E-Business Foundations and Basic Concepts - Assignment Example

E-business Foundations and Basic Concepts Table of Contents SEC 3 Purchasing process used in b2b and b2c. 3 Impact of professional buyers on the buying process 3 Purchasing variables analysis 4 SEC 2 5 Electronic transaction: how it reduces paperwork and delay? 5 How EDI has laid the foundations for b2b e-business? 5 Use of different electronic payment systems 6 SEC 3 7 Diagram for e-business supply chain 7 Advantages of e-procurement 7 Flow of information in a typical logistics operation 8 Benefits of electronic processes in integration of supply chain management 9 Reference List 10 SEC 1 Purchasing process used in b2b and b2c. The purchasing process used in b2b marketing is relatively complex than b2c marketing. In a b2b marketing process the initial stage involves the need recognition where an individual or a group of individuals is responsible for recognizing the needs of an organization and if that need can be met by purchasing a good or service. This stage is more often than not driven by the user. Following this stage the requirement is illustrated and enumerated. The buying decision is usually made by the buying center or the group of people whose major role is to set forth some parameters around the things that are needed to be purchased. They are particularly responsible for specifying what needs to be purchased, the features that the product should have, the quantity to be bought and so on and so forth. In case of a more technically complex products, the buyer actually defines the product’s technical specifications. In the following stage the potential supplier who can supply the required product are sought out for. At this stage, the customer involved in the buying process (in this case a business) seeks out for information regarding the products that they require and the vendors who can meet their demand. Majority of the buyers begin their search online and thereafter attend industry trade shows and henceforth establishes contact with the suppliers either through email or telephone. In order to gain knowledge regarding a variety of supplier buyers also tends to discuss with industry experts, consult trade magazines as well as attend webinars conducted by vendors or perhaps pay a visit to their facilities. The decision regarding the choice of qualified vendors rests in the hand of purchasing agents. The vendors who have been chosen are asked to complete responses relating to requests for proposal. The proposals are then evaluated and the suppliers are selected. Following this stage, an order routine is established and a post purchase evaluation is conducted and the feedback is reverted back to the vendor (Saylor, 2013). The buying process involved in business to consumer marketing is relatively simple and straightforward where the buyers just has to choose the required product and pay for it either through credit card, debit card or cash. The buyers have the flexibility to shop via online retailers which saves them the extra cost of transportation and as well as saves them the extra effort of being physically present in the shop. Instead they can shop online and pay via internet banking, debit and credit card (Ferrell, et al., 2012). Impact of professional buyers on the buying process Professional buyers are often referred to as buyers, purchasing agents, procurement officers or purchasing manager depending upon the type of company they work for. Majority of the professional buyers are highly qualified and that is why they tend to analyze very critically before making any decision regarding a product. Since professional buyers have very stringent criterion while buying products, they have a significant impact on the expenses, sales, and profits of a company. They seek out for multiple suppliers in order to look for products that the company’s customers want the most. They have to be very stringent while making purchasing decisions as they are worried about the consequences if the products that they buy from vendors do net sell in the market. Their stringency in terms of purchasing decisions often brings down the sales rate and profit margins of many vendors. Professional buyers are very astute and they have to be as their job depends on it. Their job depends on buying the best product at the best price from a quality vendor. They are very well informed and are less likely to buy a product on an impulse than customers. This is precisely the reason why they sometimes affect the business made buy vendors who they do business with (Saylor, 2013; Tanner and Raymond, 2010). Purchasing variables analysis Stock keeping unit (SKU) This unit is used by majority of the retailers in order to organize their buying and inventory management. It is the smallest unit of variation in a purchase or inventory management. Through SKUs business are able to keep track of their orders as well as their inventory. The advancements that have been made in the field of information technology have also enabled retailers to track their orders at an individual article level instead of the SKU level by using radio frequency identification or bar codes. Volume Requirements Volume requirement is an important purchasing variable as it helps a retailer to evaluate the material inventory that is needed to be kept at hand. Inventory is a sort of investment and hence it costs money to keep inventory piled up. Thus a retailer has to manage the volume requirements in order to prevent any wastage of inventories and thus prevent any losses. Cost Cost is yet again a very important purchasing variable as a customer determines whether to buy product or not depending