Empowering Suppliers for Integrated Business-To-Business E-Commerce

Business-to-Business E-Commerce

Empowering Suppliers for Integrated Business-to-Business E-Commerce

The Microsoft supplier enablement initiative was created to help suppliers of all sizes reach customers more effectively through multiple electronic sales channels.

Abstract

This guide outlines one of Microsoft’s key business-to-business e-commerce initiatives, an integrated strategy for empowering suppliers to take advantage of the power of the Internet to extend their selling capabilities. The Microsoft supplier enablement initiative makes it easy for companies of all sizes—from the largest global enterprises to the smallest home-based businesses—to differentiate their products and services and sell more effectively through multiple electronic sales channels including their customers’ procurement systems, e-marketplaces, and directly through their own Web sites. In addition Microsoft supplier enablement solutions can significantly increase business agility and lower costs. Working closely with partners, Microsoft offers supplier enablement solutions that can be implemented rapidly and will scale to accommodate the growth of any business.

© 2002 Microsoft Corporation. All rights reserved.

THIS IS PRELIMINARY DOCUMENTATION. The information contained in this document represents the current view of Microsoft Corporation on the issues discussed as of the date of publication. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information presented after the date of publication.

This document is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS DOCUMENT.

Microsoft, Windows, and the Windows logo, SQL Server, BizTalk, bCentral, .NET Initiative, and MSXML are registered trademarks of Microsoft Corporation.

Other product or company names mentioned herein may be the trademarks of their respective owners.

Microsoft Corporation • One Microsoft Way • Redmond, WA 98052-6399 • USA

01100

Contents

Introduction 4

Roles and Challenges in Business-to-Business E-Commerce 5

Roles in B2B E-Commerce 6

The Supplier’s Perspective 6

The Supplier’s Perspective 7

Microsoft’s Integrated Strategy and Solutions 8

Empowering the supplier 9

A Variety of Selling Channels 9

Why Item Number and Price Aren’t Enough 10

Basic Supplier Challenges 11

Making Products and Services Available to Multiple Business Customers 11

Receiving Orders from Multiple Customers 12

Managing the On-Line Business 12

enabling Technologies 14

Open Standards 15

Microsoft Applications and Technologies 15

The MICROSOFT solution FOR Supplier enablement 18

empowering suppliers of all sizes 20

Different Types of Suppliers 20

Low Complexity & Small Business Suppliers 20

Medium Complexity Suppliers 20

Enterprise-Scale Suppliers 21

Supplier Enablement Solutions in the Real World 22

Partners 25

Original Equipment Manufacturer (OEM) 25

Independent Software Vendor (ISV) 25

Application Service Provider (ASP) 25

Implementation Partners (MCSP and Solution Integrators) 25

Business Value Differentiators 26

Why Microsoft? 26

Conclusion 27

Assure Your Place in Tomorrow’s Electronic Supply Chain 27

For More Information 27

28 Empowering Suppliers for Integrated Business-to-Business E-Commerce

Introduction

Today’s business-to-business (B2B) e-commerce environment offers companies of all sizes dynamic and exciting business opportunities, but it is rife with uncertainties and challenges. Although most analysts still expect the volume of goods and services sold through B2B e-commerce to climb into the trillions of dollars worldwide in the next few years, the uncertainty seems to be growing. In the face of the all of the confusion surrounding B2B e-commerce, most companies are struggling to understand where their real opportunities lie and how they can make strategic technology investments that align with today’s business objectives while providing the flexibility to help them respond to rapid changes in the business landscape.

To help companies make informed decisions and capitalize on the right opportunities, Microsoft offers a new initiative that includes solutions designed to help companies integrate business partners more effectively. While this notion encompasses a wide range of business challenges and solutions (including supply chain management, procurement, and CRM), this white paper focuses specifically on one concept: supplier enablement. The Microsoft supplier enablement initiative and technology solutions are aimed at helping companies of all sizes to sell to their trading partners more effectively by integrating with customers’ procurement systems, as well as e-marketplaces, and other electronic sales channels—all from a single e-business foundation. No matter how large or small a business is, or how complex or simple its business processes, Microsoft supplier enablement solutions will make it easier for your company to reach its customers through whatever purchasing method they prefer.

