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Journal of Business & Industrial MarketingEmerald Article: The role of mobile technology in a buyer-supplierrelationship: a case study from the steel industry
Jari Salo
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To cite this document: Jari Salo, (2012),"The role of mobile technology in a buyer-supplier relationship: a case study from the
teel industry", Journal of Business & Industrial Marketing, Vol. 27 Iss: 7 pp. 554 - 563
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ari Salo, (2012),"The role of mobile technology in a buyer-supplier relationship: a case study from the steel industry", Journal
of Business & Industrial Marketing, Vol. 27 Iss: 7 pp. 554 - 563
http://dx.doi.org/10.1108/08858621211257329
ari Salo, (2012),"The role of mobile technology in a buyer-supplier relationship: a case study from the steel industry", Journal
of Business & Industrial Marketing, Vol. 27 Iss: 7 pp. 554 - 563
http://dx.doi.org/10.1108/08858621211257329
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The role of mobile technology in abuyer-supplier relationship:
a case study from the steel industry Jari Salo
Department of Marketing, Oulu Business School, University of Oulu, Oulu, Finland
AbstractPurpose – The impacts of information technology on business relationships have been of interest to managers for decades, and this stream of researchhas also steadily gained recognition among academics. However, the emergence of mobile technologies and the use of mobile solutions within businessrelationships is a less well studied area. Thus, the purpose of this research is to show how mobile solutions can be deployed within industrial buyer-supplier relationships to enhance processes, coordination and overall value creation.Design/methodology/approach – The empirical part of the research presents an in-depth case study in the context of the steel industry.Findings – It is shown that mobile technology usage has a central role in key business relationships to improve internal and inter-organizationalcoordination. Mobile technology usage grid was conceptualized from the literature to categorize the possible impacts of mobile technology deploymenton coordination.Practical implications – As a practical result, this research shows that a wi-fi infrastructure based system that uses handheld devices like PDAs can be
used to shorten and cut costs of internal and interfacing processes between buyer and supplier. In practice, the steel hardness test report measurementsand transmissions from one organization to another are made more effective.Research limitations/implications – The limitation of the research is the use of only one case study and the resulting lack of generalizable results.Future studies could include case studies in other contexts, and later a quantitative study could be conducted to validate and broaden the findings.Originality/value – The paper presents how mobile technology is used in a business relationship and what kind of impacts the usage has on therelationship. The paper contributes to the evolving bonding discussion in business relationships as well as indicates ways to use mobile technologyeffectively in a business relationship.
Keywords Buyer-seller relationships, Information technology, Mobile technology, Bonds, Steel industry, Mobile communication systems,Communication technologies
Paper type Case study
Introduction
Business relationships or buyer-supplier relationships have
been studied intensively (Sheth et al., 1988, Wilkinson, 2001,
Ritter and Gemunden, 2003). Nevertheless, the current
literature has been criticized for the lack of focus on
information technology (IT) usage in business marketing
(Reid and Plank, 2000; Sheth, 2007). As managers have
started to employ a wide variety of IT based solutions using
the internet as platform for commerce and coordination (e.g.
I-EDI, extranet, electronic marketplaces, ERP), scholars also
have realized the need to focus on the IT deployment within
relationships (Ryssel et al., 2004; Salo, 2006; Tong et al.,
2008). There is a growing body of research that focuses on
different types of technologies, such as electronic data
interchange (EDI) (Naude et al., 2000), internet based EDI(Angeles, 2000), electronic marketplaces (Hartmann, 2002;
Jap, 2002) extranets (Vlosky et al., 2000), radio frequency
identification (RFID) technology (Yang and Jar venpaa,
2005), and their influence on business relationships. It is
rightfully acknowledged that some research exists thatponders the adoption of mobile technology and its impacts
on business (Kadyte, 2005). Still, the impacts of mobile
technologies on buyer-seller relationships remain under-
researched even though it is a nascent field of scientific
inquiry (Salo, 2007). In this research we focus on the usage
and the impacts of it on business relationships. Specifically,
the way we deploy IT should be the focus area instead of
adoption as only new ways of IT usage create competitive
advantage (Mata et a l., 1995). Besides the industrial
marketing literature, the electronic commerce literature has
also noted the lack of academic research on business usage of
mobile technology (Okazaki, 2005, Scornavacca et al., 2005).
By combining these indications for further research from
marketing and electronic commerce perspectives, it can beargued that there is a clear call for research in this area.