upon its cost. This is one variable that is to be seriously considered while purchasing decisions are being made. When someone buys a bulk of products then they might be able to negotiate the deal at a lower price. Thus such a purchasing decision should be made by following the value proposition of the business plan. Payment Terms A buyer should always be informed about the terms of payment before placing any order. As the buyer might have his/her own preference regarding the mode of payment and so does the seller. Thus if a buyer wants to purchase a product through credit card then they should make sure the vendors offers this facility. Shipping cost Shipping costs for products varies considerably and thus should be used as a negotiating item. It is always advisable for a buyer to ask the supplier to cover the shipping cost or accept payment within a thirty day period as a part of the price negotiation (Cornell University, 2006). SEC 2 Electronic transaction: how it reduces paperwork and delay? Electronic transactions reduces the probability of error by a huge margin as there no need to enter the transaction amounts in processing terminals and cash registers. This definitely saves a lot of time and paper. Electronic transactions can be easily stored in a database for as long it is required and there will be no need to search for lost transaction information. This also prevents any delay in operation. This form of transaction enhances the accountability of information as it is very easy for both the sender and receiver to confirm whether the payment has been sent or received or not. Moreover, this form of transaction also saves a lot of paper which might have been used to issue a payment confirmation receipt in case of a physical transaction. It minimizes fraud to a huge extent and thus saves a lot of time as it is very easy to identify the person committing the fraud. The transaction time is very quick and multiple transactions can be done as a batch which reduces the authorization time to as low as three seconds for every transaction done. It completely eliminates the use of paper as well as equipments thus saving a lot of money. Electronics transaction is considerably faster and comparatively less expensive than paper transactions which save a lot of time and thus the transaction costs associated with it. This type or transaction facilitates faster billing whereby the user is able to build and process a multiple transactions which is very useful for recurring billing (American medical association, 2014; Hosting masters, 2005). How EDI has laid the foundations for b2b e-business? There are many key advantages of Electronic Data Interchange which has led solid foundation for b2b e-business. They are: It improves the customer service significantly thereby strengthening a business’s link with its trading partner. It reduces the errors associated with handling data and enhances the error detection and correction mechanism. Thus, it enhances the efficiency with which data handling operations are conducted in an e-business and also increases information integrity. This is done by bring down the rate of manual data entry errors, misinterpretations and discrepancies if any. It reduces physical work by a huge extent as it only requires one time data entry. It also enhances the productivity of the business thereby facilitating automatic settlement and rapid management reporting. EDI mechanism also leads to a faster response time which is a very crucial factor ensuring the success of b2b e-business. A company manages to do so by increasing the speed at which document is transferred from one department to another. This system decreases the cost for b2b e-business significantly by reducing the clerical effort and less paper usage. The EDI system improves the delivery of goods and services by processing orders more quickly and accurately. This is also another factor that ensures the success of a b2b e-business. This system enables an e-business to do better product planning and forecasts in terms product volume required and to be delivered as the link with the trading partner is strengthened (IBM Corporation, 2003; UNECE, 2013). Use of different electronic payment systems Electronic funds transfer involves the transfer of money electronically between financial institutions. Payment Cards are have financial value stored inside it that can be transferred between a customer’s and a business man’s computer. Credit card is the most popular mode of payment which is used by chagrin against the customer’s credit. Smart cards are very similar to payment cards which have financial values stored inside and also contain other useful information that can be used for making online payments. Electronic money also known as e-money or e-cash is standard money that has been converted into electronic form in order to facilitate online purchases. Online payment also known as internet banking involves the use internet in order to pay bills for phone, electricity and others. Electronic wallets have similar features like that of smart cards which have stored financial value which can be used for making online payments. Micro payment systems function like electronic wallets with an additional feature through which small payments can be made. Electronic gifts are a sending electronic currency as gift certificates from one individual to another. Although all these payment methods are apparently different by they are similar in one way or the other. For example, e-wallets can also be termed as payment cards when they are used for the purpose of storing financial value and can be termed as e-money when they are used for the