine to allow a coordinated supply
chain to produce products and services that better meet the
needs of the ultimate consumer.
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5.4.3 Using Materials-Tracking Technologies
with EDI and Electronic Commerce
• Companies have been using optical scanners and bar codes
for many years to help track the movement of materials. In
many industries, the integration of bar coding and EDI has
become prevalent.
– UPS
• The most promising technology now being used is radio
frequency identification devices (RFIDs), which are small
chips that use radio transmissions to track inventory.
• Passive RFID tags work by taking the energy received from
the reader through a tag's antenna and using that energy to
transmit stored data back to the reader.
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5.4.4 Creating an Ultimate Consumer Orientation in
the Supply Chain P234
• One of the main goals of supply chain management is to help each
company in the chain focus on meeting the needs of the consumer at the
end of the supply chain.
• Companies in industries with long supply chains have, in the past, often
found it difficult to maintain this customer focus, which is often called an
ultimate consumer orientation. Instead, companies have directed their
efforts toward meeting the needs of the next member in the supply chain.
• This short-sighted approach can cause companies to miss opportunities
to add value in subsequent steps of the chain.
• Example: Michelin North America
• Because Internet technologies are tools that improve communications at
a very low cost, they are ideal aids for enhancing the creating of a highly
coordinated and effective supply chain.
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5.4.5 Building and Maintaining Trust
in the Supply Chain
• Major issue for most companies is developing trust
• Key elements for building trust include continual
communication and information sharing
• Because the Internet and the Web provide
excellent ways to communicate and share
information, they offer new avenues for building
trust.
*
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5.5 Electronic Marketplaces and Portals
• People believed that the Web would provide an opportunity for companies
to establish information hubs (信息中心)for each major industry.
• Vertical portals (vortals)
– Offer a doorway (or portal) to the Internet for industry members
– Vertically integrated (each hub would offer services to just one industry)
– Types of Vortals
– Independent Industry Marketplaces（第三方行业电子集市）
– Private Stores （专属店铺）＆Customer Portals（客户门户）
– Private Company Marketplaces（专属电子集市）
– Industry Consortia-Sponsored Marketplaces（行业共同电子集
市）
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5.5.1 Independent Industry Marketplaces
第三方行业电子集市
• Industry marketplaces（行业集市）
– Focused on a single industry
• Independent exchanges （第三方交易中心）
– Not controlled by a company that was an established buyer or seller
in the industry
• Public marketplaces （公共电子集市）
– Open to new buyers and sellers just entering the industry
• Examples:
– Ventro with Chemdex for bulk chemicals
– SciQuest for life science chemicals
– ChemConnect for bulk chemicals
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5.5.1 Independent Industry Marketplaces
• By mid-2000, there were more than 2200
independent exchanges in a wide variety of
industries.
• As venture capital funding became scarce for
companies that were not earning profits- and
virtually all of these marketplaces were not earning
profits, many of them closed.
• By 2002, there were fewer than 100 industry
marketplaces still operating.
• Case: MetalSite
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5.5.2 Private Stores and Customer PortalsＰ251
• Large companies that sell to many relatively small customers can
exert great power in negotiating price, quality, and delivery terms with
those customers, those sellers feared that industry marketplaces
would dilute that power.
• Many of these large sellers had already invested heavily in websites
that they believed would meet the needs of their customers better
than any industry marketplace would.
• Private store
– Has a password-protected entrance
– Offers negotiated price reductions on a limited selection of
products －usually those that the customer has agreed to
purchase in certain minimum quantities.
– Examples: Cisco, Dell
• Customer portal sites
– Offer private stores along with services
– Examples: Grainger
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5.5.3 Private Company Marketplaces
专属电子集市
• Large companies that purchase from relatively small vendors can exert
similar power over those vendors in purchasing negotiations.
• E-procurement software
– Allows a company to manage its purchasing function through a Web
interface
– Usually require their suppliers to bid on their business.
• These larger companies were reluctant to abandon their investments in eprocurement software or to make the software work with industry
marketplaces software.
• These companies use their power in the supply chain to force suppliers to
deal with them on their own terms rather than negotiate with suppliers in
an industry marketplace.
• Private company marketplace
– A marketplace that provides auctions, request for quote postings, and
other features to companies that want to operate their own
marketplaces.
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5.5.4 Industry Consortia-Sponsored Marketplaces
• Some companies had relatively strong negotiating positions
in their industry supply chains, but did not have enough
power to force suppliers to deal with them through a private
company marketplace. These companies began to form
consortia to sponsor marketplace.
• Industry Consortia-Sponsored Marketplaces - Formed by
several large buyers in a particular industry
• Examples:
– Covisint Created in 2000 by a consortium of DaimlerChrysler, Ford,
and General Motors
– Avendra In the hotel industry by Marriott, Hyatt, and three other major
hotel chains
– Exostar by Boeing and other companies in aerospace industry
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–The lines between them are not always clear.
–Most B2B experts believe that a variety of marketplaces with
the characteristics of these five general categories will continue
to exist for some time.
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卖方控制的行业
买方控制的行业
专属店铺
客户门户
行业电子集市
一个卖家
很多买家
几个卖家
很多买家
专属电子集市
很多买家
很多卖家
行业共同电子
集市
几个买家
很多卖家
使用Ariba
CommerceOne
等软件
思科、DELL
Grainger
CheMatch.com
Avendra
Covisint
几种产品
固定价格
商品目录
固定价格
拍卖
动态定价
买家控制
固定价格
企业间电子商务的特征
一个买家
很多卖家
卖家投标
Summary
• Companies are using Internet and Web technologies
to improve their purchasing and logistics primary
activities
• EDI
– First developed by freight companies to reduce the
paperwork burden
• Internet
– Now providing the inexpensive communications channel
that EDI lacked
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Summary (continued)
• Supply chain management
– Incorporates several elements that can be implemented
and enhanced through the use of the Internet and the
Web
• Models for B2B electronic commerce
– Private stores, customer portals
– Private marketplaces
– Industry consortia-sponsored marketplaces
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Key terms
•
•
•
•
•
•
•
•
•
•
•
Contract purchasing
Customer portal
Direct connection EDI
Direct material
EDI compatible
E-government
E-procurement software
E-sourcing
Financial EDI
Independent exchange
Independent industry
marketplace
• Indirect connection EDI
• Indirect material
• Industry consortia-sponsored
marketplace
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•
•
•
•
•
•
•
•
•
•
•
Industry marketplace
Internet EDI
Knowledge management
Maintenance, repair, and
operating (MRO)
Nonrepudiation
Open EDI
Private company marketplace
Private store
Public marketplace
Purchasing card
Radio frequency identification
device (RFID)
Replenishment purchasing
66
Key terms
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Sourcing
Spend
Spot market
Spot purchasing
Supply alliance
Supply chain
Supply chain management
Supply web
Third-party logistics (3PL) provider
Tier one supplier
Tier two supplier
Tier three supplier
Transaction sets
Ultimate consumer orientation
Vertical portal (vortal)
Web EDI
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