E-business Initiatives in Food Supply Chains; Definition and Typology of Electronic Business Models

This article was downloaded by: [University of North Texas]On: 30 November 2014, At: 02:16Publisher: Taylor & FrancisInforma Ltd Registered in England and Wales Registered Number:1072954 Registered office: Mortimer House, 37-41 Mortimer Street,London W1T 3JH, UK

International Journal ofLogistics Research andApplications: A LeadingJournal of Supply ChainManagementPublication details, including instructions forauthors and subscription information:http://www.tandfonline.com/loi/cjol20

E-business Initiatives in FoodSupply Chains; Definitionand Typology of ElectronicBusiness ModelsJack G. A. J. Van der Vorst , Sjef Van Dongen ,Sebastien Nouguier & Rien HilhorstPublished online: 04 Aug 2010.

To cite this article: Jack G. A. J. Van der Vorst , Sjef Van Dongen , SebastienNouguier & Rien Hilhorst (2002) E-business Initiatives in Food Supply Chains;Definition and Typology of Electronic Business Models, International Journalof Logistics Research and Applications: A Leading Journal of Supply ChainManagement, 5:2, 119-138

To link to this article: http://dx.doi.org/10.1080/13675560210148641

PLEASE SCROLL DOWN FOR ARTICLE

Taylor & Francis makes every effort to ensure the accuracy of allthe information (the “Content”) contained in the publications on ourplatform. However, Taylor & Francis, our agents, and our licensorsmake no representations or warranties whatsoever as to the accuracy,completeness, or suitability for any purpose of the Content. Any opinionsand views expressed in this publication are the opinions and views ofthe authors, and are not the views of or endorsed by Taylor & Francis.

http://www.tandfonline.com/loi/cjol20

http://dx.doi.org/10.1080/13675560210148641

The accuracy of the Content should not be relied upon and should beindependently verified with primary sources of information. Taylor andFrancis shall not be liable for any losses, actions, claims, proceedings,demands, costs, expenses, damages, and other liabilities whatsoeveror howsoever caused arising directly or indirectly in connection with, inrelation to or arising out of the use of the Content.

This article may be used for research, teaching, and private studypurposes. Any substantial or systematic reproduction, redistribution,reselling, loan, sub-licensing, systematic supply, or distribution in anyform to anyone is expressly forbidden. Terms & Conditions of accessand use can be found at http://www.tandfonline.com/page/terms-and-conditions

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14

http://www.tandfonline.com/page/terms-and-conditions

http://www.tandfonline.com/page/terms-and-conditions

International Journal of Logistics

ISSN 1367-5567 Print/ISSN 1469-848X online © 2002 Taylor & Francis Ltd

http://www.tandf.co.uk/journals

DOI: 10.1080/1367556021014864 1

International Journal of Logistics: Research and ApplicationsVol. 5, No. 2, 2002

# Editors’ noteÐ this paper was specially selected from those presented at the 6th International

Symposium on Logistics, Salzburg, Austria, 2001.

² Correspondence: Dr. Jack G.A.J. van der Vorst, Department of Management Research,

Wageningen University, Hollandseweg 1, 6706 KN, Wageningen, The Netherlands;

Tel: + 31(0)317484160; Fax: + 31(0)317485454; Email: [email protected]

E-business Initiatives in FoodSupply Chains; Definition andTypology of Electronic BusinessModels#

JACK G. A. J. VAN DER VORST,1 ² SJEF VAN DONGEN,1

SEBASTIEN NOUGUIER1 & RIEN HILHORST2

1Department of Management Research, Wageningen University, The Netherlands& 2Stoas, Wageningen, The Netherlands

ABSTRACT E-business is a concept that has been given many definitions in practiceand in the literature. In general, e-business is used for improving the efficiency ofestablished supply chains or for the creation of new (dynamic) supply chain networkswith looser partnerships. However, because of this diversity in meanings the evaluationof the usefulness of a certain type of e-business for a specific supply chain situation isoften indistinct. Based on a review of 16 prevailing electronic business-to-businessinitiatives in (mainly Dutch) food supply chains, this paper defines and develops atypology of e-business models to elucidate these discussions. The paper is concludedwith proposed classifications and developments of e-business in food supply chains.

Introduction

Supply chain management (SCM) has been one of the main research topicssince the 1990s in management literature. It focuses on the integratedplanning, co-ordination and control of all logistical business processes andactivities in the supply chain to deliver superior consumer value at less cost

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14

120 J. G. A. J van der Vorst et al.

to the chain as a whole whilst satisfying requirements of other stakeholders,such as consumer interest organisations and government. Eventually, thecomplete implementation of the SCM concept should result in fullyintegrated, much more effective supply chains with full information transpar-ency and optimal allocation of value-adding processes.

Recently, new information and communication technologies (ICT) haveemerged to support SCM. E-business, e-commerce, e-sourcing and e-fulfilmentare some of the newest terms to be quoted in the literature. In general, they referto ª doing business electronicallyº (Huff et al., 2000). E-business has thepotential to change current ways of doing business (Means and Schneider,2000). It is forcing traditional supply chains to be substantially restructured andreconfigured. Traditional SCM activities focus on improving the efficiency andeffectiveness of existing supply chains from the point of view of currentproduct± market combinations. E-business can be used as an enabler for theseactivities, for example by implementing electronic data interchange (EDI)systems; or, as Porter states: ª The Internet is arguably the most powerful toolavailable today for enhancing operational effectiveness. By easing andspeeding the exchange of real-time information, it enables improvementsthroughout the entire value chain, across almost every company and industryº(Porter, 2001, pp. 70, 71). However, e-business can also be used to establish newpartnerships and new ways of working; via the Internet, new markets and new(third, fourth or fifth) parties to facilitate the logistics and/or informationmanagement process can be identified. In fact, supply chains may even nolonger exist; the focus is then on temporary instantiations of chains innetworks, so-called value webs (see Figure 1). Tapscott et al. (2000) refer to valuewebs as ª business websº (b-webs), defined as fluid congregations ofbusinesses Ð sometimes highly structured, sometimes amorphous Ð that cometogether on the Internet to create value for customers and wealth for theirshareholders. Business webs refer to a distinct system of suppliers, distributors,commerce services providers, infrastructure providers and customers that usethe Internet for their primary business communications and transactions.

