Proceedings of the 33rd Hawaii International Conference on System Sciences - 2000

Interaction of Electronic Commerce and Supply Chain Management

Insights from The Swatch Group
Rainer Alt
University of St. Gallen
Rainer.Alt@unisg.ch

Karl Maria Grnauer

Christian Reichmayr
University of St. Gallen
University of St. Gallen
Karl-Maria.Gruenauer@unisg.ch Christian.Reichmayr@unisg.ch
Institute for Information Management
University of St. Gallen
Mueller-Friedberg-Str. 8
9000 St. Gallen, Switzerland

Abstract
Electronic Commerce (EC) and Supply Chain
Management (SCM) are fundamental strategic concepts
when businesses are forging links with their suppliers and
customers. This article argues that both concepts are
inherently different and complementary at the same time.
To illustrate the deductive classification approach, a case
study undertaken at ETA SA provided necessary empirical
evidence. ETA SA, part of The Swatch Group, has
redesigned the distribution of spare parts and movements
to brand manufacturers by pursuing an integrated
approach of EC and SCM. The article describes the
interaction of SCM and EC as well as the critical success
factors which came up in the project.

1. Introduction
One of the most fundamental developments companies
face today is the deconstruction of existing value chains.
Traditional hierarchical organizations are giving way to
more flexible networked forms and concentration on core
competencies is key in strategies such as outsourcing,
virtual organizing and the like [1], [2]. What characterizes
this development is the increased relevance of shaping
relationships among independent business units. This
trend towards Business Networking is reflected in the
popularity of concepts which focus at the interaction of
businesses such as Electronic Commerce (EC) and Supply
Chain Management (SCM). Both concepts sustain the
networking among businesses and are attracting
significant management attention these days.
Sales of goods via electronic channels are believed to
grow significantly over the next couple of years.
According to Forrester Research [3] five percent of all
global sales will be done electronically by 2003.

While EC is often put on a level with such sales solutions

as electronic product catalogs, electronic malls and
electronic auctions, all sales involve supply chain
activities as well. The latter cover the entire production
process from procurement to distribution and for some
products at least have reached a remarkable degree of
sophistication. Examples are immaterial products (e.g.
news and software) as well as some physical products,
such as CDs, software, books or computers. Compared to
the potential of physical products, electronic sales are still
negligible. Prominent exceptions are computer maker Dell
and Cisco Systems, provider of telecommunication
equipment. These companies have achieved to closely link
their EC and supply chain solutions. For many companies
this is an intricate task since solutions for EC and SCM
have evolved from different backgrounds. The former
from sales and marketing and the latter from physical
logistics, production and materials management.
In the following, we will outline how industrial companies
can reap benefits by jointly managing EC and SCM. We
believe that pursuing integrated strategies which include
both areas is vital for the expectations in electronic sales
to materialize. As a first step, we will discuss both
concepts and their interrelationships. With this in mind,
we will present a case study to show how ETA SA has
implemented an EC and SCM strategy. This will include a
description of the solution and an evaluation of the major
benefits for the participants. From this project important
lessons and critical success factors emerged which will be
presented in chapter four. Finally, chapter five offers some
conclusions for managing the interrelationship between
the two concepts.

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Proceedings of the 33rd Hawaii International Conference on System Sciences - 2000

2. Analysis of Concepts
2.1. Supply Chain Management: Flow
Perspective
Compared to logistics, the discipline it developed from,
SCM is a relatively new term. While overall logistical
concepts have been around for many centuries [4], SCM
did not make its appearance in the literature until the last
decade. For a long time, logistics was a concept limited to
the military sector and it is only since the middle of the
20th century that logistics has come to be accepted in the
business sector. Today, SCM may be described as the
integrated management approach for planning and
controlling the flow of materials from suppliers through
the distribution channel to the end user [5]. Compared to
the internal focus of traditional logistic approaches, SCM
emphasizes the management of upstream and downstream
relationships and the role of supply chain optimization to
increase customer value at less cost [4], [6]. Examples for
SCM initiatives are just-in-time (JiT), zero inventory (ZI),
efficient consumer response (ECR), vendor managed
inventory (VMI) or continuous replenishment (CR) [7].
This involves three areas, which SCM has to deal with
[8]:

