Business-to-business e-commerce opportunities

Joshua Goldman-Brown

With all the press coverage that the Internet and electronic commerce are receiving, it's easy to get lost in the hype. We're told that e-commerce will change our lives and change the way we do business.

But we hear little about how companies that want to take advantage of this can get started, how they can avoid common mistakes, or what areas of their extended business they need to understand and address.

What do you expect the system to be able to do for you and your customers? What kind of hardware and software are available and what do need? How much do you want to invest? Should you build your own system or participate in someone else's network? Are the Internet services and infrastructure in my region sufficient to support an e-business? Do you need to worry about the security of the network?

Less discussed but of equal importance are the organisational aspects of initiating an e-commerce programme.

While technological problems tend to be relatively clear-cut _ do I need/want it, yes or no _ the people and process questions are generally more grey than black and white. No matter how brilliant the technology plan, failing to plan for the organisational and process changes that e-commerce brings can have dire consequences.

Companies need to ensure stakeholders are an integral part of the change process and not an afterthought. The first step is to understand that there are really two sets of stakeholders to consider, internal and external. Not only will an e-commerce system change how your company buys and sells, it will also require you to bring suppliers and/or customers online. From an internal perspective, this requires a good look at the culture of your organisation and the functions and processes involved. E-commerce should be implemented as a constituent element of a company's structure.

For example, when a department in your company needs to purchase some sort of MRO (maintenance, repair, and operations) supply, whether it's an industrial item or toner for the copier, there is a defined process. It is important to understand that an e-procurement system will automate this process.

Control will be decentralised as a catalogue of pre-approved products is made available on every desktop. For bureaucratic and hierarchical businesses this can be a challenging and even painful transition as jobs, responsibilities and mindsets must change.

Business process reengineering has an important role to play in helping organisations ensure that inefficiencies are identified and addressed. Automating a bad process simply speeds up your ability to work inefficiently.

On the external side, the needs, expectations, and concerns of customers and suppliers must also be addressed. Joining an e-commerce network will pose some of the same challenges for your partners' business.

Buyers need to be made aware of the multiple benefits of participating in an e-commerce network. These include ease and speed of ordering, reduction of maverick or off-contract purchases, reductions in inventory, improved purchase planning, and the ability to understand and address the root causes of demand by integrating procurement with ERP or enterprise asset management (EAM) systems.

For suppliers, too, e-commerce offers significant efficiency gains as order taking and order processing are automated, re-keying of data is reduced, and planning is improved. And unlike the business-to-consumer model, where the Internet functions like a bazaar in which individuals shop around for the best price on a particular product or service, business-to-business e-commerce initiatives should be built on long-term relationships and innovative customer service.

Contrary to what many may fear, business-to-business e-commerce will only strengthen the importance of relationships and service by enabling suppliers to better understand their customers needs and buying patterns. Ironically, in what is perhaps the greatest technological innovation that business has seen, it is the ability to complement this highly automated process with a human element _ responsive, knowledgeable, and helpful customer service _ which will separate the successes from the failures.

Yes, the Internet changes everything. Individuals throughout organisations will have access to the products they need, suppliers will be able to track the buying patterns of their customers and offer tailor-made services. The efficiencies inherent in electronic procurement will dramatically reduce bottom-line costs while ubiquitous Internet provides a channel to reach new markets faster and more effectively.

But companies that fail to address the concerns of stakeholders and work with them to build relationships will miss the opportunity. The success of business depends on individuals and teamwork, and in this sense the Internet changes nothing.

Joshua Goldman-Brown is Asia Pacific marketing manager for MRO.com.

 

© Copyright The Post Publishing Public Co., Ltd. 1999
Last Modified: Mon, Nov 16, 1999
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