E-commerce 2016: Business. Technology. Society.

, 12e (Laudon)

Chapter 12 B2B E-commerce: Supply Chain Management and Collaborative Commerce

1) Analysts predict that B2B e-commerce in the United States will grow by 2019 to approximately:

A) $8.6 billion.

B) $86 billion.

C) $860 billion.

D) $8.6 trillion.

Answer: D

2) In 2015, the total amount of B2B e-commerce in the United States was approximately:

A) $6.3 billion.

B) $63 billion.

C) $630 billion.

D) $6.3 trillion.

Answer: D

3) Which of the following was the first step in the development of B2B e-commerce?

A) Electronic Data Interchange (EDI)

B) automated order entry systems

C) computerized inventory databases

D) digital invoices

Answer: B
4) Which of the following terms refers to the links that connect business firms with one another to
coordinate production?

A) supply chain

B) B2B e-commerce

C) vertical market

D) horizontal market

Answer: A

5) Automated order entry systems:

A) show goods from a single seller.

B) increased the costs of inventory replenishment.

C) are typically owned by the purchasing firm.

D) no longer play an important role in B2B commerce.

Answer: A

6) Which of the following statements about EDI systems is true?

A) They typically serve vertical markets.

B) They are seller-side solutions.

C) They evolved from private trading exchanges.

D) They still play an important role in B2C commerce.

Answer: A
7) B2B e-commerce Web sites:

A) are a predecessor of industry consortia.

B) tend to serve horizontal markets.

C) are buyer-side solutions.

D) are considered a type of EDI system.

Answer: B

8) Which of the following is another name for a private industrial network?

A) industry consortia

B) EDI system

C) PTX

D) net marketplace

Answer: C

9) Which of the following is the fastest growing form of B2B e-commerce?

A) e-distributors

B) exchanges

C) private industrial networks

D) industry consortiums

Answer: C
10) All of the following are potential benefits of B2B e-commerce except:

A) lower administrative costs.

B) lower search costs.

C) lower price transparency

D) lower transaction costs.

Answer: C

11) EDI began as a(n) ________ system.

A) document automation

B) document exchange

C) invoice generation

D) MRP

Answer: A

12) All of the following are potential benefits of B2B e-commerce except:

A) increased production flexibility.

B) increased product cycle time.

C) increased opportunities to collaborate with suppliers and distributors.

D) increased visibility and real-time information sharing among all participants in the supply chain
network.

Answer: B
13) All of the following have led to the development of outsourcing of manufacturing around the
world except:

A) technology.

B) globalization of trade.

C) environmental concerns.

D) high levels of wage disparity between the developed and undeveloped worlds.

Answer: C

14) Which of the following statements is not true?

A) The Volkswagen Group manages almost all of its procurement needs via the Internet.

B) VWGroupSupply.com is an industry consortium.

C) VWGroupSupply can be accessed by suppliers via standard Web browser software and mobile
devices.

D) The Volkswagen Group developed VWGroupSupply using technology from a number of vendors.

Answer: B

15) Supply chain ________ refers to differentiating a firm's products or prices on the basis of
superior supply chain management.

A) management

B) simplification

C) competition

D) collaboration

Answer: C
16) A(n) ________ market is one that provides expertise and products for a specific industry, such as
automobiles.

A) vertical

B) horizontal

C) indirect

D) buyer-biased

Answer: A

17) The essential characteristic of ________ is that they bring hundreds to thousands of suppliers
into a single Internet-based environment to conduct trade.

A) industry consortia

B) exchanges

C) Net marketplaces

D) horizontal markets

Answer: C

18) B2B e-commerce Web sites tend to serve horizontal markets.

Answer: TRUE

19) Few large firms today have Electronic Data Interchange (EDI) systems.

Answer: FALSE

20) Why is B2B e-commerce seen as such a potential source of great profit for successful B2B firms?

B2B e-commerce is seen as a great promise because simply purchasing supplies, for a firm, is a costly
process. ex, firms estimate that each corporate purchase order costs at least $100 in overhead. Using
B2B e-commerce to automate B2B purchasing could save, overall, trillions of dollars. In turn, this could
enable lower prices, increased productivity and even greater wealth for a nation.
23) What is the first step in the procurement process?

A) negotiate price

B) qualify the seller and its products

C) issue a purchase order

D) search for suppliers

Answer: D

24) The last step in the procurement process is:

A) sending a remittance payment.

B) sending the invoice.

