Electronic Supply Chain Collaboration for Small Job Shop Manufacturers

Abstract

Driven to improve their competitive advantages, manufacturers are looking to electronic supply chain collaboration (ESCC). The benefits of ESCC have long been described in the literature, but only recently, after considerable advances in the capability of information technology, have these benefits been verified by empirical studies. The high cost of ESCC has limited its early application to larger companies. Although interest in ESCC is high in business and information systems circles, the large group of small manufacturers has received meager attention. Theory suggests, however, that ESCC benefits are maximized as more supply chain partners integrate their information systems into a supply chain network. This exploratory triangulation study considered the current state and future implications of ESCC for the small job shop manufacturer. Three lines of research addressed the problem in terms of the SJSM business environment, ESCC technology, and success cases studies.

The study found that ESCC integration is proceeding slowly, impeded primarily by a lack of standards for data integration. Advances in the Internet and related technology have, however, eliminated all but the last few barriers to ESCC. The remaining barriers are likely to fall pending acceptance of new ESCC standards such as RosettaNet. ESCC is already well established in select industries and will accelerate into other industries as standards develop. Currently, most ESCC activity is between top- and mid-tier manufacturers, but this activity will eventually spread down to third-tier small manufacturers. The study found no evidence that true integration, or the exchange of data between trading partners without retyping, is currently practical for most SJSMs. The study did find that low-integration ESCC is currently practical for SJSMs. In low-integration ESCC, manufacturers use Web portals to remotely access their trading partners’ information systems. Low-integration ESCC can be implemented at low cost and offers advantages such as positive return on investment, competitive advantage, and a head start toward advanced ESCC. At the time of the study, only a few SJSMs had attempted even low-integration ESCC. SJSMs have, however, widely adopted the Internet for static Web sites, for email, and for exchanging electronic documents, including CAD drawings. Although neither haste nor large investment are called for, the study recommends that SJSMs take measured steps toward truly integrated ESCC and concludes that skills in ESCC will be necessary for SJSMs to protect their competitive advantages within the next four to eight years.