The Internet provides purchasers with new avenues to transform services traditionally used to execute procurement processes. In the past, purchasers were required to perform laborious and time-consuming searches for sources of new products and services. In contrast, B2B marketplaces provide a level of service features impossible to attain in the past. These features include online catalog of products, sales promotions and special pricing, payment processing facilities, and post-sales support. Web-based technologies have made it possible for purchasing functions to significantly streamline this process by utilizing the following B2B marketplace service functions:
B2B marketplaces offer communities of buyers and sellers a way to enable a two-way interactive mode of communication and collaboration. Buyers can leverage Web-based applications to deepen their existing relationship with preferred suppliers while expanding their search for new ones on a global scale. In addition, buyers can explore new dynamic purchasing models, such as Internet-based buying exchanges and auctions for sourcing and spot buying.
SRM provides for the creation, aggregation, and Internet access to a wide-range of online product and service catalogs that can significantly enhance product search. B2B marketplaces host electronic product searches for all types of goods and services, including maintenance, repair and operating inventories (MRO) and indirect materials, production, administrative, and capital goods. Effective Web-based applications should enable e-marketplaces to centralize product and service content offerings, permit suppliers to host content on their own sites, and enable buyers to develop customized catalogs.
e-Sourcing involves leveraging Internet applications to find and build long-term, collaborative relationships with key trading partners. Technology tools for e-sourcing include spend analysis applications; automation of request for quote (RFQ), request for proposal (RFP), e-auction and reverse auction, contract management processes; and supplier monitoring and improvement.
SRM leverages the Internet to pursue a variety of other critical value-added business services, including
Originally, the central focus of supplier relationship management (SRM) Web-based applications was service and indirect inventories procurement. The reason was these goods and services are extremely well-suited to business-to-business (B2B) e-markets. They are normally highly standardized commodities, purchased in large volumes, evaluated primarily on price, require minimal negotiation, and acquired frequently through spot purchases.
In contrast, purchasing of production inventories is much more difficult. These items are subject to highly detailed designs, low volumes and variable prices purchased from specialized vertical industry suppliers. Because of the specialized nature of the products and services, procurement is often preceded by a complex negotiation process involving an RFQ, competitive bidding, long-term contracts, and continued involvement in relationship-specific investments. e-SRM in this area is more about leveraging collaborative partnerships with trusted suppliers than using a free market bid/ask exchange. These are the components constituting this area:
Portals and Auctions
Portals can be used for many business needs not just SRM.
Both consumer portals and business portals may be accessed through a browser and they help people interact either with automated systems or other persons. Security and access is predetermined by the role of the position using the portal.
Auctions are a service that determines the value of a good or service on the open market through winning bids. A winning bid constitutes a contract. Auctions are best for commodities and should be avoided when delivery time, reliability, or quality are priorities. They are solely differentiated by price.
There are several different types of auctions: