ICT and e-Business Impact in the Furniture Industry - empirica

ICT and e-business impact in the furniture industrythe cost of communication, transaction and control of quality of outsourced products andservices. The outsourcing transaction cost is difficult to calculate beforehand. Stokke hasexperienced that outsourcing generates new costs within new areas:Costs of using the price mechanism and the operations of the economic system aremainly information and communication costs.Costs related to contracts: information seeking, negotiation costs, contract design,control costs, managing agreements, error adjustment costs, binding costs.Post-contract related costs: Adjustments of transactions in case they are notprocessed as planned, negotiation costs to correct deviation from goals, start-upcosts and managerial costs of new solutions, costs of Intellectual Property Rights,human behaviour cost because human is limited rational and opportunistic.Finally, Stokke experienced that specific investments are needed towards the warehousesourcing partner. These types of Investments have low or no value outside the relationand create high control and negotiations costs. To increase the value of such investmentsStokke chose international standards for communication-content and communicationinterface.The goal for Stokke has been to find an optimum e-business solution balancing the costof control with the cost of potential losses, as shown in Exhibit 5-4.Exhibit 5.9-2: Stokke learning points: minimise transaction costsSource: Stokke ASWhen answering the question: “What would we have done different?” ICT Manager PerHenning Vågen at Stokke identifies several learning points:Spend more time together with the sourcing partner, defining the scope of theimplementation process, and the importance of Stokkes business process.A lot more training of sourcing partners employees, to avoid misunderstanding orlack of action to correct errors.145