FIGURE 1. From Value Chain to Value Web (Holland et al., 2000).

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14

E-business Initiatives 121

Although many people use the term ª e-businessº , it is often referred tofrom quite different perspectives. For example, we find business-to-business(e.g. electronic market-places), business-to-consumer (e.g. home shoppingservices), business-to-employee (e.g. tele-working systems) and business-to-authority (e.g. tax collection systems, education) approaches. We also see, forexample, buyers’ market-places, sellers’ market-places, electronic auctionsand chain information systems. At the moment, it is unclear for managerswhat e-business can do for their organisations and what kind of e-business isapplicable to what activities in their specific situation.

Our research departs with the managerial question ª What type of B2Be-business is interesting for my business?º In order to answer this question foran individual company in a specific supply chain context, we need tocharacterise the concept of an electronic business model that encompasses allrelevant elements of b-webs. Based on a review of 16 major e-businessinitiatives in Dutch food supply chains, this paper defines and develops atypology of electronic business models. This should help an individualorganisation to evaluate the usefulness and applicability of potentiale-business models.

The remainder of this article is organised as follows. First, we shallpresent our view on e-business and discuss the differences with SCM. Next,the specific characteristics of the food industry and agribusiness arediscussed. Then, the research approach is described, followed by a discus-sion on and definition of an e-business model. A case will be presented toillustrate the e-business model elements. The main part of the paper willdeal with a general typology of business web. A review of 16 e-businessinitiatives in food supply chains will be given, thereby discussing theimpact that e-business has on the design and management of those supplychains. The paper concludes with proposed classifications and develop-ments of e-business in food supply chains.

View on E-business and Supply Chain Management

Many terms are used in the literature to describe activities concerning the useof ICT between organisations and their environment, including suppliers andcustomers. In most cases the terms are not defined exclusively. A surveyamongst 903 companies in the Netherlands showed that almost 75% founde-business to be strategically important. However, when asked about thedefinition of e-business, 44.8% referred to ª having a web siteº and 44.6% toª having an e-mail connection with supply chain partnersº (Mostafi, 2000).Table 1 presents a brief overview of different definitions given for e-business.It shows that the nucleus of e-business is about information exchange over theInternet for the streamlining of business processes in the value chain. Hence,it goes much further than having a home page (usually called e-marketing) oronline catalogues or order captures (e-commerce).

E-business is not completely new; EDI has been used for two decadesalready. What is new are the opportunities provided by e-business and thepotential for change because of the differences between Internet-basede-business and EDI (see also Lancioni et al., 2000). Internet-based e-business is

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


interactive, allows for spontaneous relationships or transactions to occur, hasmany potential users and can create both a delivery mechanism and a market-place (Thompson et al., 2000). Table 2 presents an overview of general revenueand cost opportunities of Internet-based e-business according to Chopra &Meindl (2001).

In general, SCM is characterised by six groups of supply chain redesignprinciples (van der Vorst, 2000). Table 3 presents an overview of these groupsclassified to one of the elements of the logistic concept. The core of e-businessfrom a SCM perspective is the intensive and efficient information transfer

TABLE 1. Some Definitions of E-business

Source Definition

Archer & Yuan, 2000 Technologies that provide effective and efficient ways in which

corporate buyers can gather information rapidly about available

products and services, evaluate and negotiate with suppliers,

implement order fulfilment over communication links and access

post-sales services

Chopra & Meindl, 2001 The execution of business transactions over the Internet

Gartner Group, 2001

(gartnergroup.com)

A combination of: electronic commerce, technology-enabled

relationship management and SCM

Ptak, 2001 An organisation that connects critical business systems directly to

their critical constituencies (e.g. customers, employees, vendors

and suppliers) via Intranets, Extranets and the World Wide Web

Roelofs, 1998 The streamlining of all business processes in the value chain using

Internet technology to improve the efficiency and effectivity of the

complete supply chain

TABLE 2. Impact of E-business on Supply Chain Performance (Chopra & Meindl, 2001)

Revenue-enhancing Opportunities Cost Reduction Opportunities

d Offering direct sales to customers

d Providing 24-hour access from any location

d Aggregating information from various

sources

d Providing personalisation and customisation

of information

d Speeding up time to market

d Implementing flexible pricing

d Allowing process and service discrimination

d Facilitating efficient fund transfer

d Reducing product handling with a

shorter supply chain

d Postponing product differentiation until

after an order is placed

d Decreasing delivery cost and time with

downloadable product

d Reducing facility and processing costs

d Decreasing inventory costs through

centralisation

d Improving supply chain co-ordination

through information sharing

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


between companies in a value chain, which increases the responsiveness tochanges in customer demand. This may require the redefinition of businesspartners and roles to be performed. However, SCM activities are stillnecessary to benefit as much as possible from the information transparency byco-ordination of decision policies and the appropriate use of resources. Ingeneral, two forms of e-business can be distinguished:

(1) Improving the efficiency and/or effectiveness of existing supply chains. Thisrefers to the electronic exchange of demand, inventory and/or productiondata between companies in the value chain to improve responsiveness. Bymatching information transparency with the co-ordination of decisions,goals and performance indicators, the efficiency and effectiveness ofprocesses can increase; by reducing the decision-making uncertainty,inventory levels and time windows can decrease. The emphasis is not onthe elimination of actors in the supply chain, or disintermediation(Janssen & Sol, 2000), but on the use of ICT to improve existing activities.At the extreme, roles can shift between actors in the supply chain, say viathe introduction of vendor managed inventory (VMI). In principle, we canrefer to the general SCM literature.

