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B2B to B2C E-Commerce

Safe Shaikh — Fri, 20 Mar 2009 00:29:34 +0000

The Internet has and will continue to expand opportunities for e-commerce transactions across the world and has created a revolution in global commerce. The e-commerce has allowed seller to setup virtual store which is accessible by buyers around the world. In the tradition, buying the selling goods was perhaps very time consuming. For example, company A wants to purchase hundreds of widgets needed for production. To accomplish this task, it would have to find a supplier then send a request for quote along with specification via snail mail. When the bids returned, Company A would have to evaluate bid and then began a new round of bidding to obtain better price. This method was very time consuming and tedious process. Until recently, the invention of the internet with growth of e-commerce has eliminated a lot of the down time and made transaction among business to business and business to consumer efficient. This lead to observe business models such as B2B and B2C. In addition, Wal-Mart, Amazon and Dell will be use to illustrate an example on how organization operate under B2B and B2C business models in E-Commerce
Types of Business Model
Organization often today operates in many distinct business models such as Business-to-Business (B2B), Business-to-Consumer (B2C), Business-to-Government (B2G). While some organizations operate under single model, others operate under more than one or even all models. The decision to select appropriate business models lies in the product and service being sold and to whom it is being sold.
B2B is a term for transaction between business-to-business. In this business model, the customer is business, its role is to purchase either goods or service from another business. The seller is also a business whose role is to sell either good or service to another business. B2C is a term for transaction between business-to-consumers. The customer (also consumer) role is to purchase either good or service from business. On other hand the seller (business) role is to sell either good or service to consumers.
Amazon.com
A good example of B2C business model in E-Commerce is Amazon. Amazon was one of the major players online in early business. Amazon started with online book store, but soon after it began to diversify and sell almost everything. The company’s main customers are consumers around the world. Today, Amazon source and sell wide range of product to consumer. Amazon also has merchant program that allows third parties to sell their products on its websites. This allows customers to buy goods owned by third parties using Amazon’s B2C business model on e-commerce. In addition, “Amazon Marketplace generally serves individuals and small businesses, enabling them to offer their products for sale on the company’s websites alongside its products and products made available by other third-party sellers. Its Merchants program serves larger, branded businesses and is mainly focused on expanding the selection of new products available on its websites.” (Reuters, 2008)
Wal-Mart
Another good example of B2C business model in E-Commerce is Wal-Mart. It sells products and services mainly to consumers. It has two segment, traditional retail stores and online e-commerce. Wal-Mart generate most of the revenue from traditional retail store, however, it still earns significant amount revenue through online. Wal-Mart is the largest retailer in the world. The first store was opened in 1962 by Sam Walton. Today, Wal-Mart has well over 3,000 stores worldwide. “The emphasis on customer satisfaction and always low prices has resulted in Wal-Mart becoming the world’s largest retailer with annual revenue exceeding $218 billion” (Principles of Supply Chain Management, Pg 124). From B2B and B2C in E-Commerce perspective, Wal-Mart uses method of collaborative planning, forecasting and replenishment (CPFR). The CPFR allowed Wal-Mart to move toward just-in-time (JIT) system which save Wal-Mart enormous amount of money and same can be said for its suppliers. Wal-Mart also implemented data mining warehouse program. This program enables Wal-Mart to store transaction data, point of sale data and shipments data. As Wal-Mart grew, “warehouse was expanded to include much more data such as inventory, forecasts, demographic, markdown, returns and market basket by item by store, and by day” (Principles of Supply Chin Management, Pg 124). The warehouse not only contains data of Wal-Mart but its competitor as well. One of the key elements here is that these data was accessible by Wal-Mart employees and over 3000 approved supplier as well. End result is that both Wal-Mart and its suppliers were able to save million of dollars on inventory and reduce cost by forecasting accurately. As a result of data mining software, Wal-Mart has achieved increased accuracy in forecasting process and competitive advantage in the retail industry.
