E-auction as a complement to IOCM - A case study from the automotive industry

Abstract

The role of PSM has gained considerable attention in recent years as one of the key functions to impact company performance (Zsidisin, Ellram & Ogden, 2003; Kähkönen & Lintukangas, 2012). And considering that purchasing is today the single largest expenditure for the majority of organizations (Dyer & Nobeoka, 2000; Agndal & Nilsson, 2009), it is interesting to expand the idea of IOCM and explore how companies can work even closer with their suppliers to impact inter-firm transactions. E-auction is an exciting tool from a cost saving perspective, but its application has been constrained due to increased complexity in buyer-supplier relationships (Jap, 2002; Pereira, Sellitto, Borchardt & Geiger, 2011). For example, in the automotive industry it is common to purchase complete solutions from a limited number of suppliers while standardized products or subcomponents are purchased further up the supply chain (Araujo, Dubois & Gadde, 1999). Hence, I want to develop an understanding of the expectations for E-auction to be used as an interorganizational tool with the purpose of improving the purchase process of first-tier suppliers. The research is conducted from the perspective of inter-firm characteristics in the automotive industry and the case study is based on one automotive company and four first-tier suppliers. The findings suggest that for E-auction to be used in an interorganizational setting, the buyer needs to have IOCM activities in place that allows them to identify subcomponents, purchased by first-tier suppliers with E-auction potential (Smeltzer & Carr, 2003). Secondly, the buyer must be aware of the purchase strategies and processes of their suppliers to ensure that E-auction can provide greater efficiency compared to existing processes. Finally, for E-auction as a joint effort to be attractive for suppliers as a cost saving collaboration, the buyer would need to provide their suppliers with lacking resources and competences.