Businesses have the chance to determine if a private or a public exchange suits their business needs as well as their budgets. A public B2B exchange may be cheaper of the two as well as having well defined standards and procedures. Since a public exchange is open to any business that subscribes to it, businesses have a greater chance to recruit new customers and retain them. The main concern regarding public B2B exchange is the security of the information shared as well as the antitrust challenges and the viability of the exchange.
Public / Private B2B Exchange - The Differences
For larger enterprises, building and operating a private exchange can work to their advantage as they also get to control the infrastructure. They do not mind spending tons of cash as long as the work process is uninterrupted and there is a marked improvement in the supply chain coordination. They design the infrastructure of the exchange, and provide training to their staff as well as business partners effectively reducing operating cost, saving time and labor and ensure proper distribution of workload among its customers.
Some companies use both exchanges to do business, while trading sensitive data, they use a secure and reliable private exchange and while selling commodities or buying them, they make use of public exchanges as well as scouting for new business associates in public exchanges.
Some businesses prefer private exchanges as businesses can deal directly with customers unlike public exchanges, which act as a middleman. Public exchanges are used to dispose of excess inventories. Public exchanges however significantly reduce individual connection charges linking a business to its associates. Another factor influencing preference of private exchanges is the fact that not many public exchanges are actually making money, raising questions about their viability. Public exchanges have become more industry specific these days.
Businesses fear to use public exchanges, as they fear buyers will force them to lower their prices, it is true in a way as customers can find businesses that offer them the products they desire at the lowest prices. Private exchanges are less prone to security breaches and help establish central control over purchasing procedures and facilitate internal connectivity and it provides a competitive edge to its customers.
Private exchanges and public exchanges each have their advantages as well as disadvantages. Public exchanges offer small businesses a chance to utilize B2B networking to coordinate their supply chain, reduce costs, reduce inventories and establishing new customers and help retain them.
Private exchanges do not compromise on security, are flexible, scalable, and reliable and give the business a competitive edge. They however are very costly to design and implement, take a lot of time to build and require extensive changes to existing infrastructure.
There are firms that sell their services as well as products to help run a business efficiently.
Alexander Gordon is a writer for http://www.smallbusinessconsulting.com - The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business.
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