Supply Chain Management in B2b and B2c Environments

Supply Chain Management in B2B and B2C Environments

Supply chain management, whether in a traditional or E-commerce environment, involves distributing products, goods and services from point of manufacture to the delivery of the final product. Supply chain management, whether related to B2B or B2C retailers involves manufacturing, storage, distribution and delivery of products and services to consumers and other businesses. B2B supply chain management is slightly more complex than B2C transactions, as B2B wholesalers, distributors and manufacturers are typically working with larger corporate entities. For supply chain management to work in a B2B or in a B2C environment, the focus must be on provider customers with the utmost in quality services. The specific differences and similarities between supply chain management for B2B and B2C are explored in greater detail below.

According to Stephen David, CIO and B2B officer for Procter and Gamble, building a successful supply chain depends upon "the ability of manufacturers to develop a successful consumer driven system" (Reese, 2004). According to the successful business chain entrepreneur, the primary market for today's manufacturers is declining, thus "B2B supply chain management should not be focusing on consumer goods, but rather new categories" (Reese, 2004). Supply chain management in B2B must focus on the "fragmented market", comprised of very different types of consumers. B2B customers have very specific demands, and what works best in this environment is a "consumer-driven supply network that operates in real-time, is data driven and supplies products on demand" (Reese, 2004).

Supply chain for B2C sites must involve tracking the number of hits and level of traffic reaching the website, more so than in a B2B environment (Patton, 2004). According to Jupiter research, by 2006 Business to Consumer E-commerce organizations might be spending as much as $1 billion to analyze websites and account for consumer spending (Patton, 2004) in the B2C environment.

Operating in real time is important for supply chain management in B2C environments, because it allows manufacturers to "perfect real time transactions", which are typically requested of mega vending retailers (Reese, 2004).

B2B differs from B2C's in some respects, such as its reliance on other avenues of supply such as product catalogs. The largest market in the U.S. for B2B supply chain operations is providing strategic resources such as: capital equipment, direct materials and strategic services, closely followed by the commodities market including: utilities, transportation and direct materials (Kerns, Bruce 2000).

B2C capabilities include the ability of consumers in the home to log in, use auctions, direct sell, barter, order products and pay for them directly (kerns, 2000). The key way in which B2B differs from B2C are as follows: (1) B2B must handle larger transaction amounts, (2) B2C is a seller driven supply chain demand, whereas B2B is buyer driven, (3) B2C scales "linearly", and (4) B2B scales exponentially, as the number of buyers and sellers that participate increase (Kerns, 2000).

The "frequency of transactions, medium of internet exchange and knowledge that suppliers and customers have about products" also differentiate the B2B and B2C supply chain systems. B2B entities typically focus supply chain management on delivery schedules, inventory levels, specification or quality of product and product/supplier development issues (Ribbers, 2003). Additionally, B2B supply chain literature within the market emphasizes price (Ribbers, 2003). B2B's often outsource functions to reduce the cost of transactions, and typically maintain long term relationships with a few suppliers to promote efficiency and knowledge sharing (Ribbers, 2003). B2B's concentrate on profitable, upscale and larger clients as well.

Examples of B2C's include Amazon.com which sells books, records, electronic equipment and apparel directly to consumers. A B2B example is Bcop.com, which is an office supply organization that provides Boise office supplies to businesses (Malmberg, 2003). B2B e-commerce enterprises are currently larger, and expected to grow more rapidly than B2C enterprises (Malmberg, 2003).

B2B and B2C are similar in the way they change the supply chain function. Manufacturers in the chain traditionally focused their attention on brand and product management; when dealing with B2B and B2Cs however, manufacturers must focus on building customer relationships, managing web-based information, and end-customer sales initiation (Malmberg, 2003). Likewise, in a traditional commercial role the distributor often focuses on inventory financing and reseller management, but in an e-commerce situation the distributor is also concerned with end-customer sales initiation, building customer relationships and assembly-to order processes (Malmberg, 203).

Additionally the distributor must also provide an "ala carte menu of fulfillment services and handle Vendor Managed Inventory using more collaborative systems" (Malmberg, 2003). The reseller in a B2B or B2C relationship must work on setting up virtual stores, selling inventory in a virtual environment and again providing web-based information to consumers (Malmberg, 2003). In these ways B2B and B2C supply chain management are similar.

The supply chain for B2B involves web-processing from the initial point of sale to the final shipment and payment collection, as it does for a B2C. Shipment tracking and transaction management accounting must be handled in both instances (Malmberg, 2003).

The advantage that B2C's have is an expanded inventory of supplier offerings available directly to consumers without having to go through a middle man or retailer. Improved delivery reliability and order status tracking become an important part of this supply chain management process. B2C's offer consumers a greater assortment of goods that