` Have you ever wondered how all those products that you buy everyday get to those stores or how that website is able to ship you what you want? Have you ever wondered how all those companies have those products ready and waiting for you? Well I can tell you that they just don't appear out of nowhere! Businesses use what is called a supply chain to make it possible for them to provide the consumers with the products they desire and need. What exactly is a supply chain and how does it ensure that everyone gets what they need? In this paper we will define a supply chain and also take a look at business to business supply chains and business to consumer supply chains and see how they differ and how they are alike.
Investopedia.com defines a supply chain as follows: "Supply chains include every company that comes into contact with a particular product. For example, the supply chain for most products will encompass all the companies manufacturing parts for the product, assembling it, delivering it and selling it." (www.investopedia.com)
There are many different kinds of products and services out there that supply consumers with the things they need or want but they all have one thing in common and that is that they use a supply chain to make this possible. There are two main kinds of supply chains today and they are called business to business supply chains and business to consumer supply chains. Business to Business supply chains will be referred to as B2B, and Business to Consumer as B2C in this paper. The major difference between B2B and B2C supply chains is the amount of channels that a product travels through before reaching the end user. B2B supply chains have less channels overall and are larger in size whereas B2C supply chains have a larger amount of smaller channels overall.
In order to understand how the two work it is important to understand the process a business will go through to reach a specific outcome. For example, if you look at a bicycle manufacturer who needs to purchase wheels for their product, there are only a few channels involved. They would go directly to a tire manufacturer and obtain the needed parts. (www.toolsgroup.com) A simple example of a B2B supply chain would be: The bicycle manufacturer -> the tire manufacturer -> the raw supplies dealers.
A supply chain is a system through which organizations deliver their products and services to their customers. The network begins with the basic ingredients to start the chain of supply, which are the suppliers that supply raw materials, ingredients, and so on. From there, it will transfer the supplies to the manufacturer who builds, assembles, converts, or furnishes a product. The chain now needs to get the product to the consumer by transporting the finished product from the manufacturer through a warehouse or distribution center. An example is that Wal-Mart has a nearby distribution center where products are delivered there and then split up to be delivered to a retail Wal-Mart.
In order to evaluate the differences between a B2C site and a B2B site it is required to know what B2C and B2B represent. B2C is a consumer that shops on the Web and a B2B is a transaction conducted between businesses on the Web (Schneider, 2004). Reviewing ethical, legal and regulatory will provide a better understanding of what the requirements are for a B2B and B2C site. According to dictionary.com, ethical is being in accordance with the accepted principles of right and wrong that govern the conduct of a profession. Legal is defined as in conformity with or permitted by law and regulatory is identified, to control or direct according to rule, principle, or law (dictionary.com).
Li & Fung is a global trading group sourcing and managing the supply chain for high volume, time sensitive consumer goods. The group is associated with strong brands such as The Limited, Gymboree, American Eagle, Warner Brothers, Bed, Bath & Beyond, Levi-Strauss. With the rise of the internet, and the thrive of the B2B intermediaries, this memo will discuss the Li & Fung's E-Commerce strategy and how to use internet to facilitate supply chain management.
In contrast, B2C companies are product driven. These products have to be highly in demand to the consumer market, and in order to be successful these companies have to sell the product or service in high volumes to make a profit. Therefore, the relationship between the company and the consumer is not nearly as maintained as that of a B2B company. The value of this marketing strategy is the transaction- as many as possible to cover the costs and make a profit. In a similar fashion, however, there is also the value of trust, as a consumer that trusts the company or the brand will often assist the company in increasing transactions (Murphy, 2008).
Although the goal of B2B marketing is to convert prospects into customers, the process is longer and more involved. A B2B company needs to focus on relationship building and communication using marketing activities that generate leads that can be nurtured during the sales cycle. B2B companies use marketing to educate various players in the target audience because the decision to purchase is usually a multi-step process involving more than one person. For example, the goal of an email campaign for B2B is to drive prospects to the web to learn about your products and services.
“Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion and all logistic activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third parties service providers and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies.’
Supply chain management is basically refers to the fundamental supply chain analysis of the organization which predominantly describes functionalities from source to the delivery point. In this process of delivery, supply chain management framework divides in four categories: In Planning the products and suppliers evaluated and selected, Sourcing pull the information process including contracting, ordering and expediting, Moving is a physical process from suppliers to end user and Paying is the financial process including payment and performance measurement.
‘Supply chain management integrates supply and demand management within and across companies. It encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, thir- party service providers, and customers’. (Web: Council for Supply Chain Management Pr...
Supply chain management has been defined as that process that involves the management of information, materials, and all the finances that are handled within and across the entire supply chain process (Christopher, 2016). The management is usually done through out the entire supply chain management from that moment when the suppliers are involved through all the manufacturing activities, different distribution activities, and the way that the products are served to the final product consumer (Turban, et al., 2002). The process also includes all the activities that different organizations offers to their customers as after sale services for purposes perfecting their services and products towards their highly valued customers (Christopher,
Xia, M. & Xia, N. (2008) 'The Complementary Effects of E-Markets on Existing Supplier--Buyer Relationships in a Supply Chain', J.Manage.Inf.Syst., 25 (3), pp.9-64.
Further, most merchants and producers face expanded worldwide rivalry and requirement to make it less demanding for existing and prospective business clients to place requests online to dispose of minimal effort suppliers. B2b ecommerce is a piece of the in general deals and advertising method and requirements to incorporate progressed characteristics planned particularly for additional complex production network connections.
B2B serves as the venue for all manufacturers, wholesalers, distributors, and retailers to convene all year long less of the hazards of travel and less of the expensive costs of traditional ways to make business. Through B2B portals, companies can exchange communications, information, and transactions as well as perform regular business processes like purchase orders, invoices, and payment.
B2B and B2C are very similar, in fact, "B2B typically takes the form of automated processes between trading partners and is performed in much higher volumes than B2C applications". (Reference.com, 2006). As B2C is "the retailing part of e-commerce and is often contrasted to B2B. (Whatis.com, 2006). B2B and B2C each has five classifications in which businesses fall under. B2B classifications are; "company web site, product supply and procurement exchanges, specialized or vertical industry portals, brokering sites, and information sites". (Whatis.com, 2006). B2C classifications are; "direct sellers, online intermediaries, advertising based models, and fee based models". (Reference.com, 2006).
In B2B market, the buying behavior is very distinct. There are large order sizes with strong purchasing power and also the process of buying is lengthy and complex due to paper work and also risks are high due to bulk purchases.