Page 289 - DMGT501_OPERATIONS_MANAGEMENT

Unit 13: Supply Chain Management and JIT

Notes
Example: This included GM-Ford-Daimler Chrysler who banded together into consortia
with their current trading partners and competitors, a joint venture now called Covisint. Other
well-known examples include Forest Express and Aero Exchange International, in the forest
products and airline industries, respectively.
There are three types of traditional B2B marketplaces:
1. Controlled by sellers,
2. Controlled by buyers, and

3. Controlled by neutral third parties.
Marketplaces controlled by sellers are usually set up by a single vendor seeking many buyers.
Its aim is to create or retain value and market power in any transaction.

Example: Cisco Systems has set up a corporate website that enables buyers to configure
their own routers, check lead times, prices, and order and shipping status, and confer with
technical experts. The site generates $3 billion in sales a year.

Marketplaces controlled by buyers are set up by or for one or more buyers with the aim adding
value to the buyer and providing negotiating power. Many involve an intermediary, but some
buyers have developed marketplaces for themselves.

Example: Japan Airlines, a big purchaser of in-flight consumable items such as plastic
rubbish bags and disposable cups, posts procurement notices online in order to find the most
attractive suppliers.
Marketplaces controlled by neutral parties involve third-party intermediaries who match many
buyers to many sellers.

Example: Fast Parts is one such intermediary. It operates an anonymous spot market for
the trading of overstocked electronic components. It receives notice of available stock from
sellers, and then matches buyers to sellers at an online auction. Sellers get higher prices than
they would through a traditional broker; buyers get market-driven prices that are lower than
brokers', plus guaranteed quality because Fast Parts inspects the products; and Fast Parts earns
up to 8 per cent commission. All parties benefit.

13.5.1 Third-wave B2B Marketplace Models

Using a different classification, Mckinsey in a survey identified five distinct E-marketplace
models that differ in the services they provide. The classification is based on the focus and the
capabilities that the e-marketplace delivers. Two of the models focus on collecting and
distributing information, three on bringing down purchase costs and improving transactional
efficiencies. The classification is as follows:
1. Liquidity Creators: Create liquid dynamic markets between commodity products traded
between buyers and sellers.
2. Supply Consolidators: Identify relevant supply base and conduct purchases.

3. Project/Specification Managers: Aid in planning and managing complex projects or
processes.

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