All order processing activities originating at the

customer, i.e. order acceptance, input of orders into
internal order processing system, calculation of
production and material forecasts,
All material activities of the supply chain directed
towards the customer such as materials management,
production, distribution and order fulfillment,

All order-related financial activities such as invoicing,

billing and funds transfer. Unfortunately, many SCM
definitions and projects are ignoring this area and,
consequently, the benefits of close coordination of
financial flows, e.g. the reduction of the amount of
capital committed.
Various models have been put forward by software
vendors and industry organizations for modeling supply
chains. A well-established model is the Supply Chain
Operations Reference Model (SCOR) [9]1 from the
Supply Chain Council, an American industry association
with close to 500 member companies. In the first place,
SCOR provides a standardized language for the
description, analysis and measurement of supply chains
1

The Supply Chain Operations Reference Model (SCOR) is a process

reference model and was first published as Version 1.0 in November
1996 by the Supply Chain Council (SCC) as a cross-sector standard
from 73 Fortune 500 companies. The prime goal is to provide a
language standard for intra and inter-company communication with
SC partners. For further information see http://www.supply-chain.org.

among multiple partners. As shown in Figure 1, SCOR

builds supply chains are built using the four generic
supply chain functions, i.e. plan, source, make and deliver.
The interorganizational aspect is reflected in two areas:
First, source and deliver activities are located at the
interface of internal and external organizational units.
Second, SCOR envisages a planning hierarchy, i.e. the
planning in two organizations can be linked via an
additional planning activity which oversees and
coordinates the individual plans. It is placed between two
organizations in Figure 1 since this function can be
performed by either organization A and B or by a third
party which controls the supply chain.
Supply Chain Management
Organization A

Organization B
Plan

Plan

Source

Make

Plan

Deliver

Source

Make

Deliver

Figure 1. SCOR Supply Chain Functions

2.2. Electronic Commerce: Transaction

Perspective
Similar to SCM, the field of EC has its roots in earlier
concepts. Technologies, such as Videotex and Electronic
Data Interchange (EDI), were developed back in the
1960s already. However, significant momentum was
lacking until the emergence of Internettechnologies.
Today, EC is omnipresent and attributed considerable
economic impact. This is also reflected in the definitions
which see EC as the entire collection of actions that
support commercial activities on a network [10] or as
any form of economic activity conducted via electronic
connections [11]. Additional characteristics of the EC
concepts are obtained from transactionoriented definitions
which have been used to specify electronic markets [12],
[13], [14]. Transactions link the activities of buyers and
sellers and can be broken down into various phases:
During the information phase, customers make their
choice among a variety of goods and vendors. This is
followed by negotiation and decisionmaking concerning a
specific product in the contracting phase. Finally, in the
settlement phase, the selected goods are delivered to the
customer who, in turn, pays a consideration for them. For
EC to take place, it is necessary that at least one of these
phases and order entry should rely on electronic means.

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Electronic Commerce
Organization A (Sell-Side)
Single Vendor

Catalogues
Multi Vendor Catalogues
Electronic Malls
Electronic Auctions
....

Organization B (Buy-Side)
Information

Desktop Purchasing

Systems (indirect goods)

Electronic Procurement of
Contracting

direct goods
...

Settlement

Figure 2. Phase Model and Application Areas of

EC
In analogy with the two sides which are brought together
in a transactions, EC systems have emerged primarily for
electronically supporting sales processes on the one hand
and buy or procurement processes on the other (Figure 2).
Sell-side EC comprises electronic product catalogs which
permit browsing through, configuring and ordering of
goods from one or more vendors. Well known systems
come from Intershop, Openmarket or Broadvision. Buyside EC systems bundle catalogs according to
prenegotiated conditions with a vendor and are called
Desktop Purchasing or eProcurement systems. Significant
vendors are Ariba, Commerce One or Netscape. In the
following, we will focus on single vendor catalogs as a
form of Sell-side EC systems. We will mainly consider
Business-to-Business transactions and, consequently,
intraorganizational EC or Business-to-Consumer EC are
outside the scope of this article.

