IBSCM SAMENVATTING
Chapter 1
B2B markets have in common that they deliver their products directly to other
companies, governmental agencies, or public organizations (and not to consumers!).
Three di erent B2B sectors:
1. The primary sector: involves extracting, mining, and harvesting natural products
from our earth (mining corporations, shermen, and farmers).
2. The secondary sector: involves processing, manufacturing, and constructing
products using the goods or materials that the primary sector delivers
(manufacturing companies).
3. The tertiary sector: involves the services sector (accountancies and advertising
agencies).
Five di erent product-groups that B2B customers buy:
1. Resell as is: products that are bought for trade, unmodi ed as they are, by
wholesalers and retailers.
2. Integrate as component: products become part of the customer’s nal product
but need no further processing before that stage. These parts are integrated
unmodi ed into products by original equipment manufacturers (OEM).
3. Modify and resell: products become part of the B2B customer’s nal product.
They have previously undergone some processing but need further processing
by the B2B customer before they enter the nal product.
4. Capital items: used for production within the B2B customers’ organization. As
such, this customer is the end-user. These goods and services help the
company operate and conduct its main activities.
Major capital items: lifespan of more than one year, they do not become
part of the company's nal product, and cost more than $10,000 per unit
(business cars).
Minor capital items: lifespan of more than one year, do not become part
of the company's nal product, and cost between $1,000 and $10,000
per unit (computers).
5. Internal consumption: used for operating the company, maintenance, or repairs
(wine and beer for the Friday meetings or toilet paper for the toilets).
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,Derived demand = Input-to-process (I2P): companies like metal, pulp, and paper
suppliers providing goods that are utilized as inputs in the B2B customers' process (1, 2
and 3 of the previous list).
Installed-base (IB): companies, such as machinery and equipment manufacturers,
provide investment goods to B2B customers, thus helping to create an installed base of
machines and equipment at the customer’s plants.
The Capex business: capital expenditure (number 4).
The Opex business: operational expenditure (number 5).
Value chains are combinations of
companies that produce, distribute, and
eventually deliver products to the end user.
Three types of B2B relationships: B2B,
B2B2C and B2B2B.
Three views on market structures.
Non-equity- based relationships are based on licensing or another contractual
relationship.
Customer-supplier relationship with the following six dimensions:
1. The amount, content, and openness of information exchange between the
customer and supplier (early involvement in developments and product design,
, open book calculations, joint logistical planning, and openness about plans for
the future).
2. The operational linkages between supplier and customer: the degree to which
systems, procedures and routines of both organizations are linked.
3. The bonding and contractual agreements (legal bonds) between the partners.
4. The norms for cooperation between them. These are the expectations and rules
concerning how to work together as exchange partners.
5. The adaptations concerning processes, products or procedures made by the
supplier to t into the relationship.
6. The adaptations made by the customer.
Three types of
relationships.
Typical stages of a
business relationship.
The evolutionary path of intensifying relationships …
From strangers to acquaintances: as soon as there has been a transaction and
an exchange relationship has been established, a stranger becomes an
acquaintance. The CVP is often standardized, repetitive, and on par with
competitors.
From acquaintances to friends: repetitive interactions lead to a growing
familiarity with the customer. This enables the supplier to o er the customer a
more unique o ering that leads to an advantage for the customer. The value
o ered moves from parity value to di erential value, which in turn leads to a
trust-relationship.
From friends to partners: in a long business relationship, the supplier can o er a
customized value. Customer knowledge and information systems are used to
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, o er the customer tailor-made o erings and value. This leads to customers that
are willing to pay a price premium and commit themselves to the supplier for a
long-term relationship (collaborative exchange). Parties become increasingly
interdependent in such a situation.
Ten Characteristics of B2B Relationships:
1. The Pareto principle: for many B2B suppliers, 20% of their customers are good
for 80% of the revenues. Furthermore, 20% of the customers (although they
might be di erent customers than the aforementioned) generate most of the
company’s pro ts.
2. Power in the value chain: often, It’s the customer that has the power in a
relationship. However, this is not always the case. In markets where customers
are strongly dependent on their suppliers, it is the supplier that decides with
what customers (OEM, exclusive wholesalers, distributors, or retailers) to do
business.
3. Growing interdependencies: customers and suppliers and their connected
networks and outer contexts become more and more dependent on each other,
making these relationships more and more complicated. Some of the factors
that in uence this development are:
Accelerating globalization leading to increased transparency of markets.
Flattening networks of organizations that lock-in or lock-out
organizations.
Disrupting value chains because of the appearance of companies with
completely new CVPs.
Intensifying governmental involvement in uencing the companies’
possibilities to cooperate.
Continuously fragmenting customer needs leading to new niches.
Outsourcing of all non-core business activities to suppliers to increase
e ciency.
