ARTICLE IN PRESS

Int. J. Production Economics 89 (2004) 339–351

Implementation of e-procurement and e-fulfillment processes:

A comparison of cases in the motorcycle industry
Moreno Muffatto*, Andrea Payaro
Dipartimento di Innovazione Meccanica e Gestionale, DIMEG, University of Padua, Via Venezia 1, Padua, Italy

Received 7 May 2002; accepted 25 June 2002

Abstract

Electronic business is the process which uses Internet technology to simplify certain company processes, improve
productivity and increase efficiency. It allows companies to easily communicate with their suppliers, buyers and
customers, to integrate ‘‘back-office’’ systems with those used for transactions, to accurately transmit information and
to carry out data analysis in order to increase their competitiveness.
The aim of this work is to define the parameters which can be used to define the performance of companies which use
e-business. Particular attention is given to procurement and fulfillment in order to compare the companies studied and
measure their efficiency. Fulfillment means controlling and managing transactions, warehouses, transportations and
reverse logistics. This analysis is followed by case studies of two large Italian companies in the field of motorcycles. The
market strategy they use and the role of Information and Communication Technologies (ICT) in their procurement and
distribution processes is analyzed. This comparison provides useful information regarding the way in which Internet
can be used by two companies which operate in the same market.
The paper ends with the presentation of an evolutionary model for e-business strategy. The stages of the model go
from the use of ICT simply as instruments of communication to the improvement of coordination processes.
r 2003 Elsevier Science B.V. All rights reserved.

Keywords: Electronic business; E-procurement; E-fulfillment; Motorcycle industry

1. Introduction transactions. This platform continues to offer

During the 90s there was a proliferation of the
Internet and the technologies related to the
Internet which created an efficient global platform
that could be used for communicating with the rest
of the world and for performing commercial
*Corresponding author. Tel.: +39-49-827-6725; fax: +39-
49-827-6716.
E-mail addresses: moreno.muffatto@unipd.it
(M. Muffatto), andrea.payaro@unipd.it (A. Payaro).
opportunities for both large and small companies
to take advantage of investments in technology
which were made in the past to redesign the way of
doing business and interacting with customers,
suppliers and partners. Furthermore, this has
offered small companies the efficiency and cost
reduction which had previously been limited only
to large companies.
The possibility of connecting many-to-many in
real time offered by Internet allows sellers and
buyers the opportunity to communicate and

