Doing business online — Private B2B Exchanges

May 24


Nowshade Kabir

Nowshade Kabir

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Business ... are the building blocks of an ... If one of these ... fails to live up to its ... business starts to ... How to minimize the risks, get a better monitor


Business processes are the building blocks of an enterprise. If
one of these processes fails to live up to its expectation,Doing business online — Private B2B Exchanges Articles
business starts to flounder. How to minimize the risks, get a
better monitoring of the processes and, at the same time, reduce
costs involved? The answer is – business process automation.

Although, automated business processes based on online
technologies can create incredible value to existing business,
many companies are slow to adopt technological innovations and
reap benefits from them. However, lately, things have started
to change! According to a recent poll conducted among mid size
companies shows 52 percent of respondents plan to spend over
a million dollar on business process automation. Large
companies – early adopters of online business processes – have
been immensely profiting from the value created by process
automation. Intel recently announced that it saved one billion
dollar last year alone thanks to online business process

In broader sense, business process management technology
delivers solutions to understand, analyze and simulate business
process models. Companies adopt this technology to streamline
their business operations, lower overhead expenses, reduce
maverick buying, reduce paper-based – mistake
prone – transactions and get better control. The ultimate goal
is to make the corporation a fully process-managed enterprise,
transformed through strategy, design, realization and actual

Companies require streamlining their business processes to help
solve various crucial but specific problems, such as:

- An electronic supplier, in order to stay competitive, requires
reducing order fulfillment cost aggressively.

- A merchant needs to reduce shipping time by better monitoring
his inbound shipping.

- A manufacturer needs to cut production cost by reducing
manufacturing time of a key product.

- A bank needs to develop and market a financial product faster
than its competitors.

- A large distributor needs to consolidate buyers and suppliers
to bring efficiency to its business.

Although, business processes are wide in range; and there are
many complex issues that require meticulous work, automation
of some basic processes may bring notable result for virtually
any company. These processes include supply chain, procurement,
logistics, inventory control, etc. By adopting an online business
to business exchange companies can streamline most of these
business processes bringing added value to their operations.

A B2B exchange is a unified online platform, where buyers and
sellers login to communicate, collaborate and make business
transactions. A private B2B exchange, mostly, consolidates
suppliers and buyers of a specific company, which owns and
operates the exchange.

There are two ways of integrating B2B exchange to automate
business processes. A company can participate in existing B2B
exchange or create its own private exchange.

While for small companies, it is more viable to participate in
a major B2B exchange that has required components, larger
companies should consider creating their own B2B exchange.

The profits companies can reap from joining an existing B2B
exchange or creating their own private one could be enormous.

Customer Base Development

A supplier, once registers with a B2B exchange, gets immediate
access to a large community of prospective buyers of his products
or services.

Increase Revenue from Existing Customers

Business process automation allows companies develop products
faster, buyers get faster and easier access to product
information, receive quicker response to their requests,
get better customer support and may buy products online.
These turn into more sales.

Add Profit from Value Added Services

Once the exchange is set as primary sales channel, available
free resources can be used to create more value added services
for clients. Some of the services that the exchange may offer
also can be used to generate more value.

Reduce Order Processing Cost

The supply chain solutions of a B2B exchange may allow sellers
to reduce order processing cost significantly. Studies show
that cost of processing a purchase order can be reduced from
US$ 70 down to US$ 6 only.

Sales and support costs

By automating sales and customer support processes companies
can reduce over head costs over 25-30% easily.

Inventory keeping costs

Clearer visibility and forecasting ability allow companies
considerably reduce inventory keeping costs.

Since an existing B2B exchange may not have all the necessary
features and functions, a good option is to build a private
exchange based on one’s own specific business process
automation need. This exchange, at its minimum, should be able
to cover major portion of supply chain and inventory control.

The following elements should be integrated to create
substantial value to a private B2B exchange:

Supply Chain Management

Supply chain management is the core solution of an exchange
and can deliver great values to existing systems.
Implementation of this solution will help achieve incredibly
high return on investment. Business process automation in this
component of the exchange includes both supplier and buyer–side
quotation, requisition, purchase order and invoice.


This is the venue where the exchange owner company will post
their products for sale. A shopping cart should be integrated
to the electronic marketplace in order to automate the buying
process. The offered-for-sale products will be directly
related to inventory control management component of the


Electronic auction system can use both English and Dutch
auction methods. For convenience the auction component can
be integrated to the electronic marketplace.
Online auction helps liquidate surplus goods easily.

Reverse Auction

This solution allows automate electronic procurement, where
suppliers compete for a business deal real time online.

Members Storefront

The participants of the Private Exchange – both buyers and
sellers of the exchange owner company get a Storefront that
reflects profile of the company, their products and other


A Forum or Discussion Board is an organized, on-line interactive
message board where participants conduct discussion on a set of
topics by posting questions, comments and responses.

Directory of Companies

This is a listing of all registered participants – buyers and
sellers of the exchange owner company – either by business
category or by alphabetical order. An advanced search engine
tool can be incorporated in order to find a company based on
data provided.


E–catalog is a hierarchy of product and service categories.
All products and services handled by the exchange owner company
should be consolidated in the catalog.

Private B2B exchange is a powerful concept, which engulfs a
fairly big portion of business processes requiring automation.
This is more like a business ecosystem that has an ability to
change the way companies think and do business and create
tremendous value to their owners.