Dell
Another organization that practice B2B and B2C over E-Commerce is Dell. Dell Computer Corporation was founded in 1984 and has achieved record sales and profit growth in the past 22 years of operation. The secret to Dell’s success is their direct model which has focus on low cost, direct customer relationship, and virtual integration. This gives them competitive advantage in modern world business.
Dell’s focus is direct sales to consumers and companies over the phone and through Internet sales. Dell does all its business via online. However, in recent months, the Dell has partnered up with some large retail to offers its product to consumers in traditional store. Dell gives its customer custom website with standard configured product along with pre agreed prices. This makes easy for many companies to procure product that they need. Dell also offers same type of external website to it supplier. Through custom built website, suppliers can see Dell’s inventory and orders in real time data. This allows supplier to forecast accurately and maintain inventory and the production. This cuts down on inventory and lead time for both Dell and supplier. This is method is known as just-in-time.
The major e-commerce companies such as Wal-Mart, Dell and Amazon, has played very important role in development of B2B and B2C business model. While Amazon only operates e-commerce, Dell has realized the potential growth in revenue by offering its product to other retail to be sold. Dell is no longer practicing e-commerce model. It has began to diversify it method. Wal-Mart on other hand began with traditional store and had also diversified and offered e-commerce to its customers. Regardless of traditional store or e-commerce, one of the main things considers is customers and services. Return and customer service for example.
Returns and Customer Service
Traditional retail store honor return of purchase goods. When consumer purchase product, occasionally, product may be defective or customers simply change his/her mind. This is where retail company such as Wal-Mart adds value to its business by honoring return for purchase goods. For customers, return service not only gives them peace of mind when purchasing but it also gives them enough flexibility to exchange, return or even refund given circumstance. On the other hand, online store return process is bit different. Some online store does not even honor return service. Some that do makes its customer pays for freight, making difficult for customer to consider return. However, large online store such as Amazon.com goes beyond typical online competitor to ensure return process is simple, easy and similar to local retail store. When Amazon ship the product to its customer, it includes return material authorization preprinted along with prepaid freight labels, this makes is very easy and convenient for customer to return product. All customer has to do is sign the return authorization label and stick the prepaid freight label on the box which was included in the box and drop it off at one of the carrier location.
Customer service is one of the crucial elements of retail giant Wal-Mart. In traditional retail store, customers are everything. Therefore, employees are expected to perform customer service to ensure customers are satisfied. On the other hand, Amazon.com also has to deal with customer service. It’s slightly different as result of long distance customer relationship. Since Amazon is an online store, most of the interaction with customer are done through telephone, emails and online. This requires extra efforts. Even then, regardless typical retail store or online virtual store, customer is still the biggest element to be consider to be successful in competitive global modern world.
Conclusion
Wal-Mart, Amazon and Dell, all three do its business through online. They offer thousands of products through online, making it easier for their customer to buy. Traditionally, shopping at local retail store was perhaps the only way. However, thanks to creation of internet, virtual online stores have emerged to giving consumer opportunity to shop anywhere and anytime. Amazon and Dell are one of few companies who took advantage of internet to turn it in to business that it is today. As for Wal-Mart, it started as retail store and still does most of its business through it traditional method. However, it too took advantage of internet and making multibillion dollar business today. In final words, the transaction between buyer and sell over internet has created business model such as B2B and B2C in e-commerce.