Hence, the author aims to bridge some aspects of the
identified research gap. Theoretically, the research gap is filled
by using bonding discussion within buyer-seller relationships
(Johanson and Mattsson, 1987; Liljander and Strandvik,
1995; Buttle et al., 2002; Wendelin, 2004) to illustrate how
mobile technologies create a unique sub-bond to business
relationships. This illustration is based on a case study. The
paper is organized as follows: first, an overview of the bonding
in industrial marketing is presented. After that, mobile
business solutions are discussed to illustrate the importance of
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studying the deployment and impacts of mobile solutions.
The author then provides a discussion of methodology and
illustrates the changes brought by mobile solutions to the
order-delivery process of the studied relationship between
Mill and Supplier (fictional names). Finally, the theoretical
and managerial implications are presented, along with
limitations and future research areas.
Business relationships and bonding
There are numerous research traditions with different and yet
overlapping viewpoints or ways to conceptualize business
relationships, i.e. inter-organizational relationships (Sheth
et al., 1988). These schools of thought provide insights
through a frame of reference that is aimed at illustrating some
aspects whilst intentionally or unintentionally neglecting
others (Moller, 1994). Business relationships are also
likened to channel relationships (Stern and Reve, 1980) and
buyer-seller relationships (Ford, 1980). However, the
approaches mentioned above have different underlying
metatheoretical orientations, established methods (Moller,
1994), and sometimes even different “preferable” publication
outlets. From the approaches identified this paper focuses on
buyer-supplier relationships (inter-organizational
relationships) and aims to contribute to the already existing
research. Within business relationships there are sub-
approaches, and even within the interaction approach sub-
approaches can be identified (Hakansson and Snehota, 1995;
Moller and Wilson, 1995). Many of these approaches have
their roots in Hakansson (1982). In this study, different views
of interaction approaches are seen to complement each other
and are used in parallel.
Within the business relationship discussion special attention
is given to bonds and their understanding. A bond is a
building block of a relationship that is created through
interaction between business parties. Identification of a social
bond was the starting point of studies focusing on bonding(McCall, 1970; Turner, 1970).The current academic
literature has identified 11 different types of bonds that are
pertinent in business relationships (Johanson and Mattsson,
1987; Holmlund and Kock, 1995; Buttle et al., 2002;
Wendelin, 2004). These bonds are technical, time,
knowledge, legal, economic, geographic, social, cultural,
ideological, strategic and psychological. All of these bonds
have an important role in the coordination of value creation in
industrial markets. This study illustrates the technological,
ideological and social bonds that play a crucial role when
business parties are interacting.
Usually, technical bonds refer to the connection in
manufacturing processes (Wendelin, 2004). An exception to
this view is provided by Perry et al. (2002) while pinpointing
the possibilities of creating connections in communication
processes through technologies. More specifically, if company
A produces mobile phones and company B is a supplier of its
components, it is usually the case that over time company A
and B create interfacing processes in which, for example,
R&D teams meet to plan how new products can be produced
in the most effective way. Hence, it might be the case that
company B adjusts its production so that it is more suitable to
company A. Moreover, company B might even buy some
machinery that is needed specifically to deliver the new sub-
assembly to company A. This type of adaptation and mutual
planning of the manufacturing process within a business
relationship can be seen as one type of technical bonding that
has a central function in the development of business
relationships.
Ideological bonds can be created between, for example, the
Body Shop and its suppliers, since the Body Shop is a well-
known ethical producer of skin and body care solutions.
Therefore, suppliers are willingly producing raw materials
that are ethically produced, but they are also forced toproduce these products as the Body Shop needs pure and
even organic products.
To continue with bonds, social bonds were identified as the
starting point of studies focusing on bonding (McCall, 1970;
Turner, 1970). In business exchanges, before a business
relationship is created, there are many distances between two
interacting companies. Johanson and Wiedersheim-Paul
(1975) identified social, cultural, technological, and time-
related distances. For example, social distance measures the
extent to which the actors are unfamiliar with each other’s
ways of thinking and working. In the interaction process,
social exchange plays an important role in reducing the
uncertainties or distances between the two parties
(Hakansson and Ostberg, 1975). The exchange episodes
slowly lock two companies together and involve the exchange
of emotions, feelings, and other social elements that form
social bonds between business actors (Hakansson, 1982).
Therefore, social bonds are formed between people when they
interact with each other and different work groups.
