THE IMPACT OF E-SUPPLY CHAIN CAPABILITY ON COMPETITIVE ADVANTAGE AND ORGANIZATIONAL PERFORMANCE

Transcription

1 International Journal of Electronic Business Management, Vol. 4, No. 5, pp (2006) 419 THE IMPACT OF E-SUPPLY CHAIN CAPABILITY ON COMPETITIVE ADVANTAGE AND ORGANIZATIONAL PERFORMANCE Che-Yao Chen 1*, Jun-Der Leu 1 and Chyou-Huey Chiou 2 1 Department of Business Administration National Central University Chungli (320), Taiwan 2 Industrial Development Bureau Ministry of Economic Affairs Taipei (100), Taiwan ABSTRACT Supply chain management (SCM) has become a potentially valuable way of securing competitive advantage and improving organizational performance. This research develops three constructs of e - Supply chain capability (procurement, make and delivery) and tests the relationships between e-supply chain capability, competitive advantage, and organizational performance. Data for the study were collected from 130 organizations and the relationships proposed in the framework were tested using structural equation modeling (SEM). The results indicate that higher levels of e-supply chain capability and competitive advantage can lead to improved organizational performance. Also, competitive advantage can have a direct, positive impact on organizational performance. Keywords: E-Supply Chain Capability, Competitive Advantage, Organizational Performance, Structural Equation Modeling * 1. INTRODUCTION When facing the gradually competitive industry environment, the enterprises must properly integrate the department resources such as the internal procurement, production and sales. Besides, they should also closely cooperate with the suppliers and customers in order to control the competitive factors such as quality, delivery and cost and improve their competitive advantages. It also explains the reason why supply chain management (SCM) becomes more and more important. SCM refers to the planning and negotiation of product service and information among the material suppliers, manufacturing and customers [18]. SCM has been defined to explicitly recognize the strategic nature of coordination between trading partners and to explain the purposes of SCM: to improve the performance of an individual organization, and to improve the performance of the whole supply chain. Turban et al. [20] indicated that the powerful IT calculation capacity, Internet connection and communication functions operated by the enterprises could result in more efficient * Corresponding author: alex812@seed.net.tw information exchange among the enterprises. The operational would be more successful and enterprises would further reduce the stocks and increase the inventory turnover rate and organizational performance. Sander and Premus [16] had empirical study on American manufacturing industry and found out that IT operation on supply chain management can enhance competitive advantages and improve organizational performance. Thus, the e-supply chain capability becomes one of the ways for the enterprises to enhance their competitiveness. There were rare studies with respect to the influence of e-supply chain capability on firm performance and most of the studies subjectively evaluated the influence degree of IT on the activities of supply chain [6] and they lacked of objective evaluations. The purpose of this study is therefore to empirically test a framework identifying the relationships among e-supply chain capability, competitive advantage and organizational performance. The e-supply chain capability is defined as the set of activities undertaken by an organization to promote effective management of its supply chain. The e-supply chain capability is proposed to be a multi-dimensional concept,

2 420 International Journal of Electronic Business Management, Vol. 4, No. 5 (2006) including the downstream and upstream sides of the supply chain. Operational measures for the constructs are developed and tested empirically, using data collected from respondents to a survey questionnaire. Structural equation modeling is used to test the hypothesized relationships. Further, by offering a validated instrument to measure e-supply chain capability, and by providing empirical evidence of the impact of e-supply chain capability on an firm s competitive advantage and its performance, it is expected that this research will offer useful guidance for measuring and implementing e-supply chain capability in an organization and facilitate further research in this area. The remainder of this paper is organized as follows. Section 2 presents the research framework, provides the definitions and theory underlying each dimension of e-supply chain capability, discusses the concepts of competitive advantage and organizational performance, and develops the hypothesized relationships. The research methodology and analysis of results are then presented, followed by the implications of the study. 2. RESEARCH FRAMEWORK The research framework proposed in this article is shown in Figure 1. According to research purposes, there were three hypotheses proposed: e-supply chain capability will have direct impact on competitive advantages and organizational performance, competitive advantages will also influence organizational performance. The dimensions of e-supply chain capability included e-procurement, e-make and e-delivery. The detail definitions and of competitive advantages and organizational performance and research hypotheses are described in the following sections. 