References
Stocks Reuters (2008) Retrieved September 27, 2008 from http://www.reuters.com/finance/ stocks/companyProfile?symbol=AMZN.O
Principles of Supply Chain Management (1st ed.) J.D. Wisner, G. Keong Leong, and Keah-Choon Tan Thomson/Southwestern, 2005 Mason, OH
Wal-Mart (2008). Retrieved September 28, 2008 from http://walmartstores.com/
Dell (2008). Retrieved September 29, 2008 from http://www.dell.com/content/topics/globa l.aspx/about_dell/home_page/about_dell?c=us&l=en&s=corp

Website Comparison Paper and Virtual Organization

Safe Shaikh — Fri, 20 Mar 2009 00:27:33 +0000

Riordan Manufacturing is a global plastic manufacturer employing 550 people with projected annual earnings of $46 million. Riordan Manufacturing is an industry leader in the field of plastic injection molding, with state-of-the art design capabilities. Riordan manufacturing creates innovative plastic designs that have earned international acclaim. Attention to detail, extreme precision and enthusiastic quality control are the hallmarks of Riordan Manufacturing. Riordan has facilities in San Jose, California, Albany, Georgia, Pontiac, Michigan and Hangzhou, China, and has the capacity to fulfill unique needs. The company is wholly owned by Riordan Industries, a Fortune 1000 enterprise with revenues in excess of $1 billion (Riordan Manufacturing, 2008). Riordan Manufacturing is focused on achieving and maintaining reasonable profitability to assure that the financial and human capital is available for sustained growth. To maintain this profitability and achieve the required growth, the company must continue to streamline operations and stay up-to-date with current technologies. This includes e-business solutions for not only customers but its suppliers as well. Furthermore, the Riordan’s website will be described briefly and it will also be compared with website of Huffman Trucking and Kudler Fine Foods.
Kudler Fine Foods Website
The Kudler Fine Food website is full of information in related to its business and products. The Kudler Fine Food website has several web pages. They are home, bakery, meat & seafood, produce, cheese, and wine. For each webpage, it has information about product offering. The information presented is in fairly simple which can be easily understood by its customers. On the other hand, the website does not offer product for sale. The website is strictly for information purpose.
Huffman Trucking Website
The Huffman Trucking website was little different than Kudler’s Fine Food’s website. The Huffman Trucking website has many web pages. They are home, our company, facts, your accounts, tracking, employment, and contact us. The website had pictures that were consistence with it logistic business. The website also had logo and followed blue company color. The web page “Your Account” also offers it customer access to information that is exclusive base on customer. The Huffman utilize e-business in way that provides tracking information to its customers. The Huffman website was effective and follows e-business’s principles.
Riordan’s Manufacturing Website
The Riordan’s website was simple. It consists of only one webpage. Compare to other websites, the Riordan’s website does not have some of the standard webpage such as location, contacts, about us, and home. The Riordan web page consists of brief description of company’s information in center of the webpage. On the top left hand corner it has Riordan’s logo. On the right hand side column it had two pictures and right below, it had brief list of products the company manufactures. It was pretty obvious that the Riordan’s website need some work.
Riordan Manufacturing MRP System
Riordan manufacturing products include plastic beverage containers produced at its plant in Albany, Georgia, custom plastic parts produced at its plant in Pontiac, Michigan, and plastic fan parts produced at its facilities in Hang Zhou, China. The company’s research and development is done at the corporate headquarters in San Jose, California. The company has a program in effect for inventory management and control that outlines specific steps to be followed by all plants in respect to receiving, manufacturing with inventory, and final product shipping. This inventory management control process seems to be a workable concept on paper; however each location is using a variation of this control as each location has different factors that play into the specific operation. An example would be that the Albany location keeps a contingency stock of certain raw materials for quick delivery if needed, while the China location produces the end product, and stocks the product until it is sold. In addition to the cost and problems associated with stocking and storing material and products, the locations are also having issues with receiving raw materials on time from their vendors. The MRP system’s standard elements are focused on raw materials purchasing and inventory, bills of materials, production scheduling, warehousing, shipping, and payroll. An effective MRP system put into place could save the company the shelving and storing costs associated with the stocking of raw materials and with the storing of finished products, while improve the deliveries from vendors, and improving overall efficiency while reducing production costs.
Riordan’s Current Process
