B2Bi Basics

So what components make a B2Bi solution?  In short a B2Bi must facilitate successful and cost effective electronic exchange of business data and the integration of external business processes.  Any B2Bi solution must comprise of the following components.

• Electronic Data Exchange – the automation of key business documents (e.g. Purchase Orders, Shipping Notices, Invoices etc).  Essentially replacing key shared paper documents with real time exchange of electronic files.   
• Business Process Management – the use of rules and profiles to improve and cleanse the quality of key business documents (e.g. matching delivery quantities provided in an invoice to the goods received or shipping notice).  Helping companies improve the accuracy of information for back office processing.
• Business Activity Monitoring – applications, typically delivered online, that monitor the real time status of B2Bi operations and report performance over a given time period (e.g. alert me when I receive a Purchase Order over £10,000 in value).  Alerts help companies improve real time process breakdowns and reports offer the chance to strategically improve performance over time.
• Global Partner Enablement and Management – tools that allow companies to effectively automate connections from their global partners (e.g. Customers, Suppliers, Logistics Providers, Financial Institutions). This critical component of a B2Bi solution is fundamental to the success of every B2Bi solution.

B2Bi is the logical extension of internal business integration projects, ensuring that internal investments made for process automation are extended to customers and suppliers.  In recent years the proliferation of technology and deployment models have resulted in increasing complexity.  The overwhelming factor in choosing B2Bi solutions is to select scalable, flexible, feature rich solutions that deliver a return on investment whilst also ensuring tomorrows requirements can be supported.

Before learning more about a B2Bi solution, it is important to look at an example that highlights some of the key differences between traditional paper document transactions and B2Bi.  One of the first places where many companies implement B2Bi is in the exchange of a purchase order (PO).  In the traditional method of processing a purchase order, a buyer or purchasing agent will go through a fairly standard procedure to create a purchase order, consisting of the following steps:

• A buyer reviews data from an inventory or planning system
• The buyer enters data into a screen in the purchasing system to create a PO
• The buyer waits for the PO to be printed, usually on a special form
• After the PO is printed, the buyer mails it to the vendor
• The vendor receives the PO and posts it in their order entry system
• The buyer calls the vendor periodically to determine if the PO has been received and processed

When you add up the internal processing time required by the sender and receiver, and then add a couple of days in the mail, this process normally takes between three and five days.  This assumes first that both the sender and receiver handled the PO quickly and that at every point along the way there were no errors in transcribing data from a form to a system.

B2B Definition - Why B2B?

Now consider the same document exchange when a company places its purchase orders electronically using B2Bi:

• The buyer reviews the data and creates the PO, but does not print it
• B2Bi solution creates an electronic version of the PO and transmits it automatically to the sender within minutes
• The vendor’s order entry system receives the PO and updates the system immediately upon receipt

What took up to five days with paper and the postal system has just taken less than one hour.  By eliminating the paper handling from most of the stages of the process, B2Bi has the potential to transform a traditional paper based process to look like this:

B2Bi Dynamics

Before discussing the potential B2Bi solutions, it’s important to review three key principles that make B2Bi unique. 

1. The role of standards.  Much work has been completed in multiple industries to foster supply chain integration and create business standards which accelerates and eases the deployment of B2Bi technology.  While we cannot underestimate the important work of these standards bodies we must also appreciate the fact that companies will continue to sub-optimise their supply chains, meaning that no two organisations will implement the standard in the same way.  For example grocery retailers in Europe are likely to leverage the EDIFACT standards for purchase order and invoice automation.  However, because each grocery retailers process may very subtlety in nature, they may implement the standards in different ways, using making one conditional field mandatory where others may choose to leave it conditional.  This sub-optimisation of supply chain processes means that the standards will continue to be implemented differently.  A B2Bi solution must have the configuration and flexibility to support such sub-optimisation of industry standards.
   
   
2. Technology Proliferation.  Again because B2Bi can yield true competitive advantage, recent technology innovations such as XML standards or direct connectivity standards such as AS2 will continue to evolve.  When XML was first announced a few years back, the common understanding what that it would replace traditional document exchange formats such as EDI.  However, as you would expect companies continue to leverage EDI and automate new business processes with XML.  Such proliferation will continue and the implication for B2Bi solutions is that they must be future-proofed to offer companies the ability to add new data or connectivity standards.
   
   
3. Trading Partner Diversity.  B2Bi projects differ from internal integration projects due to the number of parties that require cooperation in order to implement the solution.  For example, a new replenishment project that aims to reduce the stockpile or buffer inventory in the supply chain must rely on the successful cooperation of each constituent part of the supply chain – the buyer, the supplier, the freight forwarder, the shipper or the financial institution.  As supply chains continue to globalise, diversity will continue.  A B2Bi solution must therefore offer enough flexibility to ensure that all constituent parts are able to engage in the solution, maximising the potential return.  A supply chain after all, is only as good as it’s weakest link. 

These unique features of B2Bi projects must be top of mind when considering the deployment of B2Bi solutions.  To be blunt, professionals considering to implement B2Bi solutions must plan their projects for rampant diversity and limited control of external parties.  Ignoring these unique features and treating B2Bi projects like internal integration or automation projects will almost certainly deliver lower results or at the worst guarantee a failed project. 

The major benefits of implementing B2Bi within your business are discussed in more detail in the ‘Benefits of B2Bi’ section of this Microsite but in summary B2Bi can help improve speed and accuracy of business transactions, reduce costs and increase business performance.  To find out how to build B2Bi solutions, please choose the ‘Building Solutions’ button from the menu above.