Stanford business school professor believes that B2B commerce may be
global but execution of management models has to have local genesis as cultures
SCMP - E-commerce models for managing supply chains in the United States may not
work in Asia and those companies that innovate will be the most successful,
according to Stanford University Professor Hau Lee. The director of the supply
chain management executive program at California's Stanford Business School on
Sunday said he was taking a global approach to his research, with Greater China
a major focus.
With e-commerce now influencing supply management operations, it was
important to find the right model for each country or region.
"One of the reasons why there is this globalization of our curriculum is
that US models work in the US, but when they started pushing them in Japan, they
were not as well integrated to the use of personal computers," said Prof
"Credit cards are not as common in Japan as they are in the US and
This meant that if a company wanted to push e-commerce in Japan, it had to
create its own model.
The outcome is a business venture called 7dreams.com between 7-Eleven stores
and a diverse group of companies selling such items as concert and airline
tickets and Sony products.
Prof Lee said he expected this model could work well in the mainland.
In a society more debt averse than the United States, customers in Japan are
now able to go online and order, for example, Sony headphones, or other items
not normally stocked in a 7-Eleven store.
Then, instead of the goods being paid for online and sent to their homes,
customers can pick up the items that have instead been delivered to a designated
nearest 7-Eleven store. The item is paid for in person with cash.
"I think it works well in Japan because of the cultural characteristics
of the country," said Prof Lee.
"Most Japanese people go to work using trains so the 7-Eleven stores are
"I suspect that there might be a similar type of model in the
mainland." In Taiwan, 7-Eleven is looking at a similar model, he said.
While Prof Lee believes many companies worldwide are substituting traditional
technology with e-commerce in supply chain management, many are averse to taking
the next step.
"The previous technology could have been faxes, for example, to perform
transactions or send invoices," he said.
"Many of these tasks can be substituted by the Internet," he said,
adding that "substitution" was the first 'S' of the e-commerce
evolution in supply management.
The next step for a company is "scale", or using the Internet to
increase the scale of service, such as allowing more purchases more often,
creating a company more sensitive to changes in the market.
A third step just emerging is "structural", which could involve a
direct shipment without intermediaries by using Internet technology.
An example would be a software company that no longer sells physical floppy
discs to clients but allows them to download updates and new versions through
their personal computers, meaning there is no physical product.
"I think most companies say they have an Internet strategy and then when
I examine them all they are doing is looking at a set of tasks and substituting
it with the Internet," said Prof Lee.
"They do not continue the evolution and there could be the danger of
that happening here," said Prof Lee.
"If everyone is staying at the same stage, then the benefits are
"The companies and the people who recognize it first will be
Prof Lee views the mainland - poised to become a member of the World Trade
Organization - as becoming the major manufacturing base of the world.
"They [the mainland] are in an evolving state and when you are in an
evolving state there are great opportunities for change. We want to be the
leading edge institution," said Prof Lee.
During his career, the Hong Kong-born and educated Prof Lee has worked as a
consultant for companies including Hewlett-Packard, Nortel Networks, Sun
Microsystems, Apple Computer and Eli Lilly.