CHAPTER 11· BUSINESS-TO-BUSINESS INTERNET MARKETING
Online purchasing auctions: Real-time online purchasing auctions are used by buyers
and suppliers globally. General Electric (GE) involves both established and non-estab-
lished suppliers in e-auctions. The model is of a web-based electronic bidding
mechanism that operates in a similar way to those held in traditional auction rooms
and tendering processes. However, in the case of GE the aim is to drive costs down via
a competitive, open bidding process. The downward movement of prices is some-
times referred to as a ‘reverse auction’ as opposed to a bidding situation where prices
are driven upwards. GE purchasing managers do not always select the lowest bid as
they will assess the potential risks associated with the supplier: say, the ability to fulfil
the order, quality and requirements for after-sales service issues, rejection rates, qual-
ity of goods. An emergent benefit of this model is that e-auctions allow companies to
monitor competitive pricing, which helps the organisation reduce total costs.
E-fulfilment: Although not currently referred to by many as a business model, the
delivery of goods in a timely and appropriate fashion is central to the re-engineering
of the supply chain. According to a survey, ‘fulfilment’ will be an area of significant
growth for businesses operating online. However, over 80% of organisations cannot
fulfil international orders of tangible goods because of the complexities of shipping,
although there are some geographical locations (e.g. parts of Europe and Asia) that are
better served by local warehouse support networks than others. Further discussion of
‘last mile’ problems can be found in Chapter 10.
Time will inevitably establish the validity of the proposition that online purchasing
practices are sustainable business models. Notwithstanding this point, there are some
key benefits associated with online purchasing which should be noted (see Table 11.1).
This table is based on Croom’s (2001) investigation of the impact of web-based technol-
ogy on the supply chain and the above discussions of supply-side market exchanges. The
next section examines the sell-side of organisational activities.It is envisaged that on satisfaction of the above aims sourcing, display of products and prices and order-
ing of goods and transacting with suppliers will all be done electronically. Additional expectations are
that when the e-commerce strategy is fully implemented there will be systems that can offer facilities for
budgeting and planning, reporting and control, demand forecasting and more focused strategic analysis.
The scope of the e-commerce operation is to include all the NHS’s primary, secondary and tertiary
suppliers into a trading network. The size of the network will be extensive but will primarily focus on B2B
trading relationships, not trading relationships with the general public (B2C).
The anticipated advantages of implementing this project are that it will:
improve efficiency by streamlining transactional processes with suppliers. This will be achieved by
automating manual processes, enhancing control mechanisms, optimising procurement practices,
standardising and sharing procedures and information in a coherent and consistent manner;
provide opportunities to obtain greater leverage over prices by aggregating demand for goods and
services across the network;
improve levels of transparency.
It is also anticipated that both the NHS and their suppliers will benefit from successful implementa-
tion of the e-commerce strategy.Source: Adapted from NHS Purchasing and Supply E-Commerce Strategy for the NHS