Business to Business Frameworks

By Sandy Cobb MCIWD, CIW-CI, Certified Macromedia Professional

Objectives
Explain Electronic Data Interchange (EDI) , Open Buying on the Internet (OBI), and the Open Trading Protocol(OTP) Define business to business networks Explain supply chain and procurement Explain vertical and horizontal markets Identify inter-office productivity resources

Electronic Data Interchange (EDI)

The following is a direct quote from www.webopedia.com. "EDI is the transfer of data between different companies using networks, such as the Internet. As more and more companies get connected to the Internet, EDI is becoming increasingly important as an easy mechanism for companies to buy, sell, and trade information. ANSI has approved a set of EDI standards known as the X12 standards. "

Explain Open Buying on the Internet (OBI)

The following is a direct quote from www.whatis.com:
"OBI (Open Buying on the Internet) is a proposed standard for business-to-business purchasing on the Internet, aimed particularly at high-volume, low-cost-per-item transactions. OBI uses a number of security technologies such as the digital certificate to allow orders to be placed and filled securely. On average, 80% of company purchasing is for non-production supplies such as office supplies, cleaning products, and computer equipment. Making and fulfilling an order can cost an organization up to $150 and the seller up to $50. In the fall of 1996, the Internet Purchasing Roundtable, a group of Fortune 500 buying organizations and their suppliers met to develop an open standard for business-to-business e-commerce. The result - OBI - is intended to eliminate redundant work in purchasing, minimize errors, and reduce labor and transaction costs."

Explain Open Trading Protocol(OTP)

The following is a direct quote from www.whatis.com:
"Internet Open Trading Protocol (IOTP) is a set of standards that makes all electronic purchase transactions consistent for customers, merchants, and other involved parties, regardless of payment system. IOTP accommodates a wide range of payment systems such as Secure Electronic Transaction, digital cash, e-checks, and debit cards. Payment system data is encapsulated within IOTP messages. IOTP is designed to handle a transaction that involves a number of different parties: the customer, merchant, credit checker, certifier, bank, and delivery handler. IOTP uses the Extensible Markup Language (XML) to define data that encompasses everything that may be needed in a transaction. In the "real world," you can negotiate certain factors when considering a purchase. These include choosing who you conduct business with, whether it will be conducted in person or by phone, the method of payment, the provision of a payment receipt, and the delivery of the product. In the virtual world, IOTP is designed to ensure that all of these factors are successfully and securely performed. Companies contributing to the development of IOTP include Hewlett Packard, IBM, JCP, MasterCard International, Smart Card Integrations, Sun Microsystems, and Wells Fargo Bank."

Business to business E-commerce Networks

B2B Market places B2B Portals B2B Hubs Rather than investing in an e-commerce infrastructure, many businesses are using B2B Web sites that create networks focused on bringing buyers and suppliers together. Most include: E-commerce packages Purchasing support Many also include:
Affiliations with pre-established suppliers Auction format

Other features
Offers customers the ability to browse many catalogs from different vendors on the same site Vendors can check and fulfill orders All vendors implement the same online payment system for consistency Off line each vendor can batch convert the online data into its own proprietary system

E-business
Encompasses all forms of business conducted electronically, including e-commerce
E-commerce is a subset of e-business E-business are more complex and more robust. They tie e-commerce into an automated system

Supply Chains
The channel of getting raw materials needed to build a product from all sub-part manufactures to the final assembly of a product, then to the end user. Responsible for raw materials production and delivery, transportation and meeting customer demands

Supply Chain
More and more high tech businesses are now relying on the Internet and supply chain management software Examples of supply chain management software include:
SAP www.sap.com I2 www.i2.com Ariba www.ariba.com

Procurement
The process that companies use to buy items from suppliers

Automated procurement / e-procurement Total packages that automate the entire procurement process and allow for substantial cost and time savings are now available

Vertical Marketing System

Units multiple manufacturers in the same industry to coordinate and streamline distribution channels and the supply chain. (example: the automobile industry)

Horizontal Marketing System

A venture between two or more companies, which do not compete, but instead complement each other.

What else do B2B networks have to offer?

Inventory Shipping Order Tracking

Interoffice Productivity and Cost Reduction Tools

Telecommuting Computer telephony Web conferencing Conferencing software Scheduling software Video monitoring Instant messaging Voice recognition and voice portals

Review: How does a B2B model compare to a B2C model? The B2B model is characterized by repetitive, high-volume transactions between tow companies. It is usually more complex and may involve volume discounts, along with stricter delivery and processing guidelines.

Why is EDI use increasing with the rise in e-commerce?

Because it provides a standardized document exchange format, which is an important actor in expanding online business.

What are the components of an EDI message?

An EDI message contains a string of data elements. The entire string is called a data segment: one or more data segments coupled with a header and a trailer from a transaction set. The transaction set is the EDI unit of transmission, comparable to a message.

How is EDI being adapted for Internet use?

Earlier EDI transactions relied on dedicated connections or Value Added Networks (VANs) to transport the EDI messages. Today, however, the Internet is replacing private networks and making it easier for small businesses to use EDI.

What type of business does OBI mainly support?

The OBI specification was developed to target high-volume, low cost transactions. According to some estimates, these transactions account for almost 80 percent of most companies purchasing activities.

Describe a Supply Chain

A supply chain is the hierarchical relationship between suppliers and manufacturer. It feeds the channel in which raw materials are manufactured and assembled into a final product which is later delivered to the consumer. What role does online order tracking play in consumer service: Allowing customers to check the status of their shipments using customer service tracking numbers is a valuable benefit that reduces the manual processing of the requests.