B2B vs. B2C Explained

Siva Prasad
A free video tutorial from Siva Prasad
SAP Trainer and Consultant
4.5 instructor rating • 10 courses • 110,955 students

Learn more from the full course

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 SJP typically. There are two different kinds of ways. Business transactions can happen. One is B2B and another is B to C. B2B stands for business to business, B to C stands for business to consumer or customer. Let me give you some examples. You're trying to buy coffee beans for the coffee grinder at your home. Well, you need some flour at home. What do you do? Go to Amazon.com, say. What Wal-Mart, you select your products. Then you 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 that this shop, there's a plant where pastry 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 on a coffee beans sabai the next three days and he informs the shop manager. The shop floor manager is responsible for the overall operations that say and he says, we are going to run to a 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 and invoice. And somebody in finance is going to be the random. 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 B, to C be to be is complex. If buying coffee for a simple coffee store is as complex as this, imagine Starbucks buying 100000 pounds of coffee. So this Starbucks and they want to buy 100000 pounds of coffee. What happens now? That's that's that's probably like a million dollars, 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 prescreened. So there's a process of random selection and then step number three is. Margit. Somebody higher up in the chain is going to approve the budget. Number four, please, the order. Number five escort's received. Number six, quality inspection is done. And finally. Coffee is stored in the stores or in the warehouse. Then one of the stores needs some coffee bean, coffee beans is issued. To that store. Let's 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 with your approval. You're the Kuai, 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 sorts of things. All to make this purchase happen. Another difference is in a B2B scenario, goods are paid. After delivery, right, you know, the process appears raised to the vendor, the vendor, since the goods vendor says the invoice invoice is paid. So there are four steps. So the goods are delivered. That's step number two and step number three or four, it's paid. But in the B to C scenario, you pay before delivery. This is the typical case, right? Example, Amazon.com, Walmart, swipe your card, put your card and take the goods. And before you take the goods, you're already paying for it. There are some occasional usage based scenarios in BTC like Comcast or any kind of service where, you know, they don't know how much to charge up front. In that case, you pay after. So in such kind of situations years 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 in trying to make? The point I'm trying to make is if you want to learn ASCAP or any other ERP system, think from the perspective of B to be, because that's what these softwares are built for. B to C. Is sold by different class of software, ERP software typically deals with B2B, and we'll talk about some of the scenarios where ASCAP plays a role in B2C situations. For the most part, if you want to learn SFP, think from the mindset or perspective of a B to be. 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 Wal-Mart. So it's a long decision making process takes time. There are people identifying the need that are approvers and there is a whole logistics chain and financing world to pay the goods. And typically you pay your goods after you receive the goods.