(2) Establishing new business models; towards dynamic supply chains. This form ofe-business results in new supply chain structures, as shown in Figure 1,via elimination of business roles in the (B2B2B2B2C) supply chain and/orthe introduction of new business roles, e.g. trusted third parties. Themarket dynamism is translated in dynamic chain configurations in which,depending on customer specifications, partners are selected with accom-panying roles. The main difference with SCM is that 1:1 partnerships areabandoned and more suppliers can become selected. Potentially, depend-ing on the new business model, suppliers are selected via global electronicmarket-places. Often price differentiation becomes the main order winnerantagonising the partnership thoughts of SCM.

TABLE 3. SCM-redesign Principles and E-business

Supply Chain Element SCM-redesign Principle E-business

Configuration (1) Redesign the structure of the supply chain

(change parties/locations/roles to be performed)

3

Control (2) Reduce customer order lead times 3

(3) Synchronise all logistical processes to consumer

demand process7

(4) Co-ordination and simplification of logistical

decisions7

Information system (5) Create information transparency in the supply

chain3

Organisation (6) Jointly define supply chain objectives and

performance indicators7

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


Food Industry and Agribusiness

Our research focuses on the characterisation of e-business initiatives in thefood industry and agribusiness. Food supply chains comprise of organisa-tions that are responsible for the production and distribution of vegetable oranimal-based products (Zuurbier et al., 1996). In general, we distinguish twomain types of food supply chains:

(1) Supply chains for fresh agricultural products (such as fresh vegetables,flowers, fruit). In general, these chains may comprise growers, auctions,wholesalers, importers and exporters, retailers and speciality shops.Basically, all of these stages leave the intrinsic characteristics of theproduct grown or produced in the countryside untouched. The mainprocesses are the handling, storing, packing, transportation and especiallytrading of these goods.

(2) Supply chains for processed food products (such as snacks, desserts, cannedfood products). In these chains agricultural products are used as rawmaterials for producing consumer products with higher added value. Inmost cases, conservation and conditioning processes extend the shelf lifeof agricultural products.

Participants in both types of chains realise that original good quality productscan easily deteriorate because of an inconsiderate action by anotherparticipant, for example storing a unit load of milk on a dockside in theburning sun. Van Rijn & Schijns (1993), Rutten (1995) and Den Ouden et al.(1996) sum up a list of specific process and product characteristics ofagricultural food supply chains. These include, amongst others, shelf lifeconstraints, variability of quality and quantity of supply of farm-based inputs,variable process yield in quantity and quality due to biological variations,seasonality, random factors connected with weather and pests and otherbiological hazards. Because of these specific characteristics of food products,the partnership thoughts of SCM have already received a lot of attention overthe years.

In agribusiness about 70% of the production value is accounted for by thecosts of raw materials (van Weele, 1988). It is vital for industrial producers tocontract suppliers to guarantee the supply of (the right) raw materials.Furthermore, they co-ordinate the timing of the supply of goods withsuppliers to match (expensive) capacity availability. The increased attention ofconsumers to food safety and environmental issues increases the necessity forintegral quality control systems and associated tracking and tracing systemsof goods in the supply chain. Hence, e-business in food supply chains isconfronted with very specific requirements and objectives.

Research Approach

Via a literature review, Internet search and interviews with logistics andinformation technology managers in the food industry and agribusiness, a listof about 30 prevailing B2B e-business initiatives in this industry was made.Each case was analysed and described on a number of characterising elementsthat would give insight to the objectives, structure and management of the

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


initiative. This list of characterising elements, incorporated in the definition ofan e-business model, was iteratively developed by:

(1) research of the literature on e-business models;(2) describing the cases identified in practice.

The description of each case should be in such detail that typologies can bemade and managers may answer the question: ª What type of B2B e-businessis interesting for my organisation?º In the end, 16 cases showed discrimina-tion on the elements of the e-business model (and provided sufficientdocumentation for analysis) (see the Appendix). Of course, one has to bear inmind that this area is subject to fast developments, with recent references tothe ª demise of the dot comsº . The cases described in this paper date fromSpring 2001. Our findings are described in the subsequent sections.

Electronic Business Models

Timmers (1998) defines a business model as an architecture for product,service and information flows, including a description of the various businessactors, their roles, their potential benefits and the sources of revenues. Amit &Zott (2001) state: ª A business model depicts the content, structure, andgovernance of transactions designed so as to create value through theexploitation of business opportunitiesº . According to Porter, competition onthe Internet is misguided by the use of the words ª business modelº , insteadof talking in terms of strategy and competitive advantage. He states, ª mostoften, it seems to refer to a loose conception of how a company does businessand generates revenueº (Porter, 2001, p. 73). Therefore, it is essential to focuson the value proposition of the initiative; that is, the underlying purpose forwhich the participants in the b-web are working together to createcompetitive advantage. A (food) business-web can be based on three valuepropositions, which can be found separately or in combination:

(1) Network differentiation and market segmentation. The target here is todifferentiate as a b-web to meet the specific demands of customers (e.g.lowest cost, assortment, etc.).