0925-5273/03/$ - see front matter r 2003 Elsevier Science B.V. All rights reserved.
PII: S 0 9 2 5 - 5 2 7 3 ( 0 2 ) 0 0 3 0 1 - 8
 ARTICLE IN PRESS
340 M. Muffatto, A. Payaro / Int. J. Production Economics 89 (2004) 339–351
carry out transactions online. The advantages of
carrying out electronic business are cost reduction,
improved productivity, and customer service and
the possibility to redesign inefficient company
processes and increase the management and
control of the relationships with the various
players along the supply chain (Weller, 2000;
Tan, 2001).
This study analyses the procurement and fulfill-
ment processes carried out using information and
communication technologies (ICT). In particular,
by analyzing two case studies of motorcycle
companies, we are able to identify which stages
of the procurement and distribution processes can
be digitized. Furthermore, it is interesting to point
out the way in which two projects carried out by
companies having completely different market
targets are actually quite similar regarding both
their implementation stages and proposed goals.
In fact, both companies have evolved to the same
stage of the proposed model.
The model proposes four stages of development
in e-procurement and e-fulfillment strategy. The
first level is the entry level where communication is
still based on traditional instruments or hierarch-
ical information networks, such as EDI. During
the second stage communication is carried out via
e-mail or other interactive instruments available
on the company Internet site. The third stage
involves the creation of an Internet platform based
on XML, which is used to coordinate procurement
and distribution flows with suppliers and custo-
mers via the network. The fourth stage is the
creation of a virtual network in which a con-
sortium of companies working in the same field
collaborate to increase the efficiency of some
particular processes.
2. The procurement–fulfillment processes and the
Internet
In an integrated value system several companies
belonging to the same market segment implement
and manage the flow of goods, services and
information so as to improve customers’ impres-
sion of that market segment’s value and to
optimize the efficiency of the chain.
As company value chains are progressively
transformed into integrated value systems, which
are designed to manage an ‘‘extended company’’,
the value perceived by the customer is created and
developed through the collaborations between
various companies. An integrated system allows
companies to benefit from reduced warehouse
stock/inventory, cost reduction, an increased
added-value of goods and services for the end
customer and closer relationships with partners
(Papazoglou et al., 2000; Avlonitis and Karayanni,
2000). The creation of extended companies and
value systems leads to the importance of efficiently
managing the supply chain.
The supply chain, a term now commonly used
internationally, encompasses every effort involved
in producing and delivering a final product or
service, from the supplier of raw materials to the
consumer. Supply chain management includes
managing supply and demand, sourcing raw
materials and parts, manufacturing and assembly,
warehousing and inventory tracking, order entry
and order management, distribution across all
channels, delivery and transportation to the
customer.
Due to its wide scope, supply chain management
must address complex interdependencies; in effect
creating an ‘‘extended enterprise’’ that reaches far
beyond the factory door. Today, material and
service suppliers, channel supply partners (whole-
salers/distributors, retailers), and customers them-
selves, as well as supply chain management
consultants, software product suppliers and sys-
tem developers, are all key players in supply chain
management (Handfield and Nichols, 1998;
Saunders, 1997).
A natural consequence of this context is the
need to manage all of the stages of procurement
and product distribution in an appropriate way.
Internet is an information technology which has
been used above all in Business-to-Business
relationships. In fact, Internet makes it possible
to efficiently and quickly manage many relation-
ships such as those involving wholesalers, taking
on new resources, services, and technology, and
purchasing semi-finished products, components
and equipment (Lucking-Reiley and Spulber,
2000).
 ARTICLE IN PRESS
M. Muffatto, A. Payaro / Int. J. Production Economics 89 (2004) 339–351
Internet is used in Business-to-Business relation-
ships on a wide-scale for two main reasons:
1. The open nature of the Internet network gives it
an important advantage over other information
networks (VAN, EDI, etc.) since it requires low
setup costs, limited operation costs and sig-
nificantly reduced switching costs (Roche,
1995).
2. The possibility of creating high-interaction
environments which make Internet useful both
as a communication instrument and as a
channel for marketing, thus leading to the
development of more efficient inter-company
relationships as well as opportunities for new
cooperative networks (Hoffman et al., 1997).
Procurement and fulfillment are key processes in
the Supply Chain and with the advent of Internet
those which have had to be redesigned and
reorganized (Lambert et al., 1998). The new forms
of procurement and fulfillment which take advan-
tage of Information and Communications Tech-
nologies in order to digitize certain stages of these
processes are called e-procurement and e-fulfill-
ment.
Procurement includes all of the activities in-
volved in acquiring goods or services and mana-
ging their flow from the supplier within the
company which is purchasing the goods or services
to the semi-finished products and support materi-
als, such as computers and office supply products,
which the company uses (Hough and Ashley, 1992;
Zenz and Thompson, 1994).
The stages of the procurement process can be
summarized in the following points (Lancioni
et al., 2000):
* the need to procure a particular good or service;
* the search for potential suppliers and the
definition of other possible alternatives;
* evaluation of the alternatives;
* contact with suppliers to begin the negotiating
process;
* evaluation of the offers;
* agreement on the type of supply:
* standardized products,
* products for which project specifications
must be given,
341
* products which are designed together with
the suppliers;
* an agreement is reached;
* a contract is drawn up;
* the contract is signed and the order sent;
* goods and services are transferred in exchange
for money or other forms of compensation.
Keeping in mind the above-mentioned model, e-
procurement can be defined as all of those
activities required for the procurement of goods
or services which are supported by Internet, or in
general by Information and Communications
Technologies (Gebauer et al., 1998; IBM, 2000).
Not all of the single stages mentioned above
need be carried out for the procurement of all
types of products. In fact, procurement processes
can be divided into three categories:
* The procurement of raw materials and produc-
tion goods, which is characterized by the need
to make significant amounts of purchases very
often and by particular specifications. In this
case, the relationship with the supplier is
consolidated and therefore as soon as the need
arises, the contract must be stipulated, bypass-
ing the stages of searching for suppliers and
negotiating with them.
* The procurement of materials to be used for
company maintenance, repair and operations
(so-called MRO supplies), which is character-
ized by low costs per unit, reduced volumes and
relatively high frequency. As in the previous
case, in this one as well the stages regarding
search and negotiation are bypassed since the
high frequency of purchasing these materials
makes it necessary to establish long-term
relationships with suppliers.
* The procurement of capital goods. These are
goods which have a significant value, are
purchased less often and are not included in a
company’s regular procurement. This situation,
on the other hand, requires all the stages in the
model to be carried out. Given the significant
value of the goods, the buyer also perceives a
greater risk involved and must thus gather all of
the necessary information regarding both the
potential supplier and the good to be purchased
(Gebauer et al., 1998).
 ARTICLE IN PRESS