2.3. Comparison of Concepts

The theoretical analysis of EC and SCM reveals that both
concepts have two aspects in common. First, buy-side and
sell-side overlap with the source and sell activities that are
core elements in supply chains. Second, information on
supply chain planning processes is required within the
contracting phase when the availability of goods or the
scheduled delivery time for a specific configuration is to
be determined. This functionality, called Available to
Promise (ATP), clearly requires information from the
supply chain. ATP checks have become an important
feature of SCM systems from i2, Manugistics and SAP. It
is equally important that these systems make use of the
information on EC transactions in determining demand
forecasts.
While both concepts have considerable overlaps in their
functional focus, they are inherently different in the scope
of design and the quality of the underlying relationships.
In the first place EC takes a transactional perspective and
aims at improving processes at a specific stage in the
value chain, e.g. between a manufacturer and his dealers.
It has close ties to the concept of the customer buying
cycle [15] which conceives a transaction not as an isolated
event but as the basis for further customer contacts.

Contrary to the transactional perspective of EC, SCM

takes a flow perspective which is geared towards the
optimization of flows along entire value chains and not
only at certain stages.
Both concepts are different since EC has a distinct focus
on shaping information and contracting processes within
transactions and SCM manages the underlying flow of
goods which is reflected in supply chain planning,
delivery and payment processes. From the transaction
perspective the latter mainly take place within the
settlement phase and, except for a slight overlap resulting
from the exchange of availability information noted
above, orders emerging from the contracting phase may be
the trigger for SCM activities. Concerning the quality of
the relationship it can be observed that SCM arrangements
tend to occur in longterm relationships with a substantial
intensity or depth of cooperation. Often, EC has opposite
properties since exchanging catalog providers involves
only little switching costs.
Organization A

Organization B

EC

Organization C

EC

Supply Chain Management

Figure 3. Complementary Relationship between

EC and SCM
Thus, an analysis of the two concepts EC and SCM
reveals a complementary relationship with some
overlapping (Figure 3). EC concentrates on shaping
information and contracting activities (e.g. design of
electronic catalogs and matching functions) whereas SCM
is primarily concerned with planning processes and the
organization of various flows of goods. Specifically, SCM
has developed techniques and methods for efficiently
designing, implementing and operating settlement
processes. Indeed, both concepts are bound to have an
important impact on day-to-day business [7]: The
integration of electronic commerce and supply-chain
management is changing the way businesses work
internally and work with each other.

3. Case Study: EC and SCM at ETA SA

3.1. Goals of EC and SCM at ETA SA
The Swatch Group is a globally operating producer of
watches for Swatch brands, such as Blancpain, Omega,
Rado, Longines, Tissot, Certina and Swatch. The group
consists of a number of individual companies, which
among others, focus on finished movements for watches,
component production and research and development.

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Proceedings of the 33rd Hawaii International Conference on System Sciences - 2000

Producing watches for the individual brands involves

various group companies. ETA SA Fabriques dEbauches
in Grenchen, Switzerland, employs more than 10.000
people worldwide and supplies the movements for
watches to all Swatch brands which themselves organize
production and distribution of the finished products. As
the worlds third largest manufacturer of movements, ETA
has over 15 production sites in Switzerland, Germany,
France, Thailand, Malaysia and China. In 1998, ETAs
revenues exceeded one billion Swiss francs.
In the case of ETA, Business Networking makes for
increased customer-orientation, improved cost-efficiency,
reliability and global presence. Together with the Institute
for Information Management at the University of St.
Gallen (IWI-HSG), ETA has conceived and introduced a
new solution for the distribution of spare parts and
movements which incorporate SCM and EC elements.
The ETA case highlights the potential of both strategies
for cutting costs and for streamlining customer service
processes in a typical Business-to-Business setting.2

misunderstandings resulting in the delivery of wrong

parts.

3.2.2. Phase I: Re-Engineering the Supply Chain

As shown in Figure 4, the distribution of the spare parts
involves a complex network of warehouses both in-house
and outside. Each brand orders spare parts from ETA-CS
and delivers them to their customers, e.g. The Swatch
Group-country organizations (CO) and independent
agents. Brands receive the parts from ETA-CS and store
them in their own warehouses. After analyzing the
existing supply chain, it was found that direct deliveries to
the brands customers would lead to major advantages:

3.2. Description of Solution

3.2.1. Initial Problems at ETA SA
When ETA started the project Business Network
Redesign in 1996, there were three main problems that
were considered to be of strategic importance: 1. the
redesign of the introduction process for new movements,
2. a new distribution strategy for movements and spare
parts as well as 3. the installation of a new distribution
channel for spare parts and movements. A two-phase
project was set up to tackle these challenges: Phase I
addressed the reengineering of the supply chain and phase
II the introduction of the EC solution.
To start with, a number of customer workshops and a
customer relationship analysis were conducted in order to
explore networking potentials and problems.3 The main
problems reported were:

