B2B E-Commerce: Toward a Paperless Business World The Buzz


There are a lot more opportunities in e-commerce than just selling your limited edition X-Men comic on eBay or buying a cool new book on Amazon.com. Business-to-business (B2B) e-commerce is changing the way many industries do business while saving them time and money.

B2B e-commerce has grown to influence the way that companies manage their supply chains.

A supply chain takes goods from start to finish. Links in the chain would be a customer order, the raw materials, the production of goods and the distribution of products to the customer.

Merchandise needs to be produced and distributed in the right quantities, to the right locations and at the right time. That helps businesses minimize costs while satisfying customers.

All organizations have some sort of supply chain. These networks obtain supplies and components, change these materials into finished products and then distribute them to the customer.

Delivering goods to customers quickly without having to carry extra inventory is the key to a successful supply chain. That is where B2B e-commerce comes into play.

"The automotive industry began making serious demands on their supply chain for electronic communication long before the Internet became en vogue," says Gordon Dye. He is president of a company that develops B2B systems for the automotive industry.

"In 1984, Ford Motor Company issued the edict that 100 percent of their production suppliers must be communicating with them online by the end of the year or alternatives would be found."

Ford is not the only company urging their trading partners to adopt B2B Internet communications. Wal-Mart, DaimlerChrysler and BMW are other leaders in the B2B trend, says Jim Boswell. He is vice-president of sales and marketing for a firm that provides software for e-business applications.

"Rapid adoption can be expected during the remainder of the decade," says Boswell.

Benefits of B2B

Buying things electronically, or e-procurement, was introduced to control the purchase of indirect supplies, such as office supplies or tools for maintenance. Now, the same processes are being used to control the purchase of direct supplies, such as parts, components and the raw materials used by manufacturers.

"A key goal of any procurement operation is to find the best deal, the right products and sufficient product availability," says William Woods. He has written books about B2B and now works at an e-business development center.

"B2B exchanges have enabled companies to automate the procurement of goods and services from multiple suppliers."

Today, many supplies that companies need are being automatically ordered and paid for over the Internet through B2B exchanges. This saves the time and hassle of paperwork for companies. But there are even more benefits.

"E-procurement allows a company to monitor its purchases more easily, and thus reduce the amount of redundant or repetitive purchases," says Woods.

"It is also easier to manage the approval process when purchases are made online so the company can create tighter controls over spending authorizations."

Sally Fuger is the program manager for electronic commerce at the Automotive Industry Action Group. She agrees that automating parts of the supply chain through B2B e-commerce reduces time, money, manual work and errors.

But she insists that much of purchasing is about establishing relationships between companies. And that can't be done through a computer.

Opportunities Evolving

To succeed in this new technology-based business world, you need to understand the technical environment that supports the business structure, says Patsy Snack. She works with the Automotive Industry Action Group.

"Businesspeople can't communicate with technical people, and that gap needs to be bridged," says Snack.

She recommends that young people entering the business get a good overview of how B2B e-commerce works -- they should know how it takes place and why.

Dye agrees that a mix of business and technical knowledge are going to be key.

"I see serious opportunity for people who become knowledgeable about industries and then leverage that knowledge with B2B technology," says Dye.

Woods says that web services are going to be a great opportunity for young entrepreneurs.

"Web services are the latest tool for integration of software between businesses 'across the firewall,'" says Woods. "Web services build upon an existing set of communications protocols that have been spectacularly successful - the Internet - and attempt to use it for true program-to-program integration."

With the quantity of B2B e-commerce already taking place, and the opportunity for savings and efficiency that it offers, business owners had better get wise to technology.

"If today's companies are to survive, they are going to have to reinvent themselves and integrate the Internet into everything they do," says Woods.

"Every business owner needs to consider that and everybody working at those companies today needs to consider how best to help their company achieve that aim."

Links

B2B E-Commerce
Get the basics from About.com

E-Stats
The U.S. Census Bureau's site devoted to "measuring the electronic economy"