4. Intensive relationships: the relationships based on collaborative exchanges (see
Figure 1.7.) have a long-term nature. There is a buying center on the customer’s
side, and a selling center on the supplier’s side. Key-account management is in
place to maintain this interaction.
The selling center of the supplier consists of various roles. These can be the deciders
(do we want this customer/deal?), salespeople, employees that produce the product and
other contact persons.
The buying center of the customer includes ve roles:
Users: employees who use the purchased products.
In uencers: employees and other actors who in uence the decision process
(in)directly.
Buyers: employees with formal responsibility and authority to contract suppliers
(purchasers and procurement managers).
Gatekeepers: employees and others who control the ow of information (and
materials) into the buying center.
Deciders: employees with the authority to choose among alternative suppliers
(general managers or department managers).
The usage center is the group of customer’s people who would use the product.
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, Three di erent buying situations:
1. A new task: this buying situation is complicated, many members of the buying
center can be involved.
2. A modi ed rebuy: additional information is needed before a decision can be
made.
3. A straight rebuy: this buying situation is simple, only a few buying center
members will be involved.
5. Multiple source supplierships: single, dual, or multiple source suppliership.
6. Industry 4.0
7. Ambidexterity: to be competitive and o er the best value, companies must
manage both the bene ts and sacri ces for their customers. This means not
only adding value, but also managing costs and prices for customers. Internal
cost reductions could be necessary to have the possibility to ask (low) prices at
a competitive level. Simultaneously working on high added value for customers
and at the same time working on low internal costs is a practice of walking on
two-legs called ‘ambidexterity’.
8. From acquisition to retention: research shows that keeping customers is less
expensive than acquiring new ones.
9. From volume and market share to pro tability: having the right customers is
more important than having a lot of customers. Not all customers are equal, or
even stronger: the average customer does not exist. ‘Customer rst’ and
‘Customer is king’ should be changed into ‘One customer is more king than the
other’.
10. Commoditization in markets: four factors have disrupted the dynamics in these
markets.
The quality of products has been commoditized. The
technical and qualitative di erences between suppliers
and their o erings have been narrowed.
An existential threat has been posed by new
disruptive technologies like cloud computing, mobile
applications, and arti cial intelligence.
Business customers are getting better informed by
doing research on their own. Easy access to online
information leads to an abundance of product
information.
Customers shift from a focus on almost solely
negotiating for the lowest price to selecting suppliers
based on added business value.
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Chapter 1
B2B markets have in common that they deliver their products directly to other
companies, governmental agencies, or public organizations (and not to consumers!).
Three di erent B2B sectors:
1. The primary sector: involves extracting, mining, and harvesting natural products
from our earth (mining corporations, shermen, and farmers).
2. The secondary sector: involves processing, manufacturing, and constructing
products using the goods or materials that the primary sector delivers
(manufacturing companies).
3. The tertiary sector: involves the services sector (accountancies and advertising
agencies).
Five di erent product-groups that B2B customers buy:
1. Resell as is: products that are bought for trade, unmodi ed as they are, by
wholesalers and retailers.
2. Integrate as component: products become part of the customer’s nal product
but need no further processing before that stage. These parts are integrated
unmodi ed into products by original equipment manufacturers (OEM).
3. Modify and resell: products become part of the B2B customer’s nal product.
They have previously undergone some processing but need further processing
by the B2B customer before they enter the nal product.
4. Capital items: used for production within the B2B customers’ organization. As
such, this customer is the end-user. These goods and services help the
company operate and conduct its main activities.
Major capital items: lifespan of more than one year, they do not become
part of the company's nal product, and cost more than $10,000 per unit
(business cars).
Minor capital items: lifespan of more than one year, do not become part
of the company's nal product, and cost between $1,000 and $10,000
per unit (computers).
5. Internal consumption: used for operating the company, maintenance, or repairs
(wine and beer for the Friday meetings or toilet paper for the toilets).
fffiff fi fi fi fi fi fifi
,Derived demand = Input-to-process (I2P): companies like metal, pulp, and paper
suppliers providing goods that are utilized as inputs in the B2B customers' process (1, 2
and 3 of the previous list).
Installed-base (IB): companies, such as machinery and equipment manufacturers,
provide investment goods to B2B customers, thus helping to create an installed base of
machines and equipment at the customer’s plants.
The Capex business: capital expenditure (number 4).
The Opex business: operational expenditure (number 5).
Value chains are combinations of
companies that produce, distribute, and
eventually deliver products to the end user.
Three types of B2B relationships: B2B,
B2B2C and B2B2B.
Three views on market structures.
Non-equity- based relationships are based on licensing or another contractual
relationship.
Customer-supplier relationship with the following six dimensions:
1. The amount, content, and openness of information exchange between the
customer and supplier (early involvement in developments and product design,
, open book calculations, joint logistical planning, and openness about plans for
the future).
