Lei Shi

Chapter 12



Case Study


1: If you were the owner of a small chemical company, what concerns would you have about joining Elemica?

Although small and medium firms do not need to have an ERP system to connect to Elemica, they do require some level of technological sophistication even to use the online portal. Elemica offers a Web portal for those companies not as technically sophisticated as the larger global chemical companies. For all firms, Elemica reduces the burden on IT staff. As a small firm, you would be concerned that you would be able to respond to requests for large quantities of commodities that might be requested by partners


2: Elemica claims to provide a community for participants in which 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?

The chemical industry seems to be interrelated with a history of firms selling and buying from each other. It seems like in the chemical industry at one point end up with spare inventory they want to sell, and/or come up short on specific chemicals preventing order execution. Elemica hubs are perceived as a neutral trading platform where we can all benefit from lower cost to serve and greater effectiveness.


3: Review the concept of a private industrial network and describe how Elemica illustrates many of the features of such a network.

Like a private industrial network, Elemica is focused on long-term relationships with partners to reduce long-term costs for the firm. Unlike a private industrial network, itís not just a single large firm that controls the network, but rather it is owned by key industry members trying to coordinate the transactions in an entire industry.




1: Explain the differences between total B2B commerce, and B2B
Total B2B is the total flow of value among firms.  B2B commerce is all types of computer-enabled inter-firm trade.  B2B e-commerce is that portion of B2B commerce that is enabled by the Internet.


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

The two methods of purchasing goods are contract purchases and spot purchases. Contract purchases are long-term agreements to buy a specified amount of a product. There are pre-specified quality requirements and pre-specified terms. Spot purchases are for goods that meet the immediate needs of a firm. Indirect purchases are most often made on a spot purchase basis in a large marketplace that includes many suppliers.


10: Identify and briefly explain the anti-competitive possibilities inherent in Net marketplaces.

The anti-competitive possibilities inherent in Net marketplaces include:


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

One barrier is that participating firms are required to share sensitive data with their business partners up and down the supply chain. This is a huge corporate mindset change since what was previously considered proprietary and secret must now be shared. Furthermore, in the digital environment, it can be difficult to control the limits of this information sharing. Information that a firm willingly gives to its largest customer may wind up being shared with its closest competitor.


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

In cloud-based B2B systems, much of the expense of B2B systems is shifted from the firm to a B2B network provider, sometimes called a data hub or B2B platform. The cloud platform owner provides the computing and telecommunications capability; establishes connections with the firmís partners; provides software on-demand (software-as-a-service or SAAS) to connect the firmís systems to its partnersí systems; performs data coordination and cleaning; and manages data quality for all members. Network effects apply here: the cost of these tasks and capabilities is spread over all members, reducing costs for all. B2B network providers also provide communication environments and file storage services that allow partners to work together more closely, and to collaborate on improving the flow of goods and transactions. B2B network providers charge customers on a demand basis, rather than on a percentage of their transactionsí value, depending on their utilization of the network. Another advantage of cloud-based B2B systems is that, unlike traditional firm-based B2B systems, cloud-based B2B data networks can be implemented in short periods of time to respond to corporate mergers and rapidly changing markets.




2: Examine the Web site of one of the e-distributors listed in Figure 12.9, and compare and contrast it to one of the Web sites listed for e-procurement Net marketplaces. If you were a business manager of a medium-sized firm, how would you decide where to purchase your indirect inputs Ė from an e-distributor or an e-procurement Net marketplace? Write a short report detailing your analysis.

E-distributors are the most common type of electronic marketplace; they sell products on an "as needed" basis. efficiently organizes goods from more than one source for potential buyers. E-distributors such as offer a reasonable compromise between price and service, and provide the convenience of one-stop shopping for a wide range of products from processed materials to finished goods. This is especially valuable to customers in the MRO or office supplies market. Buyers like placing one order, tracking one order, and having only one invoice to pay.