Relationships are based largely on the gradual accumulation
of trust and seldom on formal, legal agreements between the
parties. Social bonds between individuals are formed through
social exchange and ultimately after enough mutual
adjustment and time has elapsed, trusting relationships
emerge. How trust and commitment are built as part of
social exchange has been discussed vividly in different
marketing- and management-related works (Coleman, 1990:
Sako, 1992; Morgan and Hunt, 1994; Narayandas and
Rangan, 2004). Similar examples can be given for each of thebonds identified (Johanson and Mattsson, 1987; Holmlund
and Kock, 1995; Buttle et al., 2002, Wendelin, 2004).
Thus, it is evident that different types of bonds lock and
constrain but also give birth to new opportunities in business
relationships, and that bonding behavior is an important
study area. In brief, bonding can have two opposing impacts
depending on the context. First, it can have a positive impact
on a business relationship as it may enhance interfacing
processes. This is the case in the Mill-Supplier business
relationship with the adopted mobile system. The bond
created enabled faster and more accurate communication and
coordination in the buyer-seller relationship.
Second, bonding can have a negative impact, as it may
hinder cooperation with other parties. This can happen if a
supplier has intensive bonding with directly competing
companies without their consent and then cause termination
of contracts in the worst-case scenario. Also, in the contract
based software development business for mobile phone
manufacturers, this may be the case as there are only a
couple of companies capable of developing mobile-phone
specific software. Different types of conflicts of interests are
common in these cases.
When a business relationship is sliced into logical and
manageable pieces in a theoretical sense, the authors often
talk about acts, events, and episodes that form a business
relationship (Holmlund, 2004; Olkkonen et al ., 2000;
The role of mobile technology in a buyer-supplier relationship
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Tikkanen et al., 2000). An episode involves an exchange
between two parties (Hakansson, 1982). An illustration of
short-term elements of a business relationship is depicted in
Figure 1.
Outlined in Figure 1 is the interaction that occurs in the
form of acts and episodes within a business relationship.
Moreover, an act can be a phone call while multiple calls and
meetings may form an episode (e.g. time elapsed betweeninitial sales call and closing). Figure 1 describes the short-
term interaction occurring within business relationships. A
business relationship refers here to a relationship where
business interactions have continued for several years (Arndt,
1979). In this time span, this interaction has created different
types and degrees of bonding to the relationship. However,
there is a problem related to dividing the business relationship
into different action sequences (Halinen and Tornroos, 1995).
Therefore, it is acknowledged that it is difficult to differentiate
when one episode ends and a new one begins. In this paper,
there has been an attempt to identify crucial acts and episodes
in the studied relationship by first considering the totality of
the business relationship. Subsequently, the study aims at
recognizing crucial episodes based on available material (e.g.
interview transcripts and newspaper articles). Based on that,
understanding impacts of mobile technology adoption and
deployment on business relationships and bonding are
evaluated and reported in the case study.
Mobile business solutions
Today, we live in mobile economy in which mobility no longer
limits our lifestyle or the productivity of managers and
employees. Mobile and wireless communication devices and
systems are commonplace in everyday life (Balasubramanian
et al., 2002).
Mobile business has been studied for a decade now
(Okazaki, 2005; Scornavacca e t al ., 2 00 5) and many
conceptual papers exist that address the general businesslogic (Dholakia and Dholakia, 2003), describe applications
employed (Balasubramanian et al., 2002; Varshney and
Vetter, 2001), and discuss suitable business models of
mobile commerce (Lee, 2001; Yuan and Zhang, 2003).
Mobile commerce is often approached from the consumer’s
perspective, and these studies have focused on the acceptance
of mobile services like text messaging, gaming, mobile
payment (Nysveen et al., 2005; Muntermann, 2005) and
the adoption and usage of mobile commerce in general
(Harris et al., 2005).
Slowly, businesses are using mobile technologies like
Blackberries and personal digital assistants (PDAs) to re-
engineer and speed up internal and connecting business
processes like order taking and after sales automation. This is
possible as employees and strategic partners can be now
connected to back-end applications needed to finalize
purchases or sales. Also many software providers (Oracle
and SAP among others) have developed their SCM, ERP andCRM systems to enable mobile connectivity. In addition to
being more convenient, this saves sales time and eliminates
extra traveling and sales costs as well as other general
administrative work. Wireless and mobility is no longer a
novelty; it has become central to various businesses, especially
in the service sector (Nysveen et al., 2005).