(2) Integrated quality. The target here is to meet the increasing demand ofconsumers and governments for safe and environmentally friendlyproduced products.

(3) Network optimisation. The target here is cost reduction through astreamlined chain with rational information supply.

For each e-business initiative the value proposition should be determined,which then leads to the filling-in of the other elements of the business model.

Based on the literature review and the case studies, a number of elementsof an e-business model that describe the b-web initiative in detail wereidentified as indicated in Figure 2. In most cases the information flows aredecoupled from the goods flows; the information flows of the differentparticipants of the b-web are virtually gathered in a central informationwarehouse where the information is processed. This central information

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


warehouse is called an ª e-business hubº in the literature (see Kaplan &Sawhney, 1999; Lee & Whang, 2001; McKelvie & Simmonds, 2001). We shalluse the concept of e-business hub to describe the initiative. This leads us to thefollowing characterising elements of a b-web, which together define thee-business model and are used to describe each case:

d Value proposition.d Roles of participants that are interacting with each other, exchanging

information via the e-business hub (based on Tapscott et al., 2000):± context providers, who lead the choreography, value realisation and rule-

making activities of the system (they facilitate the interface betweencustomers and b-web);

± content providers, who design, make and deliver the intrinsic forms ofvalue (goods, services or information) that satisfy the customer needs;

± commerce service providers, who enable the flow of business, includingtransactions and financial management, security and privacy, informa-tion and knowledge management, logistics and delivery, and regulatoryservices (examples are trusted third parties, technical support providers,financial service providers and logistics service providers);

± customers, who not only receive but also sometimes contribute value tothe b-web (e.g. buyers at an e-market-place).

d Processes that are supported by the e-business initiative (the main processesare marketing and sales, quality control, procurement and supply chainplanning).

d Functionalities that support these processes as given in Table 4.d Applications that enable these functionalities, that is, the ICT infrastructure.

We shall not discuss this element as we focus on the business propositions.d Specific characteristics (based on Tapscott et al., 2000):

± type of co-operation in the operational process: bilateral versus multi-actor; horizontal (e.g. producers working together), vertical (fromconsumer to the farm) or network (both flows);

FIGURE 2. Descriptive Elements of an Electronic Business Model.

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


± value integration: b-webs that focus on high value integration facilitatethe production of specific product or service offerings by integratingvalue contributions from multiple sources. B-webs that focus on lowvalue integration do not impact the individual activities in participatingorganisations; they offer independent contributions;

± control: hierarchical b-webs have a leader who controls the content of thevalue proposition and the flow of transactions, sets the pricing andorganises the activities. In self-organising b-webs it is the market and itsdynamics that define the value and the price of goods and services;

± network effects: if high, then the bigger the network of users, the greaterits value to the users themselves; if low, then it makes no difference.

Case Example: Peter’s Farm® (www.petersfarm.com)

In 1996 the first veal producer started to manage his farm according to thePeter’s Farm Principle, an initiative in the Netherlands of the Alpuro Group,originating from calves raised in herds. Currently, the initiative incorporatesover 40 veal farmers, a feed producer, a slaughterhouse and a distributionpartner all connected via an Internet platform to exchange all kinds of logisticsor quality-related information. Within the complete supply chain each piece ofmeat, feed and medicine used can be traced. The incorporation of stock farmersinto the system is also being worked on, in order to include the parents of thecalves in the tracing system. Furthermore, farmers are supported with all kindsof information related to the optimisation of farm management, e.g. newregulations, training programmes, nutrition facts and animal diseases.

The basis of the initiative lies in the Peter’s Farm Principle; a combinationof norms guaranteed in the production of Peter’s Farm® veal:

TABLE 4. Possible Functionalities per Process of E-business Hubs

Process Functionality

Marketing and sales d Customer demand and behaviour monitoring

d Co-promotion

d Co-design

Quality control d Tracking and tracing (product quality related)

d Recall management

d Benchmarking

d Product data management

Procurement d Catalogues

d Forward auction

d Reverse auction

d Exchange

Supply chain planning d Tracking and tracing

d Co-forecasting

d Co-planning

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


d Animal welfare: Peter’s Farm calves live in large herds with a lot offreedom.

d Traceability: the guarantee that veal products sold in original Peter’s Farmpackaging originate from calves raised according to the Peter’s FarmPrinciple on a Peter’s Farm.

d Quality and safety: every stage in the production of Peter’s Farm® veal isfully ISO 9002 and ª PVE/IKBº (supply chain quality) certified. This meansthat independent organisations continuously monitor the production and,through this, the product safety and quality is guaranteed.

d Open information: each actor or consumer can trace the veal product backto the farm via the Internet and a unique product code, including all relatedinformation (e.g. date of birth, feed data, use of medicines) depending onthe authorisation. Furthermore, one can visit the individual farmers on theweb and check out the stables (daily between 10:00 and 16:30 a web camtakes a new photo every 10 minutes on a Peter’s Farm and automaticallysends it to the Internet).

Table 5 presents an overview of the description of the business model ofPeter’s Farm.

TABLE 5. Overview of the Description of Peter’s Farm’s Business Model

Business Model

Element

Description

Value propositio n Differentiation via the delivery of safe and guaranteed products

with additional services as recipes, restaurants, and so on

Roles

d Context provider Alpuro Group

d Content provider Peter’s Farmers, feed producer, slaughterhouse, merchandisers

d Commerce service Alpuro Group, including a bank and a logistic service provider

d Customer Consumers

Processes Focus on quality control

Functionalities Tracking and tracing system, certification programmes

Applications Centralised information system with Web-EDI, product data

management, product coding system, management information

systems

Characteristics

d Co-operation type Multi-actor horizontal approach (multiple farmers are included but

work independently)

d Value integration High, the activities of all participants are a prerequisite for

successfulness

d Economic control Medium, the Alpuro Group co-ordinates the system but all actors

manage their own business

d Network effect Medium, the more farmers the more known the brand will be.

