E-Commerces Effect on B2B Relations - Essay Example

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E-Commerces Effect on B2B Relations

Organizations typically participate in more than one exchange in order to derive network advantages from complementary goods and services. Participating in an existing web-enabled B2B exchange allows organizations to reduce their own online start-up costs and to benefit from lower customer acquisition costs. (Kabir, 2004).
"Today, supply chain management is far more important than manufacturing as a core competence; so much so that it's possible, as Nike and Cisco Systems have amply demonstrated, to dominate the market for a product without owning so much as a single factory" (Taylor, 2003).
Online business-to-business (or B2B) exchanges are widely used in commercial and industrial sectors be it automotive or retailing. The Wall Street Journal (2003) reported that US businesses spent $482 billion in B2B transactions, up 242% from 2001. It was predicted that by 2006 $5.4 trillion in goods and services would be transacted B2B. Bandyopadhyay et all (2006, 512).
B2B exchanges lower the cost to buyers through the automated nature of the procurement process. Further transaction cost falls occur with the use of reverse auctions. ...
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B2B exchanges provide a multi-node alternative approach to managing the flow of information, transactions, products and money. 'Supply webs (or vortals) serve industry sectors by integrating the supply chain systems of various buyers and sellers creating virtual trading communities.' (Turban et al, 2006: 282)…
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