Moreover, m anagers can employ various m obile
technologies and devices that enable e-mails, placing orders,
and logging onto company networks from the road (Aungst
and Wilson, 2005). Today, most of the mobile devices can be
connected to the internet, and only if a manager assumes that
connection is not secured is access denied by the mobile
device. The underlying industry of these devices and systems
has undergone rapid changes in applied mobile technologies
and changes are still to come as faster and more convenient
(e.g. 4G) technologies are emerging. Furthermore, a future
area of mobile technology that needs constant pondering by
academics and managers alike is the question of connections
between mobile devices using, for example, Bluetooth and
other short-range wireless transmission to conduct mobile
business operations (e.g. sales data transmissions) as there are
security issues that need to be addressed (Stender and Ritz,
2006).
Specifically, in a business context mobile technology can be
deployed internally or inter-organizationally. Within an
organization mobile business can be used to enhance, for
example, selling activities in the form of sales force
automation (SFA) (Aungst and Wilson, 2005). Inter-
organizationally, it can be used to mobilize customerrelationship management (Sinisalo e t al ., 2007). In a
technological sense, mobile business can be initiated locally
and globally with the help of a wireless local area network
(WLAN or wi-fi) and smart devices (such as PDAs, hybrid
phones, Blackberries). It has also been observed that IT has
different impacts on firm and business partner information
coordination, both internally and inter-organizationally (Kim
et al., 2005).
Figure 2 depicts a mobile technology deployment grid that
shows the impacts of employed mobile technology to internal
Figure 1 Acts and episodes as constituting elements of relationships
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and inter-organizational (inter-firm) coordination between
business partners.
Cell 1 of Figure 2 presents a situation in which the internal
coordination impact of the mobile technology employed is
high but the inter-organizational coordination impact is low.
In this case, mobile technology may be specifically tailored to
solve internal coordination problems. For example, some
companies in the wood processing industry, especially in log-
house construction, use RFID in the manufacturing process
to tag logs in order to specify their places in ready-built log-
houses. This saves time and money when a company knows
what is being built, and two houses can even be built at the
same time with help of this system. Also, the amount of wood
waste decreases as the log is used to its full extent in the
optimized process. It is noted that RFID can also be used
inter-organizationally, but this is not always the case. Cell 2 in
F igure 2 presents a situation in w hich the internal
coordination impact of employed technology is again high,
and also the inter-organizational coordination impact is high.
In this cell, the mobile technology is tailored to the needs of the both interacting organizations. For example, the mobile
extension of ERP can be connected to both buyers and
suppliers in order to show, for example, SKU data. This
requires a high level of information coordination and
extensive IT resources. Also, the inter-organizational usage
of RFID mentioned above suits this cell. Cell 3 in Figure 2
presents a situation in which the internal coordination impact
of the technology employed is low, and also the inter-
organizational coordination impact is low. Basically this
means that company has not invested in mobile technology or
mobile technology is used on an on-demand basis, by leasing
from a specific software house. Cell 4 in Figure 2 presents a
situation in which the internal coordination impact of the
technology employed is low, and the inter-organizational
coordination impact is high. In this cell, mobile technology is
aimed at inter-organizational coordination. Some basic point-
to-point connections or ad hoc connections fall into this
category (Stender and Ritz, 2006). Sales for automation
applications or other field service applications can be used in
this manner. For example, a number of insurance companies
and their agents, as well as some employees, use mobile
technology to take a picture of a damaged vehicle and start
the claims process on site. Also, evaluations of the cost of the
damage can be started early on. This makes the process
effective and smoother for the client of the insurance
company.
Cells 2 and 4 in Figure present cases where mobile
technology is deployed inter-organizationally. In Cell 2,
mobile-technology based bond strength is high, as both
internal and inter-organizational coordination are enhanced
considerably. In Cell 4, the internal coordination impact is
weaker, which suggests a partially weaker bond between the
buyer and the seller. For key business relationships (i.e. the
most important alliances) in which commitment and trust iscreated over a long-term exchange relationship, it may be best
to create cell two types of mobile bonds, since most benefit is
derived from both high internal and inter-organizational
coordination. For second-tier relationships in which
occasional re-engineering and cost reduction is needed, Cell
4 types of bonds may be created. As suggested earlier, the
mobile business has been studied during recent years mainly
from the consumer’s point of view. How firms – and
especially industrial companies – use mobile technology is a
rarely studied area according to the literature reviews
(Okazaki, 2005; Scornavacca et al., 2005). Based on this, it
is essential to examine how mobile systems can be deployed to
enhance the business processes, e.g. order-delivery processes,
in a business relationship.
