Businesses have the opportunity to determine whether a public or private exchange suits their business needs, as well as their budgets. A B2B public exchange can be cheaper of the two, as well as having well-defined standards and procedures. Since a public exchange is open to any company that signs up, companies have a better chance of attracting new customers and retaining them. The main concern regarding the B2B public exchange is the security of the shared information, as well as the antitrust challenges and the viability of the exchange.
Public / private B2B exchange: the differences
For larger companies, building and operating a private exchange can work to their advantage, as they can also control the infrastructure. They don’t mind spending tons of cash as long as the work process is uninterrupted and there is a noticeable improvement in supply chain coordination. They design the exchange’s infrastructure and provide training to its staff, as well as to business partners, effectively reducing operating costs, saving time and labor, and ensuring adequate workload distribution among its clients.
Some companies use both exchanges to do business, while exchanging confidential data, using a secure and reliable private exchange, and while selling or buying commodities, they make use of public exchanges and seek new business partners on public exchanges.
Some companies prefer private exchanges, as companies can deal directly with customers as opposed to public exchanges, which act as intermediaries. Public exchanges are used to dispose of surplus stocks. However, public exchanges significantly reduce the individual connection charges that link a business to its associates. Another factor influencing the preference of private exchanges is the fact that not many public exchanges are generating income, raising questions about their viability. Public exchanges have gotten more industry specific these days.
Companies fear using public exchanges, as they fear that buyers will force them to lower their prices, it is true that customers can find companies that offer them the products they want 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 provide a competitive advantage to your customers.
Private exchanges and public exchanges have their advantages and disadvantages. Public exchanges offer small businesses the opportunity to use B2B networks to coordinate their supply chain, reduce costs, reduce inventories, and establish and help retain new customers.
Private exchanges do not compromise on security, they are flexible, scalable and reliable and give the company a competitive advantage. However, they are very expensive to design and implement, take a long time to build, and require major changes to existing infrastructure.
There are companies that sell their services and products to help run a business efficiently.