2
3

Customers, i.e. mainly the different brands within The

Swatch Group, were lacking information on the
interchangeability of parts (one article may be used in
several movements) and comprehensive up-to-date
technical documentation for the assembly, the required
storage, etc. of movements and spare parts.
Specimen movements, spare parts and movementspecific tools were not available when new movements
were coming on the market.
Low level of customer service (ETA-CS) performance
due to long cycle times for the repair of movements
and the distribution of spare parts and frequent

For further description cf. [16]

For the documentation of phase I cf. [17]

Rudimentary information on ETA customers, their

sales history concerning spare and sales parts as well
as their preferences.

Concentration of inventories at ETA. Today, ETA

has about 12 different levels of in-house warehouses
which are scattered all over the production process. A
new high-bay warehouse has been installed to
eliminate the need for small warehouses.
Concentration of inventories not only reduced overall
inventories at ETA but also enabled more efficient
stock-keeping, i.e. quick retrieval of necessary parts.
Elimination of warehouses at the brands. With spare
parts delivered directly to the brands customers,
warehouses at the individual brands may become
obsolete in some cases and outphasing them will
result in reduced inventory costs and improved
capacity utilization.
Delivery guarantees. Eliminating warehouses also
entails reduced bufferage within the distribution
system. Brands that were reducing their warehouse
capacities insisted that ETA should guarantee specific
times for delivery. ETA-CS will establish two
distribution channels, Distribution A & B with cycle
times of 24 and 120 hours, respectively.
ETA

ETA

Brand 1

Brand 2

Brand 3

Swatch Group country organizations and agents

Figure 4. Supply Chain Re-Engineering at

ETA SA
3.2.3. Phase II: Introduction of EC Solution
As explained in chapter 2, the main activities of EC are
within the design of information and contracting
processes. At ETA, orders were traditionally sent via fax,

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mail or telephone to ETA-CS. Their main problem was

that consistent information on available products was
lacking and orders often were for just 40 gears with 14
teeth. Translating this order into processing terms, i.e.
finding out the relevant article number, was very time
consuming for ETA-CS and it might take hours to identify
the relevant article. After this matching process the order
was finalized and entered into ETAs ERP system.4
Obviously, incorrect matches would result in wrong parts
being delivered.
The project team indentified inconsistent product master
data as the main problem and elaborated a homogeneous
master data structure. This standardization effort will be
finished for all ETA products in December 1999.
Information on products was initially conceived for
distribution via CD-ROMs which contained article
numbers, part descriptions, and pictures. However,
maintenance of this solution involved additional effort and
order entry was still relying on conventional media, i.e.
mail, fax, or telephone. Therefore, an EC solution was
conceived which enabled the integrated support of
information and contracting activities via the World Wide
Web (Figure 5). It consists of an individual developed
product catalog based on the Microsoft Site Server (Site
Server Commerce Addition, Version 3) on a Microsoft
SQL-Server (Version 6.5).
Information
phase

Paper

Fax

Contracting
phase

CD ROM

Telephone

Electronic
Commerce
Solution

Faster information and

contracting
Richer information on
one channel
Improved ease-of-use

Mail

Figure 5. Convergence of Information Flow

The ETA Online Shop started in April 1999 with Swiss
pilot customers and will become available to all customers
in Autumn 1999. In the initial phase selected pilot
customers will be able to order spare parts and in the
further roll-out primary sales products (Flatline and
Normflatline) will be added. This mainly concerns those
individual Swatch brands which are responsible for the
largest share of ETAs revenue. Once registered in the EC
solution, customers can browse the electronic catalog and
obtain specific information about (new) products, prices,
discounts, etc. Selected components are added to a
shopping basket and the total order amount will be
calculated. After choosing a specific payment method
(e.g. credit card payment) the order process is completed.
An (electronic) order acknowledgement is sent and order
tracking is possible throughout the entire order cycle. The

ERP stands for Enterprise Resource Planning (ERP) and characterizes

a companys integrated transaction and administration system.
Prominent examples are systems from Baan, SAP, Peoplesoft etc.

main benefits to be gained from implementing the EC

solution are as follows:

