Electronic commerce solutions involve doing business online. Businesses want to harness the power of digital information to understand the needs and preferences of customers and trading partners and then deliver the products, services, and information to them as quickly and with as little human interaction as possible. Companies, enticed by the promise of delivering targeted, personalized, automated goods and services are engaging in various commerce applications like online stores, online advertising, exchanging order, and inventory and billing information with partners, on-line banking, and corporate purchasing applications that extend their enterprise to key trading partners.

The following diagram displays multiple different commerce communication and solution possibilities between Business-to-Consumers (B2C) and Business-to-Businesses (B2B). For example the arrow marked ‘A’ displays an instance of a B2C solution where a consumer can place an order for a product with a distributor and/or retailer. This commerce solution can be further extended to a B2B solution as indicated by the arrows marked ‘B’. Here trading information and communication between partners (in this case the partners being distributor/retailer, some corporation and suppliers) is being exchanged electronically using agreed upon protocols implemented through specific commerce solutions put in place to facilitate this interchange.

Based on these 2 broad categories (B2C and B2B) there are three main scenarios or service areas where companies conduct business online today:

• Direct Marketing & Selling (B2C)
• Supply Chain Integration (B2B)
• Corporate Procurement (B2B)

Direct Marketing & Selling

Selling over the Web allows businesses of all sizes to reach consumers all over the world. This requires that businesses provide consumers with an engaging shopping experience, run price promotions, cross-sell items, and accept typical consumer payment methods such as, credit cards. Further, when an order is placed through an organization’s Web site, consumers must be able to track it. Commerce solutions that sell to consumers must be able to map to existing business processes, and integrate with multiple databases and/or accounting systems.

Supply Chain Integration

Supply Chain integration, also known as Value Chain integration, uses the low cost of the Internet to highlight a tighter integration across suppliers, manufacturers, and distributors. Many of the fundamentals of building a site, extensible order processing and integration with other systems remain the same as that in the Direct Marketing & Selling scenario. But in the Supply Chain scenario, new requirements arise including authenticated log-in, generating custom catalogs for key customers and pricing and payment based on custom agreements. Suppliers need to be able to provide their business partners with secure access to their existing Web site or be able to “push” catalogs into another business’s systems, with the ability to maintain these product catalogs when pricing and/or inventory changes.

Corporate Procurement

Businesses want to leverage the intranet and the Internet to make existing business processes more efficient. At the heart of this business model are commerce solutions that facilitate the process of purchasing low-cost, high volume goods for maintenance, repair, and operations (MRO) of a business. Labor and paper-intensive operations are converted into self-service applications where purchase approvals and business policies are enforced through automated business rules. Approved purchase orders then need to be sent to suppliers. Corporate Procurement commerce solutions allow for transactions to be made with partnering businesses, suppliers and distributors, regardless of the data format, and data is communicated, whether it be over the Internet, an EDI VAN (Value-Added Networks), e-mail, or simply fax.

Scenario 1: Direct Marketing & Selling

This scenario covers the retail solution where an organization increases its customer reach by creating a virtual store so consumers can obtain products online. Further this virtual store should be able to advertise other products and be able to promote sales through discounts, cross-selling, and up-selling

The following diagram displays the architectural framework of a Direct Marketing & Selling solution.

Building Blocks for a Direct Marketing & Selling Solution:

• Dynamically built HTML pages to engage customers over a common transport
• Storage of member (customer) information for site personalization, member authentication, and the tools to manage them
• Implementation of the “shopping basket” metaphor
• Server and Administrative security
• Customer information security
• Manage and process orders, implement business rules to transact with customers
• Ability to advertise other products and services and manage the process
• Support direct marketing functionality which can also enable customers to make quick purchases of featured products
• Mechanism for cross-selling and up-selling
• Facility to store data (catalog, orders, inventory, logs,and so forth) and access it dynamically
• Management of merchandise, transactions, and the commerce system
• Tools for price promotions

Scenario 2: Supply Chain Integration

This scenario covers the solution where a business buyer purchases goods from a supplier. Often this is simply described as “supplier-side purchasing” by distributors, manufacturers, retail merchants, transport providers, distributors, and other business buyers. The full power of electronic commerce is harnessed by creating seamless chains of materials and services that work together to supply the needs of the consumer. This helps participants plan more effectively and adapt to changing business conditions rapidly. The diagram below illustrates the chain that links various possible entities in a Supply Chain solution.

An example of how a Supply Chain Integration may work, as a case study let’s use an order of a new PC as a case study. The process has the following steps:

•  A customer submits an order for a new computer system through a dealer’s Web site.
•  The dealer receives the order. Receipt of the order automatically generates a query to the manufacturer of the computers (case, microprocessor, memory, monitor, CPU, and so on) that make up the system.
•  Receipt of the query by the computer manufacturer automatically initiates a query to the parts inventory database of the computer manufacturer. The query results show that the computer manufacturer does not have the microprocessor in stock needed to fulfill the order. The computer manufacturer’s inventory system contacts the microprocessor supplier and places an order for the necessary parts.
•  The microprocessor supplier’s system informs the computer manufacturer of the earliest possible date for delivery of the microprocessor and places the order for the chip.
•  Using this date as input, the computer manufacturer calculates the date by which it could have the computers built, based on the schedule of available capacity on its manufacturing floor. Then generates a query to the shipper’s computer.
•  The shipper’s system checks its own transport capacity and determines that it will be able to schedule and provide delivery of the computer
•  The computer manufacturer then confirms the order with the dealer’s system.
•  Finally, the dealer sends confirmation to the consumer.