C) shipping the goods.

D) delivering the goods.

Answer: A

25) Office supplies are an example of:

A) direct goods.

B) indirect goods.

C) MRO goods

D) distributed goods.

Answer: B
26) The majority of inter-firm trade involves:

A) spot purchasing of direct goods.

B) contract purchasing of indirect goods.

C) contract purchasing of direct goods.

D) spot purchasing of indirect goods.

Answer: C

27) All of the following are examples of direct goods in the auto industry except:

A) sheet steel.

B) shatter-resistant glass.

C) rubber molding.

D) desktop computers.

Answer: D

28) An example of an indirect good in the fast-food industry is:

A) mustard.

B) paper napkins.

C) beef.

D) sugar.

Answer: B
29) An ________ is an independently owned, online marketplace that connects hundreds to
potentially thousands of suppliers and buyers in a dynamic, real-time environment.

A) exchange

B) e-distributor

C) e-procurement company

D) industry consortium

Answer: A

30) An ________ primarily serves businesses that primarily buy direct goods on a spot purchasing
basis.

A) e-distributor

B) e-procurement company

C) exchange

D) industry consortium

Answer: C

31) The liquidity of a market is measured by all of the following except:

A) price transparency.

B) number of buyers and sellers in market.

C) volume of transactions.

D) size of transactions.

Answer: A
32) ________ purchasing involves the purchase of goods based on immediate needs in larger
marketplaces that involve many suppliers.

A) Spot

B) Indirect

C) Vertical

D) Bulk

Answer: A

33) MRO goods are also known as indirect goods.

Answer: TRUE

34) Purchasing managers are the key players in the procurement process.

Answer: TRUE

35) What does "supply chain visibility" refer to and what benefits does it bring?

Answer: Supply chain visibility refers to the ability of a firm to monitor the output of its first and
second tier suppliers, track and manage supplier orders, and manage transportation and logistics
suppliers who are moving the products. When a supply chain is visible, you know when suppliers'
products will arrive and you have accurate tracking of your goods. The benefit of a visible supply chain
is that the firm can produce accurate production schedules and develop more accurate financial
forecasts.

37) All of the following are current major trends in B2B e-commerce, except:

A) Move to implement highly centralized supply chains to reduce risk.

B) Growing emphasis on use of business analytics software (business intelligence) to understand

C) Firms place a growing emphasis on rapid-response and adaptive supply chain rather than lowest-
cost supply chains.

D) Risks of far-flung global networks lead to an increase in regional manufacturing and supply chains.
Answer: A

38) All of the following are weaknesses of EDI except:

A) EDI is not well suited for electronic marketplaces.

B) EDI lacks universal standards.

C) EDI does not provide a real-time communication environment.

D) EDI does not scale easily.

Answer: B

39) Which of the following is a method of inventory cost management that seeks to eliminate excess
inventory?

A) lean production

B) sustainable production

C) just-in-time production

D) supply chain simplification

Answer: C

40) Which of the following statements about cloud-based B2B systems is not true?

A) Much of the expense of the system is shifted from the B2B network provider to the firm.

B) B2B network providers charge customers on a demand basis.

C) Network effects apply, enabling the spreading of costs.

D) Cloud-based B2B data networks can be implemented in short periods of time.

Answer: A
41) ________ is a method for ensuring that suppliers precisely deliver ordered parts at a specific

time and to a particular location.

A) Having an adaptive supply chain

B) Tight coupling

C) Supply-chain management

D) Materials requirement planning

Answer: B

42) Cisco estimates that by 2016, mobile traffic will represent ________% of all business Internet
traffic.

A) less than 5

B) around 10

C) around 15

D) over 25

Answer: D

43) A(n) ________ system continuously links the activities of buying, making, and moving products
from suppliers to purchasing firms, as well as integrating order entry systems.

A) EDI

B) ERP

C) CPFR

D) SCM

Answer: D
44) Collaborative commerce systems:

A) focus on structuring intra-firm communications.

B) bring customers into the product development phase.

C) provide open, competitive marketplaces.

D) foster sharing sensitive internal information with suppliers and purchasers.

Answer: D

45) Which of the following is not a characteristic of the use of social networks in B2B e-commerce?

A) It is typically unstructured.

B) It helps develop a more personal relationship between participants in the supply chain.

C) It enables participants to make decisions based on current conditions.

D) They are always private.

Answer: D

46) All of the following are important trends in B2B e-commerce in 2015-2016, except:

A) the growing emphasis on obtaining real-time data.

