Benefits and Success Factors of Buyer-Owned Electronic Trading Exchanges: Procurement at Komatsu America Corporation

Abstract Application of e-business concepts and models can be successful, but anecdotal evidence has indicated numerous failures. In this paper we present an improvement framework, named the I-Frame, to analyze a best-practice implementation of a buyer-owned electronic trading exchange at Komatsu America Corp. - Peoria Manufacturing Operations (KAC-PMO). The I- Frame is derived from five e-business models taken from the literature and describes the benefits and factors for successful implementation of Internet-based purchasing of direct materials. The I-Frame views benefits and success factors in four dimensions: business process, purchasing costs, product quality, and organization. Almost all benefits and success factors in the KAC-PMO case can be identified using the I-Frame. Moreover, the I-Frame gives rise to ideas for the further enhancement of purchasing at KAC-PMO. In general, practitioners can use the I-Frame when (1) investigating possibilities for improvements in the procurement business function, (2) determining the scope and prioritization of requirements of a procurement improvement project, (3) monitoring the success factors of a running procurement project.

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