E-business in Supply Chain Management

Introduction

In the past ten years, e-business, as an overarching business concept, has received increasing attention from academics and practitioners alike. The term ‘e-business’ was introduced by IBM in 1997. In its origins it is defined as “the transformation of key business processes through the use of Internet technologies” (IBM et al., 2000, p.1). Amor (2000) expands the definition by describing it as a secured, flexible and integrated approach in order to offer various companies values through the combination of systems and procedures and so being able to manage the core business procedures with the simplicity and penetration of Internet technology.

These two definitions of e-business both refer to using the Internet to link with customers, suppliers and other associated partners. However, the term also implies the transformation of existing business processes into more efficient ones. E-business has generally been pioneered by information technology (IT) companies, where demand is constantly changing and products have very short product life cycles and short order-to-delivery times as a result. Organisations successfully engaging in e-business are able to convert data from their back-end systems into a common readable format and thus are able to share information and conduct electronic transactions with their business partners via the Internet. It also encompasses the adoption of innovative business concepts, such as dynamic pricing through auctions/reverse auctions, co-opetition via purchasing consortia and direct online sales to customers. E-Commerce can be regarded as a subset of e-business. While e-business refers to the whole spectrum of online information exchanges, e-Commerce only encompasses online transactions.

The power and properties of information and communication technology (ICT) can be leveraged in several ways across functional domains, with online selling to customers constituting only a fraction of the potential possibilities engendered by e-business (Wu, Mahajan and Balasubramanian, 2001). Companies are increasingly incorporating e-business concepts as an integral part into their strategy in order to achieve competitive advantage. In particular, vertical Business-to-Business (B2B) applications and systems have enabled companies to interact in a dynamic, innovative and real-time environment and, as such, allow superior supply network integration.