Ict, e-business and Small and Medium Enterprises

Automobiles 

In the automobile industry, B2B transactions via EDI have a 30-year history. Many first-tier 

suppliers in Europe, Japan and the United States have established real-time connections with large car 

manufacturers to respond to the latter’s requests for design/production processes reflecting their changing 

demands and specifications for just-in-time parts delivery. Most suppliers, even large ones, see EDI (and 

its recent Internet forms) as a strategic necessity for not losing business with car producers (i.e. their 

customers) and customer push has been a major factor in the adoption of EDI by the sector (Iskandar et al., 

2001). Many smaller suppliers, especially those in second or lesser tiers, have not implemented EDI 

because the system, which may differ depending on the trading partners, has been costly to install and 

because they see asymmetric benefits in favour of large manufacturers. Eliminating the clerical errors 

associated with re-entry of order information and reduced lead-time contributes to lower inventory costs, 

and these benefits of EDI are considered to be largely in favour of their customers. 

To realise larger benefits by streamlining business information and materials flows, as well as to 

achieve greater participation by smaller suppliers, EDI systems in advanced OECD countries have 

attempted to integrate different communication networks into a single Internet network. This should allow 

high quality, high speed and security measures to protect the transmission of confidential data and other 

critical messages. The Internet-based EDI, ANX (Automotive Network Exchange) was started in 1994 and 

operated in the United States from 1998-2002 and was aimed at EDI integration involving ENX (Europe), 

JNX (Japan), AANX (Australia) and KNX (Korea) (Department of Industry, Tourism and Resources, 

Australia, 2002). Subsequently, individual parts of the system have survived, but the idea of a global 

integrated system has not been achieved, in part due to problems in designing a global business model for 

these exchanges and in part due to difficulties attracting small suppliers. 

Summary 

The adoption and use of Internet and e-business strategies depend on sector characteristics. The 

products of services like tourism, which are intangible in nature and have a high information content, are 

well-suited for purchase over the Internet. In addition, in sectors such as tourism and parts of retail and 

finance, where firms perceive a higher level of market opportunities, they tend to commit more resources 

to e-commerce. In sectors such as textiles and automobiles, where the relationship between firms along 

supply chains is very close, on-line transaction systems are seen as a strategic necessity for streamlining 

B2B transactions. 

Barriers to Internet commerce also vary among sectors. In tourism, incompatibility of systems 

and the dominance of relatively small agents with less capability impedes efficient Internet transactions 

along the supply chain, especially for B2B transactions. In the retail sector, the problem of confidence 

building seems more crucial. In manufacturing sectors, such as textiles and automobiles, established closed 

EDI systems with high installation costs structure the use of electronic commerce by SMEs. 

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