342 M. Muffatto, A. Payaro / Int. J. Production Economics 89 (2004) 339–351

The concept of fulfillment evolved from a word the players in the process. E-fulfillment makes it
which described the distribution for companies possible to satisfy customers who are demanding
which were involved in direct marketing and from more and more in terms of faster service, regard-
a word which includes all of the processes in the less of geographical location, thus requiring great-
customer-centered supply chain. Fulfillment there- er efficiency in the distribution process of the
fore means managing the following stages (Quillin product (Hintlian et al., 2001).
and Duncan, 2000): Whereas the stages of the process based on the
type of product must be identified in procurement,
* Receiving the Order. Orders received from
this is not the case in fulfillment since it deals with
various channels, such as fax, telephone and
finished products during and after shipment to the
mail, must be effectively managed.
manufacturer.
* Managing the Transaction. This process in-
cludes managing the payment and all of the
other activities needed to reduce the risk of
3. Case studies
fraud.
* Warehouse Management. This includes con-
Two famous Italian motorcycle companies were
trolling product availability and location and
studied: Ducati and Aprilia. The analysis is
pick and pack, i.e. the physical process which
particularly interesting for two basic reasons: the
involves taking the product from the shelf to the
complexity of building and managing the product
area where it will be packed and made ready for
and the complexity of how the product is perceived
delivery.
by customers and therefore of the relationship
* Managing Transportation. This includes how
between the customer and the company.
the product has to be delivered and who has to
The motorcycle as a product proves to be
deliver it (a division within the company
particularly complex during the design and pro-
or through outsourcing to a Third Party
duction stages. The components of a motorcycle
Logistics).
are several thousand pieces. The distribution
* Customer Response. Communication with the
logistics of this product are very complex as well.
customer can take place by telephone or e-mail,
Motorcycles are interesting because the custo-
or a support system via chat can be implemen-
mer can only have a good impression of the
ted. Furthermore, to reduce the number of
product once it has been physically seen and tried
requests for information made by the customer,
out. This limits transmitting via Internet the
it is useful to provide a periodic service offering
various characteristics and details of the product.
updated information regarding the state of the
Therefore, both because of the physical com-
order. Technical support is included in custo-
plexity of the product and the complexity of the
mer response as well.
relationship with the customer, a study of the
* Reverse Logistics Management. This involves
implementation of Internet-based processes in this
managing products which the customer has
field is particularly challenging.
returned either because they were damaged or
Although they operate in the same field, the two
obsolete. In the case of the former, the transfer
companies studied are not in direct competition
of the product to the repair center must be
since they are directed towards two very different
managed.
areas of the market. Ducati makes high-perfor-
E-fulfillment is the management of the above- mance motorcycles for a worldwide market and
mentioned processes by using Information and for motorcycle lovers. Harley Davidson is one of
Communications Technologies. Recent trends in- its competitors. The buyer identifies him/herself
dicate that companies are placing orders more and with the product which in turn represents a status
more often to manage smaller quantities of symbol.
products. The consequence of this phenomenon Aprilia, on the other hand, directs its sales to a
is an intensified exchange of information among middle level of the market where customers use
 ARTICLE IN PRESS
M. Muffatto, A. Payaro / Int. J. Production Economics 89 (2004) 339–351
motorcycles as a means of transportation. Its
direct competitor is Piaggio and its market mostly
European. Both companies have an area dedicated
to racing. The two companies are quite similar
regarding both revenues and number of personnel.
Their central position in the supply chain is
another characteristic which the two companies
have in common. On one side (procurement) the
products of the suppliers and sub-suppliers come
together and the company coordinates all of the
supply operations by using delivery plans. Delivery
plans are an information flow periodically sent to
the company’s suppliers in which the number and
type of components needed are defined. On the
customer side (fulfillment) the companies sell to
the end-customers through dealers which may sell
only one brand of motorcycles or more than one.
The company gathers market information from
the dealers and this is particularly useful in
planning production strategy and product innova-
tion.
The main goal of this analysis is to evaluate the
state of these two companies’ procurement and
fulfillment projects which are supported by In-
formation and Communications Technologies, in
particular the Internet. The market strategy used,
the role of the ICT in procurement and fulfillment
and possible future projects are analyzed for each
case.
Aprilia
Mission ‘‘The challenge awaiting us and in which we
are ever more heavily committed is that of
offering very high quality products, able to
guarantee emotions and performance, but
also safety, low consumption and reduced
pollutant emissions’’
4. Aprilia
The company. Aprilia was founded following the
Second World War as a bicycle manufacturer.
Today it is the second largest manufacturer of
motorcycles and scooters in Europe and offers a
complete range of two-wheel vehicles. In 2000,
343
Aprilia manufactured 240,000 scooters and motor-
cycles ranging from 50 to 1000 cc. In just 30 years,
Aprilia has become a point of reference in the
global motorcycle industry. In addition to its
headquarters, the company has five other centers
(four in Italy and one in San Marino) and seven
foreign branches (five in Europe, one in the USA
and one in Brazil).
Aprilia won 15 titles in world racing champion-
ships between 1985 and 2000. Furthermore, 2000
was important because Aprilia bought two histor-
ical companies of Italian motorcycles: Laverda
and Moto Guzzi.
Procurement. The goal of Aprilia’s e-procure-
ment projects is to involve the suppliers with which
the company already had a consolidated and
trusting relationship. In particular, the aim is to
make the procurement stage of the delivery plan
more efficient by reducing the time taken by the
communication process between the players and
by reducing the errors that result from traditional
methods of communication. To achieve these
