Diagram of Internet Software Categories
eCommerce usually means consumer Internet shopping with a catalog and shopping basket type interface. Order fulfillment issues in this category often reflect backoffice integration problems between their suppliers and fulfillment warehouses. A more accurate name for this subset of eCommerce would be 'Business to Consumer eCommerce'. Some well known companies in this space are Amazon.com and eToys.com.
B2B eCommerce is sometimes misconceived to deal strictly with the purchasing of office supplies or MRO (maintenance and repair operations). This misconception is based on where the initial market penetration of Internet software targeted at the exchange of goods between businesses has occurred. A more accurate name for this subset of B2B eCommerce would be 'Online purchasing'. Some well known companies in this space are CommerceOne (with their partnership with GM), Ariba and PurchasePro.
Supply Chain Collaboration is very different than online purchasing. For starters, supply chain collaboration is concerned with manufactured products, which overall comprise a much more significant cost component for manufacturing and distribution companies than office supplies or MRO. Within a few short years Supply Chain Collaboration will emerge as a more important subset of B2B eCommerce than Online Purchasing.
Collaborative Product Data Management is one type of supply chain collaboration. Internet software is emerging for Product Data Management (PDM) enabling trading partners to exchange specifications and bills of material in real time. Agile Software is a well known company in this space, concentrating on the electronics industry.
Collaborative Planning is a second form of supply chain collaboration. Trade relations between businesses that deal with the manufacturing and distribution of product tend to be persistent. For example, a food company does not post a requirement for eggs and conduct an open bidding auction on the contract. Suppliers are certified and prices are negotiated up front.
Collaborative planning deals with dependent demand, an MRP concept. In the normal course of manufacturing and distribution, projected shortages arise. These shortages explode backward through the supply chain based on bills of material, routings and lead times. Up until now, these dependent demands have been generated by Master Production Schedule (MPS) and Material Requirements Planning (MRP) applications. The resultant dependent demands are then presented as work orders or purchase orders to the precertified trading partner in a variety of forms such as phone, fax, mail and email.
The emerging Collaborative Planning software will extend MRP across the supply chain, exploding dependent demands in real-time and delivering them through a simple, browser based interface. We refer to this new technology as business-to-business material requirements planning, or B2BMRP™. This replacement, once it starts, will hit with tremendous force. Why? Because it is orders of magnitude faster. And speed translates into huge savings in inventory coupled with dramatic improvements in service.
In spite of the fact that this type of business to business commerce is the dominant way that manufactured products and all the materials associated with those products are traded, this type of B2B commerce has received relatively little media attention. This is in part because the next generation of Internet software solutions are just now emerging in this space. The big deals to date have been in the Online Purchasing arena.
Unfortunately, most of the early Collaborative Planning software is very expensive - costing in the hundreds of thousands of dollars, and is far too complex. SCAN™ is the only software in this space that is designed and priced to scale from small-to-medium-sized companies.
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