Chapter 6 Company-Centric B2B and E-ProcurementLearning ObjectivesOPENING VIGNETTE : General Motors’ B2B InitiativesGeneral Motors’ B2B Initiatives (cont.)Slide 5Two major operational problems: General Motors’ B2B Initiatives (cont.)Slide 7Slide 8Slide 9Slide 10End of the Vignette6.1 Concepts, Characteristics, and Models of B2B ECSlide 13Slide 14Concepts, Characteristics, and Models of B2B EC (cont.)B2B Characteristics (cont.)Slide 17Slide 18Slide 19Slide 20Slide 21Slide 22Slide 23Slide 24Slide 256.2 One-to-Many: Sell-Side MarketplacesOne-to-Many: Sell-Side Marketplaces (cont.)One-to-Many: Sell-Side Marketplaces (cont.)Slide 296.3 Selling via AuctionsSelling via Auctions (cont.)Using Intermediaries in Auctions (cont.)6.4 Sell-Side CasesSell-Side Cases (cont.)Slide 35Slide 36Slide 37Slide 38Slide 396.5 One-from-Many: Buy-Side Marketplaces and E-ProcurementOne-from-Many: Buy-Side Marketplaces and E-Procurement (cont.)Benefits of E-ProcurementOne-from-Many: Buy-Side Marketplaces and E-Procurement (cont.)Slide 44Slide 45Implementing E-ProcurementSlide 47Unbundling the Business6.6 Buy-Side E-Marketplaces: Reverse AuctionsSlide 50Reverse Auctions A Pioneer: General Electric’s TPNReverse Auctions A Pioneer: General Electric’s TPN (cont.)Slide 53Reverse Auctions A Pioneer: General Electric’s TPN (cont.)6.7 Other E-Procurement MethodsSlide 56Slide 57Slide 586.8 Infrastructure for B2BOther E-Procurement Methods (cont.)Slide 61Slide 62Slide 63Slide 64Slide 65Managerial IssuesSummarySummary (cont.)End of Chapter 6Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce1Chapter 6Company-Centric B2Band E-ProcurementJason C. H. Chen, Ph.D.Professor of MISSchool of Business AdministrationGonzaga UniversitySpokane, WA 99223 [email protected]://barney.gonzaga.edu/~chenPrentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce2Learning Objectives1. Describe the B2B field.2. Describe the major types of B2B models.3. Discuss the characteristics of the sell-side marketplace, including auctions.4. Describe the sell-side intermediary models.5. Describe the characteristics of the buy-side marketplace and e-procurement.6. Explain how reverse auctions work in B2B.7. Describe B2B aggregation and group purchasing models.8. Describe infrastructure and standards requirements for B2B.9. Describe Web EDI, XML, and Web services.Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce3OPENING VIGNETTE : General Motors’ B2B Initiatives•The Problem–Because the automotive industry is very competitive, GM is always looking for ways to improve its effectiveness –GM expects to custom-build the majority of its cars by 2005–The company hopes to use the system to save billions of dollars by reducing its inventory of finished carsPrentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce4General Motors’ B2B Initiatives (cont.)–GM sells custom-designed cars online through its dealers’ sites avoiding channel conflict–This collaboration requires sharing information with dealers and suppliers–Operational problemsdisposing of manufacturing machines that are no longer sufficiently productive procurement of commodity productsPrentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce5General Motors’ B2B Initiatives (cont.)•The Solution–GM established an extranet infrastructure called ANX (Automotive Network eXchange)–ANX has evolved into the consortium exchange covisint.com supported by other automakersSolutions and services to Connect,Communicate, and Collaborate.Prentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce6Two major operational problems:General Motors’ B2B Initiatives (cont.)–Capital assets problem GM implemented its own electronic market from which forward auctions are conducted –Resource procurement problemGM automated the bidding process using reverse auctions on its e-procurement sitePrentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce7General Motors’ B2B Initiatives (cont.)•The Results–Within just 89 minutes after the first forward auction opened, eight stamping presses were sold for $1.8 million –Off-line method, a similar item would have sold for less than half of its online price, and the process would have taken 4 to 6 weeksPrentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce8General Motors’ B2B Initiatives (cont.)–Online reverse auction prices are significantly lower than the prices the company had been paying for the same items previously negotiated by manual tendering –Administrative costs per order have been reduced by 40%–Most GM dealers and thousands of GM’s suppliers are connected on a common extranet platformPrentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce9General Motors’ B2B Initiatives (cont.)•What can we learn…–Involvement of a large company in three EC activities:1. connecting with dealers and suppliers through an extranet2. electronically auctioning used equipment to customers3. conducting purchasing via electronic biddingPrentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce10General Motors’ B2B Initiatives (cont.)–B2B transactionsCompany can be a seller, offering goods or services to many corporate buyersCompany can be a buyer, seeking goods or services from many corporate sellers (suppliers)–A company canemploy auctionsuse electronic catalogsuse other market mechanismsPrentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce11End of the VignettePrentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce126.1 Concepts, Characteristics, and Models of B2B EC •Basic B2B conceptsBusiness-to-business e-commerce (B2B EC): Transactions between businesses conducted electronically over the Internet, extranets, intranets, or private networks; also known as eB2B (electronic B2B) or just B2BPrentice Hall & Dr. Chen, Dr. Chen, Electronic CommerceElectronic Commerce13E-ChannelManagementProcurementNetworkTradingNetworkE-Customer RelationshipE-CommerceE-Portal ManagementE-Business, E-ServicesSCM/ERP/Legacy ApplsBusinesses (PRM)Businesses & Consumers (CRM)1:NM:1 M:NKnowledge Management/Business IntelligenceFocus on e-Business ApplicationsPrentice Hall & Dr. Chen, Dr. Chen, Electronic