Business-to-business trading platforms, including on-line catalogues, auctions, and exchanges, will drastically change the face of business transactions, according to a recent industry study conducted by Deloitte Research.
The study, B2B On-line Exchanges: The New Economics of Markets, showed that increased efficiencies and savings will drive substantial corporate participation in business-to-business (B2B) Internet exchange markets. Deloitte Research states that B2B trading platforms will evolve in to a landscape called MarketTone.
“In the past, dealing with a market space involved going out, procuring supplies, bringing them back, shipping them, storing them in your warehouse, manufacturing them, producing them, then shipping them off to customers,” said Don Thompson, Deloitte Consulting partner.
Thompson said with MarketTone, one will be continuously connected to suppliers and customers, allowing market activity to be constant.
“It’s like a dial tone. You go to the market, and it’s already there, active,” said Thompson.
In some cases, you may receive supplies before you need them.
“Your computer systems are talking to your supplier’s computer systems and making the orders for you based on your computer systems talking to your customer systems and knowing what the demand will be,” noted Thompson.
This will create a new underlying structure for e-business, according to John Reid, president of Ottawa-based advocacy group CATAAlliance. “Basically what you’re doing is providing that continuous tone to improve the efficiency of your transactions 24 hours a day, which is the very essence of B2B commerce.”
B2B is responsible for the vast bulk of the e-commerce being generated today, according to IDC Canada analyst Joe Green.
Green said there will be a percentage of new revenue generated through expanding markets, and the real benefits are through the cost savings of conducting business electronically.
“It’s getting rid of the negotiations, the deals, the phone calls, the paper management required to handle procurement of general supplies but also procurement of the production of raw materials,” Thompson said.
According to Reid, the business rationale isn’t very different from the technological revolutions of the past, where businesses needed to look at new techniques, resources and strategies to be more productive and efficient.
“B2B allows businesses to achieve efficiency. It has to do with productivity and being the most successful within your group,” Reid said. “If you fail to adopt new solutions, you can be left behind in the marketplace, because your cost of production or servicing is higher than the competitor groups.”
There might, however, be a few downfalls to B2B exchanges.
Thompson said people may feel they are losing control, because they’re not directly interacting with the process.
“The cost of being in control is huge, compared to letting the systems interconnect and focusing on what you really should be focusing on, which is quality and the differentiation of products,” Thompson said.
Deloitte Consulting and Deloitte and Touche have been getting involved with a number of these exchanges. They have put together strategies of products, and also set up business plans. Thompson said the demand is almost more than they can meet.
“Pay attention folks, because this is where business is going,” said Thompson. “This is where you need to play if you want to stay competitive.”
