With so many collaborative e-commerce application providers on the market, it´s easy to get confused trying to figure out which one makes the most sense for your business — if any.

In recent years, some businesses have started combining the upstream and downstream links in their supply chains through the adoption of collaborative commerce. They hope that by using c-commerce to design products closer to their customers’ needs, and by quickly bringing them to market, they can achieve a higher level of customer satisfaction and have a head start on their competitors.

Will collaborative commerce help them reach their goals? The answer to that question is not that simple.

The term “collaborative commerce” first surfaced in a report by the Gartner Group in August 1999. It predicted that “collaboration would become a dominant business model by 2002″. Immediately following that forecast, providers of e-commerce solutions included the collaborative notion as a key component of their offerings. Their advertising and press literature, for the most part, left the process sketchily defined. Even as companies adopted the advertised solutions, a concrete definition of collaborative commerce was lost in the clamor. Part of the confusion stems from the fact that collaboration is a broad term, allowing even companies that merely send e-mails back and forth to claim that they are engaged in collaboration.

The trend these companies are exhibiting by adopting “collaborative commerce” reveals a shift in the focus of e-procurement. Thus far, e-procurement has focused on securing MRO products, and indirect materials. Increasingly, however, it is being used to obtain direct materials and the essential components that comprise the company’s end product – an area of procurement inextricably linked to the supply chain. Some of its early adopters contend that the collaborative commerce process has become an intricate part of their operations as it permits them to get a better grip on a chain of players upon whose collaboration they depend. As these companies often deal with a multitude of manufacturers and co-contractors, each with its own back-end system and internal procedures, collaborative commerce provides these users with a much needed means of communication.

For the company looking to implement c-commerce, there are many providers on the market. These providers can be divided into two groups: those targeting aspects of collaborative planning, and those focusing on collaborative product commerce (CPC) and collaborative design.

Collaborative planning applications are generally geared toward integrating the links in a company’s supply chain. C-commerce promises to provide this kind of integration, regardless of the systems being employed by the back offices at the company’s trading partners. This, in turn, affords the company greater visibility into its supply chain.

Collaborative product commerce/collaborative design brings suppliers into the production process at an earlier stage than has been the norm. According to c-commerce proponents, this situation will give manufacturers the opportunity to implement their suppliers’ recommendations in the design stage. Cost savings would be realized since the number of changes required after the design is completed would be minimized. This flexibility also encourages faster time-to-market of the end products. By having first to market advantage, companies can be the first to put their products on the shelves and charge a premium while their competitors struggle to keep abreast.

Some analysts point out that suppliers taking part in the collaborative commerce can also benefit from using the web as the primary means of communication with the buyer. By utilizing this method of communication funds would be saved, as traveling costs would be reduced. The analysts also suggest that customer loyalty will be enhanced, as they will be part of the process in a collaborative environment.

There are, however, some obstacles in the way of companies planning to implement collaborative commerce. There are concerns with infrastructure, imprecise standards, security issues, and the cultural barriers attending any shift to collaboration.

• Infrastructure issues refer to the incompatibility of the legacy systems that operate in the back offices of trading partners. Solution providers purport that by designing software with interface capabilities – finding, extracting, and translating data from a wide variety of systems — the problem can easily be surmounted.

• As far as standards are concerned, companies engaging in c-commerce need to establish standards not only around the data, semantics, nomenclature and information that they share, “but also what the actual process is for sharing with trading partners”, suggests Gartner’s Peterson. He also argues that the software available needs to be further developed.

• Security issues remain a major obstacle because companies are concerned about giving trading partners access to sensitive information, a situation that could give their competition the edge. Solution providers respond that their systems provide for security granting their users control over the types of information to be shared, and the ability to designate a varying degree of security, as each collaborative partnership requires.

• Cultural barriers generally come into play when companies use collaborative design solutions. In situations where a company’s engineers are interacting directly with suppliers, conflicts often arise between the engineers and the purchasing department. In these cases, the purchasing department has to be willing to step aside and let the collaborative process continue unimpeded. Ideally, the departments can find common ground by considering the best course of action for the customer.

With regard to the pace at which a company should adopt collaborative commerce, analysts are advising that they begin small and gradually build on their victories. If all goes well, they can expand the adoption, but only after the company understands what can be truly achieved as opposed to what was only promised.

There are varying opinions as to whether or not collaborative commerce is the best course of action for all companies. Not surprisingly, solution providers are uniformly supportive of the idea. E-Commerce analysts are not so sure. To quote Karen Peterson, senior researcher at the Gartner Group, “Our visions of everybody collaborating together are utopian at best”. Many analysts agree that among the factors determining which companies will benefit the most from c-commerce are the element of trust, as well as a company’s ability to respond as an enterprise, and move information quickly and efficiently. The supplier’s ability to include sufficient functionalities and security in its applications is also important, but not crucial, to successful implementation.

The winners will be those companies that are cognizant of the smaller players in the supply chain. They recognize that by engaging in collaborative commerce, it must not be to the detriment of those businesses that could be made bankrupt by “companies that have a footprint in the supply chain sufficiently large enough that they can dictate to the other player in the chain.” The real losers will be those companies that do not participate in collaborative commerce at all.

Source: The Collaboration Question
Andrew K. Reese
iSource Business, May 2001
http://www.isourceonline.com/article.asp?article_id=1115