Academic journal article Journal of Supply Chain Management

Evaluating Prospective E-Providers: An Empirical Study

Academic journal article Journal of Supply Chain Management

Evaluating Prospective E-Providers: An Empirical Study

Article excerpt

INTRODUCTION

While academia has conventionally treated supply chain management and information technology (IT) as two distinct streams of research, practitioners have long realized the importance of IT in coordinating and integrating intra- and interorganizational business operations (Shah, Goldstein and Ward 2002). Investments in IT for effective e-business (1) are growing at a rapid pace. For instance, TowerGroup estimates that IT spending for supply chain management will rise from $30.9 billion in 2004 to $49.3 billion by 2008 (Garcia 2004). Firms are seeking more sophisticated capabilities and faster time to market, and e-providers (2) are beginning to respond. The market for e-purchasing software, also called spend management or supplier relationship management solutions, is growing at a compound annual growth rate (CAGR) of 10 percent (Bartels 2007). Recognizing these trends, current work in supply chain coordination places emphasis on information flows in addition to material flows (Frolich and Westbrook 2001). IT enables information and activity coordination, leading to tangible benefits in areas as diverse as supply chain forecasting, production scheduling, new product development, procurement, ordering, customer relationship management and inventory location and tracking information (Shah et al. 2002). E-providers of IT_SCM systems promise these deliverables, and more (Kotzab, Skjoldager and Vinum 2003). However, it has been problematic to evaluate these publicized product benefits before actual adoption and use of the technologies. Reports of losses of revenue and profits have been attributed to ill-designed or under-performing e-business systems, and post hoc complaints from users highlight the need for effective a priori evaluation of offered products. "Many of those purchases proved to be big disappointments ... [and] often provide little return on investment" (Lavelle, 2002). There is, therefore, a need to a priori identify provider evaluation criteria and evaluation process factors that can predict post-hoc performance. This study seeks to address this need.

Customer goals and desired capabilities in e-business can vary widely, ranging from simple order and invoice processing to complex goals such as the exchange of technical road maps with core suppliers, design collaboration, graphical interchange, contract bidding and design of supply chain/delivery management processes (Bernstein 2001). E-business, as defined in this paper, adapts two perspectives from Kalakota and Whinston's (1997) definition: an online perspective, which describes e-business as the capability to transact B2B exchanges, and a business process perspective, which presents e-business as the application of technology for business process and workflow automation. Within both of these perspectives, objective measurements of prospective e-provider value have not seen much use. The reason may lie in the paucity of established objective a priori evaluation criteria. Validated routines are lacking for formalizing the strategic and tacit gains expected from e-business investments, including implicit support of business objectives, response to competitor moves and other issues. Users seek suppliers, systems and processes that are stable, secure, available, flexible and scalable, and are based on open standards to enable evolution. Many of these criteria are difficult to quantify, and yet find extensive use in IT package selection and adoption.

This research seeks to identify and prioritize e-provider evaluation criteria from buyers' perspectives. It further investigates how these criteria relate to evidence of achieved performance, using data gathered from e-business projects in more than 100 companies. The objective is to develop a list of critical performance-linked criteria and associated evaluation processes that buyers can use to develop a business case to acquire e-business software or evaluate e-providers more effectively before adoption. …

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