However, the benefits per farmer will probably not change

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


Typology of Business-webs

After all 16 e-business initiatives were analysed and described in detail(analogous to Peter’s Farm) we searched for clusters of cases to provideinsight into the opportunities of e-business for food industry and agribusiness(see the Appendix for a description of the cases). In general, the followingconclusions could be drawn:

d The value propositions of most cases relate to the specific characteristics ofthe food industry and agribusiness. Nowadays, customers are verysensitive to food safety and environmentally friendly produced products;they prefer certified products. Furthermore, the variability in quality,quantity and timing of agricultural products makes buyers search for waysto reduce supply risks. Both these characteristics are incentives for partiesto set up e-business-driven supply chains.

d Related to the previous point, most initiatives are instigated via the processesquality control (food safety) or purchasing (reduction of supply risks). Theability to track and trace goods is a definite order winner in food supplychains. When these processes are implemented and function well, theinitiative is often expanded with the processes supply chain planning andmarketing and sales.

d Overlooking the purchasing functionalities of all cases, several levels of thee-business hubs can be identified:± hub 1: focus solely on information transparency of the supply of goods

(e.g. LAB2, Agromarket-place);± hub 2: functionalities hub 1 + sending orders electronically (e.g.

Floweraccess);± hub 3: functionalities hub 2 + include settling the financial flows (e.g.

Agrifirst);± hub 4: functionalities hub 3 + logistical services (e.g. WWRE, Transora,

Plantania).d The cases showed that inter-organisational tracking and tracing systems are

found only when economic control is high. That is, when one party takesthe lead and sets the standards. In all cases the initiator in the supply chainwas the party closest to the consumers (hence not the farmers/growers).Furthermore, most tracking and tracing systems were developed only aftera basic quality control system was installed. Some initiatives have gonefurther towards the marketing, or branding, of certified products.

Figure 3 presents four types of e-business initiatives based on thefindings of Tapscott et al. (2000). This typology is based on two axes: economiccontrol versus value integration. More typologies were developed based onother axes; however, most of them resulted in comparable clusters. The maincharacteristics of each type of b-web are summarised in Table 6.

E-market-places bring together sellers and buyers. Hierarchical b-webs have aleader who controls the content of the value proposition, the pricing and theflow of transactions and positions itself as a value-adding intermediarybetween suppliers and buyers. For example, E-farm functions as a one-stop

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


web shop offering standard web pages and payment structures. Self-organising e-market-places facilitate the exchange between buyers and sellers,who jointly ª discoverº a price through different price discovery mechanisms(open markets, sell-side auctions and exchanges), e.g. Floraplex (see box 1).The main value proposition of an e-market-place is market efficiency; in detailaccess to a broader range of suppliers and buyers, improved informationaccess (better product knowledge) and market-making mechanisms to matchbuyers and suppliers (e-catalogue, e-auction). This all removes search timefrom the buying and selling process and results in better matches.

Box 1. The Floraplex bid/ask system (www.floraplex.nl)

This system allows buyers to negotiate directly with growers. It isdesigned to link European, African and Israeli growers to wholesalersand distributors world-wide. It provides growers with an opportunity toexpand their markets and increase profits quickly and efficiently. Userswill buy from Holland, Africa and Israel with service through the Dutchauctions and from South and North America with service through self-provided logistics providers. Wholesalers and distributors will be able toovercome operational expenses and will get fresher flowers.

Information chains are characterised by transparency of information throughthe value chain. Most value chains in food and agribusiness comprise manyparticipants, therefore content providers have little knowledge of consumers.The main value proposition of information chains is demand-driven supplychains; adjusting value chain processes to the wishes of consumers enabled byfunctionalities like ª Customer demand and behaviour monitoringº (e.g. HAKor Plantania; see box 2). This not only supports marketing and sales processes

FIGURE 3. B-Web Typology.

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


TA

BL

E6

. M

ain

Ch

ara

cter

isti

cs o

f th

e F

ou

r T

yp

es o

f B

-web

s (B

ased

on

Ta

psc

ott

et

al.,

20

00)

Ele

men

tE

-ma

rket

-pla

ceIn

form

ati

on

Ch

ain

Vir

tua

l E

nte

rpri

seV

alu

e C

ha

in

Va

lue

pro

po

siti

on

Ma

rket

eff

icie

ncy

:

op

tim

isat

ion

of

sele

ctio

n,

pri

ce,

mat

chin

g a

nd

fulf

ilm

ent

Dem

an

d-d

riv

en s

up

ply

cha

ins;

ad

just

ing

va

lue

cha

in p

roce

sses

to

con

sum

er w

ish

es

Ag

gre

ga

ted

co

nte

nt:

crea

tiv

e co

lla

bo

rati

on

in

aid

of

a g

oa

l sh

are

d a

cro

ss a

com

mu

nit

y o

f co

ntr

ibu

tors

Su

pp

ly c

ha

in i

nte

gra

tio

n:

des

ign

an

d d

eliv

ery

of

an

inte

gra

ted

pro

du

ct o

r

serv

ice

tha

t m

eets

a s

et o

f

cust

om

er n

eed

s

Key

pro

cess

Pri

ce d

isco

ver

y o

r n

eed

s

ma

tch

ing

Info

rma

tio

n t

ran

spa

ren

cy

(tra

ckin

g a

nd

tra

cin

g)