Methodology
The methodological choices in this study are guided by the
basic aim of expanding the existing knowledge on buyer-seller
relationships. More specifically, we want to understand how
mobile technology may be used to enhance ineffective
relationships. This goal requires a case study method (Yin,
1989). A case study is applicable to situations in which
researchers require deeper understanding, a solid contextual
sense, and provocation toward theory building (Bonoma,
1985). With the use of the case study method, it is possible to
receive detailed and rich information from one focal
phenomenon (Yin, 1989; Woodside and Wilson, 2003). In
fact, case studies may have more influence on marketingmanagers than surveys (Johnston et al., 1999). The business
relationship that is studied is formed between two companies
interacting. That is to say, both parties of interaction are
studied instead of one. The perspective of both parties of the
business relationship needs to be studied to be sure of the
value of the findings (John and Reve, 1982). The particular
relationships in this study were chosen because the companies
have intensively adopted IT, and a mobile solution was
acquired.
The data was collected by employing several data collection
techniques. These included public and corporate archival
research, participative observation and several in-depth
interviews with semi-structured interview questions. These
methods allowed the researcher to get as close to the subject
as possible, which enabled an understanding of the
individuals, events, and actions (Pihlanto, 1994) that
formed the content, context, and processes of the business
relationship under investigation.
In more general terms, data was collected by interviewing
key members of the relationship. Altogether 11 interviews (six
in Mill, five in Supplier) were conducted in multiple
hierarchical levels to ensure data validity (see Table I for
details).
The interviews were personal interviews and were taped
with permission. All interviews lasted from one hour to a
maximum of two and half hours and were transcribed and
Figure 2 Impacts of mobile technology on the coordination in thebuyer-seller relationship
The role of mobile technology in a buyer-supplier relationship
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analyzed. Qualitative data analysis was employed to focus the
material into different themes (Miles and Huberman, 1984).
Ensuring the validity of case studies is not straightforward.Different sources of information were used, including
documents, minutes of meetings, industry reports, and plant
visits to triangulate the respondents’ answers in order to
validate the research results (Yin, 1989) and increase the
validity of the research (Eisenhardt, 1989). In practice, data
triangulation was favored as opposed to other triangulation
methods (Patton, 1987) between the numerous information
sources mentioned above to validate observations and
interpretations. The identities of the case study companies
or the informants are not revealed in the study for
confidentiality reasons.
Mobile technology usage in the Mill-Supplier
relationship
Background
The steel processing industry was chosen as the empirical
context since computerization has had a long tradition in the
industry and new technologies have a central role in the steel
industry (Chaffey, 2004, p. 15). Moreover, business
relationships in the steel or steel processing industry are
seldom examined from a business relationship and bonding
perspective. The exception to this is research conducted by
Johanson (1966). However, bonding perspective is not
employed. To elaborate further, the steel industry relies on
existing business relationships between parties as an exchange
model. Long-term business relationships between workshops,
mills, and steel wholesalers create the stability needed for steel
processing (Hamalainen, 2003). It is acknowledged that there
are studies that focus on some influences of IT in the steel
industry context (Fuller-Love and Cooper, 1994; Chan and
Swatman, 2000). However, research on the usage of mobile
solutions in the steel industry context is scarce. Based on this,
it can be argued that the steel business context is that is worth
studying, especially when companies are employing new
mobile solutions to enhance their business. To be more
precise, the narrow context of the studied business
relationship is the steel processing, for example, the
hardening and marketing of steel plates and components.
The bonding conceptualization developed was combined with
the mobile business discussion, as the basic assumption was
that a new bond or sub-bond in the business relationship
could be identified.
Early years of the Mill-Supplier relationship
The business relationship between Mill and Supplier is six
years old. Mill is a relatively large steel mill operating in
Europe, while Supplier is a subsidiary of Alpha, which is a
large Finnish steel workshop focusing on heavy steel objects
and welding competencies. Supplier provides hardening
services to Mill. A fter individual steel plates and
components are hardened, they are further processed by
Mill and then sold to their customers as part of their steel
solutions. These solutions can vary from part of an oil rig to
steel plates manufactured for military use in mine clearance
vehicles.
The Mill-Supplier business relationship is based on and hasdeveloped from an earlier 40-year old business relationship
that still exists between Mill and Alpha. Before the
establishment of Supplier, there were several negotiations
between Mill and Alpha in which they were planning the
hardening of steel plates. It was in early 2000 when Supplier
was established to serve Mill’s needs in the hardening steel
qualities from 5 mm up to 60 mm. At first, most of Supplier’s
production were sold to Mill, but today sales are equally
divided over a large customer base. This study will focus on
the interfacing processes between Mill and Supplier, and
there is an attempt to identify the changes made in the
processes that enabled both parties to work more efficiently
and effectively.