2.1 E-Supply Chain Capability A company s supply chain divides an organization into a sequence of primary activities, inbound logistics, operations, outbound logistics, marketing and sales, and service, along with support activities [14]. Supply chain management involves the integration of these business es, and provides products, services, and information that add value for customers. The management of the supply chain is revealed in this holistic approach. The goal is to reduce uncertainties, such as demand, delivery times, quality, and competition in the supply chain. E-supply chain means using network and IT to transform the corporate core business and ; through internet, it manages negotiation, sharing and cooperation of business for employees at internal aspect and deals with transaction and cooperation with supply chain partners at external aspect [4]. Banker et al. [3] pointed out that the better way to evaluate the effect of IT was the analysis of Process Oriented Approach. As to the allocation on supply chain, we followed the study of Swafford et al. [19] and there were three major dimensions (procurement, make and delivery). As to the evaluation on e-supply chain capability, this research focused on the extent to which a firm accomplishes business electronically including transactions and information exchange facing suppliers (e.g., procurement), internal production (e.g., make) and customers (e.g., delivery). The definition of three major dimensions and their business are below: 1. Procurement: it mainly refers to the enterprises and the suppliers development of a set of business on demand planning, order delivery, delivery and financial management. 2. Make: it means the related business faced during production in the enterprises, including production scheduling, product R&D, on-site execution and quality control. 3. Delivery: it means the sale and delivery for the customers or agents, including having customer demand estimation planning, order receiving, product delivery and financial collection. 2.2 Competitive Advantage Competitive advantage is the extent to which an organization is able to create a defensible position over its competitors. The said position allows them to gain more profits than the competitors [11]. Bhatnagar and Sohal [5] identified the manufacturing industry of Asian as the research targets and proposed supply chain performance measurement indicators on plant location factor, supply chain uncertainty and manufacturing practices to measure supply chain competitive advantages. The indicators are lead time, inventory, time to market, quality, delivery, flexibility, etc. This research followed the study of Li et al. [9] and Bhatnagar and Sohal [5] used inventory, quality and delivery rate as the measurement questions on competitive advantage. 2.3 Organizational Performance The definition of organizational performance depends on the scholars different views. Vickery et al. [21] considers that the organizational performance refers to how well an organization achieves its market-oriented goals as well as its financial goals.. Thus, they set up the measurement performance items as return on assets, market share and growth rate. This study followed the indicators adopted by Barua et al. [4] and Li et al. [9] as the base for designing the questionnaire evaluating organizational performance, including market share, sale growth and profit margin on sales.

3 C. Y. Chen et al.: The Impact of E-Supply Chain Capability Research Hypotheses The study of Rosenzweig et al. [15] on 238 consuming product manufacturers in the US found out that when the supply chain integration intensity between internal aspect of enterprises, external suppliers and customers was higher, corporate performance was more likely to be upgraded. Supply chain IT capacity had direct influence on internal and external collaboration and information sharing of manufacturing industry and organizational performance could be significantly improved [17]. Based on the above it is hypothesized that: Hypothesis 1: Firms with high levels of e-supply chain capability will have high levels of organizational performance. Delivery, quality and the increase of costs are the problems faced by the manufacturing industry. The reason is in the lack of immediate negotiation on internal and external supply chain integration [15]. IT application can enhance the information dealing efficiency in supply chain. Through the integration of supply chain management and information system, the manufacturing industry can strengthen the flexibility of supply chain, reduce cycle time, upgrade efficiency, increase inventory turnover rate and immediate delivery and improve supply chain competitiveness [8,12,13]. The above arguments lead to: Hypothesis 2: Firms with high levels of e-supply chain capability will have high levels of competitive advantage. Yamin et al. [22] managed the empirical study on the relationships among operational strategies, competitive advantages and organizational performance of Australian manufacturing industry. Their research findings described that the enterprises with competitive advantages had better organizational performance. The above related study findings revealed that corporate competitive advantages could lead to higher economic effects, customer satisfaction and loyalty and further promote sale and profit-gaining capacities. Therefore, a positive relationship between competitive advantage and organizational performance can be proposed. Hypothesis 3: The higher the level of competitive advantage, the higher the level of organizational performance. The above three hypotheses, taken together, support the e-supply chain framework presented in Figure RESEARCH METHODOLOGY This research explored the relationships between e-supply chain capability, competitive advantages and organizational performance. These three concepts are latent constructs which allow SEM to explore the cause-and-effect relation among variables and validate the theories [11]. The data analytical tool is based on 8.54 version of Linear Structural Relationship (LISREL) to test the propriety of the whole model. Organizational