CHAPTER 4

B2B BUSINESS

Objectives:
Define B2B business.
Identify the commonalities of B2C and B2B business.

DEFINITION OF B2B
B2B stands for “Business to Business”. In general: Business
interaction between different organizations is considered. B2B E-
Commerce is simply defined as E-Commerce between companies.
Business processes cross the boundaries of the participating organizations.
B2B also includes business interactions between sub-organizations of
(big) organizations. Big enterprises are often organized as a group of
different autonomous legal entities. There is no clear limit between “inner
world” and “outer world”.

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 Business processes cross boundaries of organizations. Thus the
process ownership must be clearly defined and assigned. It also should be
clear, who are the owners of different sub- processes and how they have
to coordinate their work. The overall process owner may be a process
committee consisting of all sub-process owners. If there is a process
committee then decision rules must be defined and agreed on by all
involved organizations.
Business rules cover:
1. Decision rules for process management
2. Decision rules for process management
3. A comprehensive data model including input requirements and
output descriptions
4. Rules for the operation of interfaces
5. Policies for the usage of information systems
6. Areas of responsibilities and accountabilities
7. Reporting lines
The primary aspects of B2C business are:
1. The fundamental pattern is the one-time cooperation with a focus on

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 the single transaction.
2. Each transaction has to be executed as if business partners have
never cooperated in the past and will never come together again in
the future.
3. Both business partners have to find out whether they want to conduct this
transaction (negotiation). Both business partners have to see that they
will benefit from this transaction (win-win situation).
4. Prices have to be allocated for each transaction specifically (See
chapter 3 of this book: pricing challenge).
5. The appropriate payment method has to be selected (See chapter 7 of
this book: Electronic payment)
The primary aspects of B2B business are:
1. The fundamental pattern is the on-going cooperation. Business
partners have agreed to cooperate for some time. Business partners
have concluded a (written) contract
2. Large data quantities are exchanged along the value creation
chain; there is an information process coming along with the
business process.
3. Different partners with specific objectives have to be coordinated
4. All members work together to reach common objectives.
5. Negotiation is in most cases completely done in the initiation phase of
the B2B cooperation; there is one decision to cooperate for many
transactions or a long period of time.
6. Price allocation is in most cases completely done in the initiation phase
of the B2B cooperation; it is normally not done in each single
transaction.
7. Payment is in most cases done beside the B2B cooperation via
traditional payment channels; often payments are not done for each
single transaction but for a set of transactions, e.g. on a monthly basis.

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SUPPLY CHAIN MANAGEMENT

Supply Chain Management (SCM) is considered as the strong

interlinking and coordination of all activities, which are related to
procurement, manufacturing and transportation of products. The supply
chain connects suppliers, manufacturing shops, distribution centers,
shipping companies, merchants and customers through processes like
procurement, warehouse management, distribution and delivery, to provide
goods and services to the customer. It is characteristic for supply chains
that they coordinate several value chain stages.

Customer Relationship Management

Strategic processes Operational processes

• Review corporate and marketing • Differentiate customers

strategy • Prepare the
• Identify criteria for categorizing account/segment
customers management team
• Provide guidelines for the degree • Review the accounts internally
of differentiation in the • Identify opportunities with the
product/service agreement accounts
• Develop framework of metrics • Develop the product/service
• Develop guidelines for sharing agreement
process improvement benefits with • Measure performance and
customers generate profitability reports

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 Customer Service Management

Strategic processes Operational processes

• Develop customer service strategy • Recognize events

• Develop response procedures • Evaluate situation and alternatives
• Develop infrastructure for • Implement solution
implementing response procedures • Monitor and report
• Develop framework of metrics

Demand Management

Strategic processes Operational processes

• Determine demand management • Collect data/information

goals and strategy • Forecast
• Determine forecasting strategies • Synchronize
• Plan information flow • Reduce variability and increase
• Determine synchronization flexibility
procedures • Measure performance
• Develop contingency
management system
• Develop framework of metrics

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 Order Fulfillment Management

Strategic processes Operational processes

• Review marketing strategy, supply • Generate and communicate order

chain structure and customer • Enter order
service goals • Process order
• Define requirements for order • Handle documentation
fulfilment • Fill order
• Evaluate logistics network • Deliver order
• Define plan for order fulfilment • Perform post-delivery activities
• Develop framework of metrics and measure performance

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 Manufacturing Flow Management