More specifically, the Microsoft supplier enablement solutions leverage existing and new technology investments, open technology standards, and partnerships to empower suppliers to reach the broadest set of buyers by selling both directly from and beyond their own Web site through a range of cost-effective, high-performance solutions that offer superior scalability, reliability, and time-to-market.

Roles and Challenges in Business-to-Business E-Commerce

Before solving key issues in business-to-business e-commerce, it is important to understand the key roles that companies or individuals within companies play. There are four primary roles in B2B e-commerce. Every company plays at least one of them, and many companies play multiple roles. Diagram 1 shows three of the roles (web services live within and between the three others)

·  Suppliers: Businesses that market and sell goods or services directly to business customers through traditional or other sales channels, ideally selling directly to their customers’ Web-based procurement systems and electronic marketplaces.

·  Buyers: Customers and businesses that purchase goods and services directly from suppliers, either through traditional means or electronically through self-service procurement systems, ERP-based procurement applications, and electronic marketplaces (private or public). Examples of buy-side applications include those from vendors such as SAP, Ariba, Clarus, PeopleSoft, Commerce One, Oracle and many others.

·  Market Makers: Third-party organizations that run e- marketplaces using Internet technologies to connect multiple buyers with multiple suppliers so that participants can reach new trading partners, conduct e-commerce, and take advantage of Web services such as payment, logistics, and collaboration.

·  Web service providers: Third-party organizations that provide buyers, e-marketplaces, and suppliers with Web-based services—including payment, authentication, logistics, credit, business registries, and many others —necessary for completing B2B e-commerce transactions and collaboration.

Each role has distinct business and technical challenges, but there are some common themes. For buyers, market makers, and Web service providers, the primary issue is liquidity. Success depends on the ability to reach the critical mass of trading partners and transaction volume necessary to provide sufficient return on investment and create a viable, sustainable business.

Roles in B2B E-Commerce

Diagram 1

Suppliers face the difficult challenges of maintaining the ability to sell effectively to all their customers, both in traditional channels and through emerging e-commerce channels, while finding a way to differentiate themselves from the competition in those new electronic environments.

As a result, while it has been relatively easy to convince buyers and market makers of the value of B2B e-commerce, suppliers have been much slower to come around. And without a critical mass of suppliers, the savings from procurement systems can’t be maximized and the liquidity that e-marketplaces require will be impossible to achieve.

The Supplier’s Perspective

Arguably, the number one reason that suppliers have been reluctant to take advantage of B2B e-commerce is that while electronic trading offers clear, easy-to-understand benefits for buyers, the value proposition for suppliers has been much less clear. Suppliers must look at the e-commerce landscape as it relates to their own business ecosystem and their ongoing efforts to drive maximum revenue and benefits. And all suppliers have different types of customers that must be served through some combination of traditional and electronic methods. In addition, e-commerce systems must integrate with and take advantage of existing internal systems (Diagram 2). Finally, electronic channels must offer suppliers the ability to differentiate themselves and expose their business value to their customers in order to compete effectively.

The Supplier’s Perspective

Diagram 2

From the supplier’s perspective, a technology investment must fulfill a number of objectives that are common to companies of every size and complexity:

·  It must make measurable impact on the supplier’s business through:

o  Increased revenue

o  Increased efficiency

o  Lower costs of doing business

o  Increased agility

o  Improved customer service and satisfaction

·  It must allow suppliers to differentiate themselves and compete more effectively by providing:

o  The ability to expose the supplier’s full value proposition and brand in electronic form

o  Lower cost and faster acquisition of new customers

o  Increased business from existing customers
It must leverage the existing strengths and investments of the supplier through:

o  The ability to enhance and compliment existing business processes

o  The ability to enhance and complement existing technology investments (ERP, supply chain, CRM, logistics, collaboration, etc.)

o  The ability to increase overall business intelligence and decision-making abilities

Microsoft’s Integrated Strategy and Solutions

Microsoft and its partners understand the challenges businesses face in trying to achieve their B2B e-commerce goals. To meet the needs of suppliers throughout the world, we have built our strategy and solutions around two basic principles:

·  Empowering the supplier: All suppliers have a common goal—to sell more effectively to business customers through the channels that are available to them, including procurement systems, e-marketplaces, and directly via the Web. At the same time, every supplier has unique characteristics that set it apart from its competition. Empowering the supplier means providing the tools needed to allow suppliers to reveal in electronic form not just part numbers and prices, but their true capabilities and competitive advantages.