performance H1 H3 e - Supply chain capability H2 Figure 1: Research framework Competitive advantage In analyzing the collected data, our study followed the two-step procedure recommended by Anderson and Gerbing [1]. We estimated and re-specified the measurement model prior to incorporating the structural restrictions. Convergent and discriminant validity of the remaining items and scales were tested with confirmatory factory analysis (CFA) using the LISREL program. Each item was modeled as a reflective indicator of its hypothesized latent construct. The three constructs were allowed to covary in the CFA model. The measurement models were evaluated using maximum likelihood estimation. Therefore, our study first managed CFA on e-supply chain capability and dealt with structural relation analysis and validation on the whole research model of e-supply chain capability, competitive advantage and organizational performance. 3.1 Measurement Scale of each Dimensional Factor E-Supply Chain Capability The definitions of e-supply chain capability in the model are the extent to which a firm accomplishes business electronically including transactions and information exchange. The digitization levels of 11 business es are measured based on a five-point Likert scale ranging from 1 to 5 as follows: 1. Non-computerization: Using traditional way to communicate, such as by telephone, fax or post. 2. Computerization but non-structural data format: Communicating thru and keep record by excel or word file. 3. E-system implementation and structural data format: Communicating thru E-system implementation, structural data format, and web-based or turnkey information transaction. 5. E-system implementation, structural data format,

4 422 International Journal of Electronic Business Management, Vol. 4, No. 5 (2006) and web-based information transaction by auto-conventional standard between systems, in other words, server-to-server, such as ERP-to-ERP Competitive Advantage Based on the above, the indicators of the competitive advantage constructs used in this study are inventory, quality and delivery rate. The measurement questions were based on Likert five-point scale for evaluating the managers perception on each competitive advantage. The research managed the perception evaluation and judgment on the related competitive capacity questions on the companies (comparing with their competitors in the market). The item scales are five-point Likert type scales with 1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, 5 = strongly agree Organizational Performance The items of organizational performance measurement was based on the related executives evaluation and judgment with regard to the market share, sale growth and profit margin on sales of the company (comparing with the last year). The item scales are five-point Likert scales with 1 = significant decrease, 2 = decrease, 3=same as before, 4=increase, 5=significant increase. 3.2 Samples This research treated the manufacturing enterprises adopting a B2B information system (B2BIS) promoted by the Industrial Development Bureau (IDB) of Ministry of Economic Affairs (MOEA) as the research targets and used expert interview method for on-site evaluation and data collection. From August 2005 to January 2006, there were totally 169 return questionnaires. After deducting 39 companies which did not answer because they did not have the related business, there were 130 valid samples. The ratio of numbers of employees in the valid samples was shown in Table 1 and ratio of industry category was in Table RESULTS 4.1 Examination on Reliability and Validity The questionnaire questions of this research all followed the literatures overseas and from November 2004 to December 2004, the researcher invite the companies adopting B2BIS promoted by the IDB for evaluation. During the pre-test, there was evaluation data from 32 enterprises. Thus, this scale had considerable degree of content validity. Table 1: Ratio of numbers of employees Employee Number Percentage < > Table 2: Ratio of industry category Industry Number Percentage ICT Mechanical Chemical Consumer goods Other Confirmatory Factor Analysis on E-Supply Chain Capability The Confirmatory Factor Analysis result of measurement model was shown in Figure 2. As to the propriety of model, GFI value reached 0.91, AGFI was 0.86, CFI was 0.99 and RMSEA was Therefore, generally speaking, the measurement model of this e-supply chain capability had fine propriety. The reliability values of latent variables in measurement model were all over 0.91 which revealed that the internal consistency of research model was fine [7]. Average Variance Extracted of each latent variable was more than 0.7 which showed that latent variables had reliability and convergence validity. The data of Average Variance Extracted (AVE) of Squared Multiple Correlation (SMC), Construct Reliability (CR) and latent variables are presented in Table Test on the Structural Relationships between E-Supply Chain Capability, Competitive Advantage and Organizational Performance The above overall propriety test of measurement model and reliability and validity analytical results showed that 11 questions of e-supply chain capability in this research could actually efficiently measure the constructs of procurement, make and delivery. Thus, we could manage the analysis of structural format at the second stage. In the test of this structural relation model, as to three constructs of e-supply chain capability, the researcher dealt with the average of the questions in each dimension; in addition, competitive advantage was based on inventory, quality and delivery rate as measurement variables; organizational performance was based on market share, sale growth and profit margin on sales as measurement variables mentioned above.

