A Study of the Value and Impact of Electronic Commerce: Electronic Versus Traditional Replenishment in Supply Chains

Abstract

The area of electronic commerce (EC) is receiving a great deal of attention in academia and organizations. Many organizations are choosing to implement EC without regard to the positive or negative impact, or the potential it may have on the organization. Organizations implement EC without knowing the impact of EC on the organization. Supply chain management (SCM) is an application of EC; therefore, the impact of EC is seen throughout the supply chain (SC). This study determines the difference in value between electronic and traditional SCs and attempts to determine whether electronic systems are more effective than nonelectronic (traditional, manual) systems by analyzing customer-supplier relationships in SCs. Similar products are analyzed in pairs, one product using an electronic SC and one product using a nonelectronic SC. The empirical findings indicate that an electronic SC is more effective than a nonelectronic SC and improves the SC replenishment process in terms of: (a) lower inventory levels, (b) lower inventory carrying cost, (c) fewer stockouts, (d) shorter order cycles, (e) lower prices (costs), and (f) greater availability of products. These findings provide businesses with a measure to evaluate their EC systems and enable them to justify the investment (time and money) in EC systems.

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