Efficiency of information processes. The convergence

of information in the EC solution (Figure 5) enables
customers to obtain all relevant information on
existing and new products (prices, technical
descriptions, sales conditions, interchangeability) via
one channel. Since the site is maintained centrally,
ETA-CS can easily assure that information is up-todate and benefit from cost savings in producing and
distributing catalogs, price lists and technical
documents.
Improved level of customer service. Additional,
previously unavailable, features have been introduced
with the EC solution and will yield significantly higher
service levels. This includes electronic order payment
options (credit card payments were unavailable
before), technical document downloads and electronic
order tracking. Additional functionalities are currently
conceived and will include customer profiling,
individual
customer
homepages,
customer
communities, frequently-asked-questions databases
(FAQ), online complaint management as well as
auctions to sell refurbished or old parts.

Efficiency of order processing. With the EC solution,

order processing efficiency has increased remarkably.
This has been mainly due to the homogenization of
master data which reduces matching efforts and,
consequently, eliminates misunderstandings as well.
Increased efficiency allows ETA-CS to cope with an
increased order volume and enables the personnel to
concentrate on intensifying customer relationships
(e.g. acquisition of new customers, answering
individual questions).
The EC solution consists of an individual developed
product catalogue and several functionalities and is based
on the Microsoft Site Server, Site Server Commerce
Addition, Version 3 and a Microsoft SQL-Server, Version
6.5 database.

3.3. Complementarity of Concepts and

Implementation
The case of ETA SA shows the complementarity of EC
and SCM which was elaborated in chapter 2. Supply chain
activities were started by optimizing the traditional flow
of physical goods from ETA to the customer. A central
aspect was establishing a direct delivery channel as well
as enhanced capabilities for monitoring and controlling
the distribution processes which has made it possible to
offer guaranteed delivery times. The fact that no specific
supply chain planning system was implemented shows that

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increased supply chain performance may be attained

without setting-up complex planning systems.
Direct customer contact has also been accomplished with
the EC solution since customers are able to directly
browse ETAs catalog and use the same platform for order
entry. Clearly, the main areas of EC were the design of the
catalog and the order entry channel. EC implementation
was accomplished via a proprietary, tailor-made solution.
Linking the ERP and the EC system is first done manually
with the integration of both systems being the object of
the next step.
The overlapping of both concepts was manifest from
several aspects. First, the attactiveness of the EC solution
increased as direct order entry and direct delivery became
practical possibilities. This was mainly due to significantly
reduced cycle times and reduced uncertainty of delivery.
Before, the complex warehouse structure and incoherent
master data impeded quick and reliable deliveries. Despite
ETAs business has a long tradition in business already,
distribution structures comparable to Dell and Cisco could
be obtained with the new electronic channel. Second, an
analysis of the financial flow resulted in an additional
payment method being introduced, i.e. credit card
payments. Third, there are plans to integrate logistic
functionalities from third party-distributors to track orders
through the entire order cycle and to calculate prices
including the accurate shipping costs.

been possible. Therefore, master data management has

been recognized as a hidden success factor.

4. Critical Success Factors for EC/SCM

Projects

4.3. Communication of Win-Win Situation

From the ETA case several factors can be identified that

are important for the success of introducing a SCM/EC
solution.

4.1. Master Data Management as Hidden

Success Factor
Both strategies, SCM and EC, were dependent on the
standardization of processes and master data. This
involved identifying the applicable standards for handling
orders via the customer counter of ETA-CS and possible
modifications of the existing master data scheme. It led to
a far-reaching standardization and maintenance initiative
in the area of product and customer master data. As
explained earlier, the most time-consuming part of order
processing was the conversion of an order into ETAs
article numbering system. This concerned mainly the
processing
of
interchangeability
information,
consolidation of pricing information (for single originally
packaged quantities) as well as the integrity of article and
technical descriptions. Neither EC nor SCM includes this
standardization activity in their scope, but without master
data management the described benefits would not have

4.2. Strategic Alignment with Marketing

Strategy
EC and SCM represent a major intervention in the
marketing strategy since they established a new
(electronic) distribution channel with new functionalities
(direct order entry and direct deliver). However, EC
initiatives often originate in a companys IT department
and SCM on the production side. For this reason, the first
step to be undertaken should be to sure that the marketing
department is convinced of the initiatives benefits and
strongly believes in the necessity to act.
In the case of ETA SA, the benefits of and possibilities for
implementing the new distribution channel were clarified
with the companys top-management by demonstrating
best practice EC solutions from Dell, Cisco and others.
This offset an intensive discussion process during which
the positive effects of the planned solution on the
companys marketing as well as customers sourcing
strategy became more visible. This yielded a better
understanding of the expected benefits, costs and project
timescale. As a side effect, it was possible at an early
stage of the project to clarify such upcoming questions as
security issues and legal aspects of EC.