goals, an environment must be used where all
information is coded and which is accessible for all
of Aprilia’s main suppliers, from both practical
and financial points of view.
Carrying out an e-procurement project which
involves players that interact with irregular fre-
quency has proven to be difficult except for
Ducati
‘‘Ducati exceeds the demands of even the
most fanatical enthusiasts and ridersy’’
products whose specifications can be defined and
specified in a simple way such as catalogue items.
The company already had an ERP type manage-
ment system when the e-procurement project was
initiated. The ERP project began by extending the
information network to external sales businesses,
post-sales, logistics and production.
 ARTICLE IN PRESS
344 M. Muffatto, A. Payaro / Int. J. Production Economics 89 (2004) 339–351
The implementation of the e-procurement pro-
ject made it possible to digitize the delivery plan.
This leads to greater flexibility and better control
of the goods supplied. The difficulty proved to be
identifying the items to be manufactured or
purchased. Also the item codes as precisely as
possible and as close to the beginning of the
production stage as possible. The information
regarding the delivery plan come from MRP. The
delivery plans are then published on the compa-
ny’s Internet site. The suppliers can access the site
in a ‘‘collaboration’’ environment where they can
see the plans and download them from the
network. Because the Supply Chain at Aprilia is
based on the delivery plans, by making them as
efficient as possible, the efficiency of the entire
Supply Chain can be improved.
The basic problem related to e-business is the
organization that supports it. It is necessary to
create an organizational and technological com-
patibility between the various companies involved,
from the suppliers to the customers. Keeping with
this basic principle, Aprilia has an information
management system on the company server in
order to have greater compatibility of the codes
used and to reduce the number and variety of
interfaces needed. This can be done in business
when a ‘‘lead company’’ can impose its own
system on the other players involved.
Another aim of a company information system
is to understand where ‘‘weak signals’’ arise.
‘‘Weak signals’’ are neglected information (e.g.
defects in some components) which cause pro-
blems that can effect the entire production system
and can lead to the need to recall defective
products. Therefore, by being able to trace
products, i.e. knowing which groups of compo-
nents a particular product is made up of, it
becomes possible to trace the movements of a
particular lot from a particular supplier.
Fulfillment. Aprilia has about 300 dealers, most
of which sell several brands of vehicles. Aprilia has
offered its dealers the opportunity to create and
manage a virtual warehouse. This allows the
headquarter to always know which products are
available and where in the distribution network.
The dealers access the company’s server via Web
and from there they can access the transaction
which are carried out locally on that server (the
applications, therefore, are centralized). The phi-
losophy behind this is to be able to control the
complexity of the situation by centralizing the
operations. Furthermore, in this way Aprilia can
have a complete picture of the situation of the
various peripheral warehouses at all times thus
obtaining valuable market information (customer
needs and interests). There are even more problems
when dealers sell non-Aprilia brand products. In
fact, in this case, there have been difficulties
convincing dealers to use the company’s software
for information exchange rather than competitors’.
The purpose of this type of network is to allow a
company to gather and manage all of the
information regarding a particular product. In
this way, the product has an identifying code and
thus the information related to it can be easily
found. This information is collected by bringing
together the various contributions of all of the
players in the stages of production and distribu-
tion, from the assembly line to the sales network.
The e-procurement and e-fulfillment projects
were carried out by creating a platform which
could work in client-server mode. In this way, the
suppliers and dealers accessing the network do not
have to install the applications in their own
system. Thus, investment in Information and
Communications Technologies are kept low and
the user skills required are minimal. The significant
results are that the time needed to carry out the
various activities in the procurement stage are
reduced, the process is simplified and there is
greater control of the products needed for
production which leads to a reduction of work-
in-process.
Future projects. One of the projects to be carried
out in the future is the management of the
production of a Build-to-Order motorcycle in the
shortest time as possible. Aprilia makes vehicles
for a middle segment of the market. At this level,
the end customer is not willing to wait a very long
time to get the product that has been ordered.
Therefore, the company’s goal is to be able to
produce and ship the order within two weeks’
time. Managing Build-to-Order production is very
complicated since there must be very close
coordination between the sales and production.
 ARTICLE IN PRESS
M. Muffatto, A. Payaro / Int. J. Production Economics 89 (2004) 339–351
Production can only begin once the sales network
has inserted the order, including the specifications
requested by the end-consumer, into the system.
The Build-to-Order project is the final stage in the
process of an e-business system. The prerequisite
for this type of project is a total integration of all
the stages from the beginning to the end of the
Supply Chain.
5. Ducati
The company. Ducati was founded by the Ducati
brothers in 1926 in Bologna. Ducati is one of the
lead manufacturers of high-performance motor-
cycles. In addition to motorcycles, Ducati also sells
accessories and clothing in more than 40 countries
worldwide, especially in Europe and North Amer-
ica (85% of sales). The remaining 15% is
distributed between Asia and Australia.
Ducati’s distribution network is a pillar in the
company’s strategy. In 2000, Ducati had more
than 60 stores (Ducati Stores) worldwide. The
criteria used to determine the location of these
stores was that they be as close to the customer as
possible. Every Ducati Store has an exclusive
environment where the motorcyclist can find all of
the accessories for his/her own motorcycle.
Procurement. All Ducati motorcycles are man-
ufactured in Bologna. The company has carried
out several projects to reduce production costs and
improve the production process. In January 1999,
Ducati introduced a production software which
controls the flow of information from when the
customer places the order to when the product is
delivered. By using an MRP designed specifically
for the company, the system generates production