Strategic processes Operational processes

• Review manufacturing, • Determine routing and velocity

sourcing, marketing and through manufacturing
logistics strategies • Manufacturing and materials
• Determine degree of planning
manufacturing • Execute capacity and demand
flexibility requirements • Measure performance
• Determine push/pull boundaries
• Identify manufacturing constraints
and determine capabilities
• Develop framework of metrics

Supplier Relationship Management

Strategic processes Operational processes

• Review corporate, • Differentiate suppliers

marketing, manufacturing • Prepare the
and sourcing strategies supplier/segment
• Identify criteria for categorizing management team
suppliers • Review the supplier/supplier
• Provide guidelines for the degree segment internally
of customization in the • Identify opportunities with the
product/service agreement suppliers
• Develop framework of metrics • Develop the product/service
• Develop guidelines for sharing agreement and communication
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 process improvement benefits with plan
suppliers • Implement the
product/service agreement
• Measure performance and
generate supplier cost/profitability
reports

Product Development and Commercialization

Strategic processes Operational processes

• Review corporate, marketing, • Define new products and assess

manufacturing and sourcing fit
strategies • Establish cross-functional
• Develop idea generation and product development team
screening processes • Formalize new product
• Establish guidelines for cross- development project
functional product development team • Design and build prototypes
membership • Make/Buy decision
• Identify product rollout issues and • Determine channels
constraints • Product rollout
• Establish new product project • Measure process performance
guidelines
• Develop framework of metrics

Returns Management

Strategic processes Operational processes

• Determine returns management • Receive return request

goals and strategy • Determine routing
• Develop avoidance, gatekeeping • Receive returns
and disposition guidelines • Select disposition
• Develop returns network and • Credit consumer/supplier
flow options • Analyse returns and measure
• Develop credit rules performance
• Develop secondary markets
• Develop framework of metrics

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ENTERPRISE RESOURCE PLANNING (ERP)

ERP (Ganesh et al 2014) is a category of business-management

software – typically a suite of integrated applications – that an
organization can use to collect, store, manage and interpret data from
many business activities, including:
a. Product planning
b. Manufacturing or service delivery
c. Marketing and sales
d. Inventory management
e. Shipping and payment.

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MARKETPLACE
A (digital) marketplace is a piece of software with comprehensive E-
Commerce functionality. It can be characterized by m suppliers and n
customers (m>1, n>1). Process and software are under control of the
marketplace owner. It uses portal technologies and enables the
cooperation of different suppliers and different customers. Providing and
demanding organizations act autonomously. It is possible, that members
are at the same time providing and demanding organizations.

Marketplaces can be differentiated due to:

a. Type of product or service
b. Type of transactions
c. Functions

Co Framework
There is a framework for electronic marketplaces. It has been
developed between 1994 and 1999 by CommerceNet, an American
industry association. Updates have been released with respect to CORBA,
Java and XML. This framework has 7 layers:
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 a. Network: aggregation of different marketplaces, is a kind of
registry
b. Market: different actors, sorted by industries
c. Business: definition of a firm, can have different roles, can ask for
different products or services, can offer different products or
services
d. Service: specific services which can be offered (e.g. download a
catalogue, send an order, delivery status), interaction of different
companies
e. Interaction: communication between business partners, e.g.
ordering, order confirmation, exception reporting
f. Document: complete document for specific transactions, consists
of different data elements
g. Data element: basic elements, are defined according to specific
patterns

SPECIFIC SOLUTIONS AND SERVICES

Due to the increasing needs for logistics transportation,
warehousing and distribution are offered, sometimes by organizations,
which originally were not logistics experts, e.g. Procter & Gamble.
Application service providers offer deployment, hosting and management
of packaged software from a central facility, e.g. Oracle and Linkshare.
Outsourcing of functions in the process of E-Commerce such as Web-
hosting, security, and customer care solutions are offered by outsourcing
providers such as eShare, NetSales, iXL Enterprises and Universal
Access

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 For further discussion please refer to the link provided: Principles of B2B Marketing
[Link]
For further discussion please refer to the link provided: Supply Chain Management
[Link]
For further discussion please refer to the link provided: Difference Between B2B and B2C
[Link]

.
Reference Books:
Introduction to E-Commerce
(Combining Business and Information Technology)
By: Martin Kutz, 1st Edition 2016

Internet Marketing
(2011, The Internet Marketing Academy and Ventus Publishing ApS)

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