Inn

ov

ati

on

Pro

du

ct d

esig

n,

SC

M

Ty

pe

of

co-o

per

ati

on

Ma

inly

ver

tica

lly

bil

ate

ral

Ma

inly

ver

tica

lly

bil

ate

ral

Ma

inly

ho

riz

on

tal

mu

lti-

act

or

Ma

inly

ver

tica

l m

ult

i-a

cto

r

Va

lue

inte

gra

tio

nL

ow

Med

ium

Hig

hH

igh

Eco

no

mic

co

ntr

ol

Sel

f-o

rga

nis

ing

or

hie

rarc

hic

al

Oft

en h

iera

rch

ical

Sel

f-o

rga

nis

ing

Hie

rarc

hic

al

Net

wo

rk e

ffec

tsH

igh

Hig

h (

nu

mb

er o

f

con

sum

ers)

Hig

hM

ediu

m

Lo

gis

tics

fo

cus

Bac

k o

ffic

e in

teg

rati

on

Su

pp

ly c

ha

in r

e-en

gin

eeri

ng

an

d I

T

Info

rma

tio

n d

istr

ibu

tio

nS

CM

-lo

gis

tics

an

d I

T

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


but also enables an effective supply chain planning. Information chainsusually need a context provider with sufficient economic control.

Box 2. Plantania (www.rijnconsult.nl)

Plantania is a collaborative project between the German do-it-yourselfshop OBI, the Dutch export organisation Lemkes and the Dutch growerassociation MOS, with the aim to create a demand-driven supply chainfor pot plants. Point-of-sale data are collected at OBI outlets andcollected into a data-warehouse, enlarging the insight on purchasebehaviour of consumers. This facilitates the analysis of the effect ofmarketing actions and preferences regarding the assortment. Lemkesand MOS growers could follow and predict demand to tune their offer.Results of the project were very satisfying: reaction time to changes inthe consumer market diminished from weeks to 3 days, loss of plantsdecreased ca. 50% and sales went up 10%.

Virtual enterprises (or alliances) are characterised by complementary contribu-tions from a number of different companies, where the site (e.g. Transora; seebox 3) plays the role of a broker. The value offered to customers depends onthe contributions of all participating companies. The alliance strives for highvalue integration without hierarchical control. Its participants design goodsor services, create knowledge, or simply produce dynamic, shared, experi-ences. The main value proposition is aggregated content/community. Thisincludes the value gained from knowledge brought to the network, be itindustry best practices, knowledge management, benchmarking studies, orother content-based value.

Box 3. Transora (transora.com)

Transora offers a full range of professional services to meet the specificneeds of (global) suppliers, manufacturers and retailers. Suppliers canseamlessly integrate with manufacturers and improve collaboration,demand planning, logistics and inventory management. Manufacturerscan expand their customer base and strengthen their links to keysuppliers. Retailers can develop closer, more productive relationshipswith manufacturers and more responsive consumer strategies. Industryparticipants and consumers can access and exchange relevant, timelyinformation to build their community.

Value chains (or extended enterprises) are characterised by a dominatingcompany (the context provider) who structures and directs a b-web network toproduce a highly integrated value proposition (e.g. Peter’s Farm or Spoormans;

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


see box 4). The main value proposition is supply chain integration; the final valueoffered to customers depends on the contributions of all participatingcompanies. Other value propositions in this area might include improvedvisibility across market supply chains, reduced lead time, reduced inventorylevels, improved logistics management and Enterprise Resource Planning-related process integration.

Box 4. Spoormans (www.spoormans.com)

The Spoormans-Group is a Belgian producer of poultry productscomprising poultry farmers (hatchery and fattening stage), slaughter-houses and poultry feed producers. All stages are quality certified andall company data saved in a central database. Each partner Ð but also theconsumer Ð can get relevant information out of this database. Thisallows for benchmarking and for consumers to trace the whereabouts ofthe bought chicken.

Van Weele (2001) states that supply chain partnerships (value chains) aremainly relevant for strategic products and bottleneck products with highsupply risk. Departing from Kraljic’s purchasing matrix (Kraljic, 1983), herecognises four types of procurement depending on the supply risk andimpact on the financial result (see Figure 4). For products with low supplyrisk new business models can be exploited; either purchased by virtualauctions or by e-procurement. Since each company usually possesses all typesof products in its assortment, the corporate information system should be ableto deal with all kinds of procurement.

We evaluated the initiatives as a whole, from the perspective of allparticipants in the system. When a specific organisation evaluates the

FIGURE 4. Types of Procurement (Adapted from Van Weele, 2001).

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


potential of e-business models it should do this both from a systemperspective (the value proposition offered) and from a product perspective(positioning the product in Kraljic’s matrix).

Implications for Food Supply Chains

At the start of this article we discussed the differences between e-business andSCM. One of the conclusions was that e-business can create dynamic supplychains (with changing participants), which challenges the thoughts on long-term supply chain partnerships. When we focus on the food industry andagribusiness we see that major attention is given to food safety andenvironmentally friendly-produced products due to consumer preferences.This results in a need for accurate certification and documentation of the originand the identity of products served, amongst others, by chain informationsystems combined with tracking and tracing systems. One can imagine that,especially in comparison with information chains, the value chain b-web (asused by Peter’s Farm and Spoormans) is likely to become widespread in foodsupply chains. This is due to the importance of tracking and tracing of productsrelated to food safety and environmental issues and the presence of qualitycertification programmes in these supply chains. However, the cases revealedshortcomings in agriculture that need to be overcome. For example:

d fresh products are not standard and subject to quality deterioration;d there is a lack of clear product descriptions and coding standardisation;d information requirements differ per customer, making standardisation

complex;d relatively low degree of automation of farmers.