purpose of storing electronic currency. The standardization of such electronic payment mechanisms is a very crucial factor that ensures the stability, sustainability and success of an e-commerce (Metu, n.d.). SEC 3 Diagram for e-business supply chain (Enporion, 2011) Advantages of e-procurement The major advantage of e-procurement is the low cost of information and technology because of the advent of internet. The barriers to market entry as well as the cost of selling and buying has been significantly reduced due to the reduction in operating costs as a result of the e-procurement system. Prices are becoming more transparent and purchases that occur beyond the guidelines specified by the business can be avoided. Through e-procurement system businesses can easily use the preferred supplier networks and can establish an equilibrium between the seller and buyer due to adequate information availability. E-procurement mechanism also facilitates an efficient amalgamation of supply chains and also offers better management and evaluation of transaction records for the purpose of easier data acquisition. Through this system, transactions can be easily standardized and all the bids for services and products can be recorded and tracked more easily. This enables a business to utilize the knowledge available in order to obtain better pricing. E-procurement system also facilitates shorter product-development cycles by enabling faster delivery of goods and services as well as swift exchange of information (Boone and Ganeshan, 2002). Flow of information in a typical logistics operation Order transmission This is done through mail, telephone, fax or EDI. The appropriate means of transmission should be selected from the above mentioned sources in order to avoid uneven capacity usage of the logistics system. Preparations This phase involves adjusting the order to meet the internal requirements of the company and henceforth the order is integrated into the logistics system’s planning. The task involves gathering missing information, checking information related to pricing, customer creditworthiness, delivery conditions and the availability of materials in the warehouse. Routing This phase involves the confirmation of orders and the creation of internal job orders wither mechanically, manually or electronically. Picking This stage involves the communication of order processing information to the warehouse and inventory segment. The information is then used conduct management of storage and recovery equipment or for stock accounting. Shipping The shipping documents are prepared following the picking stage. This stage involves the selection of the optimal mode of transport and the route to be taken for delivery from the choices which are available. Invoicing Invoicing of orders is done at various stages in a logistic system either as pre-invoicing before shipping has been arranged or after which is termed as post invoicing. It can also be done while collection and shipping is being done (DHL, 2014). Benefits of electronic processes in integration of supply chain management The major benefit of electronic process, in the integration of supply chain management, is that it facilitates effective and efficient information availability and visibility. In addition to that, it also enables a single point of contact for getting access to data (Chan and Lee, 2005). The electronic processes also permits decision making that is based on the information availability of the integrated supply chain (Quayle, 2006). Electronic processes also enable supply chain partners to improve the collaboration and coordination between them. It helps to enhance and improves the efficiency with which activities are performed within the supply chain thereby ensuring absolute transparency, reliability, timeliness and quality. Furthermore, the typical role of electronic processes in the integration of supply chain management is to minimize the resistance in transaction between the supply chain partners by facilitating the flow of cost-effective information (Tassabehji, R., 2003). Reference List American medical association, 2014. Moving to Electronic Transactions. [online] Available at: [Accessed 25 January 2014]. Boone, T. and Ganeshan, R., 2002. New directions in supply-chain and technology management: Technology, strategy, and implementation. New York: Amacom Books. Chan, C. and Lee, H. W. J., 2005. Successful strategies in supply chain management. London: Idea Group Inc Cornell University, 2006. Purchasing Variables. [online] Available at: [Accessed 25 January 2014]. DHL, 2014. Information flow from the order to delivery. [online] Available at: [Accessed 25 January 2014]. Enporion, 2011. Supply Chain Management Software. [online] Available at: [Accessed 25 January 2014]. Ferrell, O. C., Lukas, B. A., Schembri, S. and Niininen, O., 2012. Marketing Principles. Connecticut: Cengage Learning. Hosting masters, 2005. What are the advantages of Electronic Transactions? [online] Available at: [Accessed 25 January 2014]. IBM Corporation, 2003. Implementing Edi solutions. New York: IBM Redbooks. Metu, n.d. Electronic payment systems. [pdf] Available at: [Accessed 25 January 2014]. Quayle, M., 2006. Purchasing and supply chain management: Strategies and realities. London: Idea Group Inc. Saylor, 2013. Business Buying Behavior. [pdf] Saylor Available at: [Accessed 25 January 2014]. Tanner, J. and Raymond, M. A., 2010. Principles of marketing. [online] Available at: [Accessed 25 January 2014]. Tassabehji, R., 2003. Applying e-commerce in business. London: Sage UNECE, 2013. Introducing UN/EDIFACT. [online] Available at: [Accessed 25 January 2014]. Read More