Contrary to EDI systems which large companies imposed

upon their suppliers, it was clear from the beginning that
customers would have to be convinced with (positive)
incentives. For example, a win-win situation or reciprocity
is not achieved until both supplier (e.g. ETA) and
customers are able to increase their ROI [2]. Wellbalanced win-win situations increase the adoption of a
Business Networking system and need to be laid down in
a business model which can be easily communicated to
the relevant partners. One possible graphical
representation of the win-win situation between two
partners is the Taguchi Loss Function [18].
In the project the first activity was to communicate the
current status of development work to the partners on the
basis of the isolated EC solution (no ERP integration) .
This provided a pretty clear picture of the scope of the
solution at this early stage and enabled the partners to
assess their specific win-win situation. For this purpose,
the project team conducted workshops where win-win
situations were elaborated in terms of improved
effectiveness (guaranteed delivery times, higher
informationlevel, transparent order tracking information,
interchangeability information for customers of the EC
solution) and higher efficiency (lower order fulfillment

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costs for ETA SA and cost saving potentials for the

brands local warehouses). It was decided that the selling
proposition for the EC solution should consist in superior
supply chain performance, mainly guaranteed delivery
times, rather than price incentives.

4.4. Common Basis for Communication

As strategies for business networking, EC and SCM are
inherently interorganizational in nature. In determining the
scope of a joint solution and the degree of synchronization
of processes among independent business units, it was
important to establish a common basis for communication.
At ETA, the previously mentioned SCOR model proved
helpful in as much as it aims at improving communication
among supply chain partners.5 SCOR distinguishes
multiple analytical levels from which the upper three were
used at ETA.

At level 1, management and relevant supply chain

partners jointly elaborated a business network that
enabled an overview of the internal and external
organizational units for the product groups affected by
the solution. Included was an overview of production
and distribution locations on ETAs procurement side
as well as intermediate storage facilities, distribution
centers, wholesalers, retailers and end customer groups
on the distribution side. With the aid of this chart,
ETA defined which distribution levels should have
access to the EC solution in the future.
At level 2, relevant business processes and exchanged
outputs were defined using the generic SCOR
distribution strategies such as Make-to-Stock,
Make-to-Order, Deliver Stocked Products and
Deliver Made-to-Order Products. At ETA, this
execution process network mainly consisted of
execution and planning processes. For example, Plan
Make was used to coordinate the order-based
production process with the order-based delivery
process. For the case of spare parts only the process
category D1 (Deliver stocked products) is present. For
the distribution of sales products the process
categories D1, D2 (Deliver Make-to-order products)
and D3 (Deliver Engineer-to-order products) play a
role. However, the vast majority of orders is of the D2type which is the reason why only this case is treated
in the Electronic Customer solution.

such as product description, customer inquiries, order

confirmations, etc. were specified. An important step
was the application of the metrics provided in the
SCOR model (e.g. lead times, number of perfect
orders, etc.) since this forms the basis for measuring
the performance of the SCM/EC solution in the future.
SCOR clearly helped in rapidly mapping out processes
and in compiling an unambiguous documentation of the
future supply chain configuration. However, it turned out
that SCOR was conceived for supply chains and, when
applied to the modeling of an EC solution, it permitted
only delivery processes in the settlement phase to be
modeled with the predefined elements. Despite the
shortcomings in the area of information and contracting
activities, SCOR was chosen for the introduction of the
EC solution since the selling proposition consisted to a
high degree of supply chain performance.

