Doing Business Online — Private B2B Exchanges

Business processes are the building blocks of an enterprise. If one of these processes fails to live up to its expectation, business starts to flounder. How to minimize the risks, get a better monitoring of the processes and, at the same time, reduce costs involved The answer is – business process automation.

Although, automated business processes based on online technologies can create incredible value to existing business, many companies are slow to adopt technological innovations and reap benefits from them. However, lately, things have started to change! According to a recent poll conducted among mid size companies shows 52 percent of respondents plan to spend over a million dollar on business process automation. Large companies – early adopters of online business processes – have been immensely profiting from the value created by process automation. Intel recently announced that it saved one billion dollar last year alone thanks to online business process management.

In broader sense, business process management technology delivers solutions to understand, analyze and simulate business process models. Companies adopt this technology to streamline their business operations, lower overhead expenses, reduce maverick buying, reduce paper-based – mistake prone – transactions and get better control. The ultimate goal is to make the corporation a fully process-managed enterprise, transformed through strategy, design, realization and actual operations.

Companies require streamlining their business processes to help solve various crucial but specific problems, such as:

• An electronic supplier, in order to stay competitive, requires reducing order fulfillment cost aggressively.
• A merchant needs to reduce shipping time by better monitoring his inbound shipping.
• A manufacturer needs to cut production cost by reducing manufacturing time of a key product.
• A bank needs to develop and market a financial product faster than its competitors.
• A large distributor needs to consolidate buyers and suppliers to bring efficiency to its business.

Although, business processes are wide in range; and there are many complex issues that require meticulous work, automation of some basic processes may bring notable result for virtually any company. These processes include supply chain, procurement, logistics, inventory control, etc. By adopting an online business to business exchange companies can streamline most of these business processes bringing added value to their operations.

A B2B exchange is a unified online platform, where buyers and sellers login to communicate, collaborate and make business transactions. A private B2B exchange, mostly, consolidates suppliers and buyers of a specific company, which owns and operates the exchange.

There are two ways of integrating B2B exchange to automate business processes. A company can participate in existing B2B exchange or create its own private exchange.

While for small companies, it is more viable to participate in a major B2B exchange that has required components, larger companies should consider creating their own B2B exchange.

The profits companies can reap from joining an existing B2B exchange or creating their own private one could be enormous.

Customer Base Development

A supplier, once registers with a B2B exchange, gets immediate access to a large community of prospective buyers of his products or services.

Increase Revenue from Existing Customers

Business process automation allows companies develop products faster, buyers get faster and easier access to product information, receive quicker response to their requests, get better customer support and may buy products online. These turn into more sales.

Add Profit from Value Added Services

Once the exchange is set as primary sales channel, available free resources can be used to create more value added services for clients. Some of the services that the exchange may offer also can be used to generate more value.

Reduce Order Processing Cost

The supply chain solutions of a B2B exchange may allow sellers to reduce order processing cost significantly. Studies show that cost of processing a purchase order can be reduced from US$ 70 down to US$ 6 only.

Sales and support costs

By automating sales and customer support processes companies can reduce over head costs over 25-30% easily.

Inventory keeping costs

Clearer visibility and forecasting ability allow companies considerably reduce inventory keeping costs.

Since an existing B2B exchange may not have all the necessary features and functions, a good option is to build a private exchange based on one’s own specific business process automation need. This exchange, at its minimum, should be able to cover major portion of supply chain and inventory control.

The following elements should be integrated to create substantial value to a private B2B exchange:

Supply Chain Management

Supply chain management is the core solution of an exchange and can deliver great values to existing systems. Implementation of this solution will help achieve incredibly high return on investment. Business process automation in this component of the exchange includes both supplier and buyer–side quotation, requisition, purchase order and invoice.

Marketplace

This is the venue where the exchange owner company will post their products for sale. A shopping cart should be integrated to the electronic marketplace in order to automate the buying process. The offered-for-sale products will be directly related to inventory control management component of the exchange.

Auction

Electronic auction system can use both English and Dutch auction methods. For convenience the auction component can be integrated to the electronic marketplace. Online auction helps liquidate surplus goods easily.

Reverse Auction

This solution allows automate electronic procurement, where suppliers compete for a business deal real time online.

Members Storefront

The participants of the Private Exchange – both buyers and sellers of the exchange owner company get a Storefront that reflects profile of the company, their products and other information.

Forum

A Forum or Discussion Board is an organized, on-line interactive message board where participants conduct discussion on a set of topics by posting questions, comments and responses.

Directory of Companies

This is a listing of all registered participants – buyers and sellers of the exchange owner company – either by business category or by alphabetical order. An advanced search engine tool can be incorporated in order to find a company based on data provided.

E–catalog

E–catalog is a hierarchy of product and service categories. All products and services handled by the exchange owner company should be consolidated in the catalog.

Private B2B exchange is a powerful concept, which engulfs a fairly big portion of business processes requiring automation. This is more like a business ecosystem that has an ability to change the way companies think and do business and create tremendous value to their owners.