plans based on sales forecasts, optimizing the
amount of stock in the warehouse, creates the
orders for the purchase of materials and manages
the flow of materials needed for production.
Ducati gives its suppliers a platform which
allows them to be responsible for sending the
modules which will make up the final product.
This reduces the number of suppliers, increases the
number of products each supplier provides and
strengthens Ducati’s contractual power. Since the
same components are used for several different
345
motorcycles, the company can maintain high levels
of efficiency even with relatively low volumes of
sales.
Fulfillment. In the Business-to-Business sector
Ducati set up an Extranet called DesmoNetTM
in order to have greater control over managing
customer orders. This facilitates the exchange of
information between dealers and the headquarters
and to offer better customer service. The network
connects all of the Ducati Stores to the head-
quarters.
DesmoNet was introduced in Italy at every
Ducati store and set up during the year 2000 in
other European countries, starting with subsidi-
aries and distributors. When running out of a
certain item, it is possible to check whether a
nearby dealer has it in stock, in which case the part
can be quickly transferred.
As far as the Business-to-Consumer market is
concerned, Ducati uses its Internet site (www.du-
cati.com) to reinforce the brand. The site registers
more than 150,000 hits a day and more than
17,000 fans subscribe to the newsletter which keeps
them updated on racing results and the latest news.
The main goal of the Internet site is to create a
community and a virtual environment where the
Ducati brand name can be strengthened. At
present, the site is a small portal for several
different Ducati sites: ducatidoc.com, memorabil-
ia.ducati.com, ducaticorse.com and ducatistore.-
com. It focuses on products, services and news
relating to Ducati. In the future, Ducati plans to
offer other services on the existing home page such
as e-business, hospitality for virtual communities,
news relating to the world of motorcycles,
entertainment and financial services. At present,
however, Business-to-Consumer business cannot
be carried out on the site. The business activities
offered are limited to auctions for collection items
(memorabilia.ducati.com) and sales of the MH900
model, which has limited production.
In the case of Ducati, e-procurement and e-
fulfillment were carried out using an information
network which, on the one hand, has made the
procurement stages more efficient and on the other
hand made it possible to have greater control over
sales and the overall status of the market.
The network has also improved the company’s
 ARTICLE IN PRESS
346 M. Muffatto, A. Payaro / Int. J. Production Economics 89 (2004) 339–351
relationships with the end customer. By being able
to check on the availability of spare parts in each
dealer’s warehouse, it is possible to satisfy
customer needs in very little time.
Future projects. As far as future projects are
concerned, the aim of Ducati.com is to become a
virtual vertical marketplace dedicated to the very
life-style of motorcyclists and to various happen-
ings in the sector. In addition to providing more
information, the area of online sales will be
strengthened by focusing in particular on Con-
sumer-to-Consumer business. This can happen by
offering entertainment services such as forums,
chats, games, information for stock-holders, af-
filiation programs and other activities such as the
Desmo Card. All of the information regarding
one’s own motorcycle is recorded onto the owner’s
Desmo Card so that the history of the motorcycle
can be visualized by any Ducati Store or technical
assistance center. For example when the motor-
cycle was manufactured the various check-ups and
repairs carried out during the life span of that
particular product (Jelassi and Leeven, 2000). In
the Business-to-Business sector, e-commerce op-
erations will be made possible by using DesmoNet.
Motorcycles, spare parts and accessories can be
sold online.
6. The benefits of e-procurement and e-fulfillment
The two case studies point out some of the
benefits that can result from a company using the
Internet for some of its activities. The information
in Table 1 compares the e-business models used by
the two companies studied.
Both companies created an information net-
work able to connect both suppliers and customers
to the company. This was done in hopes of
managing transactions between the various players
in the supply chain in a more effective manner.
Making the flow of the information which comes
from the market and making it available to those
involved in production as fast as possible proves to
be very important.
The use of an information network able to
connect the company to its suppliers allowed both
companies to transfer some of the stages in the
procurement process to digital format. In parti-
cular, for Aprilia the delivery plans were made
faster. Overall, for both companies this led to
more flexibility and better planning.
Supplier companies also need to introduce some
changes. They need to integrate Web-based com-
munication systems with companies’ already ex-
isting management systems which are at times not
very flexible. For this reason supplier companies
must acquire new skills.
The e-fulfillment strategies of the two companies
are quite similar. Both companies create an
Extranet-type information network to connect
the company to all stores selling their products.
The diversity of the dealers for the two companies
can lead to some problems. In the case of Aprilia,
most of its dealers are multi-brand dealers, i.e.
they do not sell only Aprilia products. This may
make it difficult for the dealers to use Aprilia’s
information system since it may not be compatible
with other motorcycle companies’ systems. Ducati,
on the other hand, manages its own Ducati stores,
which sell exclusively Ducati products. Thus is
easier for these stores to use a platform created by
Ducati.
The advantages of implementing e-fulfillment
projects are greater control of sales, optimization
of warehouse stock and greater control of market
trends.
While Ducati has a brand which leads the
consumer to identify him/herself with the compa-
ny’s exclusive nature and involvement in racing,
Aprilia does not. This influences each company’s
approach to online business. Ducati was able to
sell the MH900e model online with great success.
Aprilia, however, has yet to carry out a real online
Business-to-Consumer project for the sale of
motorcycles both because of the nature of the
company–consumer relationship and because of
problems the company has with distribution.
Nonetheless, both companies sell spare parts and
motorcycle accessories via Internet.
The Main Advantages of e-procurement and e-
fulfillment Projects:
* Better management of the information and
knowledge exchanged with suppliers and
customers;
 ARTICLE IN PRESS