4.5. Method for Structured Procedure

Managing projects involving EC and SCM in an interbusiness setting is a complex and challenging task.
Success factors are technical and non-technical in nature.
The latter include homogenized master data and clear
responsibilities between marketing and IT for the design
and operation of the EC solution, and have proved
especially important. To manage the intricacies of
Business Networking systematically and efficiently, a
method is being developed in the ETA project which
structures the critical steps in Business Networking
projects.
Methods have emerged from the Business Engineering
discipline [19] and aim at effectively and efficiently
building information systems. Following the principles of
Method Engineering [20], methods consist of a procedure
model, result documents, techniques, roles and tools. The
method elaborated at ETA is validated on the basis of
other EC and SCM projects as well [21] and includes the
insights and findings of other existing methods which
have been developed at IWI-HSG.6

At level 3, the process elements relevant to EC were

analyzed and refined. For example, outputs exchanged,

The SCOR model comprises a standard description for management

processes, a framework for relationships among the standard
processes, standard metrics to measure process performance,
management practices that produce best-in-class performance, and
standard alignment to software features and functionality [9].

Examples are PROMETBPR, a method for Business Process

Redesign, PROMETI-NET, a method for the implementation of
Internet-Technologies, and PROMETeBN, a method for distribution
planning of business processes and standard software [22]. Currently,
PROMETiBN is developed for inter-Business Networking.

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Proceedings of the 33rd Hawaii International Conference on System Sciences - 2000

5. Conclusions and Next Steps

1
Preliminary Information
2

Procedure Model - iBN

Project Start
3
Potential/Benefit Analysis
4
Supply Chain Configuration
5

Implementation
Planning and Execution

6
Win-Win Communication
7

Change Requests and

Going Live

Figure 6. Phases of the Procedure Model

The procedure model is at the heart of a method. Figure 6
depicts the model as a logic funnel from general
conceptualization to specific implementation issues. In the
first phase the management of the initiator and major
external supply chain partners clarify their expectations
and define a binding set of goals and timeframes on the
basis of the anticipated win-win situation. Existing
standards in the areas of processes and master data are
identified and communicated. The appointment of the
members of the project steering committee initializes the
project (Phase 2). In Phase 3 the management of the
initiator makes a selection of the affected products and
markets. For example, this selection is based on the
customers expectations regarding the scope of ECsupported products and a sound analysis of the
quantifiable benefits for the initiator.
Phase 4 includes a sketch of the material, information and
finance flows which are relevant for the EC solution. It is
followed by the configuration of the process network
which consists of execution and planning processes.
Afterwards the network of supporting information systems
(ERP and EC applications) is designed. Phase 5 covers
developing and executing an implementation plan for an
isolated EC solution (no ERP integration) towards an
integrated EC solution (full ERP integration). In Phase 6
the EC pilot is used to communicate benefits to the
customers (see chapter 4.4). Change requests are collected
and are successively implemented in Phase 7 after each
major implementation step to meet not included customer
requirements and to clarify the results. Furthermore,
marketing activities are carried out to ensure a successful
Going Live of the EC solution.

The article presented the implementation of a business-tobusiness EC solution based on a redesign of the supply
chain for industrial products at ETA SA. When the EC
solution was implemented, the supply chain proved
critical and direct delivery and direct order entry
facilitated a direct link to the customer. The performance
of the supply chain was, in fact, used as a selling
proposition to foster the diffusion of the EC solution. At
the same time, the EC system improves supply chain
activities, such as order entry and payment. There are
many other aspects, too, that underline the
complementarity of EC and SCM, i.e. the flow perspective
of SCM versus the transaction perspective of EC.
More importantly, the project also reflected the intricacies
of inter-business projects that involve multiple Business
Networking strategies. It was crucial for the success of the
project that it had managements support and that not only
IT and customer service were involved, but the marketing
department, too. As far as external partners are
concerned the individual brands at ETA here is a case
that bears witness to the importance of reciprocity, i.e.
win-win-situations. Addressing these challenges and the
hidden success factors that became apparent in the course
of the project, is a complex task. The method adopted
provided a structured procedure model and systematic
guidance for identifying roles, problems, success factors,
milestones, budgets and other key elements.
It should be pointed out, however, that work on both the
method and the EC/SCM solution is ongoing. We believe
that the action research approach [23] chosen for this
paper yields valuable insights for the next steps. This
mainly concerns an extended cost-benefit analysis and
defining metrics for determining the performance of the
EC/SCM solution as well as establishing a link towards
relationship management functionalities, such as
complaint management, customer communities or self
information services.

0-7695-0493-0/00 $10.00 (c) 2000 IEEE

Proceedings of the 33rd Hawaii International Conference on System Sciences - 2000

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