B2B vs. B2C Explained

A free video tutorial from Siva Prasad
SAP Trainer and Consultant
Rating: 4.5 out of 5Instructor rating
10 courses
177,365 students
B2B vs B2C - Change your perspective

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SAP MM Training - in Plain English

You know English ? That's more than enough to learn SAP MM

26:00:09 of on-demand video • Updated August 2018

Understand the major business processes in SAP MM
Understand how to complete the business processes in SAP MM
Understand key technical concepts ( apart from the business processes ) like Movement Types
This course is NOT just a short HOW-TO. It deals with all the important business processes in SAP MM
English [Auto]
The next thing that I want you to understand is the perspective that you should be taken when you're learning. SAP. Typically, there are two different kinds of ways. Business transactions can happen. One is B2B. None other is B2C. B2B stands for Business to business. B to C stands for business to consumer or customer. Let me give you some examples. If you're trying to buy coffee beans for the coffee grinder at your home. Or you need some flour at home. What do you do? Go to Amazon.com. Say. Or Walmart is select your products. Then you pay. Take the bag of coffee. Put it in your truck and go home. Simple. So the process of buying coffee beans for home or for retail consumption generally is pretty simple. Imagine the same scenario happening in our coffee shop. My coffee shop, although small, is still an example of a B2B transaction. How does it happen? So there's this shop, there is a plant where pastry is being manufactured. So this is the factory. And right next to it, there is a storage location where I store the coffee beans and whatnot. This, of course, is the coffee shop. Somebody from the stores who's managing the inventory. So the store manager observes that the store is running out of coffee beans. Say by the next three days. And he informs the shop floor manager. The shop floor manager is responsible for the overall operations, let's say. And and he says we are going to run out of coffee shop floor manager raises this to the general manager of the store. Right And the general manager is going to raise a purchase order and this is going to go to the vendor. The vendor is going to send the goods later. An invoice. And somebody in finance is going to pay the vendor. Right. So if you want to buy coffee beans, the process is just not that simple. This is just in a single coffee shop. So in contrast to B2C. B2B is complex. If buying coffee for a simple coffee store is as complex as this, imagine Starbucks buying £100,000 of coffee. So this Starbucks. And they want to buy £100,000 of coffee. What happens now? That's that's. That's probably like $1 million, right? So step number one, Starbucks is going to create a purchase order. Step number two, probably there is a vendor screening process that happens or pre-screened. So there's a process of vendor selection. And then step number three is. Budget. Somebody higher up in the chain is going to approve the budget. Number four. Place the order. Number five is received. Number six, quality inspection is done. And finally. Coffee is stored in the stores or in the warehouse. Then if one of the stores needs some coffee, then coffee beans is issued. To that store. Just say the store on Michigan Avenue. The process of doing all of this is complicated. There's a long decision making process. Whereas if you want to buy the same coffee for yourself, it's very simple, right? You are the approver. You are the QA. You go inspect the coffee for smell. You're the logistics provider. Meaning you take the coffee, put it in your truck or car and you drive home. Right. You are everything. You do all of that. In a B2B scenario, though, there are different sets of people doing different sets of things. All to make this purchase happen. Another difference is. In a, B to B scenario, goods are paid. After delivery, Right. You know, the process is raised to the vendor. The vendor sends the goods. The vendor sends the invoice. Invoice is paid. So there are four steps. So the goods are delivered that step number two and step number 3 or 4 is paid. But in a B to C scenario, you pay before delivery. This is the A typical case, right? Example Amazon.com, Walmart. Swipe your card, put your card in, take the goods, and before you take the goods, you're already paying for it. There are some occasional usage based scenarios in B2C like Comcast or any kind of service where, you know they won't know how much to charge upfront. In that case, you pay after. So in such kind of situations, you sent a bill later after usage. Except for those usage kind of scenarios, for regular scenarios where the price is fixed, you almost always pay before delivery. So what's the point I'm trying to make? The point I'm trying to make is if you want to learn SAP or any other ERP system, think from the perspective of B to B, because that's what these softwares are built for. B to C. Is served by a different class of software. ERP software typically deals with B2B, and we'll talk about some of the scenarios where SAP plays a role in B2C situations. For the most part, if you want to learn SAP, think from the mindset or perspective of a B2B. So what are the things that we have covered here? We have understood that B2B scenarios are complex. They're not. They're not as simple as buying coffee from Walmart. So it's a long decision making process takes time. There are people identifying the need, there are approvers and there is a whole logistics chain and finance involved to pay the goods and typically you pay your goods after you receive the goods.