Page 284 - Electronic Commerce

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

Summary

In this chapter, you learned how companies are using Internet technologies in a variety of ways
to improve their business processes for purchasing, logistics, and support activities. Companies
and other large organizations, such as government agencies, are finding it more important than
ever to extend the reach of their enterprise planning and control activities beyond their organi-
zations’ legal definitions to include parts of other organizations. This emerging network model of
organization was introduced in Chapter 1 and is used in this chapter to describe the growth in 259
interorganizational communications and coordination. In many cases, organizations outsource
some of their business processes to companies that specialize in those processes. Some of
those business process service providers are located in other countries and can perform the
work at a much lower cost.
EDI, the first example of electronic commerce, was first developed by freight compa-
nies to reduce the paperwork burden of processing repetitive transactions. The spread of
EDI to virtually all large companies has led smaller businesses to seek an affordable way
to participate in EDI. The Internet is now providing the inexpensive communications chan-
nel that EDI lacked for so many years and is allowing smaller companies to participate in
Internet EDI.
The increase in communications capabilities offered by the Internet and the Web is, and
will continue to be, an important force driving the adoption of supply chain management
techniques in a variety of industries. Supply chain management can be implemented and
enhanced through the use of online technologies. Increasingly, firms are connecting with
their supply chain alliance partners and other companies, such as 3PL providers, to become
more efficient and provide more value to the ultimate consumer of their value chains’ prod-
ucts and services.
The emergence of industry electronic marketplaces in the mid-1990s gave way to the
development of several different models for B2B electronic commerce, including private
stores, customer portals, private marketplaces, and industry consortia-sponsored
marketplaces.

Key Terms
Accredited Standards Committee X12 EDI compatible
(ASC X12) EDI for Administration, Commerce, and
American National Standards Institute (ANSI) Transport (EDIFACT, or UN/EDIFACT)
AS2 (Applicability Statement 2) EDIINT (Electronic Data Interchange-Internet
AS3 (Applicability Statement 3) Integration, EDI-NET)
automated clearing house (ACH) e-government
business process offshoring e-procurement software
contract purchasing e-sourcing
customer portal impact sourcing
direct connection EDI independent exchange
direct materials independent industry marketplace

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