The Effect of Investment in Interorganizational Information Technology in a Retail Supply Chain

Abstract

Fundamental changes are occurring in the way organizations interact with each other. Competitive and antagonistic relationships are giving way as supply chain members begin to realize the strategic and economic potential of increased interorganizational trust and commitment (Andaleeb 1996;Bowman 1993). Long-term supply chain relationships are reducing the costs of repetitive transactions, improving customer satisfaction, and helping companies "compete in time." The focus of supply chain management on maximizing performance through efficiency and effectiveness improvements is at the center of business decision making in the 21 st century (Mentzer 1993). Information technology (IT) appears to play an important role in facilitating these types of improvements for the supply chain.The relationship between IT and interorganizational coordination is particularly evident in the retail consumer products industry. Retailers are using various forms of logistics management strategies that include quick response (QR) and efficient consumer response (ECR) techniques. Each of these techniques requires complete, timely, and accurate coordination of stock-keeping unit (SKU) level information among the organizations involved in a retail supply chain. Product demand is captured within electronic point-of-sale (POS) systems and triggers inventory replenishment. Inventory replenishment is then tracked from global positioning systems (GPS) and shared among the participant firms within the supply chain using electronic data interchange (EDI). Ultimately this logistics information is made available to employees and suppliers of the retail firm via sophisticated logistics information systems (LIS) (Hagon 1994;Walton and Miller 1995).Information technologies appear to provide significant opportunities for restructuring supply chain relationships, thus improving total supply chain performance through increased commitment, performance, dependence, and (ultimately) long-term orientation. An abundance of information can be found in the popular business press citing anecdotal benefits for the use of information technology in supply chain management (

Exploring quality generating factors in customer-supplier relationships

“…Relational trust positively affects the longterm orientation of the relationship (Ryu et al 2007), relational stability and, consequently, business results (Yang et al 2008). The positive influence of trust on the partners' commitment and continuity of the relationship is contrasted unanimously in the academic literature (Achim 2003;ganesan 1994;Kent and Mentzer 2003;Levin et al 2006;Yang et al 2008). Hypothesis 15 is presented next.…”

“…in this regard, Caves and Bradburd (1988) justify that the transmission of information is more efficient through the vertical integration of its best qualities of coordination. However, on the other hand, the transmission of information enhances the relational environment (Brush and Rexha 2007;Mukherji and Francis 2003;Patnayakuni et al 2006;Rodríguez del Bosque Rodríguez et al 2006), the commitment between parties (Kent and Mentzer 2003) and the generation of trust (Achim 2003;Hartmann and Apaolaza ibáñez 2007;Levin et al 2006;Wang et al 2006;Yang et al 2008).…”

Bundling digitized logistics activities and its performance implications

“…Prior studies have found that investment in digitized logistics activities can lead to commitment of partner firms to cooperate in managing logistics activities (Kent & Mentzer, 2003;Bakos & Brnjyolfsson, 1993) and subsequently in cost and service improvements for the involved parties. Digitization in logistics management would enable partner firms to develop external relationships (Bowersox & Daugherty, 1995;Clemons & Row, 1993;Yang et al, 2009) and facilitate the development of long-term partner relationships.…”

Supplier market orientation and accommodation of the customer in different relationship phases

“…These specific adaptations may improve channel efficiency (Kent & Mentzer, 2003), reduce the customer's acquisition or manufacturing costs, and provide better functionality for the customer (Cannon & Homburg, 2001). …”