Mezzia is a developing software developer company. This company has health industrial market target, such as hospital. Hospital tries to reduce operating cost, especially ordering cost on medicine supply, because, health industry is very fragmented and inefficient, traditional distribution channel applies bricks and mortar principle. Traditional health industries slowly adopt informational technology and spend less from their operating cost for informational technology. Besides, companies in traditional health business face difficulty in estimating demand quickly. Therefore, Mezzia tries to offer e commerce application for hospital operation.
Mezzia plans to create software specific for health industry. In the year of 2000, Mezzia created its first software, this software helps providers to plan their demands. As an addition, Mezzia plans to create web site to connect the buyers and the suppliers and to create a trade community, clearly affiliated with the buyers. This web site will increase the ability of supply chain manager to manage company’s procurement process.
Mezzia is aware of facing with various competitors such as Ariba, Chemdex, commerce One, Freemarkets, Medibuy. And Medicalbuyers.com. Besides, Mezzia is also competing with a method that has long been used by companies in health business. This system combines the automation and the manual paper processing. The buyers tend to manage their buying process alone directly with sales personnel, telesales, catalog sale, group purchasing cooperatives, and several suppliers’ web sites.
II. Problem Statement
a. Which Business-to-Business application suitable to be applied in a company running health business like hospital ?
b. Is by implementing e commerce procurement then the companies in health business can reduce their operating cost ?
c. How Mezzia win the competition with their competitor ?
From various existing B-to-B model, at least there are five models proven as “established”, as a kind of business, which will keep operating in abstract world, i.e., Infomediaries Portal, Procurement, Buyers and Suppliers, Auction, and Supply Chain.
1.INFOMEDIARY / PORTAL
Portal in Internet world can be assumed as an “entrance” to “something”. It is said as an entrance because usually the customers or the people wishing to buy, first of all, have to visit certain portal site before exploring further to the wide abstract world. This portal business is being the choice from day-to-day because of the rapid growth of Internet (exponential scale) causes the development of “informational jungle” in abstract world as a result of informational flood.
So far, the biggest income from the e-commerce type, like portal, is still coming from advertisement strongly related to the size of loyal portal customer. All of this can be seen from the “hit rate” level of the related site.
Business opportunity in this procurement market comes from the high level of total procurement cost to pay by the company in general. The raw material, basic material, or fixed material suppliers are aware of the problem faced by the buyers, so that Internet business practitioners see a promising enough business opportunity. For example, if they are offered a service that can give various benefits to the buyers, mainly related to the reduction of total stock cost.
As it is generally understood, the stock cost is increasing because of two things. First, inventory cost and overhead cost, and certainly various other costs related to these two things. The B-to-B application of procurement type offers an automatic mechanism of stock process so that the company can feel many of benefits, for example:
§ Reducing the stock cost of a product, which directly related to the product price.
§ Increasing the availability level.
§ Reducing the total inventory cost (order cost, holding cost, and opportunity cost)
§ Adjusting cash management of the company.
§ Increasing the purchasing efficiency and effectiveness, and stock availability, etc.
Notice that this business mechanism is not only limited to the production company, but also relevant to be used in companies running in service business. For example, on-line travel agency needing ticket availability process quickly and safely, on-line banking services, needing fast and cheap money availability, etc. In this business form, the company wanting to repair its stock process can relate it with supplier party, which can be built alone or given to other parties (outsourcing). This technological cooperation between various is the thing forming new market opportunity in type B-to-B e-Commerce side.
3.BUYERS AND SUPPLIERS
Tight relationship between the buyers, the sellers, and the intermediaries, indirectly can form certain new market in abstract world, which frequently called as “The B-to-B exchange”. In this B-to-B stock exchange, the suppliers’ community, buyers’ community and intermediaries’ community can freely cooperate to form certain business opportunity. Say a software and hardware companies working together with distributor companies and shipping service; or hotel community, transportation service community and recreation places community cooperate with various travel agent offering vacation packages to the customers.
