Supply Chain

Supply Chain - B2B vs B2C

Electronic Commerce, the Second Wave by Gary P. Schneider defines Business to Business or B2B as "Transactions conducted between businesses on the Web". The same book and author define Business to Consumer or B2C as, "Transactions conducted between shoppers and businesses on the Web." At first glance B2B and B2C appear to be somewhat similar processes; however, that statement cannot be further from the truth when considering the network of suppliers, transportation firms, and brokers that combine to create a supply chain for each of these two examples of business units.

A supply chain, logistics network, or supply network is the system of organizations, people, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform raw materials and components into a finished product that is delivered to the end customer (Schneider, 2004). A typical supply chain begins with the extraction of raw material and includes several production links, for instance; component construction, assembly and merging before moving onto several layers of storage facilities of decreasing size and ever more remote geographical locations, and finally reaching the consumer. Many of the exchanges encountered in a supply chain will be between different companies who will seek to maximize their revenue within their specialty of interest, but may have little or no knowledge or interest in the remaining players in the supply chain (Schneider, 2004).

The main difference between the B2B and a B2C supply chain is the amount of channels a product must flow through before reaching the end user. A B2B unit includes less total channels, however, they are greater in size when compared to the greater amount of smaller channels supporting a B2C unit (Hameed, 2006). The volume of B2B transactions has much higher volumes than B2C applications. One reason for this is the greater acceptance of electronic commerce technologies by businesses, relative to acceptance by consumers. Also, in a typical supply chain there will be many B2B transactions, but only one B2C transaction at the end of the supply chain, as the completed product is sold to the end customer.

For example, a motorcycle manufacturer is shopping for tires to put on their new line of motorcycles. The manufacturer would generally deal directly with a tire manufacturer to get the needed product. The supply chain channels would simply be: motorcycle manufacturer - tire manufacturer - raw supplies dealers. Now consider an individual or consumer looking to book a flight and hotel in San Diego. This supply chain would be as follows: individual - online store - airline - airline staff - hotel - hotel staff.

Another difference comes with technology and integration, B2B needs to be integrated with a business partners' software for effective resupply, billing, etc. This is an aspect that the B2C unit does not have to worry about since the customer will most likely return to the supplier out of loyalty versus convenience. Using the previous examples above, once the motorcycle manufacturer signs a deal with the tire company the systems will have to communicate so the tire company knows how many motorcycles are going to need tires delivered for the