M. Muffatto, A. Payaro / Int. J. Production Economics 89 (2004) 339–351 347

Table 1
Comparison of e-business models

Aprilia Ducati

Market strategy Motorcycle and scooter sales aimed at a Motorcycle sales aimed at the high end of
middle level of the market the market

Network strategy Creation of an information network to Creation of an information network to

B2B e-procurement strategy
connect the company to its suppliers and
dealers (multi-brand ones)
Creation of an XML-based Web platform
with a client-server which makes it easier
to have greater control over managing
supplies
connect the company to its suppliers and
Ducati Stores
Creation of a platform which allows
suppliers to be responsible for the
shipping of the semi-finished products and
to manage their relationships with each
sub-supplier

Strong points of the B2B e-procurement By making the delivery plans digital there Greater control over the various stages
strategy is greater flexibility. Being able to trace along the supply chain
products

Management/running system MRP MRP

B2B e-fulfillment strategy Creation of a platform to centralize the Creation of DesmoNet—an Extranet
complexity of the one based on XML in which connects all of the stores to the
order to allow dealers to manage the headquarters
virtual warehouses

Strong points of the B2B e-fulfillment Headquarters can always know which The strong point of DesmoNet is that it
strategy products are in the sales network allows the headquarters to keep a check
on all the stores by having access to
information in real time

B2C e-business for motorcycle-related E-business for consumers; still in the E-business for the sale of gadgets and
products experimental stages accessories

B2C e-business for motorcycle sales No project to date One very successful project selling the
MH900e model exclusively online