The Riordan Manufacturing facilities are being driven by the customer to operate as required by the customer’s demand. The current process is appropriate for the customer’s requirements; however, in order to reduce the inventory costs of the plants, the current processes must be changed. The China plant currently purchases fan motors and plastic polymers from local suppliers; the polymers are then melted down and injected into molds for individual fan parts; the fan motors and fan parts are then assembled and packaged for stock. The first problem with the China facility is the method in which the forecasting is done for fans. One section of the plant is building a standard product for general distribution and forecasting for these products is based on a three-year average, while another section of the plant is building customized electric fans based on customer negotiated quantities. Albany, Georgia has another process for custom bottle making and the facility must keep raw materials and finished product in stock for quick deliveries. The plant is required to keep an abnormally large safety stock in supply as to avoid any possible contract penalty clauses. Pontiac, Michigan and San Jose, California also keep stock of raw materials for part designs and creating working models for research and development; however with the small order requirements that are required for these sights the amount of raw material’s in stock is excessive for the production runs.
Albany, Georgia Location
The Albany, Georgia facility manufacturers both standard and customer unique bottles based on yearly contracts negotiated with the customers. The customer then places the yearly blanket order and submits the release of orders thorough out the year to Riordan. The problem with this is that Riordan Manufacturing has to keep a rather large amount of stock, not only for raw material but also for the finish product to meet the customer’s unanticipated demand. This increases inventory and costs associated with the process. However, if Riordan were to request a monthly or quarterly forecast from the customer, the level of raw material and finished product inventory would be reduced. The MRP system would use both the yearly blanket orders and quarterly forecast to maintain the inventory. The forecast would be entered into the MRP system which would analyze the data provided by customers and ensure that a safety stock is maintained to meet the demands. This will streamline the cost, improve production time, improve delivery and make the Supply Chain Management far more effective.
Hang Zhou Location
The Hang Zhou manufacturing facility has a make to stock operation and a custom operation. Each of these operations is acting independent from the other in terms of raw goods purchasing, inventory control, stocking and finished goods storing or dispersing. The recent three-year average for fans is used in forecasting the necessary stock required for the year. The forecast theory is that history will repeat itself. The make to stock operation is purchasing fan motors from only one supplier, and a good MRP should have as minimum two or three suppliers for planning and inventory control.
The customized fan product operation provides custom fan products for customers. The custom fans will start as a pilot run to develop the fan design and estimate production cost. Once the fan is developed and costs are assigned, the customer will place yearly contracts in which they will call for varying quantities of fans throughout the year. In order to make delivery for the varying quantities the operation maintains a larger than optimal inventory and stock of raw material. A MRP system that is properly designed and implemented could save both of the China operations money in inventory and raw material cost while increasing production efficiency and reducing product lead-time.
Michigan Location
The Pontiac, Michigan facility operates as a custom-build shop and keeps a large amount of raw materials on supply for quick build of the custom plastic parts. A large amount of dye is required at this facility for the custom part colors as required by customer specifications. In order to decrease the amount or cost of raw materials the facility must develop a quarterly forecast from customers to properly prepare for orders with short delivery requirements.
San Jose, California Location
The San Jose, California facility has a Research and Development department. The Research and Development department consists of five product development personnel whose job is research, development, and innovation. Since new product development efforts require only a small amount of raw materials and components, there is no need to keep inventory nor do they have any supply chain management problem similar to the other facilities. In terms of the MRP system development, no changes would be required for this facility.
Conclusion
In summary, the reader will have observed that two primary topics covered above were website and MRP system. The Riordan website was fairly simple compared to other two website. Additionally, reader will observed that the production and supply problems that exist in Riordan Manufacturing, though not fatal are still cause for concern. When the problems with production and supply are left unchecked, the culminate effects on the industry finance and efficiency can drain the company and eventually lead to that company’s down fall. The implementation of the MRP and various proposed solutions would not only alleviate the production and supply difficulties but would also help to speed efficiency allowing Riordan Manufacturing to increase its market share.

