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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 a 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 who, 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 to 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 the 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
costs 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.
About the Author
Nowshade Kabir is the founder, primary developer and present CEO of Rusbiz.com.
A Ph. D. in Information Technology, he has wide experience in Business Consulting,
International Trade and Web Marketing. Rusbiz is a Global B2B Emarketplace with
solutions to start and run online business. You can contact him at mailto:nowshaderusbiz.com,
http://ezine.rusbiz.com, http://www.rusbiz.com
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