* Better understanding of where weak signs arise;
* Better control of supplying operations;
* Fewer mistakes related to procurement;
* Better control of sales;
* Optimization of warehouse stock;
* Better control of market trends;
* Increase in the number of products supplied by
the main suppliers.
7. The proposed model
An analysis of the literature and case studies
makes it possible to define a model which can
describe the evolutionary path that takes place
when the Internet is adopted to more efficiently
manage inter-company relationships and pro-
cesses. The model involves two variables: network
integration and technological integration.
Network integration is the sharing of resources
and co-participation in a common environment
where the relationships in a supply network are
coordinated using information networks. Techno-
logical integration is a company’s ability to have
information systems which can be used to control
many different company functions and which
interact with each other either using similar
communication protocols or adopting interfaces
 ARTICLE IN PRESS
348 M. Muffatto, A. Payaro / Int. J. Production Economics 89 (2004) 339–351
to allow different systems to communicate. Tech-
nological integration is even more complete when
different players in the supply network use the
same communication protocols or the same
computer applications.
The model presented here proposes four stages
for the implementation of e-business within an
existing company: traditional communication
tools, Web-based communication tools, XML
Web-based platform, Integrated enterprise.
Traditional communication tools. In the first
stage, the information flow between the various
players in the same supply chain and the company
in reference is managed using traditional commu-
nication systems. In this case, a company’s
information systems are mostly used to manage
internal processes rather than communicate ex-
ternally. However, a company may have its own
communication network, such as EDI. There are
many limitations at this stage, such as the
implementation cost, the difficulty in interacting
with other information systems, the need for a
company’s partners to adopt the same technology,
the need for particular skills, and the lack of
flexibility which makes it difficult to bring in new
partners and creates high switching costs for those
who wish to leave (high entry and exit barriers).
Traditional communication systems are very
inefficient in that they do not allow information to
be transferred quickly with a low probability of
error. Furthermore, if the company uses a tradi-
tional management system, all of the entry and exit
orders must be put in the system manually.
Web-based communication tools. During the
second implementation stage, on the other hand,
Internet is used to communicate with suppliers as
well as with all of the players involved in the
supply chain. In this case, an environment is
created where the players can access and use
various services via the Web. This solution does
not integrate the Web environment with the
company’s internal management system. There-
fore, some of the interfacing activities between the
different information systems must be carried out
manually. Compared to the previous stage, the
time needed for the various players to commu-
nicate is reduced (faster information flow) and the
accuracy of the information transferred increases,
with a significant reduction in the number of
mistakes. Dealers and retailers can access a series
of forms via Web which allow them to place
orders. In this case, the codes are transferred
correctly, avoiding the mistakes which occur when
telephone and fax are used. The network of
relationships between the players becomes very
flexible and there are no particular entry or exit
barriers. This solution is particularly appropriate
for small suppliers and retailers since there are no
significant investments required with regards to
technology or skills (Fig. 1).
XML Web-based platform. The third implemen-
tation stage involves more integration between a
company’s internal management system and the
Web environment. At this stage an interface
between the two environments must be developed.
Not all of the companies in the supply chain can
carry out this type of implementation. Only
medium-to-large sized companies which have
significant contract power regarding their suppliers
and customers can implement a system. In this
case, the lead company develops a software which
allows the main suppliers and customers to see the
situation of the warehouse in real time. Whereas in
the previous stage, orders placed via Web were
transferred manually to the company’s internal
management system, in this stage they are auto-
matically converted from the Web channel and
transferred to the leader company’s manage-
ment system. Access to the system is directly
controlled by the leader company; at the begin-
ning, only the main partners have access. In this
way, the manual activities are reduced, as is the
lead-time, and all of the stages of procurement and
fulfillment can be traced. The technology needed
to make all of this possible is offered by XML
applications.
The companies considered in the two case
studies presented in this paper belong to this stage
of implementation.
Integrated enterprise. The fourth stage repre-
sents a probable evolution of information and
communication systems. In particular, the infor-
mation system being developed would have to
bring together different companies working in the
same field into a sort of consortium. By using Web
interfaces, a platform is created in which many
 ARTICLE IN PRESS
M. Muffatto, A. Payaro / Int. J. Production Economics 89 (2004) 339–351
Fig. 1. Levels of implementation.
suppliers and customers can collaborate to make
some processes more efficient.
The adoption of strategies to integrate the
supply chain offer much more than just an
improvement in company efficiency. Some com-
panies are discovering new ways of carrying out
business and new opportunities which were pre-
viously not possible. In fact, at this level, all of the
logistical flows are redefined and there is a move
towards the creation of a ‘‘supply network’’ (Lee
and Whang, 2001). The players involved in these
networks can create new products together, work
towards mass customization and penetrate new
markets and new customer segments.
New rules will come about as a result of the
integration made possible by the Internet
(Frohlich and Westbrook, 2001). This integration
would not be complete without strong ties between
the companies involved in the network. Success
would be based on the following rules:
* The channels of communication must be well
defined and managed according to norms and
responsibilities which are clear and articulate.
* There must be several ways of measuring the
performance of the entire supply chain.
349
* Within the network, all of the players involved
must have a real sense of added value. The
value and risk must be equally distributed
among all the players.
The ‘‘glue’’ holding the various players together
