Restructuring supply chains through information channel innovation

Abstract

This paper examines the optimisation of purchasing for maintenance, repair and operating supplies (MRO) through purchase process re‐engineering. In particular, the use and development of the Internet as a channel for procurement of MRO items was examined from a transaction cost perspective. The focus of this paper is on the impact of Web/Internet based electronic commerce on the structure of MRO supply chains. The paper provides a discussion of the theoretical basis for analysis of the impact of e‐commerce on supply chain structure, and presents existing literature in the area. The empirical research involved a series of semi‐structured interviews with UK, European and US based manufacturers, retailers, government bodies, and service organisations. Respondents ranged from experienced users of e‐procurement to organisations just starting out on their pilot investigations of the contribution of Internet trading to their purchasing efficiency. The impact on supply chain configuration of greater information transparency may be posited to be one which will lead to increased outsourcing, improved procurement processes and more strategic management of MRO purchases.