5 C. Y. Chen et al.: The Impact of E-Supply Chain Capability e-procurement e-make e-delivery P1 P2 P3 P4 M1 M2 M3 D1 D2 D3 D4 Figure 2: Results of confirmatory factor analysis Latent Variable Table 3: Reliability and validity analytical results of measurement model Item Completely Standardized Factor Loading SMC Composite Reliability AVE E-Procurement Process E-Make Process E-Delivery Process P P P P M M M D D D D The analytical result of overall model was shown in Table 4. All of the indicators reached the standard suggested by the scholars and p-value = It showed that the propriety of this theoretical model and samples was excellent. Thus, we could manage the analysis according to this model result. For the preciseness of overall model analysis, this research followed Zhu s [23] analytical method and dealt with reliability and validity analysis of observation variables on overall model. The result was shown in Table 5. The structural model was mainly to test if the hypotheses proposed were supported by actual data. The path relation of structural format model was mainly showed by complete standardization factor. The larger the factor was, the higher the importance degree in cause-and-effect relation was. Among three hypotheses of the research model, there were only two hypotheses (H1, H3) reaching significant standard which supported the hypotheses as Figure 3 and Table CONCLUSIONS AND SUGGESTIONS 5.1 Conclusions This paper provides empirical justification for a framework that identifies three key dimensions of e-supply chain capability and describes the relationship among e-supply chain capability, competitive advantage, and organizational performance. It examines three research questions: (1) do organizations with high levels of e-supply chain capability have high levels of competitive advantage; (2) do organizations with high levels of e-supply chain capability have high levels of organizational performance;(3) do organizations with high level of competitive advantage have a high level of organizational performance? For the purpose of investigating these issues a comprehensive, valid, and reliable instrument for assessing e-supply chain capability was developed. The instrument was tested using rigorous statistical tests including convergent validity, discriminant validity, reliability, and the validation of second-order constructs. This study provides empirical evidence to support conceptual and prescriptive statements in the literature regarding the impact of e-supply chain capability.

6 424 International Journal of Electronic Business Management, Vol. 4, No. 5 (2006) Types Items Absolute Propriety Indicators Relative Propriety Indicators Table 4: Fit indices of structure model Propriety Indicators Ideal Figures [2] Research Findings χ 2 (Chi-square) N/A 35.19, p-value=0.06 χ 2 /d.f GFI > AGFI > SRMR RMSEA NNFI NFI CFI Table 5: Reliability and validity analytical results of the whole model Latent Variables Factor Loading of Measurement Reliability Complete Variables Constructed Standardization AVE E-Procurement 0.92 E-Supply Chain Capability E-Make 0.89 E-Delivery 0.92 Inventory 0.55 Competitive Advantages Quality Delivery rate 0.83 Market share 0.68 Organizational Return on investment 0.91 Performance Sale growth Market share Sale growth Profit margin on sales Inventory Quality Delivery rate Organizational performance 0.46 *** Competitive advantage 0.22 * e-supply chain capability e-procurement e-make e-delivery Figure 3: Analytical result of structural relation in overall model (Dotted line means not supporting)

7 C. Y. Chen et al.: The Impact of E-Supply Chain Capability 425 Table 6: Results for proposed structural equation model Hypothesis Estimation value (t-value) Result H1 Firms with high levels of e-supply chain capability will have high levels of organizational performance. 0.22* (2.33) Supported H2 Firms with high levels of e-supply chain capability will have high levels of competitive advantage (-0.79) Not Supported H3 The higher the level of competitive advantage, the higher the level of organizational performance. 0.46*** (3.6) Supported *** means t >3.29, p-value<0.001 ** means t >2.58, p-value<0.01 * means t >1.96, p-value<0.05 The research findings showed that the enterprises reinforcement of e-supply chain capability could improve organizational performance; when the competitive advantages were increased, there would be better organizational performance. Generally speaking, the e-supply chain capability evaluation framework constructed by this research was proper after examination. The results support Hypothesis 1, which states that firms with high levels of e-supply chain capability will have high levels of organizational performance and Hypothesis 3, which indicates that the higher the level of competitive advantage, the higher the level of organizational performance. It showed that IDB/MOEA promoted an