References
Riordan Manufacturing, 2008. Retrieved September 14, 2008 from University of Phoenix Student Website, https://ecampus.phoenix.edu/secure/aapd/CIST/VOP/Business/Rior dan/Internet/IndexPort.htm
Huffman Trucking, 2008. Retrieved September 14, 2008 from University of Phoenix Student Website, https://mycampus.phoenix.edu/secure/aapd/cist/VOP/Business/Huffman/InterS ite1/index.htm
Kudler Fine Foods, 2008. Retrieved September 14, 2008 from University of Phoenix Student Website, https://mycampus.phoenix.edu/secure/aapd/cist/VOP/Business/Kudler/Inte rnet/Index.htm

E-Business Evolution

Safe Shaikh — Fri, 20 Mar 2009 00:25:27 +0000

In the realm of modern businesses, it is difficult to find a business organization that does not conduct at least a part of its business on the internet. When an organization decides to enter the electronic world of e-business, that organization can find itself operating in a virtual world without borders. Suddenly that company can be receiving business from consumers and businesses located in several countries, across several time zones. Furthermore, that company possibly subject to international and ethical challenges.
E-Business
People are becoming dependent more often on computer these days. Computers are being used for all aspect of people’s life from personal to business. Furthermore, recent trend in use or perhaps addiction to internet has gain even more attention. Large portion of population worldwide is hooked to internet for popular increase in demand for emails, communication, information, entertainment and even doing business. For this new addictions trend e-business has become important part of business. “E-Business is the conduct of automated business transactions by means of electronic communications networks.” (M. Papazoglou, P. Ribbers, 2006) Today, E-Business has become a crucial part of organization in ways that it would be impossible to operate without it.
Legal Issue
There are many legal issues that companies deals with as result of conducting e-business. One is such where the information of product presented on website must be appropriately presented. Not displaying sufficient information of product can misled buyer something which can be a liability to that company. Secondly, fraud is greater risk as there is no personal one-on-one relationship between buyers and sellers through e-business. As a result of not having boundaries, buyer could be any where in world. In some instance buyer could be in country which United States does not have any international trade agreement. Additionally, it is also important for organization to consider how to handle export control restriction. For example, the buyer could be in country of Iraq conducting e-business. Therefore, the organization must be able isolate the transaction which involves export to restricted countries and take appropriate actions. The organization could face a fine if not complied with export control restriction.
Privacy and security would also important legal issue for the organization. In conducting e-business, there are always risks of computer viruses, worms, and even hacker stealing personal customer information along with credit cards information. There are many securities, and virus protection software which can help the organization in conducting e-business while reducing risk, however, these risks can never be eliminated. Therefore, legal issue of security and privacy still is concern for many if not all organization.
When e-business is conducted within the United States, the laws governing criminal activity fall within the jurisdiction of the United States. But when e-business is conducted between countries, they are governed by international law. International law is the law that governs affairs between nations and that regulates transactions between individuals and businesses of different countries. However, there is no single legislative source of international law. All countries of the world and numerous international organizations are responsible for enacting international laws. There is no single world court that is responsible for interpreting international law. There are, however, several courts or tribunals that hear and decide international legal disputes of parties that agree to appear before them. (Cheesman, Chapter 8, 2004). International laws are usually generated from four different sources. The four sources are treaties and conventions, custom, general principals of law, and judicial decisions and teachings. The courts having jurisdiction over criminal activity on the internet would be decided by the court systems in the country of origination and the country of reception. However, an e-business dispute involving possible civil litigation would be handled differently. When civil disputes develop between e-business corporations that are operating across international boundaries, determining who has jurisdictional authority over the dispute can be complicated. In most disputes, this problem can be alleviated or even prevented by both parties drafting and agreeing to a comprehensive contract.
Ethical Issue
Business ethics defines how a company integrates a core values such as honesty, trust and fairness into policies, practices, process and procedure. “ethics is a branch of philosophy that deals with what is considered to be right and wrong. Over the years, philosophers have proposed many ethical guidelines, yet what is unethical is not necessarily illegal. Ethics are supported by common agreement in a society as to what is right and wrong.” (E. Turban, D. Viehland, J. Lee, 2006) Businesses have many on going trainings for their employees to ensure all employees are following policies and procedures. Some time even good managers commit unethical act because they do not carefully think through. All companies have policies that are supposed to help managers make right decision. Even then sometime manager gives in to what they perceive to be the pressure. For example, when boss tells them “Achieve specific sale, period,” In my opinion, those mangers will do every thing they can to achieve specific sale, even if they have to break their own beliefs. This action is not acceptable. These actions are unethical. It is manager’s obligation to do what is right, just and fair. Since Enron corporate scandal, the ethic in business world has taken even more attention. Especially in e-Business, the ethical issues are even difficult to alleviate. The main reason is due to complexity in difference of culture, background, and region.
Conclusion
In Summary, almost all the companies conduct e-business via internet. Internet provides company opportunity to conduct business globally. It opens door to global trade market. It provides information, and method of exchanging data. Positive outcome as result of e-business has changed the way business operates these days. E-business is a virtual store which is open to world. It has no geographic or jurisdictional boundaries. As a result, legal and ethical issues are primary problem in conducting e-business.

References
M. Papazoglou and P. Ribbers Wiley, (2006) e-Business: Organizational and Technical Foundations (1st ed.) Hoboken, NJ
Cheesman, H. (2004). Business Law: Legal, E-Commerce, Ethical, and International Environments. Prentice-hall, Inc. A Pearson Education Company.
E. Turban, D. King, J. Lee, and D. Viehland (2006) E-Commerce: A Managerial Perspective (4th ed.) Prentice Hall Upper Saddle River, NJ