February 2006

Your B2B eCommerce Program – Key to Your Corporate Strategy
By Susan Stecklair, Electronic Commerce, Inc.

To reduce costs and maintain a competitive edge, companies are mandating that their suppliers integrate with them via eCommerce programs. In such programs, business documents such as purchase orders, invoices, inventory status and shipment notices are transmitted electronically between the customer and vendor.

Many business executives are only familiar with traditional consumer-to-business (C2B) eCommerce models such as ordering a book from Amazon.com. However, C2B models differ from the business-to-business (B2B) model, which has predetermined parts, contract pricing and invoicing terms. Although many flavors of processes exist, B2B transactions are commonly computer-to-computer and utilize standardized EDI (Electronic Data Interchange) or XML. It is widely reported that the volume of B2B transactions dwarfs their C2B counterparts.

The beauty of a B2B initiative can be seen in the following simple example:

• A purchase order (PO) is automatically generated from your customer's system.

• Within minutes, it's transmitted via the Internet to you and is processed automatically into your system.

• An internal sales order is automatically created, and a pick-list is printed on the manufacturing floor.

• The product is picked, boxed and shipped.

• Your accounts receivable system automatically generates an invoice.

• This invoice is transmitted to your customer where it automatically updates the accounts payable system.

People only need to pick and pack the product from inventory – and, in some cases, even this is performed by robots. An eCommerce implementation can save an impressive amount of money. Transaction-intense programs such as Just-in-Time (JIT) systems are augmented by, and often necessitate, B2B programs.

Common benefits of a B2B eCommerce program are:

• Developing stronger ties with customers, distributors and vendors
• Improving business processes
• Shrinking cycle-time
• Drastically reducing clerical data entry
• Reducing errors

But these are challenging programs, impacting a number of organizations and processes. It is important they be implemented in a professional manner. Your strategic customers, bankers, distributors and suppliers will see this as a reflection of your technical savvy and professionalism.

Here are some recommendations for success:

• Research what your strategic customers and suppliers recommend
• Research industry models
• Evaluate and purchase the proper tools
• Start simply
• Create a project team
• Document your requirements

Research what your strategic customers and suppliers are doing

Your customers or suppliers can be a great source of information. Often they have already initiated a program, and can explain the rewards and pitfalls of initiating an eCommerce program. They can help you understand the common business models used in your industry. Ask them which transactions they use or would like to target with you. What are they using? What standards and versions? What metadata do they require? Ask for their implementation guides, if any. Make it clear that you are in the investigate phase of the project. Do not over-commit at this point.

Research industry models

Join and participate in industry groups. Often you get the best information informally speaking to your peers over lunch or at networking events. The peer-to-peer sessions are often helpful. Beware of veiled sales pitches from software providers that may oversell their solutions and over-simplify the process.

Evaluate and purchase the proper tools

Avoid the pitfalls of developing your tools in-house. Ecommerce systems require a variety of controls that are not obvious to the uninitiated. Prepare a list of requirements for your evaluation, and interview several potential providers. There are many acceptable, low-cost solutions on the market. However, make sure your tool can scale if your company dramatically increases in size or in the number of transactions.

Start simply

After discussions with your strategic trading partners, prioritize the business processes you want to implement. We commonly recommend making the Purchase Order the first implementation, so that key information is captured for the outbound transactions.

You should plan on integrating your eCommerce application into your ERP system. Research its recommended method of integrating into the applications. Do not reinvent the wheel. Minimize customization. The implementation costs will be offset by lower data entry fees, reduced errors and customer satisfaction.

However, if your budget or time does not allow for a fully integrated process, consider a web solution that allows you to view and print the order you have received from your customer. Then you can manually enter it into your order-management system, or create the appropriate outbound transaction utilizing the web form.

Create a project team

Perform a staffing analysis and create a communications plan. For example, with an inbound Purchase Order application, you might have the following team members:

• The Director of Order Management who is championing the project.
• An Order Management Analyst who can explain the current process flow and help to define the new exception processes.
• An eCommerce resource for the process design of best business practices, who should be an expert in the configuration and integration into your ERP system.
• An ERP programmer who is responsible for changes to your ERP system if you require some proprietary processes. Most systems do.

Once you are ready for customer testing, the team will be expanded to include your customer's representatives.

Document your requirements

Ecommerce tools exist for the development of specifications to give to your trading partners. Intelligent, well-developed specifications or guidelines can dramatically reduce testing times and avoid misunderstandings.

Summary

Your eCommerce program is an essential strategic tool for working with your customers, suppliers, bankers, carriers, distributors and contract manufacturers. By streamlining operations and automating procedures, the proper blend of technology and best business practices ensures better returns for your growing business.

©2005. Electronic Commerce, Inc., All rights reserved.

Susan Stecklair, founder of Electronic Commerce, Inc., has nearly 20 years experience integrating and managing complex ERP projects. She has successfully managed projects for many of Silicon Valley’s premier companies both locally and internationally. Prior to founding Electronic Commerce, Inc. in 1993, Susan was in IT, financial and operational management at Philips Semiconductor and Applied Materials. She has a B.S. and an M.B.A. in finance from the University of Michigan. Susan can be reached at 408-996-7492 or Stecklair@ecommerce-inc.com.