Relationship between B2B Exchanges and Supply Chain - Essay Example

Supply webs (or vortals) serve industry sectors by integrating the supply chain systems of various buyers and sellers creating virtual trading communities (Turban et al, 2006). An example of how B2B exchanges might operate is shown in figure 4. E-marketplace operators hoped to create a true value-added experience for their customers (marketplace participants) and to reach the aspired scale (Schneider, 2000). [I do not understand what the previous phrase means] Currently, B2B exchange platforms can support whole trading networks from the planning procurement of the raw materials up through to the selling sale to the final customer, supporting new structures and relationships in the supply chain (Hayes, 2005).

[You should use an example of these structures/relationships to make your meaning more clear] Thus, the value proposition of B2B exchanges can move away from price minimization towards cost optimization through improved efficiencies and tightened coordination between buyers and sellers. According to Lejmi (2005) research defines, supply chain management (SCM) involves the coordination of both online and traditional delivery channels. This includes the settlement phase of each transaction on e-marketplaces, which must be taken into consideration when planning demand and supply in a given network.

On the other hand, e-marketplaces can be used as supplementary channels to the efforts to get rid of to ameliorate inefficiencies in the supply chain in order to remove excess inventory. B2B exchanges, which are centralized systems, can build the basis for SCM. Moreover, they allow solving two of the major problems faced by SCM systems: discontinuities in the information flow and the lack of trust among the different partners (Knolmayer et al, 1999). Figure 5 describes different types of B2B exchanges offering different advantages for the participating companies and can support specific SCM functionalities in different ways.

The private exchange1 could be the most useful type for introducing the supply chain optimization between member companies. This type of e-marketplaces enables a company organization with a dominant position in the supply chain to strengthen collaboration and synchronization with its trading partners. The most well-known example among private exchanges would be Dell's eHub accessible from Valuechain.dell.com from Dell. B2B applications are offered online so they can serve as supply chain enablers that offer distinct competitive advantages.

Hoffman et al (2002) argue that various B2B types have a different effect on supply chain relationships. B2B prA ivateprivate B2B e-marketplace provides a company organization with high supply chain power and high capabilities for online interactions. This is basically how much bargaining and control power a companion organization has. On the other hand, joining a public e-marketplace provides a business organization with high buying and selling capabilities, but will result in low supply chain power.

Companies that choose an intermediary to do their buying and selling capabilities.