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Impact of Standardization on B2B collaboration

Impact of Standardization on B2B collaboration - Version...

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Version: August 27, 2003 Impacts of Standardization on Business-to-Business Collaboration Barchi Peleg · Hau L. Lee Stanford University Abstract Over the past few years, a growing number of organizations have shifted the focus of their supply chain management practices from internal operations to cross-enterprise collaboration. Through advanced information sharing and knowledge exchange practices, companies are able to build products that better meet customer expectations and deliver them to the marketplace at the right time and place, while simultaneously improving the efficiency of their internal operations. Such collaborative activities require numerous process steps involving business-to-business information technology (IT) applications. Having standards for these underlying business-to-business applications can have tremendous values, since standardization enables such initiatives be repeated with the same partner or with a more extensive set of partners easier, faster, and less costly. While the value of business-to-business collaboration, especially when based on standards, is no doubt significant, the efforts required for such implementation processes are usually quite high, involving investment in IT infrastructure as well as in human resources. Resources are required to potentially re-engineer the business processes, train the employees, and select and install the required IT infrastructure. This paper discusses the costs and benefits of cross-enterprise collaboration, as well as the added value of standardization. We present a case study of one company that went through a large-scale collaboration effort with one of their major customers in a joint effort to streamline the company’s planning and replenishment processes. We describe the benefits realized by both business partners, as well as the challenges they faced and the efforts needed to make this project successful. 1. Introduction Today’s competitive environment drives a growing number of companies to the realization that success cannot rely solely on improving the efficiency of their internal operations. Rather, to gain new levels of competitiveness they must extend their focus beyond their own four walls, and collaborate with their business partners across the extended value chain. Taking advantage of e-business solutions within application areas such as customer relationship management (CRM), supply chain management (SCM), supplier relationship management (SRM), and enterprise resource planning (ERP) can be of great values and help companies to better prepare for and respond to changing customer demands. Consider the example of TaylorMade, which became part of Adidas- Salomon in 1998. The company had continued losing revenue because of its difficulty in gauging customer demand and in optimizing its supply chain and supplier relationship.
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