Conklin
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Global B2B eCommerce adoption is being driven by companies seeking to reduce procurement costs and improve supply chain management. B2B eCommerce solutions allow companies to automate contract negotiations, better coordinate internal groups and external partners, and gain insights into vendor performance. Early research shows B2B eCommerce can cut contract management costs from 5% of revenues to 1-2.5% and reduce total purchase costs by as much as 30% by enabling more effective negotiations and continuous improvement of procurement processes. However, issues like lack of internet infrastructure and security concerns may slow adoption in some regions initially.
Conklin
- 1. Global B2B eCommerce Adoption: The Business Perspective Presentation to The Information Technologies Group at the Center for International Development Harvard University by Jeff Conklin Founder and CEO May 2, 2001
- 2. Context for global B2B eCommerce What is driving adoption of global B2B eCommerce? What companies are looking for in B2B eCommerce solutions, and why? Issues and forecasts for global adoption Introduction
- 3. B2B eCommerce is complex and contract based B2B supply and distribution chains are international Buy-side, or procurement focus in this presentation Context
- 4. Complexity of Contract eCommerce Logistics Sell-side Requirements Sales Legal Engineering Manufacturing Management Finance Info Services Buy-side Requirements Procurement Finance Logistics Manufacturing Engineering Management Legal Info Services Business Rules Inter-enterprise Data Valid Commerce and Non-Repudiation International Trade Practices and System Requirements Inter-enterprise Requirements Banking Contract negotiations and transactions Financing Escrow Factoring Schedule, Delivery Terms, Returns Form, Fit, Function, Quality Credit, Payment Terms Ts & Cs Warranties, Schedule, Quality Service Level Agreements Contract Document Contract Document
- 5. Complexity of Procurement Cycle Key Activities Forecasting Operations/ production planning New product design Supplier identification RFI, RFP, RFQ Vendor short list Vendor selection Terms negotiation (e.g., BOM, payment, delivery, T&Cs) Vendor selection Agreement renewal Respond to changes Journaling / archiving Purchasing / ordering Order management Physical delivery / Materials management Payment processing Financial settlement Reconciliation Fulfillment Negotiation Sourcing (RFx) Operations Planning Vendor Evaluation and Feedback
- 6. Market Magnitude Total - $20 Trillion Contract-Based B2B - $13 Trillion Contract-based goods commerce represents approximately $13 trillion of business in the US, and $52 trillion globally - US Goods Commerce ($ Trillions) - Consumer B2B Spot Market ($3) B2B Under Contract ($13) Indirect Goods ($2) Direct Goods ($11) Sources: CAPS Procurement Survey Ratios, U.S. Department of Commerce data and Morgan Stanley analysis
- 7. Company Spend Analysis Sources: CAPS Procurement Survey Ratios, Accenture and Ozro Analysis Communications & Hi Tech Industry Spending Benchmarks 0% 25% 50% 75% 100% Procurement Spend Contract-Based Procurement Percent of Company Revenues 67% Contract- Based 18% Spot Buying 85% 59% Direct 67% 8% Indirect
- 8. Supply Chain Best Practices Obtain Competitive Purchase Price Reduce Total Cost of Ownership Improve Supplier Performance Motivate Early Supplier Involvement 2 3 4 Tactical Solution Strategic Solution (1 time, per event ) 1 What Companies Want 1 st Generation, Reverse Auction 2 nd Generation, Effective Negotiation VS.
- 9. Continuous Improvement Continuous Improvement Inform Multiple Business Processes of Key Terms Coordinate Internal Groups Manage External Partners Monitor/Report on: Vendor Activity Organizational Activity Vendor/Customer Performance & Feedback Compliance Reporting Negotiate Lowest Total Cost Terms Respond to Changes Re-negotiate or Renew Agreements Inform Negotiate Monitor eCommerce Virtuous Circle
- 10. Companies spend 5% of revenues managing contracts eCommerce software can cut this to 1% - 2.5% eCommerce software can also reduce total purchase costs as much as 30%, and sourcing cycle times 50% Direct materials savings flow through COGS; even small savings create significant impact on profitability Why Sources: Goldman Sachs estimates and Ozro Analysis
- 12. Internet access and infrastructure IT infrastructure Payment processing Security concerns Competitiveness ‘ Red Herrings’ Issues in Global Adoption
- 13. International Timing, by Region
- 14. Worldwide eCommerce Growth $ Billions Sources: Forrester Research, Inc.
- 15. Countries that have invested in competitiveness will lead global adoption 86% of Singapore’s exports sold to computing and electronics industry/US supply chains eCommerce hyper growth in 2002 .3% of Turkey’s exports tied to US supply chains eCommerce ramps in 2006 ‘ Red Herrings’ stall supporting policies Tax collection Customs Security Financial controls Money talks in B2B… Summary
Editor's Notes
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