The goal of a Supply Chain electronic commerce solution is to deliver a dynamic data stream that connects trading partners from around the world with real-time data. To reach this goal, all participants in a Supply Chain solution must adopt an integrated set of data standards so that data flow through them is smooth and seamless.

Building Blocks for a Supply Chain Integration solution:

The core commerce platform for a Supply Chain Integration solution is very similar to the Direct Selling & Marketing scenario. In a Supply Chain Integration solution, the business is selling to a business rather than selling to a consumer. Most of the building blocks for this solution are very similar, to a direct marketing and selling solution, except majority of the communication between businesses is automated:

• Dynamically built HTML pages to engage customers over a common transport
• Storage of member (buyer/requisitioner) information for site personalization, member authentication, and the tools to manage them
• Implementation of the “Purchase Requisition” metaphor similar to the virtual “shopping basket”.
• Server and Administrative security
• Customer information security
• Manage and process orders, implement business rules to transact with customers
• Ability to advertise other products and services and manage the process.
• Facility to store data (catalog, orders, inventory, logs, and so on) and access it dynamically
• Tools for price promotions

Few additional things that need to be put in place to accomplish this scenario are as follows:

• Secure log-in and password authentication when entering a trading partner site
• Secure exchange of business information between trading partners
• Integration with backend financial and/or inventory management systems
• Catalog management
• Price calculation depending on classes of accounts, purchase history, credit, territory, and so forth.

Scenario 3: Corporate Procurement

This scenario is another example of a business-to-business commerce solution. Typically this scenario involves an intranet environment where employees of a particular organization (Requisitioners) can order MRO goods, office supplies, and general services from various vendors and suppliers in different countries. The goal of Corporate Procurement solutions is to automate the task of processing and fulfilling orders on goods that are low cost but high-volume.

In this scenario, typically users fill out requisitions using an interface like a browser to use self-service Web applications to place orders for goods. These orders can then be electronically routed to approving managers. Company officials are able to enforce purchase approval policies through automated business rules. Once purchase orders are approved, they are routed electronically to the business partners (typically suppliers) and committed for fulfillment. Products ordered subsequently will be logged to accounts payable applications and delivered to the requistioner in accordance with the terms in place between the buyer’s organization and the supplier. This process is illustrated in the diagram below:

Successful Corporate Procurement systems offer the ability to place orders with multiple vendors and have a flexible order processing system. This means that they must be able to communicate purchase orders, status reports, and delivery notifications with means most suitable for each of the business partners.

The three most common ways that typical Corporate Procurement systems exchange and transact order information are: e-mail messages, flat-file order output, and using custom applications built in the Commerce Interchange Pipeline (CIP). Some of the key attributes of a Corporate Procurement commerce solution are:

Businesses of all sizes can communicate purchase orders, transact payment, and deliver goods regardless of size and location.

Purchase order output is flexible, so partnering businesses can adopt a common format that works with their existing business systems.

Frameworks like CIP offer increased flexibility for how business information is communicated and how this information is delivered to multiple partners with different business systems.

Corporate Procurement applications can support multiple suppliers within one site.

Rationalization of an organization’s supplier base to negotiate better volume discounts.

Empowerment of employees by introducing self-service applications that can take advantage of an organization’s intranet.

Building Blocks for a Corporate Procurement Solution:

The commerce platform for a Corporate Procurement solution is very similar to that of the Supply Chain solution. Although the back end purchasing process may be automated like in a Supply Chain scenario, the actual buying experience will be a manual process (like the direct selling solution) in which individuals purchase goods as required. The technical considerations/implementation and the ‘building blocks’ for both these scenarios are almost identical. However, following are a few business and design considerations that are different between these two solutions:

The business goals of these two scenarios are different. Corporate Procurement solutions are designed to streamline the cost structure of an organization while Supply Chain solutions are geared towards the direct trading and manufacture of goods.

Corporate Procurement solutions are typically designed as intranet solutions while Supply Chain solutions may have components that are Intranet based, the majority of the application will either be Internet or Extranet solutions. As such, following are some design considerations for Corporate Procurement solutions:

Corporate Procurement solutions are typically designed as intranet solutions while Supply Chain solutions may have components that are Intranet based, the majority of the application will either be Internet or Extranet solutions. As such, following are some design considerations for Corporate Procurement solutions:

• Requisitioners can be standardized on a browser.
• Technologies like ActiveX Controls, and DHTML can be used to deliver graphically and functionally rich Web applications.
• Windows can be used to authenticate users and provide security.
• Integrating procurement into existing corporate infrastructure systems like security and mail can help eliminate additional overhead and leverage routing/basic workflow.
• Site Server 3.0 Membership could be used to enhance or complement existing internal user directories by extending the attributes and storing them in a common repository.