B) industry demand for supply chain sustainability.

C) generation and management of huge Big Data repositories.

D) increase in regional manufacturing.

Answer: B
47) EDI document structures are defined by:

A) a single international standards body.

B) individual suppliers and buyers.

C) industry committees.

D) each purchaser.

Answer: C

48) A(n) ________ supply chain is one in which the labor conditions in low-wage, underdeveloped
producer countries are visible and morally acceptable to ultimate consumers in more developed
industrial societies.

A) sustainable

B) ethical

C) lean

D) accountable

Answer: D

49) ________ production is a set of production methods that focuses on the elimination of waste
throughout the customer value chain.

A) Green

B) Sustainable

C) Lean

D) Just-in-time

Answer: C
50) ________ is defined as the use of digital technologies to permit organizations to work together
to design, develop, build, and manage products through their life cycles.

A) SCM

B) Social e-commerce

C) EDI

D) Collaborative commerce

Answer: D

51) In the BYOD trend, employees are allowed or encouraged to:

A) work from home.

B) use their own mobiles and laptops.

C) use mobile devices for work.

D) bring work devices to the home.

Answer: B

52) Highly centralized supply chains provide lower short-term costs, but higher, longer-term risk
protection.

Answer: TRUE

53) Collaborative commerce has a much broader mission than EDI.

Answer: TRUE

54) Lean production is an extension of just-in-time production methods.

Answer: TRUE
55) What is the difference between accountable and sustainable supply chains?

Answer: Accountable supply chains provide information to consumers about the labor conditions of
employees of the firm's suppliers and ensure that these conditions are satisfactory to their consumers.
Sustainable supply chains take a somewhat wider focus, as they take both social and ecological
interests into account throughout the firm's decision making, including issues such as carbon foot
prints, impact on the environment and community.

56) Define and explain supply chain management systems, supply chain simplification, and
collaborative commerce, and the relationship between these concepts.

Answer:

Supply chain management systems coordinate and link the activities of suppliers, shippers, and order
entry systems to automate the order entry process from start to finish including the purchase,
production, and moving of a product from a supplier to a purchasing firm.

Supply chain simplification refers to the reduction of the size of a firm's supply chain. Firms today
generally prefer to work closely with a strategic group of suppliers in order to reduce both product
costs and administrative costs. Instead of open bidding for orders, large manufacturers have chosen
to work with strategic partner supply firms under long-term contracts that guarantee the supplier
business and also establish quality, cost, and timing goals. These strategic partnership programs are
essential for just-in-time production models. They often involve joint product development and
design, integration of computer systems, and tight coupling of the production processes of two or
more companies.

Collaborative commerce is a direct extension of supply chain management systems and supply chain
simplification. The goal is for organizations to collaboratively design, develop, build, and manage
products throughout their life cycles. The focus has changed from the simplification of transactions to
the relationships between the supply chain participants. Collaborative commerce fosters the sharing
of sensitive internal information between suppliers and purchasers. A rich communications
environment is cultivated so that inter-firm sharing of designs, production plans, inventory levels, and
delivery schedules can take place. Strategic partners in a supply chain are connected for much broader
purposes, including potentially the development of shared products.

57) How are social networks being used in B2B e-commerce?

Answer: In B2B e-commerce, social networks are beginning to be common tools for procurement
offers, managers of supply chains, logistics managers and others engaged in B2B e-commerce. Social
networks can provide personal connections among customers, suppliers, and logistics partners that
are needed to keep the supply chain functioning, and to make decisions based on current conditions.
Participants in the supply chain are using social networks for purchasing, scheduling, exception
handling, and deciding with their B2B customers and suppliers. In many cases, supply chain social
networks are private and owned by the largest firm in the supply chain network. In other cases, firms
develop Facebook pages to organize conversations among supply chain network members. Public
social network sites like Facebook and Twitter can be excellent for coordinating the flow of
information among business partners through the supply chain
58) Which of the following is an example of an e-distributor?

A) AmazonSupply

B) PowerSource Online

C) VWGroupSupply

D) Elemica

Answer: A

59) Which of the following primarily serve horizontal markets?

A) e-distributors and exchanges

B) e-distributors and e-procurement Net marketplaces

C) e-procurement Net marketplaces and industry consortia

D) exchanges and industry consortia

Answer: B

60) Which of the following primarily deal with indirect goods?

