New Means for ERP Systems by eContracting

Nowadays business to business (B2B) coordination is characterized by long term contracts albeit the fact that most interactions are already made electronically based on ERP-systems. Especially in cooperations, the flexibility offered by electronic coordination is rarely used. With the term eContracting we refer to electronic coordination among participants in the sense of the alienation and acquisition, between individuals, of rights of property and liberty in supply chains which are influenced by new information technologies. An interdisciplinary approach, i.e. incorporating economics as well as computer science, will provide new means to the alienation and acquisition of short to medium term contracts in supply chains. Introduction With the term "eContracting" we refer to the coordination in supply chains among economic actors, which is influenced by new information technologies. Only those relationships which are coordinated electronically are considered by eContracting. Typically, ERP-Systems are used to coordinate the production within business units. Emerging products from software vendors, especially advanced planning optimization tools, address the necessity of electronic business-to-business (B2B) contracting. However, still dominating are long term contracts made up face to face. By enabling the electronic contracting in B2B interactions flexibility, e.g. short term integration of new actors and relationships among actors as well as their substitution, will be provided. Thus, the flexible integration of participants in supply chains is supported as well as the changing needs within the flow of goods in such networks (Christopher 1998; Knolmayer, Mertens, Zeier 1999). We propose that despite the technical challenging requirements in supply chains additional effort has to be provided in order to allow flexible coordination through short and medium term contracts (Beungard, Jezequel, Watkins 1999; Koistinen, Seetharaman 1998). Contracting in supply chains depends on national and international law as well as on varying business environments and last but not least on the incorporated information systems. Hence, an interdisciplinary approach is needed to generate an electronic contracting system (eCS). Additionally, cooperation with major software vendors, i. e. SAP and JD Edwards, will provide the necessary test environment for the eCS prototypes. The paper is structured as follows: first the elements and structure of electronic coordination systems are presented. The following section explains our approach of analysis, modeling and refinement in constructing eCS, based on real world's data gathered through empirical studies. The paper closes with conclusions. Electronic Coordination Systems (eCS) An electronic coordination system is a triple determined by the following elements: law environment, coordination-mechanisms of short and medium term contracts (principal-agent-models), and B2B coordination in supply chains based on ERP systems (advanced planning tools). In the research project different comparable eCS will be investigated. They may differ in each element of the triple. As a first step we consider the law environment as fixed. The effects of the variation of the latter aspects will be investigated in the first phase of our research: In an economic view the term contracting is used to describe efforts by individuals to assign or to modify property rights. Hence incentive and costeffects of short and medium term contracts will be compared with those in long term contracts by analysing and modifying principal agent models. Efficient electronically generated short and medium term contracts will be generated by considering different tasks of business actors in supply chains Gibbons 1998; Koistinen, Seetharaman 1998; Libecap 1989, Masten 1996; Vickers 1995. Current ERP-systems are evolving such, that enterprise spanning production planning and optimization of supply chains is supported (Buxmann, Konig 1999; Knolmayer, Mertens, Zeier 1999). Thus, comparison between individual and standard based coordination will generate feedback for necessary extensions. The interoperability of existing ERP-systems (through all layers: e.g. business process models, network interaction and data representation) as well as security concerns have to be considered.