September 22, 1997

IT Value: Buyer-Supplier Relations By Anandhi Bharadwaj and Benn R. Konsynski nformation technology-applied both within and across organizations-is having a fundamental impact on business relationships among traditional industry participants. While many of the benefits are intangible, the influence on the organizations' markets can be profound. These new electronic links let companies offer novel incentives and services, participate in new marketing programs, take advantage of new channels of distribution, introduce operational efficiencies, and realize revenue enhancements. Su ch arrangements can make small companies look, feel, and act big, and let them reach for customers that were previously beyond their grasp. The links can also make big companies look small, so they can target and service custom markets. It's up to each organization's IS group to design complex, interorganizational systems that can fundamentally transform the marketplace. Many intangible benefits result from new strategic arrangements in buyer-supplier relations. Electronic data interchange (EDI), electronic markets, electronic integration, and other forms of interorganizational interchange are having a significant effect on strategic relationships in all buyer and seller communities. While many are fighting wars of disintermediation and the bypass of traditional players in the supply chain, others are finding great opportunity in new forms of intermediation-new ways of "getting in the middle." In their quest for operational efficiencies and competitive position, organizations today are, more often than not, looking beyond traditional boundaries for cooperative arrangements based on information sharing. New interorganizational arrangements such as strategic alliances, vertical integration, and new business partnerships are made possible by unique information interchange relationships such as electronic links across organizational boundaries. Attention to these initiatives should be one of the top priorities for IT management because the influence of the initiatives on competitive position, market channels, logistics, distribution, and administrative practices can be far-ranging. By Anandhi Bharadwaj and Benn R. Konsynski Anandhi Bharadwaj is an assistant professor and Benn R. Konsynski is the George S. Craft professor of business administration at the Goizueta Business School of Emory University in Atlanta. Back to the IW500 Menu Send Us Your Feedback Top of the Page

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