Page 254 - Electronic Commerce

Business-to-Business Activities: Improving Efficiency and Reducing Costs

down and organized for them. Many of these workers were earning less than two dollars per day.

With Samasource, they can earn two dollars an hour in many cases.

Organizations such as Samasource help businesses in the developed world get tasks accom-

plished more cost effectively. At the same time, they help build worker knowledge and skills in less 229

developed countries that can help industries grow there. Global industries see this development of

trained workforces that can eventually support manufacturing industries as a good long-term strategy.

The Internet helps bring together work and workers in a way that does a great deal of good for peo-

ple in need around the world.

PURCHASING, LOGISTI CS, AND BUSINESS
SUPPORT P ROCESSES
In this chapter, you will learn how companies use electronic commerce to improve
their business processes, including purchasing and logistics primary activities and all
of the processes relating to their support activities (which include finance and
administration, human resources, and technology development). You can refer to
Figure 1-9 in Chapter 1 for a review of primary activities and support activities.
Although the work might not seem as creative as designing a Web site or developing
an advertising campaign, the potential earnings impact of cost reductions and business
process improvements in purchasing, logistics, and support activities is tremendous.

Outsourcing and Offshoring
An important characteristic of purchasing, logistics, and support activities is flexibility.
A purchasing or logistics strategy that works this year may not work next year.
Fortunately, economic organizations are evolving from the hierarchical structures used
since the Industrial Revolution to new, more flexible network structures. These network
structures are, in many cases, made possible by the transaction cost reductions that
companies realize when they use Internet and Web technologies to carry out business
processes. For example, the use of other organizations to perform specific activities is
called outsourcing. U.S.-based companies such as Paychex and TriNet handle payroll,
human resources, health insurance, and other employee benefit plans for thousands of
companies that have decided to outsource those business processes.
When the outsourcing is done by organizations in other countries, it is often
called offshoring. Outsourcing and offshoring have existed for decades, but the
activities outsourced were typically manufacturing activities. For example, Apple or
Motorola would offshore the manufacture of their U.S.-designed mobile phones by

Copyright 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.