Information Technology and Changing Supply Chain Behavior: Discussion

Abstract

industrialization and the vertical integration of the agrifood supply chain. While imperfect information and transaction costs are often cited as key incentives for vertical coordination of a supply chain, the role of information technology has largely been ignored. Undoubtedly, as the capabilities of electronic commerce improve, the agrifood supply chain will undergo further dramatic structural change. Most intriguing, the direction of structural change may reverse from closely aligned hierarchal relationships to a greater market orientation (Steinfield, Kraut, and Plummer). The primary reason is that Internet-based electronic commerce and electronic logistics have the potential to provide a competitive alternative to more formal supply chain relationships, such as tying agreements, contractual coordination, and vertical integration. The fast-paced advancements in information technology capabilities, the rise of the Internet, and the emergence of business-to-business (B2B) commerce makes this a highly fertile area for research in imperfect information and organizational structure. The papers by Kinsey and Salin directly address the status of information technology and its implications for supply chain management. Ward attempts to find evidence of structural changes to the supply chain (albeit not directly attributable to information technologies) by focusing on vertically related prices. Kinsey focuses her paper on an overview of electronic commerce systems and their effect on the manufacture-distributionwholesale-retail segment of the supply chain. Kinsey begins with an assessment of why electronic data interchange (EDI) systems mostly underperformed expectations. She also provides useful insights on how EDI al ered strategic investment in the supply chain. Beyond this historical perspective, Kinsey raises several key market issues related to the adoption of electronic information systems. This includes a discussion of the positive network externalities of information systems, the role of standardization in improving market efficiency, and lowering bar iers to entry and the potential uses of standardized information for cooperative planning, forecasting, and replenishment in the supply chain. The Internet provides a common platform with interconnectedness as an inherent feature. This makes obsolete