Many different terms are used to describe B2B process automation. These terms can be confusing, in part because they are so interrelated. This article will go into detail about these terms to dispel some of the confusion and explain common terms used in B2B process automation, including the differences between eCommerce and EDI.
First, electronic commerce (e-Commerce) is a very common term that refers to the exchange of information through electronic means such as the Internet and private communication networks.
What are the two types of e-commerce?
- Business-to-consumer (B2C) e-commerce – this is the term most people think of when e-commerce is mentioned. Every day, we experience B2C e-commerce, whether it is booking airline tickets and hotel reservations or buying books, shoes and clothes online.
- Business-to-business (B2B) e-commerce – as its name indicates, B2B Ecommerce is the electronic exchange of information between two businessesand not between a consumer and a company.
What is EDI?
Electronic data interchange (EDI) It is the most widely used B2B e-commerce technology today. It is the computer-to-computer exchange of business documents, such as purchase orders and invoices, in a standard electronic format between trading partners. You can use rules such as ANSI X12, EDIFACT or an XML-based standard such as RosettaNet in the high-tech industry. There are many different types of EDI that use different standards..
EDI has been in use in many industries, including retail, banking, manufacturing, high-tech, and services, since the 1980s and continues to be a game changer. To achieve the benefits of EDI, the companies involved should aim to be as integrated as possible with each other.
21st century corporations expect a network of business partners—their suppliers, their customers, their logistics providers, their banks—to function in a way that enables digital integration.
What are the two types of B2B integration?
- Data level integration –automation of the exchange of commercial documents between commercial applications, such as the automation of the exchange of all documents in the purchase-to-pay process.
- Integration at the people level – enable B2B collaboration between people from different companies during business processes, such as dispute resolution and new supplier registration.
B2B integration at the data level
For two companies to integrate tightly at the data level, they must automate the following tasks:
- Connect electronically, typically over the Internet using a secure communications protocol such as AS2, SFTP, or FTPS.
- To exchange data electronically in a format that can be understood by each company’s computer systems, usually through a standard EDI format, which can be understood immediately.
- Translate EDI data into each company’s internal system format, which is usually accomplished by using special EDI translation software.
B2B integration at the people level
For two companies to integrate closely at the people level and truly collaborate to solve problems or plan new initiatives, they need a central repository of critical information about trading partners, such as details related to e-commerce readiness, regulatory compliance, security of consumer products, the supplier. diversity programs and environmental responsibility surveys.
In addition, they need information management tools to simply and easily:
- Allow trading partners to maintain their own company and contact profiles, thus keeping partner information fresh and up-to-date
- Deliver mass communications to the appropriate segments of the trading partner base without relying on out-of-date spreadsheets on multiple employees’ computers
- Implement compliance initiatives (eg, send out a 20-question supplier survey on the greenhouse gas initiative) to all or a subset of your partner community
- Audit business partner compliance with various initiatives
- Capture, share, and collaborate on performance-related data that helps quickly resolve multi-party disputes and discrepancies with full traceability and audit control. For example, this may result in improvements such as a reduction in overpayments resulting from unprocessed or mis-negotiated claim, price, or shipping disputes.
What are the 3 different approaches to B2B integration tasks at the data level and people level?
- A do-it-yourself approach, where you are responsible for purchasing and maintaining all connections and software systems that address both types of integration.
- A « Managed Services » approach, where you outsource responsibility for all B2B integration tasks.
- A combination of 1 and 2.
If you want to learn more about why B2B integration is such a hot topic and its many benefits for businesses of all sizes, read our latest integration blog.