Lecture #6 (Part 1) - When you’re Big, You can be your Own B2B E-Marketplace

1)      Volkswagen operates its own proprietary B2B e-marketplace in which its suppliers participate. What are the disadvantages to Volkswagen of not using a generic B2B e-marketplace with even more supplier? What are the advantages to Volkswagen of developing and using its own proprietary B2B e-marketplace?

 

Without using a generic B2B e-marketplace with even more supplier, Volkswagen unable to connect buyers and sellers across many industries. By connecting to difference supplier, they could compare the price and product quality, enable Volkswagen to choose the most suitable suppliers for them. Apart from these information, there are many other information being shared through a generic B2B e-marketplace with variety of suppliers. Having a generic B2B e-marketplace helps Volkswagen keep up to the trend as they could access to the latest information in the market, ensuring they always stay ahead from other competitors. They could even collaborate with other businesses on new product and service offerings. Lacking of a generic B2B e-marketplace is definitely a disadvantage for them.

On the other hand, Volkswagen can develop its own proprietary B2B e-marketplace to solely one supplier, when they want to establish a long-term relationship with the supplier and their business need to purchase millions of dollars in inventory, parts or raw materials. Using IT for B2B e-marketplace usage can help to streamline the ordering and procurement processes to create tight supply chain management systems and drive out cost. The primary advantage to Volkswagen of developing and using its own proprietary B2B e-marketplace is to enhance the effectiveness of working closely with the supplier, and reduce the cost efficiently. It is definitely an advantage in giving tremendous efficiencies to the business for performing all of the operational task with their supplier. In short, it creates a Just-In-Time supply chain management that are high in efficiency.

2)      When Volkswagen needs a new part design, it uses VWsupplygroup.com to gets its suppliers involved in the design process early. This creates a tremendous amount of interorganizational collaboration. What are the advantages to the suppliers and to Volkswagen in doing so?

This platform is able to save a lot of time for Volkswagen’s daily operational tasks because it links their suppliers in this one platform, it enhance the efficiency of procurement, information search, inventory update, etc. It is also a very secured platform for info exchange with their suppliers, that ensure all information are shared only to relevant parties. The website is also a platform to compile all real time data accurately, this further enhance efficiency of each operational task as the chances of having errors are minimize to the lowest possible.

3)      How is Volkswagen’s VWgroupsupply.com B2B e-marketplace an example of a vertical e-marketplace implementation? How is it an example of a horizontal e-marketplace implementation? Why is it necessary that Volkswagen combine both of these e-marketplaces into one e-marketplace? What would be the drawbacks to creating two different e-marketplaces – one for suppliers of direct materials and one for suppliers of MRO materials?

A vertical e-marketplace is an electronic marketplace that connects buyers and sellers in a given industry. For example, it has an Electronic Data Interchange (EDI), as the exchange of structured business data (such as supply call-offs, delivery and transport data, credit notes) and product data between Volkswagen’s partners information system and their in-house process control systems.

A horizontal e-marketplace is an electronic marketplace that connects buyers and sellers across many industries, primarily for maintenance, repair, and operations (MRO) materials, which are necessary for running a modern corporation, but do not relate to the company’s primary business activities. For example, Volswagen group website provides a platform for those who want to become partner with them. Those who want to be their partner can register themselves in order to have access to activated applications and information services. They invite anyone from different business areas to join their platform.

It is important to combine both vertical and horizontal e-marketplace because both of the system has their distinctive advantages. For example, buying or selling using a vertical e-marketplace for your industry sector can increase your operating efficiency and help to decrease supply chain costs, inventories and procurement-cycle time. In addition, vertical e-marketplace can spans up and down every segment of one specific industry. Each level will greatly increases collaboration. Buyers and sellers in the industry are connected to increase operating efficiency and decrease supply chain costs, inventory and cycle times. This is possible because buying or selling items in a single industry standardizes needs and wants of the costumer, thereby reducing the need for outsourcing many products. On the other hand, horizontal e-marketplace connects buyers and sellers across different industries or regions in the societies. You can use a horizontal e-marketplace to purchase indirect products such as office equipment or stationery.

4)      To make effective purchasing decisions, Volkswagen’s purchasing agents need business intelligence. What kind of business intelligence does iPAD provide to purchasing agents for carrying out their tasks? What additional kinds of business intelligence not discussed in this case could Volkswagen’s purchasing agents take advantage of to make more effective decisions?

iPAD can facilitate data manipulation.  For example, purchasing agent could use the iPAD system to sort the number of suppliers, classify the parts that require frequent replenishment of inventory, identify whether suppliers deliver parts on time, or delete those suppliers that are not up to Volkswagen standard.
Apart from data manipulation, iPAD has all the information stored in the database to deliver to the purchasing agent immediately, thus accelerating the procurement processes. The time spent on routine work is considerably reduced, enabling purchasing agents to focus their work on important tasks. The VW group noticed that the motivation of the employer using this tool was also better. iPAD intelligently links and optimizes their cross-department processes, enabling them to increase employee productivity while improving purchasing performance

5)      iPAD manages the workflow for purchasing agents. Describe how iPAD manages this process including information provided, steps to be executed, and the presentation of information.

iPAD captures and sends business event to the purchasing agent, such as the need to order vehicle front modules. Second, iPAD attaches to that communication other necessary information such as information about potential suppliers, their costs, and other forms of analysis and descriptive information. Finally, iPAD sends the corresponding business processes and work flows to be completed electronically. In short, iPAD have all the information necessary for the whole process of purchase order, from internal parts information system, request for quotes, contract- negotiation info, to finding, retrieving, analysing, validating and moving information.