Why Electronic Commerce?

Why Electronic Commerce?

Ultimately, the reason to use electronic commerce is based on the classic business equation:

Profit = Revenue - Costs

Businesses use electronic commerce to either lower operating costs or increase revenue, or both.

Electronic commerce can reduce operating costs through transaction management by:

  • Better coordination between sales, production, and distribution (that is, supply chain management, customer relationship management (CRM), etc.).
  • Consolidating operations and reducing overhead.

Electronic commerce can increase revenue by:

  • Creating new markets for old products.
  • Creating new information-based products.
  • Establishing new service delivery mechanisms to better server customers.

To be more specific, business-to-business computer applications are developed to facilitate the management of the areas outlined in the following table.

Management Areas

Area Management Improvements
Inventory Shorten the order-ship-bill cycle.

Overall levels can be reduced.

Reduce turn-around time.

Reduce out-of-stock occurrences.

Supplier Rreduce the number of suppliers.

Reduce Purchase Order (PO) processing costs and time.

Increase the number of PO's processed in the same amount of time.

Increase PO processing accuracy.

Reduce the number of people required to process POs.

Distribution and channel Better tracking of goods from supplier to consumer

Better tracking of documentation

Better information distribution to trading partners

Payments and funds transfer Payments sent and received electronically

Reduced clerical errors

Lower transaction costs

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Microsoft Corporation - Microsoft. Net Server Solutions for the Enterprise
Microsoft .NET Server Solutions for the Enterprise
ISBN: 0735615691
EAN: 2147483647
Year: 2002
Pages: 483

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