A) e-distributors and industry consortia

B) e-distributors and e-procurement Net marketplaces

C) exchanges and industry consortia

D) exchanges and e-procurement Net marketplaces

Answer: B
61) Which of the following primarily deal with direct goods?

A) e-distributors and independent exchanges

B) exchanges and e-procurement Net marketplaces

C) exchanges and industry consortia

D) e-procurement Net marketplaces and industry consortia

Answer: C

62) Which of the following primarily involve long-term sourcing?

A) e-distributors and exchanges

B) e-distributors and industry consortia

C) e-procurement Net marketplaces and exchanges

D) e-procurement Net marketplaces and industry consortia

Answer: D

63) An ________ provides electronic catalogs that represent the products of thousands of direct
manufacturers.

A) e-distributor

B) e-procurement company

C) exchange

D) industry consortium

Answer: A
64) An ________ primarily serves businesses that buy indirect goods on a spot purchasing basis.

A) e-distributor

B) e-procurement company

C) exchange

D) industry consortium

Answer: A

65) E-distributors:

A) make money by charging a mark-up on products they distribute.

B) usually operate "private" markets.

C) operate in vertical markets.

D) focus on selling direct products.

Answer: A

66) An ________ primarily serves businesses that primarily buy indirect goods on a contract
purchasing basis.

A) e-distributor

B) e-procurement Net marketplace

C) exchange

D) industry consortium

Answer: B
67) Which of the following is an example of an e-procurement Net marketplace?

A) TheSeam

B) Ariba

C) Grainger

D) SupplyOn

Answer: B

68) An ________ serves businesses that primarily buy direct goods on a contract purchasing basis.

A) e-distributor

B) e-procurement company

C) exchange

D) industry consortium

Answer: D

69) The Seam is an example of an ________.

A) exchange

B) industry consortium

C) e-procurement Net marketplace

D) e-distributor

Answer: B
70) WW Grainger is an example of a(n) ________.

A) e-distributor

B) exchange

C) private industrial network

D) e-procurement Net marketplace

Answer: A

71) Industrial consortia were the first form of Internet-based B2B commerce.

Answer: FALSE

72) E-distributors operate in vertical markets.

Answer: FALSE

73) Industry consortia are more focused on optimizing long-term relationships than independent
exchanges, which tend to focus more on short-term purchasing relationships.

Answer: TRUE

74) Exchanges are closely tied to ERP systems used by large firms.

Answer: FALSE

75) What services do e-procurement Net marketplaces provide?

Answer: E-procurement Net marketplace services include providing a marketplace for long term
contractual purchasing as well as some spot-sourcing of indirect goods (MRO). They provide value
chain management services to both buyers and sellers. VCM services include automation of a firm's
entire procurement process on the buyer side (e.g., purchase orders, sourcing, requisitions), and
automation of the selling business processes on the seller side (e.g., catalog creation, order
management, invoicing).
76) Describe at least five characteristics of Net marketplaces.

Answer: Characteristics of Net marketplaces include

(1) bias–whether the marketplace advantages sellers, buyers, or each group equally (neutral);

(2) ownership–who owns the marketplace, a specific firm, group of firms, or an industry group;

(3) pricing mechanism–how are prices determined for products sold: fixed prices, bidding, RFPs;

(4) Scope/focus–does the marketplace serve horizontal or vertical markets;

(5) value creation–what benefits are offered to customers or suppliers; and

(6) access to market–is the marketplace open to everyone or limited to invitees only.

77) Walmart's global supply chain has been criticized for all of the following except:

A) exploiting labor in underdeveloped countries.

B) bribing officials.

C) wasting energy.

D) failing to be efficient.

Answer: D

78) ________ is another name for trans-organizational business processes.

A) Supply chain management

B) Collaborative commerce

C) B2B e-commerce

D) Value chain management

Answer: B
79) Private industrial networks are direct descendants of:

A) e-procurement Net marketplaces.

B) existing EDI networks.

C) independent exchanges.

D) industry consortia.

Answer: B

80) All of the following are forms of collaboration among businesses except:

A) RFQs.

B) CPFR.

C) demand chain visibility.

D) marketing coordination and product design.

Answer: A

81) Which of the following is not a typical barrier to the implementation of a private industrial
network?

A) It requires participating firms to share sensitive data.

B) It requires the large network owners to give up some of its independence.

C) It requires a significant investment of time and money.

D) It requires a change of mindset and behavior of employees.

Answer: B