An Emerging Vision of Internet-Enabled Supply-Chain Electronic Commerce

Robert B. Johnston and Horace Cheok Mak
International Journal of Electronic Commerce,
Volume 4, Number 4, Summer 2000, pp. 43.

Abstract: Increasingly, large retail companies are finding that the traditional vision of Electronic Data Interchange, using a value-added network with expensive message-translation software and private wide-area networks, is unable to deliver its promise of paperless trading with their suppliers. Many companies have achieved a high level of EDI compliance from their large suppliers, but unsophisticated, usually small, suppliers generally remain outside their electronic commerce networks. This poses a serious problem, since the most important business reengineering benefits require 100 percent compliance. Many large retailers are turning to the diverse range of new Internet-based document distribution and presentation systems for ways of including unsophisticated traders in their replenishment systems.

The traditional EDI vision resulted from the interaction of several aspects of the replenishment problem (available technology, transaction cost structure, the power of message-transmission intermediaries, notions about how to achieve supply-chain cooperation, shared understandings of correct e-commerce practice within the industry), but it achieved only partial supply-chain compliance because it failed to take account of the differences between sophisticated and unsophisticated trading partners. This paper argues that the commercial availability of the Internet does more than simply provide a cheaper alternative document-transmission channel. Rather, by upsetting the balance among the contextual forces, it allows the emergence of a new vision of supply-chain electronic commerce featuring a backbone any-to-any network of EDI-compliant, technologically sophisticated trading partners, with Internet-based subnetworks, centered on large players or third parties, using proprietary software, development tools, and message formatting to provide connection to unsophisticated players.

Key Words and Phrases
: Electronic data interchange, intelligent gateways, Internet, small to medium-size enterprises, supply-chain management.