Poverty and Development Division
last updated : 20 December 1999
ELECTRONIC COMMERCE BENEFITS FOR BIG BUSINESS
Electronic commerce is growing fastest among big businesses. It is used for coordination between the purchasing operations of a company and its suppliers; by logistics planners and transportation companies that warehouse and move products; by sales organizations and wholesalers or retailers which sell the products; and in customer service and maintenance operations with the customer. The growth of business-to-business electronic commerce is being driven by lower purchasing costs, reductions in inventories, lower cycle times, more efficient and effective customer service, lower sales and marketing costs, and new sales opportunities.
The advantages for corporations that succeed at electronic commerce for business-to-business transactions are potentially enormous. There are billions of business-to-business financial transactions a year and hundreds of billions of customer service interactions. Most are candidates for increased automation, providing dramatic opportunities to improve management of the manufacturing supply chain, increase revenue, improve the quality and cost-effectiveness of service delivery, reduce administrative expenses and develop more effective planning processes. For business-to-business communication needs, Internet-enabled electronic commerce is all about leveraging emerging technology to support improved business process models through the automation of various processes. Some of the advantages of using ICT for various business processes are outlined below.
Marketing applications can be created over Internet channels to support many different processes between businesses and their customers.
Information for sales. Applications can deliver product information to the point of sale on request. A virtual channel can provide multiple layers (rich content) of multimedia product information.
Product marketing. Product marketing applications generally exploit the two-way communications of the Internet, establishing managed communications channels, with structured or unstructured content, between a company and its field personnel, channel partners or customers. The most sophisticated applications are work-flow-enabled and allow collaboration in developing product plans, specifications, forecasts and market feedback. Collaborative marketing applications can support interactions using structured or unstructured message files across organizational boundaries; e-mail bulletin boards and chat rooms are the earliest forms of such collaboration. Filtering and agent technologies are now being applied to collaboration applications to tailor content and schedule distribution.
Supply chain management. Applications can automate the collection of planning data from partners across supply chains for their planning processes.
Market intelligence publishing. Applications supporting the controlled electronic distribution of public and private information, often incorporating tools for management and retrieval of information content and/or work-flow management, are frequently referred to as "knowledge publishing" or "knowledge management" tools. Filtering and agent process management techniques are being used to tailor content and schedule of delivery in combination with a variety of search engines that vary in the level of qualitative and quantitative performance.
On-line promotion. Promotion management capabilities, including delivery of on-screen banner advertising, can be custom-tailored, based on current or past customer behaviour, attributes, knowledge of prior buying behaviour, or a combination of all three.
Sales and marketing electronic commerce applications create and manage virtual sales and marketing channels for businesses. They include the following processes.
Catalogue management. This process may be considered part of the marketing or sales processes and is also integral to procurement applications. Sales applications provide navigation of a supplier's catalogue for its customers' transacting business with the company. Procurement applications require support for multi-supplier catalogues and product comparisons. The ability to customize the look and feel of catalogues is an important differentiating characteristic.
Search and retrieval. Keyword searching is a baseline catalogue or knowledge publishing capability. Search engines may be integrated with standard product classification schemes, such as Dun & Bradstreet or the Thomas Register of American Manufacturers, to assist users in catalogue navigation by providing a common nomenclature which supports parametric searching, a capability which has increased value for products with multiple technical attributes. The most sophisticated catalogue systems add classification data to supplier stockkeeping unit descriptions to create uniform retrieval capabilities.
Spot market management. Specialized spot markets are emerging in both business-to-business and business-to-customer relationships to aggregate information from multiple sellers and to support transaction processing. The aggregation of content across suppliers delivers a value-added service to the buyer. Specialized tools are being provided to support buyers' analyses of products. These sites can either transact business or feed other sites with transaction capability.
Transaction processing, back office processing and legacy integration. The back-end processing capabilities of electronic commerce sales automation systems vary widely and may include generation/receipt of EDI and credit card transactions, electronic payments, bill presentation services and account reconciliation functions. Effective back-end integration requires real-time linkages to existing enterprise systems. The systems with the strongest back-end integration have real time transaction processing links to legacy, financial, sales and distribution, and manufacturing systems. They can confirm order numbers in real time, as well as confirm availability-to-promise and/or availability-to-deliver, shipping costs, delivery schedules and account status information.
Procurement and purchasing
A number of electronic commerce applications which support corporate purchasing management have emerged in the past year or two. These applications generally manage and present a multi-supplier catalogue for a buying organization and may also manage the work-flow required to generate and issue a purchase requisition. The most broadly functional systems include payment and account reconciliation capability as well as integrated tools to analyse purchasing trends and practices. Specialized areas of purchasing, such as travel requests, can be automated by application extensions available from certain suppliers.
Multi-supplier catalogue administration. The strategy by which a multi-supplier procurement catalogue is assembled and maintained can vary widely, from full data replication in a single, central catalogue to distributed supplier catalogues with replication of only the index information and embedded links to the remote catalogue pages.
Product classification and parametric search capabilities. In these, multi-supplier catalogue data replication strategies are combined with widely differentiated product classification and search capabilities. Features which determine the ways in which a buyer can find products and the speed of the search process include keyword text, parametric classification and graphic presentation of materials. The aggregation of the product catalogue data from multiple suppliers creates an opportunity to deliver value-added differentiation by making information from multiple suppliers available in user-friendly formats for comparative shopping, or by creating a uniform indexing scheme or nomenclature through which similar products can be identified and compared across suppliers.
Complete order processing and legacy integration. The level of integration between a buyer's own legacy purchasing systems, as well as his supplier's order entry systems, also differentiates ICT products. The underlying transaction processing infrastructure can allow large-scale processing, with the most advanced procurement systems supporting work-flow management as well as controlling purchasing approval processes and real-time inventory commitments by the seller's system.
Distribution and logistics
Applications are emerging which both support multi-modal transportation logistics and create new, virtual distribution channels for certain types of products.
Logistics. Internet applications are available which provide customer service functions for logistic processes, particularly advance shipping notices and shipment tracking. These functions may be integrated into sales and procurement applications. See box V.1 for information on such applications in the maritime shipping area.
Soft goods distribution. Internet applications are enabling the automated distribution of electronic products via the Internet, Intranet, Extranet and private networks. Depending on the physical size of the digital product, it may be sent or requested in conjunction with file transfer technology.5
Internet applications can automate a range of customer service functions using virtual channel self-service processes.
Help Desk. Knowledge bases of technical troubleshooting documents can be searched using a text search engine. These applications are already widely used by technology companies. Several customer information system suppliers have Web-enabled their expert systems for troubleshooting and Help Desk activities. A few suppliers that generally specialize in Help Desk automation are able to link individual customer self-service interactions with fee-for-service transaction capability.
Transaction status. Many electronic commerce suppliers provide limited customer service functions to support order or account status enquiries as part of sales-to-order and purchase-to-order applications. Similar query functions may be provided to track shipment status such as putting Web application linkages into the tracking systems of courier service providers. These applications generally require real-time transaction access to existing enterprise systems.
5 StampMaster has announced that the United States Postal Service has given it permission to test its technology for delivering postage over the Internet. StampMaster's Internet postage system allows users to print electronic postage delivered over the Internet directly onto envelopes or labels using ordinary laser or ink jet printers. See Sandeep Junnarkar, "StampMaster to test Net postage", CNET News.com, 25 August 1998, (27 January 1999).
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