Chapter 12

Case Study:

1.  If you were a small chemical company, what concerns would you have about joining Elemica?

Is the cost worth the benefits of joining Elemica? 

What do you lose by being in Elemica’s community platform?  “It unites community members by linking together their enterprise systems.”

2.  Elemica provides a community for participants where they can transact, coordinate, and cooperate to produce products for less.  Yet these firms also compete with one another when they sell chemicals to end-user firms in the automobile, airline, and manufacturing industries.  How is this possible?

This is possible because Elemica is like a network or trading hub that caters to this particular industry.  It allows companies and firms of all sizes to compete without a middleman.  This helps level the playing field and improve efficiency.

3.  Review the concept of private industrial networks and describe how Elemica illustrates many of the features of such a network.  In what ways is it different from a private industrial network?

Elemica facilitates transactions of all types including order processing and billing, and logistics management.

Diminish communication barrier and reduces overhead and errors.

Elemica offers cloud-based solutions for four area: Logistics Management, Customer Management, Suppler Management, and Sourcing Management.

Gives safe and reliable deliveries.



1.  Explain the differences between total B2B commerce and B2B e-commerce.

Before the Internet, B2B referred to the procurement process.  The term now refers to all types of inter-firm trade to exchange value across organizational boundaries.  It does not include transactions that occur within the boundaries of a single firm.

B2B e-commerce is a term to describe specifically that portion of B2B commerce that is enabled by the Internet, including mobile apps.

5.  Name and define the two methods of purchasing goods.

1.    Contract purchasing—involves long-term written agreements to purchase specified products, under agreed-upon terms and quality, for an extended period of time.

2.    Spot Purchasing—involves the purchase of goods based on immediate needs in larger marketplaces that involve many suppliers.

10.  Identify and briefly explain the anticompetitive possibilities inherent in Net marketplaces.

Some anticompetitive possibilities could be:

·       It could be biased against suppliers because they can force suppliers to reveal their prices and terms to other suppliers in the marketplace.

·       Big firms could collaborate and force suppliers to sell at lower price.

·       Access to some markets dominated by large firms could force small firms to pay higher prices.


15.  What are the barriers to the complete implementation of private industrial networks?

·       Concern with sharing proprietary and sensitive data which could potentially be shared with its closest competitor.

·       Integrating private industrial networks into existing enterprise systems and EDI networks poses a significant investment of time and money

·       Requires a change in mindset and behavior for employees and suppliers

o   Recognize fate is intertwined with their suppliers and distributors

o   All lose some of their independence

20.  What is a cloud-based B2B platform and what advantages does it offer?

The cloud platform owner provides the computing and telecommunications capability; establishes connections with the firm’s partners; provide software on-demand to connect the firm’s systems to its partners’ system; performs data coordination and cleaning; and manages data quality for all members. 

Advantages are the expense of B2B systems is shifted from the firm to the B2B network provider, and the cost of these tasks and capabilities is spread over all members, reducing costs for all.



#2.  e-distributors vs e-procurement.  For medium-size firm, where would you decide to purchase your indirect inputs?


Home Depot – Spot Purchasing

Ariba – Long-term Sourcing

Offers reasonable price and services.  Have variety of finished and unfinished good. 

Offers their suppliers online catalogs and services. Eliminates managers and streamlines orders to help reduce cost.

e-distributor – “are the most common and most easily understood type of Net market-place.  They provide an online catalog that represents the product of thousands of direct manufacturers.  They are also independently owned intermediaries that offer industrial customers a single source from which to order indirect goods.”

e-procurement—“are typically used for long-term contractual purchasing of indirect good; they create online horizontal markets, but they also provide for members’ spots sourcing.”  They offer hundreds of suppliers. “They are independently owned intermediary that connects hundreds of online suppliers.”


For a medium-size firm, it would probably be an advantage to use an e-procurement system for the cost of goods.  However, they would have to invest in the cost of joining the e-procurement system.  It does depend on their needs and if they want to join a system.  Otherwise e-distributors are streamlined and convenient.