If in conventional business, auction is more famous as a trade mechanism, which only fit to be used for selling used things. In the abstract world, it is also applied for new product or other form of service. The principle of auction, basically, is to obtain the highest price among the buyers, so that the owner can get customer surplus. Therefore the free market mechanism is a sell-buy concept generally carried out in Internet. The auction concept is most suitable thing to be applied because the buyer and the seller can freely meet to have a transaction. This auction concept can also develop in the abstract world because of the ‘cost transparency’ phenomenon, which imply makes the customers know in transparent the normal price prediction of a product or service.
For medium and high classes companies owning reliable internal information system, implementing supply chain management is a favorite choice. The gist of supply chain management is integrating internal process chain of the company with the process chain owned by the suppliers and customers. Certainly, if the suppliers or the customer has owned good computerized internal system, the combination of the existing chain value will significantly increase the efficiency of the company, along with the increase of revenue potential of the company.
Various expected benefits can be obtained by combining process chain among the companies, such as:
§ Accelerating time cycle of manufacturing process
§ Reducing the creation of chain and developing product.
§ Reducing the distribution and sale period
§ Reducing inventory cost
§ Increasing the revenue potentials
§ Reducing product price, etc.
From the 5 application model of B2B, thus the procurement is the most suitable to be applied in the health industry, especially hospital, because by implementing this system, the hospital can reduce its operating cost, especially medicine supply cost.
Procurement saves companies time and money by automating the procurement process. Thousands of paper or fax based Purchase Orders can be eliminated and replaced with more accurate and standardized electronic documents. In addition, advanced workflow as well as search and requisition capabilities drive deep process efficiencies enterprise-wide, lowering typical purchasing cycle time by 75% and improving spend management.
Designed to integrate with financial and accounts payable systems, Procurement provides straight-through processing and delivers on the benefits of a truly seamless procurement process. Procurement works hand-in-hand with Supplier, allowing companies to connect once and access all of their trading partners. Built as a collaborative service, the Perfect Commerce procurement module also integrates directly with Perfect Commerce Invoice, automating every step of an invoice transaction from preparation receipt and review to remittance advice.
To win the competition The Mezzia should do several thing such as five steep to success in e-commerce business and eight critical success factor in e-commerce business. We will explain about five steep to success in e-commerce business, the first steep is set strategy, setting strategy has to based on the consideration to make consumer easier to interact to the company. Second the company has to focus on the end customer, it mean the company has identify who is their end user or end customer. Third redesigning customer focus business process, with redesigning the business process the company can make their activity more efficient and effective. Fourth wire the company for profit, the company has to prepare the infrastructure to support the business mechanism that the company has decide. It mean the company has to transform business needs with information technology specification (business and information technology alignment). Five is foster customer loyalty, the company has make the customer loyal, because by make the customer loyal he company can get their profit.
From consumer point of view there are eight critical success factor that the company has to consider eight factor. First target the right customer, the company has to decide who is their end user. Second own the customer’s total experience it mean the company has to treat the customer well. Third streamline business process that impact to the customer, the company has to streamline their business process so they can improve their service. Forth provide a 360 degree view of the customer relationship, the company has make easier the customer to interact to the company. Five let customer help themselves, make customer easier to get data that they need before they decide to buy. Six help customer do their jobs, make customer easier to solve their problem or fulfill their needs. Seven deliver personalized service, the company has to treat different customer differently. Eight Foster community, establish customer community and set them as loyal customer.
Using this, the company can reduce its operating cost. The most suitable B2B application model to be used is procurement. This is probably because by implementing e-commerce, the buying process of medicine product can be estimated appropriately on the amount needed and when to order. Then, automatically, the computer will order to the supplier when the stock reaches iron stock, so that with this way, it will result paperless and save the time of ordering, so that the company will not lose the opportunity cost, resulting by the empty stock of medicine. To win the competition The Mezzia should do several thing such as five steep to success in e-commerce business and eight critical success factor in e-commerce business
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