Information Technology in Supplier Networks

Under what conditions does the use of modern information technology in procurement relationships lead to more dynamics, e.g. in the form of using (electronic) marketplaces; under what conditions are long-term partnerships predominant? This book analyzes the impact of advances in information technology on procurement decisions in organizations. On the methodological basis of transaction cost theory and search theory a formal model is developed to represent decisions on supplier selection and the use of information technology. General statements are made in respect of the effect of progress in information technology on the expected duration of supplier contracts and the frequency of supplier changes.

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The present work by Sascha Weber addresses procurement which deals with business partners beyond the boundaries of one's organization. Procurement refers to the function of purchasing goods and services from suppliers, whether raw material used to manufacture an organization's final products, maintenance and repair supplies, or capital goods such as machinery and buildings. Major decisions in procurement concern the selection of the right suppliers with whom to establish a business relationship, the design of purchasing contracts, and the selection of information technology used to support the procurement process. In recent years the progress in information technology not only provided opportunities to rationalize the existing way of organizing procurement, but also opened up new ways of conducting business as the emergence of virtual enterprises and electronic markets may indicate. The objective of Sascha Weber's research is to analyze and answer the question of how the use of information technology and expected progress influences procurement decisions of an organization. The analysis is conducted identifying important parameters which describe the relevant properties of information technology and supplier relationships. Information technology is distinguished flrstly in terms of the task which is supported between information technology used to support the evaluation of potential suppliers and information technology for the support of the execution of a supplier relationship.

Contenu

1 Introduction.- 1.1 Research motivation.- 1.2 Research objectives.- 1.3 Research benefits.- 1.4 Structure of the thesis.- 2 Supplier Relationships.- 2.1 Basic aspects of supplier relationships.- 2.1.1 Supplier relationships and procurement.- 2.1.2 Procurement in the value chain of an organization.- 2.1.3 Institutionalizing the management of supplier relationships.- 2.1.4 Contracts in supplier relationships.- 2.1.4.1 Purchasing contracts in theory.- 2.1.4.2 Purchasing contracts in practice.- 2.1.5 Phases of supplier relationships.- 2.1.5.1 Evaluation phase.- 2.1.5.2 Settlement phase.- 2.2 Assessment of supplier relationships.- 2.2.1 Transaction costs.- 2.2.1.1 Asset specificity.- 2.2.1.2 Uncertainty in terms of transaction and behavior.- 2.2.1.3 Complexity of transaction and good.- 2.2.1.4 Frequency of a transaction.- 2.2.1.5 Fundamental transformation.- 2.2.2 Production costs.- 2.2.2.1 Economies of scale.- 2.2.2.2 Capacity utilization.- 2.2.2.3 Efficiency gains by specialization.- 2.2.2.4 Arbitrage between industrial sectors and/or geographical locations.- 2.2.2.5 Opportunity costs of suboptimal capital allocation.- 2.2.3 Optimal governance structure.- 3 Information Technology.- 3.1 Basic aspects of information technology.- 3.1.1 Theory of network effects.- 3.1.2 Standards.- 3.1.2.1 Compatibility standards.- 3.1.2.2 Quality standards.- 3.1.2.3 De jure standards.- 3.1.2.4 De facto standards.- 3.2 Information technology for the support of supplier relationships.- 3.2.1 Procurement applications.- 3.2.2 Supplier search and electronic catalogs.- 3.2.3 Information technology in the negotiation phase.- 3.2.3.1 Electronic auctions.- 3.2.3.2 Negotiation support systems.- 3.2.4 Standards for structuring the communication process in the settlement phase.- 3.2.4.1 Open-EDI.- 3.2.4.2 Interorganizational Procedures (InterProcs).- 3.2.4.3 Open Applications Group Integration Specifications (OAGIS).- 3.2.4.4 Open Trading Protocol (OTP).- 3.2.4.5 Open Buying on the Internet (OBI).- 3.2.5 Standards for structuring communication objects.- 3.2.5.1 The syntactic level: languages for the specification of standards.- 3.2.5.2 Standards on the semantic level.- 3.2.6 Information technology and transaction costs.- 3.2.6.1 Evaluation cost reductions.- 3.2.6.2 Settlement cost reductions.- 3.3 Information technology and changing supplier relationships.- 3.3.1 The move to the market hypothesis.- 3.3.2 The move to the middle hypothesis.- 3.3.3 Provisional results.- 4 Decisions about Supplier Relationships and Information Technology.- 4.1 The progress of information technology and the state preference approach.- 4.2 The basic model of supplier selection decisions.- 4.2.1 Acquisition and evaluation costs.- 4.2.2 Settlement costs.- 4.2.3 Costs of keeping the current transaction partner.- 4.2.4 Properties of the basic model.- 4.2.4.1 Marginal evaluation costs.- 4.2.4.2 Transaction volume.- 4.2.4.3 Riskiness of the price distribution.- 4.2.4.4 Mean value of the price distribution.- 4.2.4.5 Initialization costs.- 4.2.4.6 Adaptation costs.- 4.2.4.7 Frequency of a transaction.- 4.2.4.8 Costs of exchanging the goods.- 4.2.5 Decisions in the basic model.- 4.2.5.1 Transaction partner selection.- 4.2.5.2 Outsourcing.- 4.2.5.3 Determining the optimal contract duration.- 4.3 Extending the basic model: the selection of information technology.- 4.3.1 Modeling the selection of information technology.- 4.3.2 Properties of the extended model.- 4.3.3 Decisions in the extended model.- 4.3.3.1 The duration of supplier contracts under the condition of changing technology diffusion.- 4.3.3.2 The selection of information technology under the condition of newly emerging solutions.- 5 Conclusion.- 5.1 Summary.- 5.1.1 Information technology and transaction costs.- 5.1.2 Reduced transaction costs and the design of supplier contracts.- 5.1.3 Growing dissemination of information technology and the duration of supplier contracts.- 5.1.4 The adoption of new information technology.- 5.2 Implications for the management of supplier relationships.- 5.3 Outlook.- 6 References.- 7 Appendices.- 8 List of Figures.- 9 List of Tables.- 10 List of Used Symbols.- 11 List of Abbreviations.