Ebus 400 - Supply Chain Paper

Supply Chain Paper

Michael Mariano

University of Phoenix

EBUS/400

Bert Hoff

November 20, 2006

Through the years, brick and mortar buildings seemed to have been the most effective way of having a successful business. Today, with the creation of the internet many businesses now have the opportunity to reach millions of customers and other businesses worldwide. The internet has caused an enormous surge in the world’s economy through business to customer (B2C) and business to business (B2B) transactions. According to Nariane (2003), in 2003 B2B sales worldwide accounted for $1.41 trillion. B2C sales accounted for $90.1 billion in 2003. Because there is an enormous amount of e-commerce between B2B and B2C worldwide, the supply chain plays a vital in transporting all purchases throughout the world. This paper will define what a supply chain is. Defining the terms of B2B and B2C will also be discussed. Finally the last segment will explain how the supply chain differs on a B2C site compared to a B2B site and will also provide specific examples.

Defining the Supply Chain

According to learnthat.com (2004), a supply chain is a series of channels a product takes from its initial production to reach its final destination. A current example of a product going through the supply chain would be the hottest new item just in time for Christmas, Sony Playstation 3. The supply chain begins with the initial development and production of each system by Sony. Sony produces the product by making components that are compatible with the system and raw materials from other manufacturers. The company only produced 400,000 on their initial launch. This makes competition amongst customers fierce because millions more then the initial 400,000 made want to be the first to have it. The systems moved throughout the country to chain stores like Wal-Mart, Best Buy and Target to name a few. On November 18th at 12 midnight stores throughout the country opened their doors to groups of people camping out in order to buy the Playstation 3 system. Some of the customers brought the system home with hopes of playing it; others had intentions of selling it closer to the holiday season for double and sometimes triple what they originally bought it for in the store, which creates the customer to customer (C2C) concept of e-commerce.

Business to Consumer

According to Patton (2001), B2C is suited to meet the needs and wants of the individual customer, not the business. B2C started with consumers purchasing from the internet on sites that include EBay.com, Target.com and Amazon.com. B2C has escalated to new features for consumers that include online banking, travel services, online auctions, health information and real estate to provide a few examples.

Business to Business

According to Varone (2001), a business to business site includes a complex structure with high security needs. Selling to another business involves a lot of negotiations that include haggling over prices, delivery and product specifications. B2B ecommerce has evolved past basic purchasing. Now b2b encompasses supply chain management as more organizations continue to outsource parts of their supply chain to their trading partners.

B2C vs. B2B Supply Chain

According to Marketing Profs (2005), the main difference between B2C and B2B is the amount of channels a product must flow through before reaching the end user. With B2B there are fewer total supply channels that a product must go through in order to reach its final destination. The B2C product typically goes through many smaller channels in order to reach the end user. B2B is almost a direct line from the producer to the customer because many elements factor in such as delivery time, pricing and exact specifications that all cut the middleman out so the business can deal directly with the manufacturer. A business to business model would be if a new car manufacturer is looking for tires to put on their new line of cars. The car manufacturer would deal directly with a tire manufacturer to get their product. The different supply channels