An Emerging Vision of Internet-Enabled Supply-Chain Electronic Commerce

Increasingly, large retail companies are finding that the traditional vision of Electronic Data Interchange using a Value Added Network with expensive message translation software and private wide area networks, is unable to deliver its promise of paperless trading with their suppliers. While many have achieved a high level of EDI compliance from large suppliers, many unsophisticated, usually small, suppliers remain outside their electronic commerce network creating a barrier to achieving the most important business re-engineering benefits which require 100% compliance. Many large retailers are turning to the diverse range of Internet-based document distribution and presentation systems which have recently appeared to provide new ways of including unsophisticated traders in their replenishment systems. In this paper we argue that the traditional EDI vision emerged through the interaction of a number of aspects of the replenishment problem context, namely available technology, transaction cost structure, the power of message transmission intermediaries, notions about how to achieve supply chain cooperation, and the shared understandings of correct electronic commerce practice within the industry. The traditional EDI vision achieved only partial supply chain compliance because it failed to take account of the essential differences between sophisticated and unsophisticated trading partners. We argue that the effect of the commercial availability of the Internet is greater than simply the provision of a cheaper alternative document transmission channel: its appearance has disturbed the balance among these contextual forces to allow the emergence of a new vision of supply chain electronic commerce featuring a backbone any-to-any network of EDI compliant, technologically sophisticated trading partners, with large-player-centered or third-party-centred Internet based sub-networks providing connection to unsophisticated traders using proprietary software, development tools and message formatting.