Industry e-business (EB) Promotion Program since 1999, the resource investment from the government triggered companies with funding of implementing a B2BIS, which has shown significant results in terms of organizational performance. However, the analytical result did not support Hypothesis 2, which states that firms with high levels of e-supply chain capability will have high levels of competitive advantage. The explanatory capacity of inventory in competitive advantages was weaker. The reason might be in that corporate supply chain strategies would be influenced by contextual factors, such as the type of industry, firm size, a firm s position in the supply chain, supply chain length, and the type of a supply chain (divergent or convergence networks). For example, the length of a supply chain may influence the level of information quality negatively. Information suffers from delay and distortion as it travels along the supply chain, the shorter the supply chain, the less chance it will get distorted. Therefore, when establishing the information system, the enterprises would first consider their core business. Since the enterprises were in different environment and the competitive advantage indicators developed were not the same. Thus, Hypothesis 2 was not supported. In addition, competitive advantages included the related capacities separated the enterprises and their competitors and it was the result through the planning of managerial decision-making; the questions of questionnaire upon procurement, make and delivery dimensions for evaluating e-supply chain capability only observed the information delivery and sharing among enterprises and did not investigate the decision-making of operational planning in the enterprises. Thus, we infer that it was also the reason why the influence of e-supply chain capability on competitive advantages did not support. 5.2 Research Implications Using IT to construct competitive advantages and improve organizational performance has become a trend for the enterprises. The present study validates the e-supply chain capability construct that has generally been poorly defined and about whose meaning there has been a high degree of variability in people s understanding. Although some organizations have realized the importance of implementing SCM information system, they often do not know exactly what to implement, due to a lack of understanding of what constitutes a comprehensive set of e-supply chain capability. By proposing, developing, and validating a multi-dimensional, operational measure of the construct of e-supply chain capability, and by demonstrating its efficacy in enhancing organizational performance and competitive advantage, the present study provides SCM managers with a useful tool for evaluating the comprehensiveness of their current SCM information construct. We have shown that e-supply chain capability forms a second-order construct composed of the first-order constructs of procurement, make and delivery-the three major dimensions of e-supply chain capability. Through the analysis of the relationship of e-supply chain capability construct with competitive advantage (Hypothesis 3), it was demonstrated that e-supply chain capability may directly impact organizational performance. 5.3 Research Imitations Because of the limited number of observations (130), the revalidation of constructs was not carried out in this research. Lack of systematic confirmatory research impedes general agreement on the use of

8 426 International Journal of Electronic Business Management, Vol. 4, No. 5 (2006) instrument. Future research should revalidate measurement scales developed through this research. As the concept of SCM is complex and involves a network of companies in the effort of producing and delivering a final product, its entire domain cannot be covered in just one study. Future research can expand the domain of e-supply chain capability by considering additional dimensions such as such as planning and return. Future studies can also examine the proposed relationships by bringing some contextual variables into the model, such as organizational size and supply chain structure. For example, it will be intriguing to investigate how e-supply chain capability differs across organization size. It will also be interesting to examine the impact of supply chain structure (supply chain length, organization s position in the supply chain, channel structure, and so on) on e-supply chain capability and competitive advantage. REFEERENCES 1. Anderson, J. C. and Gerbing, D. W., 1988, Structural equation modeling in practice: A review and recommended two-step approach, Psychological Bulletin, Vol. 103, No. 3, pp Bagozzi, R. and Yi, Y., 1988, On the evaluation of structural equation models, Journal of Academy of Marketing Science, Vol. 16, pp Banker, R. D., Kauffman, R. J. and Morey, R. C., 1990, Measuring gains in