How are B2B and B2C Supply Chains Different?

Reevaluating your eCommerce supply chain solution for agility, scalability, and faster time to market efficiencies
The Importance of Planning, Sourcing, Inventory, and Transportation for SCM

What Is Supply Chain Management?

A supply chain generally refers to a particular product reaching a particular customer. There are several stages from a customer ordering a product (step 1) until the product is delivered to them (step X), interconnected similarly to the hoops of a chain. If one of the hoops is broken, the chain is broken, and procurement might not be as smooth as possible. Such steps include procurement of raw materials from suppliers, manufacturing products or specific parts, product assembly, storage, delivery, possibly returns and re-delivery, and customer service. Supply chain management (or SCM for short) refers to the management of the supply chain to ensure that movement through the steps is smooth and efficient, requiring the least amount of recourses and time and resulting in the highest possible profit. SCM is a constantly evolving process, trying to maximize efficiency while minimizing unforeseen costs and delays.

With the introduction of electronic commerce (eCommerce) in our lives over the past few years, SCM gained even more importance, with eCommerce supply chain management being extremely important for a business's success. eCommerce introduced fluctuating demands due to fluctuating traffic to online platforms, leading to changes in standardized supply chain practices until then. Whereas before the explosive dominance of eCommerce, SCM was more or less mapped out for a company, with demand coming from regulated, usually national channels, online shopping, and the ability to buy products from anywhere in the world created the need to update SCM practices and adapt them to fit the new reality.

The new reality involves shorter delivery times to longer destinations, transactions through different platforms, and operations transparency. eCommerce SCM has introduced much higher pressure to companies, as with increased competition and customer requests, companies are pressed to cover the demand and secure a slice of the pie.

DIFFERENCE BETWEEN B2B SCM AND B2C SCM

How Does SCM Differ For the Two Business Models?

The supply chain can be different for different business models. Having to reference the two most well-known business models, business-to-business (B2B) and business-to-customer (B2C), we will explore the difference between B2B and B2C SCM. Fundamentally, the two business models are different, not only regarding the receiver but also regarding the methods used. For example, the B2B model is based mainly on personal relationships, whereas in B2C cases, the customer might never put a "face" on the business. Also, the B2C model is based on quick turnaround upon customers' request, whereas in the B2B model, delays might be justified and accepted by receivers.

Furthermore, in B2B supply chain management, there is a higher allowance for negotiations within different stakeholders, whereas, in B2C SCM, this is rarely the case. Another difference is that the B2B supply chain is generally considered shorter than the B2C supply chain, as fewer stakeholders and middlemen are involved. Coming back to the personal element of B2B SCM, there is much more room to develop personal relationships in every step of the supply chain, as there is a shorter list of end-users. On the contrary, the B2C supply chain has to cater to many more customers with diverse goals and "excellence" criteria, making personal relationships more difficult to create and attain, nonetheless also important.

A last but definitely not less important point of difference between the two business models regarding their supply chain is the importance that social media holds. In the B2C case, social media can have a very important role in the demand for specific products and specific timelines, with reviews being the nemesis of companies. In the B2B case, transactions are mostly based on personal connections and companies' ability to provide samples of products and let prospective end-users decide on the product's suitability for the desired purpose. However, with the development of eCommerce and its applicability to B2B transactions, this sector has an emerging need for digitalization of transactions, although probably not to the point of B2C digitalization.

Could the Two Business Models Share the Same SCM System?

Having gone through the significant differences between B2B and B2C supply chain management and the constantly increasing importance of eCommerce, whether the SCM system between the two models could be unified arises. The short answer is "maybe." Both systems can learn from each other, especially from the respective supply chains' successes and failures. For now, the two business models seem to have quite a distinct character to share the same SCM system. Still, undeniably there is common ground, especially as eCommerce keeps making a drastic impact, and it is here to stay. The end-user in each case is fundamentally different, and it will probably remain different. With eCommerce having such a drastic impact on everyday and commercial life, it is safe to assume that some SCM factors will inevitably merge for the two business models.

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