2. The operational linkages between supplier and customer: the degree to which
systems, procedures and routines of both organizations are linked.
3. The bonding and contractual agreements (legal bonds) between the partners.
4. The norms for cooperation between them. These are the expectations and rules
concerning how to work together as exchange partners.
5. The adaptations concerning processes, products or procedures made by the
supplier to t into the relationship.
6. The adaptations made by the customer.
Three types of
relationships.
Typical stages of a
business relationship.
The evolutionary path of intensifying relationships …
From strangers to acquaintances: as soon as there has been a transaction and
an exchange relationship has been established, a stranger becomes an
acquaintance. The CVP is often standardized, repetitive, and on par with
competitors.
From acquaintances to friends: repetitive interactions lead to a growing
familiarity with the customer. This enables the supplier to o er the customer a
more unique o ering that leads to an advantage for the customer. The value
o ered moves from parity value to di erential value, which in turn leads to a
trust-relationship.
From friends to partners: in a long business relationship, the supplier can o er a
customized value. Customer knowledge and information systems are used to
ff fi ff ff ff ff
, o er the customer tailor-made o erings and value. This leads to customers that
are willing to pay a price premium and commit themselves to the supplier for a
long-term relationship (collaborative exchange). Parties become increasingly
interdependent in such a situation.
Ten Characteristics of B2B Relationships:
1. The Pareto principle: for many B2B suppliers, 20% of their customers are good
for 80% of the revenues. Furthermore, 20% of the customers (although they
might be di erent customers than the aforementioned) generate most of the
company’s pro ts.
2. Power in the value chain: often, It’s the customer that has the power in a
relationship. However, this is not always the case. In markets where customers
are strongly dependent on their suppliers, it is the supplier that decides with
what customers (OEM, exclusive wholesalers, distributors, or retailers) to do
business.
3. Growing interdependencies: customers and suppliers and their connected
networks and outer contexts become more and more dependent on each other,
making these relationships more and more complicated. Some of the factors
that in uence this development are:
Accelerating globalization leading to increased transparency of markets.
Flattening networks of organizations that lock-in or lock-out
organizations.
Disrupting value chains because of the appearance of companies with
completely new CVPs.
Intensifying governmental involvement in uencing the companies’
possibilities to cooperate.
Continuously fragmenting customer needs leading to new niches.
Outsourcing of all non-core business activities to suppliers to increase
e ciency.
4. Intensive relationships: the relationships based on collaborative exchanges (see
Figure 1.7.) have a long-term nature. There is a buying center on the customer’s
side, and a selling center on the supplier’s side. Key-account management is in
place to maintain this interaction.
The selling center of the supplier consists of various roles. These can be the deciders
(do we want this customer/deal?), salespeople, employees that produce the product and
other contact persons.
The buying center of the customer includes ve roles:
Users: employees who use the purchased products.
In uencers: employees and other actors who in uence the decision process
(in)directly.
Buyers: employees with formal responsibility and authority to contract suppliers
(purchasers and procurement managers).
Gatekeepers: employees and others who control the ow of information (and
materials) into the buying center.
Deciders: employees with the authority to choose among alternative suppliers
(general managers or department managers).
The usage center is the group of customer’s people who would use the product.
ffi
fffl fl ff fi ff fifl fl fl
, Three di erent buying situations:
1. A new task: this buying situation is complicated, many members of the buying
center can be involved.
2. A modi ed rebuy: additional information is needed before a decision can be
made.
3. A straight rebuy: this buying situation is simple, only a few buying center
members will be involved.
5. Multiple source supplierships: single, dual, or multiple source suppliership.
6. Industry 4.0
7. Ambidexterity: to be competitive and o er the best value, companies must
manage both the bene ts and sacri ces for their customers. This means not
only adding value, but also managing costs and prices for customers. Internal
cost reductions could be necessary to have the possibility to ask (low) prices at
a competitive level. Simultaneously working on high added value for customers
and at the same time working on low internal costs is a practice of walking on
two-legs called ‘ambidexterity’.
8. From acquisition to retention: research shows that keeping customers is less
expensive than acquiring new ones.
9. From volume and market share to pro tability: having the right customers is
more important than having a lot of customers. Not all customers are equal, or
even stronger: the average customer does not exist. ‘Customer rst’ and
‘Customer is king’ should be changed into ‘One customer is more king than the
other’.
10. Commoditization in markets: four factors have disrupted the dynamics in these
markets.
The quality of products has been commoditized. The
technical and qualitative di erences between suppliers
and their o erings have been narrowed.
An existential threat has been posed by new
disruptive technologies like cloud computing, mobile
applications, and arti cial intelligence.
Business customers are getting better informed by
doing research on their own. Easy access to online
information leads to an abundance of product
information.
Customers shift from a focus on almost solely
negotiating for the lowest price to selecting suppliers
based on added business value.
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