operational efficiency from information technology: A study of the position development at Hardee s Inc., Journal of Management Information Systems, Vol. 7, No. 2, pp Barua, A., Konana, P. and Whinston, A. B., 2004, An empirical investigation of Net-Enabled business value, MIS Quarterly, Vol. 28, No. 4, pp Bhatnagar, R. and Sohal, A. S., 2005, Supply chain competitiveness: Measuring the impact of location factors, uncertainty and manufacturing practices, Technovation, Vol. 25, No. 5, pp Byrd, T. A. and Davidson, N. W., 2003, Examining possible antecedents of IT impact on the supply chain and its effect on firm performance, Information and Management, Vol. 41, No. 2, pp Fornell, C. and Larcker, D. F., 1981, Evaluating structural equation models with unobservable variables and measurement error, Journal of Marketing Research, Vol. 18, No. 1, pp Krajewski, L. J. and Ritzman, L. P., 2005, Operations Management: Process and Value Chains, 7th Edition, Pearson Education, Inc. 9. Li, S., Ragu-Nathan, B., Ragu-Nathan, T. S. and Rao, S. S., 2006, The impact of supply chain management practices on competitive advantage and organizational performance, Omega, Vol. 34, No. 2, pp MacCallum, R. C., Roznowski, M., Mar, C. M. and Reith, J. V., 1994, Alternative strategies for cross-validation of covariance structure models, Multivariate Behavioral Research, Vol. 29, No. 1, pp McGinnis, M. A. and Vallopra, R. M., 1999, Purchasing and supplier involvement in improvement: A source of competitive advantage, Journal of Supply Chain Management, Vol. 35, No. 4, pp Power, D. J., Sohal, A. S. and Rahman, S. U., 2001, Critical success factors in agile supply chain management: An empirical study, International Journal of Physical Distribution & Logistics Management, Vol. 31, No. 4, pp Radjou, N., 2003, U.S. manufacturers supply chain mandate, World Trade, Vol. 16, No. 12, pp Reid, R. D. and Sanders, N. R., 2005 Operations Management: An Integrated Approach, 2nd Edition, John Wiley & Sons, Inc. 15. Rosenzweig, E. D., Roth, A. V. and Dean-Jr, J. W., 2003, The influence of an integration strategy on competitive capabilities and business performance: An exploratory study of consumer products manufacturers, Journal of Operations Management, Vol. 21, No. 4, pp Sander, N. R. and Premus, R., 2002, IT application in supply chain organizations: A link between competitive and organizational benefits, Journal of Business Logistics, Vol. 23, No. 1, pp Sander, N. R. and Premus, R., 2005, Modeling the relationship between firm IT capability, collaboration and performance, Journal of Business Logistics, Vol. 26, No. 1, pp Scannell, T. V., Vickery, S. K. and Droge, C. L., 2000, Upstream supply chain management and competitive performance in the automotive supply industry, Journal of Business Logistics, Vol. 21, No. 1, pp Swafford, P. M., Ghosh, S. and Murthy, N., 2006, The antecedents of supply chain agility of a firm: Scale development and model testing, Journal of Operations Management, Vol. 24, No. 2, pp Turban, E., Lee, J., King, D. and Chung, H. M., 2000, Electronic Commerce: A Managerial

9 C. Y. Chen et al.: The Impact of E-Supply Chain Capability 427 Perspective, Prentice Hall, New Jersey. 21. Vickery, S. K., Droge, C. and Markland, R. E., 1991, Production competence and business strategy: Do they affect business performance? Decision Science, Vol. 24, No. 2, pp Yamin, S., Gunasekaran, A. and Mavondo, F. T., 1999, Relationship between generic strategies, competitive advantage and organizational performance: An empirical analysis, Technovation, Vol. 19, No. 8, pp Zhu, K., 2004, The complementary of information technology infrastructure and e-commerce capability: A resource-based assessment of their business value, Journal of Management Information Systems, Vol. 21, No. 1, pp ABOUT THE AUTHORS Che-Yao Chen is a Ph.D graduate student of business administration, National Central University, Taiwan. His current research interests are in e-business and supply chain management. Jun-Der Leu received the Ph.D degree in Economics and Management from Technical University Berlin, Germany, in 1999 and then joined the SIEMENS Infineon Technologies AG, Germany and the Germany Fraunhofer Institute. In it, he was responsible for global logistics, investment planning as well as IT-solutions for the clean room manufacturing business. Since September 2002 Dr. Leu was an assistant professor of business administration, National Central University, Taiwan. His research focuses on global logistics and IT-solutions for high-tech industries. Chyou-Huey Chiou received his Ph. D. degree from Department of Mechanical Engineering, National Taiwan University, Taiwan. He is a deputy director of Industrial Development Bureau, Ministry of Economic Affairs, Taiwan. His current research interests are in e-business and knowledge management. (Received August 2006, revised November 2006, accepted December 2006)