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

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ICT and e-business impact in the furniture industryThe increasing competitive pressure on companies, many of which operate in a globaleconomy, has been a strong driver for ICT adoption. Firms are constantly searching foropportunities to cut costs and ICT holds great promise in this respect as it increases theefficiency of a firm’s business processes, both internally and between trading partnersin the value chain.While cutting costs continues to motivate e-business activity, innovative firms havediscovered and begun to exploit the potential of ICT for delivering against key businessobjectives. They have integrated ICT into their production processes and qualitymanagement and, most recently, in marketing and customer services. These lastsectors are widely considered key to improve competitiveness in the current phase ofdevelopment of European economies. Competing in mature markets, such as furniture,requires not only optimised cost structures, maximal efficiency, and products or servicesof excellent quality but also the ability to communicate effectively and cooperate withbusiness partners and potential customers. Case studies presented in Chapter 5demonstrate that efficient communication with intermediate and final is a key successfactor in this industry.A definition of e-businessAs part of this maturing process, electronic business has progressed from a specific to avery broad topic. A central element is certainly the use of ICT to accomplish businesstransactions, i.e. exchanges between a company and its suppliers or customers. Thesecan be other companies ('B2B' – business-to-business), consumers ('B2C' – business-toconsumers),or governments ('B2G' – business-to-government). In the broad sense,transactions include commercial as well as other exchanges such as sending tax returnforms to the tax authorities.GlossaryDefinitions by standardisation groups (ISO, ebXML)The term 'business transaction' is a key concept underlying the developmentof e-standards for B2B exchanges. Therefore, definitions have beendeveloped by standards communities to underpin their practical work.Examples include:Business: "a series of processes, each having a clearly understoodpurpose, involving more than one party, realized through the exchange ofinformation and directed towards some mutually agreed upon goal,extending over a period of time" [ISO/IEC 14662:2004]Business transaction: "a predefined set of activities and/or processes ofparties which is initiated by a party to accomplish an explicitly sharedbusiness goal and terminated upon recognition of one of the agreedconclusions by all the involved parties even though some of therecognition may be implicit" [ISO/IEC 14662:2004]e-Business transaction: "a logical unit of business conducted by two ormore parties that generates a computable success or failure state"[ebXML Glossary]If transactions are conducted electronically ('e-transactions'), they constitute e-commerce. Transactions can be broken down into different phases and related15
ICT and e-business impact in the furniture industrybusiness processes, each of which can be relevant for e-commerce (see Exhibit 1.3-2).The pre-sale (or pre-purchase) phase includes the presentation of (or request for)information on the offer, and negotiations over the price. The sale / purchase phasecovers the ordering, invoicing, payment and delivery processes. Finally, the after sale /purchase phase covers all processes after the product or service has been delivered tothe buyer, such as after sales customer services (e.g. repair, updates).Exhibit 1.3-2: Process components of transactionsPre-sale /pre-purchase phaseRequest for offer/proposalOffer deliveryInformation about offerNegotiationsSale / purchase phase After sale /after-purchase phasePlacing an orderInvoicingPaymentDeliveryCustomer serviceGuarantee managementCredit administrationHandling returnsPractically each step in a transaction can either be pursued electronically (online) or nonelectronically(offline), and all combinations of electronic and non-electronicimplementation are possible. It is therefore difficult to decide which components actuallyhave to be conducted online in order to call a transaction (as a whole) ‘electronic’.In 2000, the OECD proposed broad and narrow definitions of electronic commerce, bothof which remain valid and useful today 11 . While the narrow definition focuses on 'internettransactions' alone, the broad definition defines e-commerce as "the sale or purchase ofgoods or services, whether between businesses, households, individuals, governments,and other public or private organisations, conducted over computer-mediatednetworks. The goods and services are ordered over those networks, but the paymentand the ultimate delivery of the goods or service may be conducted on- or offline" (OECD,2001). The addendum regarding payment and delivery illustrates the difficulty mentionedabove to specify which of the processes along the transaction phases constitute e-commerce (see Exhibit 1.2-2). The OECD definition excludes the pre-sale / pre- purchasephase and focuses instead on the ordering process. The SeBW follows the OECDposition on this issue, 12 while fully recognising the importance of the internet during thepre-purchase phase for the initiation of business.Using the OECD definition, e-commerce is a key component of e-business but not theonly one. A wider focus oriented on business processes has been widely recognised.This vision of e-commerce also covers the digitisation of internal business processes(the internal processing of documents related to transactions) as well as cooperative orcollaborative processes between companies that are not necessarily transactionfocused(for example industrial engineers collaborating on a design in an onlineenvironment). The OECD WPIIS 13 proposes a definition of e-business as "automatedbusiness processes (both intra-and inter-firm) over computer mediated networks" (OECD,2004, p. 6). In addition, the OECD proposed that e-business processes should integratetasks and extend beyond a stand-alone or individual application. 'Automation' refers hereto the substitution of formerly manual processes. This can be achieved by replacing thepaper-based processing of documents by electronic exchanges (machine-to-machine)111213In 1999, the OECD Working Party on Indicators for the Information Society (WPIIS) establishedan Expert Group on Defining and Measuring Electronic Commerce, in order to compiledefinitions of electronic commerce which are policy-relevant and statistically feasible. By 2000,work of the Group had resulted in definitions for electronic commerce transactions.The respective survey questions ask companies whether they "place / accept online orders".Working Party on Indicators for the Information Society.16
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