·  Enabling suppliers of all sizes: Suppliers come in all sizes and with all levels of complexity, from small businesses with minimal IT capabilities and limited budgets to the most demanding enterprises with complex products, services, and integration challenges. Enabling suppliers of all sizes entails creating solutions that solve business issues for companies of all sizes and seamlessly scale as companies grow and technology needs become more complex.

Empowering the supplier

For an electronic commerce solution to be truly effective it must empower suppliers to sell through whatever channel their customers prefer (procurement, marketplaces, etc.) without adding unnecessary effort. Solutions in the Microsoft supplier enablement initiative are built on open standards (such as XML), core technologies (such as Microsoft Windows 2000 the Microsoft .NET Enterprise Servers®), and industry partnerships that provide all of the capabilities needed for today’s electronic supplier.

A Variety of Selling Channels

A wide range of electronic selling channels exist today. One hypothetical example—imagine a maker of industrial supplies based in Brazil that sells products directly to customers all over the world via its Web site, to its biggest customers in North America and Europe through their electronic procurement systems, and to a wide range of additional customers through vertical and regional marketplaces. Because all of those external systems may use different platforms, technologies, communication standards, and data formats, integration can be complex and costly. To be truly valuable for the supplier, a solution must insulate a supplier’s processes and strengths from the complexities that exist outside of its control. To target these issues directly and empower suppliers, we have created the Microsoft Solution for Supplier Enablement (Diagram 3).

Diagram 3

Why Item Number and Price Aren’t Enough

Some solutions offer suppliers the ability to make their goods and services available and take orders electronically, but stop far short of truly empowering the supplier. In some cases, these solutions actually threaten their existing business by reducing a company’s ability to differentiate itself and expose the true value of its products or services.

For example, if a supplier of automobile parts has traditionally competed by offering superior, customized products and great service at a premium price, simply publishing a catalog of goods and services to a marketplace or procurement system could make those items appear as peers to lower-priced, lower-quality items. Buyers may only see the part number, description, and price, leading them to choose the lower-priced item. This disempowers the supplier and can result in misinformed buying decisions by their business customers and ultimately, lost sales for the supplier.

Additionally, many sellers want to promote their brand and capabilities along with their products and services, and need a way to effectively interact with their customers and build stronger customer relationships, even while selling electronically.

Basic Supplier Challenges

For suppliers that are considering whether to embrace B2B e-commerce, it is important to understand the business and technical challenges, as well as the functionality necessary to achieve success online. These challenges fall in three major categories:

Making Products and Services Available to Multiple Business Customers

The first step in any electronic selling environment is providing suppliers with the ability to get their products and services to market. Several challenges must be overcome to make this possible:

o  Catalog considerations: What separates a good catalog from a bad catalog? The characteristics of successful electronic catalogs include the ability to create and manage custom catalogs, including catalogs that provide customized pricing for individual customers or specific selling channel. Interaction with existing sources of product, pricing and inventory information (ERP, supply chain, and other back office applications) is also critical. Additionally, an effective catalog system should provide Web-ready information (photos, short and long descriptions, links to additional information, etc) and proper classification data (such as UNSPSC) to be effective with customer applications.

o  Catalog publishing: Any effective solution must provide the ability to publish product and pricing information in whatever format is required to meet the needs of any customer, without adding new layers of complexity for the supplier.

o  Direct buyer interaction: As a supplement to catalog publishing and directly tied to the suppliers’ ability to differentiate themselves, an effective sell-side e-commerce application must go beyond simply passing data between buyer and supplier, it must also enable collaboration between applications and the people that use them. This functional requirement is known by Microsoft as Remote Shopping and has been given different names by technology vendors of buy-side applications (Round Trip/OCI – SAP/Commerce One; Punch Out – Ariba; Tap Out – Clarus; etc). Not only does the supplier’s solution need to have this capability, but it must understand the standard ways that different customers have of interacting.