Next to value chains, e-market-places may be used for the supply of routineitems.

This prediction is in accordance with Porter (2001), who expects openmarket-places to diminish over the long haul, and buyers to focus on buildingclose, proprietary relationships with fewer suppliers, using Internet technolo-gies to gain efficiency improvements in various aspects of those relationships.He states that the great paradox of the Internet is that its very benefits Ðmaking information widely available, reducing the difficulty of purchasing,marketing and distribution, allowing buyers and sellers to find and transactbusiness with one another more easily Ð also make it more difficult forcompanies to capture those benefits as profits (Porter, 2001). The result is oftena shift toward price competition, resulting in a negative net effect on thecompetitive advantage. This is probably the reason that some of the b-websinvestigated that focus on e-market-places are expanding the functionalitiesof the b-web hub towards information and logistics services, therebytransforming into virtual enterprises.

Conclusion

There is a shift from competition between organisations towards competitionbetween supply chains (Christopher, 1998) through to competition between

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


business webs. Information sharing is critical for competitive advantage.Supply chain collaboration and visibility are growing in importance,requiring central (value chain or b-web) databases. Another critical factor isconsolidation of goods flows since smaller flows have to reach moredispersed networks. This will give more room for logistic service providers,whoÐ together with application service providers Ð give companies facilitiesto focus on their core competencies. In this way new intermediaries will arise,lengthening the supply chain. Logistics research in this area should focus onthe integration of front and back office systems, on the definition of newperformance measurement systems and on preparing organisations forhandling multiple logistical concepts concurrently.

This paper tries to clarify the discussion on e-business typology in orderto show managers of companies, who are thinking of starting such initiatives,potential e-business models. Four types of b-webs were identified: e-market-places focusing on market efficiency through price discovery or needsmatching; information chains adjusting value chain processes to customerneeds through information transparency; virtual enterprise creating collab-oration in aid of a goal shared across a community of contributors; and,finally, value chains which design and deliver an integrated product orservice that meets a set of customer needs.

Further research will focus on the specific elements of the businessmodels. That is, the outsourcing of e-business-related activities (usingservice providers), the applications used and, especially, the performance ofdifferent types of e-business models in specific situations. This will giveroom for more prescriptive conclusions as to which model is best used inwhat circumstances.

REFERENCES

AMIT, R. & ZOTT, C. (2001) Value creation in e-business, Strategic Management Journal, 22, (6 ± 7),

pp. 493 ± 520.

ARCHER, N. & YUAN, Y. (2000) Managing B2B relationships throughout the e-commerce

procurement life cycle, Internet Research: Electronic Networking Applications and Policy, 10, (5),

pp. 385 ± 395.

CHOPRA, S. & MEINDL, P. (2001) Supply Chain Management Ð Strategy, Planning and Operations

(Englewood Cliffs, NJ, Prentice-Hall).

CHRISTOPHER, M.G. (1998) Logistics and Supply Chain Management; Strategies for Reducing Costs and

Improving Services (London, Pitman).

DEN OUDEN, M., DIJKHUIZEN, A.A., HUIRNE, R.B.M. & ZUURBIER, P.J.P. (1996) Vertical co-operation

in agricultural production-marketing chains Ð with special reference to product differ-

entiation in pork, Agribusiness, 12, (3), pp. 277± 290.

HOLLAND, C., BOUWMAN, H. & SMIDTS, M. (2000) Back to the Bottom Line; onderzoek naar

succesvolle e-business modellen, ECP.NL (http://www.ECP.NL) (in Dutch).

HUFF, S.L., WADE, M., PARENT, M., SCHNEBERGER, S. & NEWSON, P. (2000) Cases in Electronic

Commerce (Boston, Irwin).

JANSSEN, M. & SOL, H.G. (2000) Evaluating the role of intermediaries in the electronic value

chain, Internet Research: Electronic Networking Applications and Policy, 10, (5), pp. 406 ± 417.

KAPLAN, S. & SAWHNEY, M. (1999) B2B e-commerce hubs: towards a taxonomy of business models

(netmarketmakers.com/documents).

KRALJIC, P. (1983) Purchasing must become supply management, Harvard Business Review, Sept/

Oct, pp. 109± 117.

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


LANCIONI, R.A., SMITH, M.F. & OLIVA, T.A. (2000) The role of the Internet in supply chain

management, Industrial Marketing Management, 29, pp. 45 ± 56.

LEE, H.L. & WHANG, S. (2001) Supply Chain Integration Over the Internet (Graduate School of

Business, Stanford University).

MCKELVIE, K.M. & SIMMONDS, M. (2001) EHubs: the new web-enabled technology driving true

supply chain collaboration (ascet.com/documents).

MEANS, G. & SCHNEIDER, D. (2000) Metacapitalism: The E-business Revolution and Design of the 21st

Century Companies and Markets (New York, John Wiley & Sons).

MOSTAFI, K. (2000) Nederlands Bedrijfsleven: E-business is Van Strategisch Belang (emerce.nl/

archives/nieuws/Industrie) (in Dutch).

PORTER, M.E. (2001) Strategy and the Internet, Harvard Business Review, March, pp. 63 ± 78.

PTAK, C.A. (2001) E-business, APICS Conference 2001, Amsterdam, 4 ± 6 April.

RIJN, TH.M.J. VAN & SCHIJNS, B.V.P. (1993) MRP in Process Ð The Applicability of MRP-II in the Semi-

process Industry (Assen, Van Gorcum).

