No Speed Limits: Hyperpartnering in the Internet Age

B2B e-commerce, despite predictions for rapid growth, is still in the "early adopter" stage. But, the concept behind it is nothing new, and companies have been doing business electronically for years before the Internet came into the picture using proprietary EDI mechanisms.

B2B strategic partnerships require you and your partners to be on the same page technologically. You must be able to send and receive information, such as invoices and purchase orders, in the same format over the same network. Fortunately, the Internet and standards like XML have made this a lot easier and a lot cheaper than it used to be.

Partners not only have to be on the same page technologically, they have to be on the same page strategically and logistically, too. Think of your company and your partner companies as a big collective, where members move in and out depending on current needs, and all work towards a common goal.

Who are your partners, though? It's a moving target. Great warriors throughout history have advised others to "know your enemies." I advise you to "know your partners," and be aware that whoever is a partner today may not be tomorrow. And what's more, your enemies (competitors) may not always be enemies. You may compete with someone one day, buy from them another day, and you may cooperate with them to supply a common customer on yet another day.

As B2B e-commerce continues to become entrenched in both small and large corporate environments, the business model -- how people actually conduct business -- will look a lot different than it does today. One of the most noteworthy changes that has already started to occur is that contract durations have shortened, and they will continue to do so. Dynamic trading vehicles, such as auctions, exchanges and e-marketplaces, will make up an increasing percentage of transactions, and may even dominate the marketplace. These dynamic trading vehicles naturally lend themselves to short-term contracts.

Of course, if you're a supplier, nailing down a long-term contract probably sounds like a pretty good thing, and it is. Unfortunately, you're likely to get less and less of these, and you'll have to change your business model to one of competing on dynamic exchanges for short-term supply deals, or participating in commodity exchanges. This is what has been termed "hyperpartnering." Losing the long-term contract isn't necessarily a bad thing, though, there are some strategic advantages. Because the marketplace has become more dynamic, so can your pricing. You can reorganize your price structure to be more in line withthe day-to-day marketplace, current expenses and other market conditions.

The old-fashioned business model based on long-term contracts and a linear supply chain will go the way of the horse and buggy. The linear supply chain will be replaced by a completely new market structure, which Forrester Research calls the eBusiness network, "in which partners can switch allegiances without cost, information and best practices spread like wildfire, and market feedback flows in real time."

The eBusiness network is really a group of interdependent players, which cooperate with one another in real time over the Internet. This model keeps costs down several different ways:

* By allowing companies to take advantage of the spot market and day-to-day fluctuations in price* By implementing technology to automate the workflow and supply chain * By helping companies find absolutely the best deal available at any given point in time* By avoiding the need to carry high inventory levels* By buying goods and materials on a "just-in-time, as-needed basisIn the 21st century, businesses aren't strictly competitors. The concept of "coopetition" has taken hold. This is really a combination of cooperation and competition, and modern e-businesses do a little bit of both with one another. You don't necessarily categorize other businesses as friends or enemies any more.

Japanese business culture has always had a concept similar to this, called the keiretsu. This is a closed group of independent businesses that work exclusively with one another. Once you're in the keiretsu, you have a solid group of associates and customers. And because it's closed, you are obligated to buy from other members, even if a company outside of your keiretsu has a better price.

This is where the keiretsu differs from B2B e-commerce in the US. The Americanized version isn't closed, but it does maintain the same concept of cooperation between a group of businesses. The affiliation is a lot looser and there's probably a little more competition than cooperation, but the connection is there. The overall goal is to transcend the concept of separate business entities with separate business goals; to create a sort of single, grand uber-business that is made up of you and all of your suppliers. Although each business has its own identity, it has a second identity, which is as a member of the uber-business.

An uber-business, like all types of B2B e-commerce, is based on communication between all parties in the circle. Sharing information is easy, typically through an extranet or corporate portal.

In this type of business model, what was once proprietary knowledge quickly becomes common knowledge. There are few secrets.

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