will above all be the standard of communication,
at present not possible, which allows players to
share resources and create a strong collaboration
resulting from a high level of trust and commit-
ment.The companies considered here are presently
using XML Web-based platforms. However, the
specific need to integrate more and more all of the
players in the supply chain was expressed during
the interviews. A ‘‘supply network’’ would make
it possible to optimize the management of the
following activities (Simchi-Levi et al., 2000):
* Demand Planning: setting sales forecasts based
on historical data and on an analysis of
customer buying behavior.
* Supply Planning: efficiently allocating logistical
resources in order to satisfy demand.
* Manufacturing Planning and Scheduling: allo-
cating production resources in order to satisfy
demand.
 ARTICLE IN PRESS
350 M. Muffatto, A. Payaro / Int. J. Production Economics 89 (2004) 339–351
All of this requires the shift from the local
optimization of the relationships between custo-
mers and suppliers to the global optimization
along the entire supply chain lead by end customer
demand. Information networks could make global
optimization possible even if the standardized
communication protocols needed are not presently
available.
8. Conclusions
Even if the two companies studied are geared
towards different markets, the strategies they have
used are quite similar.
As far as e-procurement is concerned, the
players involved are suppliers with which the
companies already have a stable and trusting
relationship. Furthermore, they are suppliers the
companies deal with quite frequently. As far as the
technological aspect is concerned, the companies
created systems at the beginning of the supply
chain that allow suppliers to take part in a private
environment where they can access the manufac-
turer’s production plans. In this way each supplier
can manage its own virtual warehouse and plan its
own production from a distance without having to
invest in software systems to carry out in-house
management.
At the other end of the supply chain, an
information network was developed with the
dealers to make it possible to check on all the
stores in real time in order to generate statistics,
optimize warehouse stock, develop new marketing
activities and feel the pulse of the market. The
main difficulties encountered in having suppliers
and dealers use a common platform were those
related to changes in the relationship and the shift
from traditional means of communication, e.g.
telephone and fax, to a network environment.
As far as future projects are concerned, the
companies would like to strengthen their online
presence and become vertical portals dedicated to
the world of motorcycles and events in the sector.
In addition to merely providing information on
their sites, both companies would like to strength-
en online sales focusing mostly on Consumer-to-
Consumer business (auctions and second hand
products). In other words, they intend to encou-
rage the sales of second hand and collection items
by offering the site as a meeting place for these
transactions. In order to achieve this goal, they
will have to create virtual communities by offering
entertainment services such as forums, chats,
games, information for stock-holders and affilia-
tion programs.
Further studies will have to be carried out to
better understand the evolution process involved
in implementing e-procurement and e-fulfillment
projects in companies. In particular, it is important
to understand if there is an evolutionary path
which aims at integrating the procurement and
distribution stages into one single virtual environ-
ment.
It would be interesting to study which stages of
the procurement and distribution processes are
made digital, if this takes place in the same way for
the two processes and if this can be applied to
different industrial sectors. Furthermore, it is
necessary to evaluate if the evolutionary path
changes according to the product which is being
commercialized and what effects this may have on
the entire process.
References
Avlonitis, G.J., Karayanni, D.A., 2000. The impact of Internet
use on business-to-business marketing. Industrial Market-
ing Management 29, 441–459.
Frohlich, M.T., Westbrook, R., 2001. Arcs of integration: An
international study of supply chain strategies. Journal of
Operations Management 19, 185–200.
Gebauer, J., Beam, C., Segev, A., 1998. Impact of the Internet
on procurement. Acquisition Review Quarterly 14, 167–181.
Handfield, R.B., Nichols, E.L., 1998. Introduction to Supply
Chain Management, 1st Edition.. Prentice-Hall, Englewood
Cliffs, NJ.
Hintlian, J.T., Mann, R.E., Churchman, P., 2001. E-Fulfillment
Challenge—the Holy Grail of B2C and B2B E-Commerce,
Accenture, White paper.
Hoffman, D., Novak, T., Chatterjee, P., 1997. Commercial
scenarios for the Web: Opportunities and challenges.
Journal of Computer-Mediated Communications 1(3).
http://www.ascusc.org/jcmc/vol1/issue3/hoffman.html
Hough, H.E., Ashley, J.M., 1992. Handbook of Buying and
Purchasing Management. Prentice-Hall, Englewood Cliffs,
NJ.
 ARTICLE IN PRESS
M. Muffatto, A. Payaro / Int. J. Production Economics 89 (2004) 339–351
IBM Global Procurement, 2000. A Corporate View on E-
Procurement Projecting IBM Through the Supply Chain.
State of Iowa, ERP Migration Plan.
Jelassi, T., Leeven, S., 2000. Ducati Motorcycle (Italy): Riding
Traditional Business Channels or Racing through the
Internet, INSEAD Fontainebleau.
Lambert, D.M., Cooper, M.C., Pagh, J.D., 1998. Supply chain
management: Implementation issues and research opportu-
nities. International Journal of Logistics Management 9 (2),
1–19.
Lancioni, R.A., Smith, M.F., Oliva, T.A., 2000. The role of the
Internet in supply chain management. Industrial Marketing
Management 29, 45–56.
Lee, H.L., Whang, S., 2001. E-business and supply chain
integration. Stanford Global Supply Chain Management
Forum. SGSCMF-W2-2001, November.
Lucking-Reiley, D., Spulber, D.F., 2000. Business-to-business
electronic commerce. Journal of Economic Perspectives
15 (1), 55–68.
Papazoglou, M.P., Ribbers, P., Tsalgatidou, A., 2000. Inte-
grated value chains and their implications from a
351
business and technology standpoint. Decision Support
Systems 29, 323–342.
Quillin, T.J., Duncan, M., 2000. Fulfillment. The industry
behind the button. Industry Report, Stephens Inc., August
2000.
Roche, E., 1995. Business value of electronic commerce over
interoperable networks. Discussion Paper, National Science
Foundation, Rosslyn, VA, July 6–7.
Saunders, M., 1997. Strategic Purchasing and Supply Chain
Management. Pitman, London.
Simchi-Levi, D., Kaminsky, P., Simchi-Levi, E., 2000. Design-
ing and Managing the Supply Chain. Richard D. Irwin,
Inc., Homewood, IL.
Tan, K.C. A framework of supply chain management literature.
European Journal of Purchasing and Supply Management
7 (1), 39–48.
Weller, T.C., 2000. BtoB eCommerce, the rise of emarketplace.
Equity research, Legg Mason Wood Walker.
Zenz, G., Thompson, G.H., 1994. Purchasing and the Manage-
ment of Materials, 7th Edition. Wiley, New York.