Examining the Impact of Interorganizational Systems on Process Efficiency and Sourcing Leverage in Buyer–Supplier Dyads

Abstract

Manufacturing firms are increasingly seeking cost and other competitive advantages by tightly coupling and managing their relationship with suppliers. Among other mechanisms, interorganizational systems (IOS) that facilitate boundary-spanning activities of a firm enable them to effectively manage different types of buyer-supplier relationships. This study integrates literature from the operations and information systems fields to create a joint perspective in understanding the linkages between the nature of the IOS, buyer-supplier relationships, and manufacturing performance at the dyadic level. External integration, breadth, and initiation are used to capture IOS functionality, and their effect on process efficiency and sourcing leverage is examined. The study also explores the differences in how manufacturing firms use IOS when operating under varying levels of competitive intensity and product standardization. In order to test the research models and related hypothesis, empirical data on buyer-supplier dyads is collected from manufacturing firms. The results show that only higher levels of external integration that go beyond simple procurement systems, as well as who initiates the IOS, allow manufacturing firms to enhance process efficiency. In contrast, IOS breadth and IOS initiation enable manufacturing firms to enhance sourcing leverage over their suppliers. In addition, firms making standardized products in highly competitive environments tend to achieve higher process efficiencies and have higher levels of external integration. The study shows how specific IOS decisions allow manufacturing firms to better manage their dependence on the supplier for resources and thereby select system functionalities that are consistent with their own operating environments and the desired supply chain design. † Corresponding author. 366Examining the Impact of Interorganizational Systems

Development of a risk-oriented strategic sourcing (ROSS) framework for the construction and electronics manufacturing industries

“…However, electronic sourcing is in general increasing process efficiency (Saeed et al, 2005), the collaboration with suppliers (Saeed et al, 2005), price reductions through auction (Arnold et al, 2005), but companies remain concerned about security issues in adapting electronic sourcing (Hartley et al, 2006) or operational risks (Sharp, 2007). Where Emiliani (2004) argues that auctions do not offer real benefits and reduce total costs, Arnold et al (2005) argue the contrary.…”

“…Gelderman and Van Weele (2003) identify in case study research different applications and company-specific characteristics of the Kraljic matrix, particularly where the experienced user included additional informa-tion, such as the overall business strategy, specific situations of supply markets and individual suppliers (Gelderman and Van Weele, 2003). It is surprising that the application of eSourcing or reverse auction is not well established because it improves process efficiencies (Saeed et al, 2005). Research by Spekman et al (1999) identified that, in general, companies lag behind in the implementation of electronic data interchange or other electronic sourcing tools.…”

“…Saeed et al (2005) argue that electronic collaboration with suppliers (interorganisational systems) improves process efficiencies and different performance objectives, while Engelbrecht-Wiggans and Katok (2006) show in a laboratory study on reverse auctions that a hybrid process combined with reverse auctions and negotiations decreases buyers' total costs. Hartley et al (2006) present survey results from 164 managers and conclude that the biggest barriers for non-adopters of electronic auctions are security concerns in information systems.…”

“…However, few companies really see an integration of suppliers as important, and the use of electronic data interchange is not well established. Saeed et al (2005) generally argue to improve process efficiencies and different performance objectives by establishing and improving the electronic collaboration with suppliers. In this context, Leek et al (2004) argue that manufacturing companies work mainly with personal judgments, where auto companies utilise a formal supplier relationship management system.…”

End User Satisfaction and Individual Performance Assessments in e-Procurement Systems

“…Saeed, Malhotra [34] points out that inter-organizational systems (e.g., e-procurement systems) facilitate the exchange and the process of the information; therefore, the time information substitute the old manual functions. Moreover; e-procurement systems facilitate the execution of complex orders, Brandon-Jones and Carey [33] claimed that user perception of complex order processing quality can be experienced by system speed, accuracy, and capability.…”