Part TWO - News Business Career Jobs Education World Books High Tech Online Articles

Business to Business eCommerce Technical Overview

An eCommerce Management Primer (Part 2)

Types of eCommerce Solutions
Technical Elements of B2B eCommerce
B2B eCommerce Order Flow / Site Functionality

Over the last few years, eCommerce has become the buzzword of the business and the finance communities. As a result, more and more companies are jumping into the Internet and eCommerce for fear of being left behind. Boards are directing CEOs to get eCommerce initiatives going and to get them going fast!

The problem is that in a lot of cases the management does not have a clear understanding of what eCommerce is or can be, and how it is different from the traditional bricks and mortar commerce.

This is the second of a series of articles that attempt to provide a basic technical overview of the basic elements of eCommerce and to detail some of the differences these systems have over traditional commerce. Part two focuses on a basic description of the technical elements and process flow for a generic business to business (B2B) solution.

Types of eCommerce Solutions

eCommerce sites can be divided into two basic types: business to consumer (B2C) and business to business (B2B). In the second wave of eCommerce solutions, companies focused on turning their purchasing operations into the B2B eCommerce operations. Notable initiatives include the recent announcement by Ford and General Motors of their intent to handle all procurement through a joint B2B site and sites like eSteel (which provides a market for the purchase and sale of steel - bars, rolled, etc.).

Technical Elements of B2B eCommerce

The basic technical elements of a B2B eCommerce solution are the same as a B2C solution with the following potential additions:

· Tender management system

A tender management system is a system that allows businesses looking to purchase goods/services to issue digital tenders. The tenders will include the descriptions of goods/services required, date/time, price (optional), quality requirements, and any other miscellaneous terms such as shipping and payment terms.

· Bid management system

A bid management system is a system that allows the suppliers on the system to respond to tenders with the appropriate details for their bids. The data collected will depend on the type of B2B system, but will include goods/services offered, date/time available for delivery, price, quality issues, and other miscellaneous terms.

· Email facilities

Email facilities will be used in a number of different areas, including bulk mailing for supplier lists and responses/negotiations between a purchaser and supplier. As a result of the sensitive nature of the bidding process, a secure version of the email system may have to be provided (encrypted).

· Online negotiation system

The online negotiation system (if present) will be a live chat method that allows two parties to discuss a tender/bid pair securely online. This may include support for a round table discussion of a tender (with a group of suppliers) or may instead be handled via teleconferencing outside the system.

· Contracts issuing system

The contracts issuing system is an extension to a basic B2B system that allows the participants to issue digitally signed contracts and to store/manage these contracts online. This aspect of the B2B system may be handled instead offline (via traditional paper contracts).

· Electronic Funds Transfer (EFT) system

The EFT system is a bank to bank transfer system that allows the two parties of a transaction to settle the transaction through a direct withdrawal and deposit system.

· Digital certificate system for user authentication

Digital certificates that definitely establish a user's ID may be used in addition to username/password systems in order to provide greater security to B2B sites. These certificates are becoming more common as B2B systems transact higher dollar value transactions.

B2B eCommerce Order Flow / Site Functionality

The order flow and site functionality for B2B eCommerce sites can be broken down into seven main steps - issuing a tender, distributing tenders to specific companies/lists, receiving bids, negotiating contracts, issuing and tracking contracts, recording fulfillment of contracts, paying for services/goods via credit card / EFT. The following narrative describes the process and assumes that all parties are already members of the B2B system.

· A registered purchaser enters the site and logs in

1. A site may use digital certificates as an additional method of verifying a user's identity.

· The purchaser records the details of the goods/services they would like to purchase

1. Purchaser either creates a new tender or accesses an tender that has not yet been issued

2. Purchaser fills out all required information on the goods/services they wish to purchase

3. Purchaser proceeds to the issue tender function after the tender has been completed

· The purchaser selects criteria as to which users should receive the tender

1. The purchaser may choose to issue the tender to all interested parties or to a selected list of companies that have been pre-screened.

· System sends notification via email to appropriate suppliers that a new tender is available

1. Through either the secure email system or through regular email (without details), the system sends tender information to the appropriate suppliers.

2. Email may include attached tender document or may just provide a secure link to the tender location on the B2B site.

· Notified suppliers review new tenders

1. This process may take place online or through a review of the attached formatted tender documents.

· Interested suppliers issue a bid for the tender

1. Supplier login into the B2B site and record the details of their bid.

2. System may allow suppliers to attach a bid document to the tender or email it securely to the prospective purchaser.

3. System may prevent suppliers from bidding on a tender after the specified close date, or may just rely on a manual process by the purchasers.

· System notifies the purchaser of a tender close

1. Notification could be through email or a daily report of closed tenders.

2. System will provide a list of suppliers who submitted a bid before the tender close date.

· Purchaser reviews bids for tender

1. This process may take place online or through a review of attached bids.

2. Certain aspects of bids may be presented to the purchaser through the B2B site in a form that allows for easy comparison.

3. A B2B site could include weighting of criteria and provide automatic bid ranking based on the purchaser defined criteria for the specific tender.

· If required, the purchaser contacts supplier(s) to clarify bids

1. The contact could be through secure email or telephone/fax.

2. More sophisticated systems will provide online discussion rooms for one-on-one and group tender clarification meetings (real time).

3. As technology improves, some B2B sites may offer video conferencing options for the clarification process.

· Purchaser approves a bid

1. Bid is marked as approved and stamped with a digital certificate.

· System notifies suppliers of success or failure of bids

1. Successful suppler will be notified of how and when to contact the purchaser to clarify any additional details.

2. Suppliers for unsuccessful bids are notified and possibly given reasons that their bid was not chosen.

3. Sophisticated systems may provide a ranking system for second and third bid choices.

· Successful bid holder acknowledges approval and negotiates delivery specifics

1. Acknowledgement is recorded in the system and marked with the supplier's digital signature.

2. Supplier provides any details for delivery and payment details as required by system/purchaser.

· Supplier arranges for deliver of goods/services

1. Supplier provides goods/services through standard channels.

2. Advanced systems for services may provide tracking systems for time and effort contracts and well as reporting for purchaser to track progress.

3. Goods systems may provide links to shipping systems so that supplier/purchaser can track shipments.

· Delivering party marks with digital signature that the goods/services have been filled

1. Done online through B2B system.

2. Delivery system may provide wireless or web-based integration so that signature for receipt of delivery is captured by B2B system directly.

· Receiving party marks with digital signature that the goods/services have been filled

1. Allows purchaser opportunity to officially indicate that goods/services were received in good order.

2. May result from email notification or a standardized timed process (weekly/monthly).

· System transfers appropriate funds from purchasers account to sellers account via credit card transaction or bank to bank transfer via EFT

1. After approval from the purchaser, B2B system securely connects to a bank and transfers money from the purchaser's account to supplier's account.

2. System records success of EFT payment or any errors reported (NSF etc.).

3. Parties are notified of completed transaction and contract is stored for reference.

Leon Salvail is the CEO of Global Village Consulting Inc. He can be contacted at lsalvail@global-village.net

© Copyright 2001. Galt Western Personnel Ltd. Unless otherwise specified, you may reprint this article, quote from it, use it in research or projects, duplicate it or distribute it. Credit of authorship and source MUST be given to galtglobalreview.com. Ownership of Copyright remains with Galt Western Personnel Ltd.

Return to Top

Business News / Business Roundup - Australia / Canada / Europe / United States / Careers / Classified / Information Technology / New Technology / Education News / World Facts / Book Reviews / Archives/Research