Page 290 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes 4. Transaction Facilitators: Transact and execute purchases.
5. Aggregators: Combine demand within and across buying enterprises to use the resulting
market power to achieve lower prices from suppliers.

Market places that exemplify the information-based model help buyers and suppliers cut costs
by helping to set appropriate specifications and by streamlining interactions among the parties
constituting the value chains. They can also help them collaborate on design and other high-
value decisions. Marketplaces for supply consolidators offer search capabilities based on different
parameters as well as price data. This information helps customers trade-off cost against quality.
Both project/specification managers and supply consolidators develop and control information
that would be very hard to duplicate; in addition, supply consolidators offer highly customized,
difficult-to-replicate tools.
A new model used by aggregators is that of the "e-distributor". Like distributors in the off-line
world, e-distributors take title to the goods they sell, and aggregate those goods for the
convenience of buyers. In addition, e-distributors perform a critical service for sellers by reaching
hard-to-find buyers, such as small ones. The result, in many cases, is significant extra value for
buyers and decent profits for sellers.

The marketplaces based on the other three models – for liquidity creators, aggregators, and
transaction facilitators – focus on benefits such as reducing waste and supplier margins and
increasing the efficiency of transactions.

Example: TPN Register, a joint venture between GE Information Services and Thomas
Publishing, grew out of an initiative within GE Lighting to consolidate purchases. It was then
extended across all divisions. Finally, TPN Register expanded beyond GE to include other
leading corporations in a buying consortium. The results have been a reduction in processing
costs and in order processing time (from a week to one day for GE Lighting), and a 10 to 15 per
cent reduction in prices.
One hallmark of third-wave B2B approaches seems to be the idea of choosing a different model
for each kind of transaction. Companies purchasing a commodity, for example, might value the
liquidity, the transparency, and the price orientation of an online bourse. By contrast, companies
making highly specialized purchases might value the possibilities for customization offered by
the traditional bilateral relationship between buyer and seller. To use this tailored-solutions
approach, buyers must know which category to choose. They must develop a deep understanding
of the cost structures of all their various purchases.
The rewards of these models of e-commerce are split three ways. Sellers can reach more customers,
gather better information about them, target them more effectively, and serve them better. The
marketplaces also create value for the third-party intermediaries that typically organize them.
Intermediaries can earn transaction commissions and fees for value-added services such as
information capture and analysis, order and payment processing, the integration of buyers' and
sellers' IT systems, and consulting services. The best rewards go to buyers, however.

13.5.2 Electronic Banking

The banking business has been revolutionized by computer technology and E-commerce.
Successful e-commerce ultimately leads to some form of payment, and ideally this will involve
"electronic funds transfer" (EFT). EFTs are initiated through devices like cards or codes that let
you, or those you authorize, access your account. Many financial institutions use ATM or debit
cards and Personal Identification Numbers (PINs) for this purpose.

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