Value added logistics in supply and demand chains. Smile. Part 1. eBusiness between global company and itslocal sme supplier network

VALOSADE (Value Added Logistics in Supply and Demand Chains) is the research project of Anita Lukka s VALORE (Value Added Logistics Research) research team in Lappeenranta University of Technology. VALOSADE is included in ELO (Ebusiness logistics) technology program of Tekes (Finnish Technology Agency). SMILE (SME-sector, Internet applications and Logistical Efficiency) is one of four subprojects of VALOSADE. SMILE research focuses on case network that is composed of small and medium sized mechanical maintenance service providers and global wood processing customers. Basic principle of SMILE study is communication and ebusiness in supply and demand network. This first phase of research concentrates on creating backgrounds for SMILE study and for ebusiness solutions of maintenance case network. The focus is on general trends of ebusiness in supply chains and networks of different industries; total ebusiness system architecture of company networks; ebusiness strategy of company network; information value chain; different factors, which influence on ebusiness solution of company network; and the correlation between ebusiness and competitive advantage. Literature, interviews and benchmarking were used as research methods in this qualitative case study. Networks and end-to-end supply chains are the organizational structures, which can add value for end customer. Information is one of the key factors in these decentralized structures. Because of decentralization of business, information is produced and used in different companies and in different information systems. Information refinement services are needed to manage information flows in company networks between different systems. Furthermore, some new solutions like network information systems are utilised in optimising network performance and in standardizing network common processes. Some cases have however indicated, that utilization of ebusiness in decentralized business model is not always a necessity, but value-add of ICT must be defined case-specifically. In the theory part of report, different ebusiness and architecture models are introduced. These models are compared to empirical case data in research results. The biggest difference between theory and empirical data is that models are mainly developed for large-scale companies – not for SMEs. This is due to that implemented network ebusiness solutions are mainly large company centered. Genuine SME network centred ebusiness models are quite rare, and the study in that area has been few in number. Business relationships between customer and their SME suppliers are nowadays concentrated more on collaborative tactical and strategic initiatives besides transaction based operational initiatives. However, ebusiness systems are further mainly based on exchange of operational transactional data. Collaborative ebusiness solutions are in planning or pilot phase in most case companies. Furthermore, many ebusiness solutions are nowadays between two participants, but network and end-to-end supply chain transparency and information systems are quite rare. Transaction volumes, data formats, the types of exchanged information, information criticality, type and duration of business relationship, internal information systems of partners, processes and operation models (e.g. different ordering models) differ among network companies, and furthermore companies are at different stages on networking and ebusiness readiness. Because of former factors, different customer-supplier combinations in network must utilise totally different ebusiness architectures, technologies, systems and standards.