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Assessing the benefits of B2B trade cycle integration: a model in the home appliances industry

Alessandro Perego (Department of Management, Economics and Industrial Engineering, Politecnico di Milano, Milano, Italy)
Alessandro Salgaro (Department of Management, Economics and Industrial Engineering, Politecnico di Milano, Milano, Italy)

Benchmarking: An International Journal

ISSN: 1463-5771

Article publication date: 13 July 2010

1120

Abstract

Purpose

The paper aims to give a quantitative assessment of the benefits obtainable by using information and communication technologies to integrate the order‐to‐payment process involving manufacturers and specialized retailers in the home appliances industry.

Design/methodology/approach

Standard business processes were defined and activity base costing was applied to develop the cost model with the support, i.e. validation and data provision of most of the companies operating in the Italian home appliances market.

Findings

The bottom line is €96 per order‐to‐payment cycle in the conventional, paper‐based scenario, compared to €23 in the integrated scenario involving the exchange of structured electronic documents. The potential savings amount to about 80 per cent of the costs, almost equally shared between the retailer and the manufacturer. A significant part of the benefits comes from the reduction in the management costs of non‐conformity issues.

Research limitations/implications

The assessment considers only tangible benefits and does not include more intangible advantages, such as cycle time reduction, compliance with regulation and easier and faster accessibility to documents.

Practical implications

The paper measures the benefits of using trade process integration technologies and presents a methodology that can be applied to other industries and to particular supply chains. The difficulties in assessing the benefits have been claimed to be one of the main barriers to adoption.

Originality/value

The paper provides a model to assess the order‐to‐payment cycle costs, considering both the costs of the “perfect cycle” (where no errors occur) and the cost of managing non‐conformities. At present, there is no benchmark available in the literature for the order‐to‐payment cycle costs in conventional and integrated conditions that could help companies to assess the expected benefits of integration.

Keywords

Citation

Perego, A. and Salgaro, A. (2010), "Assessing the benefits of B2B trade cycle integration: a model in the home appliances industry", Benchmarking: An International Journal, Vol. 17 No. 4, pp. 616-631. https://doi.org/10.1108/14635771011060611

Publisher

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Emerald Group Publishing Limited

Copyright © 2010, Emerald Group Publishing Limited

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