ROELOFS, I.M. (1998) Electronic Commerce en Logistiek, Onderzoek naar electronic commerce in

opdracht van Nederland Distributieland (Den Haag: NDL) (in Dutch).

RUTTEN, W.G.M.M. (1995) The use of recipe flexibility in production planning and inventory

control, Dissertation, Eindhoven University of Technology, The Netherlands.

TAPSCOTT, D., TICOLL, D. & LOWY, A. (2000) Digital Capital (Boston, MA, Harvard Business School

Press).

THOMPSON, S.J., HAYENGA, M. & HAYES, D. (2000) E-agribusiness, Proceedings of the IAMA

Conference, Chicago, 23 ± 28 June.

TIMMERS, P. (1998) Business models of electronic markets, Electronic Markets, 8, (2), pp.

318± 335.

VORST, J.G.A.J. VAN DER (2000) Effective food supply chains; generating, modelling and

evaluating supply chain scenarios, PhD Thesis, Wageningen University, The Netherlands.

WEELE, A.J. VAN (1988) Inkoop in Strategisch Perspectief (Alphen aan den Rijn, Samson) (in

Dutch).

WEELE, A.J. VAN (2001) Myths and truths about e-procurement and virtual markets, APICS

Conference 2001, Amsterdam, 4 ± 6 April.

ZUURBIER, P.J.P., TRIENEKENS, J.H. & ZIGGERS, G.W. (1996) Verticale Samenwerking (Deventer,

Kluwer Bedrijfswetenschappen) (in Dutch).

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


AppendixTABLE A1. Overview of the E-business Initiatives

Case Brief Description

Agrifirst.fr Buy-side catalogues for French farmers of over 4000 article numbers.

It includes electronic ordering and payment, news letters, weather

information, expert advice

Agromarketplace.com B2B intermediary for merchandising potato, vegetables and fruit

products. It is a market-place where buyers can select suppliers that

offer specific products for a certain price; the actual deal is done

bilaterally via phone or fax

CLG

(telin.nl/klict.org)

A system for the unique coding of products throughout the supply

chain, including tracking and tracing systems and scanning systems

at garden centres. The aim is to develop a supply chain that is

demand driven, including product development

Efarm.nl A B2B web shop for farmers incorporating over 40 suppliers of

different product assortments. As a whole the site offers a one-stop

formula (it is not a portal!) with the same layout and payment

methods. Fulfilment is taken care of via local dealers

Floraplex.nl This system allows wholesalers and distributors world-wide to

negotiate directly with European, African and Israeli growers. Users

will buy from Holland, Africa and Israel with service through the

Dutch auctions and from South and North America with service

through self-provided logistics providers

Floweraccess.com Electronic information and ordering system of Verenigde

Bloemenveiling Aalsmeer (auction) for florists and garden centres in

western Europe using unique product codes. Demand-driven

supply chains where customer orders initiate activities at growers.

Customers can buy via the auction or mediation and have direct

contact with their suppliers

GPI

(akk.nl)

Offers topical and objective detailed product information of

foodstuff to the supply chain: producers, wholesalers and

institutional users. Objective is to adjust the assortment to the

shifting customer demand. Consumers can select those products

that have the required ingredients

HAK System that gives (a number of) consumers and retailers insight into

detailed process and product information of a vegetable and fruit

canning factory, HAK. HAK hopes to identify the consumer wishes

and set up the supply chain accordingly

KPA

(lto.nl)

System that gathers and offers all information concerning

(environmentally friendly) production methods and product quality

of agricultural products to farmers, industry and customers. Works

with certified farmers

LAB2

(florecom.nl)

Electronic information and ordering system for

merchandisers/wholesalers, which offers the complete supply of

plants for the coming 24 hours, including detailed product

information. Logistics services are to be included

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14


TABLE A1. (Continued)

Case Brief Description

PetersFarm.com See case description in text

Plantania

(rijnconsult.nl)

Demand-driven information system which registers POS data of pot

plants at retail outlets. This information is used by a wholesaler to

organise the supply of (potentially) requested plants and offer these

products at a certain price to the retailers. Provides means to

evaluate promotions and forecast demand. Includes full tracking

and tracing system for all participants, including the final customer

Spoormans.com System comprising poultry farmers (hatchery and fattening stage),

slaughterhouses and cattle feed producers. All stages are quality

certified and save all company data in a central database. Each

partnerÐ but also the consumerÐ can get relevant information out

of this database. This allows for benchmarking and for consumers

to trace the whereabouts of the bought chicken

Transora.com World-wide market-place where food industry can buy agricultural

products, packaging materials, production means and office

supplies. Comprises amongst others collaborative purchasing,

company-specific and public price catalogues. Basic idea is to

generate buying power for the food industry

WWRE

(worldwideretail

exchange.org)

World-wide market-place where retailers can (independently) buy

industrial products (foodstuff, consumer care products, textile,

general merchandise). Comprises amongst others (reverse and

forward) auctions, catalogues, CPFR, product design. Basic idea is

generating buying power for retailers

Zuivelketen

(nrs.nl)

Information exchange via standard EDI messages between dairy

farmer, dairy industry, feed producer, veterinary, etc. according to

standard product codes with the aim to achieve process efficiency

and information transparency

Dow

nloa

ded

by [

Uni

vers

ity o

f N

orth

Tex

as]

at 0

2:16

30

Nov

embe

r 20

14

E-business Initiatives in Food Supply Chains; Definition and Typology of Electronic Business Models

Documents

Transcript of E-business Initiatives in Food Supply Chains; Definition and Typology of Electronic Business Models