When the business relationship between Mill and Supplier
was initiated, the process from order to delivery was
conducted in the traditional means, manually by sales
assistants. First, orders arrived at Supplier by fax machine
or by phone. Orders, order confirmations and other
docum entation w ere handled m anually and order
specifications were input into the hardening machines. The
production employee provided verbal notification of the new
order to the manufacturing manager. The pricing process was
manual, along with sending the bill. All the documents were
delivered to the financial department for billing purposes, and
those were of course written on a paper and delivered
manually. Additionally, the scheduling of transportation of
Table I Interview data
Type of contact Date, duration of interview and transcribed pages
Mill
Purchasing Manager Telephone calls, e-mail correspondence, and interview November 24, 2003, 1 hour 40 minutes, 17 pages
IT Manager 1 Telephone calls and interview March 15, 2004, 1 hour 30 minutes, 25 pages
IT Manager 2 Telephone calls, e-mail correspondence, and interview March 24, 2004, 1 hour 45 minutes, 18 pages
Technology Advisor Telephone calls, e-mail correspondence, interview, and plant tour March 17, 2004, 1 hour, 45 minutes, 21 pagesProduction Planner Telephone calls and interview March 17, 2004, 1 hour 59 minutes, 30 pages
Product Manager Telephone calls and interview March 17, 2004, 1 hour 59 minutes, 30 pages
Supplier
CEO Telephone calls, e-mail correspondence, plant visit, and interview November 17, 2003, 2 hours 10 minutes, 37 pages
Production Manager Interview and plant tour November 17, 2003, 1 hour 30 minutes, 13 pages
CIO Telephone calls and interview November 18, 2003, 1 hour 45 minutes, 23 pages
Production specialist Interview and plant tour November, 17, 2003, 1 hour 10 minutes, 13 pages
CFO Telephone call and interview November 18, 2003, 1 hour 55 minutes, 20 pages
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steel plates from Mill’s factory to Supplier’s facilities and back
was done by phone or fax. The order to delivery process is
one of the key processes within a relationship, and is depicted
in Figure 3.
As Figure 3 illustrated, the order to delivery process was,
extremely laborious at the beginning of the relationship, with
multiple manual phases in which room for error existed and
there were many possible information gaps. Thus, it tookdays, which turned into weeks, to deliver hardened products
and solutions. Moreover, it was difficult to estimate whether
Supplier could harden more steels for other customers and
whether Mill would place an additional order if Supplier had
free capacity. This is one of the pain points identified in the
relationship. Consequently, Supplier could not guarantee
delivery dates. After these problems and inefficiencies were
identified by the managers of Supplier and Mill, these issues
were addressed with a sequential development program
including several internal meetings and workshops. As a
result, many of the difficulties were solved over the years.
Usage of information technologies in the Mill-Supplier
relationship
There were several steps that were taken to ensure theefficiency and effectiveness of activities in the relationship.
The first step of reorganizing the ordering activities took place
when Mill’s existing first-generation enterprise resource
planning (ERP1) system and secured internet connection
were used to transmit orders. Orders were carried out by the
manager of subcontracting with ERP while the internet-based
secure connection assisted in delivering information from Mill
to Supplier. Before this could be possible, Supplier had to
adopt a small-scale ERP1 system that would transform paper
to bits. This adoption of new technology and adaptation made
by Supplier also gave a sign to Mill that they were willing to
help in every way possible to make the business relationship
even more profitable. Similarly, Mill indicated to Supplier
through increasing orders that the relationship was worth
continuing. After an order arrived at Supplier’s ERP system it
informed production employees via e-mail of the new order. A
similar e-mail was received by Supplier’s production manager.
During the next phase, at the end of 2004, Supplier adapted
to a new pricing module for ERP along with changes to
pricing policies. Based on this change, products that already
had early based prices are now priced and checkedautomatically. When an order arrived that contained
products that were non-standardized, the order e-mail was
sent to the production manager who, depending on the order
size, solely or together with the CEO defined and input the
price information required.
It is acknowledged that these types of information
technology adaptations were not easy. However, in this case
it was easier than in other cases, as Mill has a long history of
developing information technology in the steel business. They
even had a large IT department until the late 1990s, when it
was outsourced to a large IT company. Also, Supplier had
some elementary IT skills but also used a local IT developer
w hoc developed their IT skills and knowledge in a
relationship with the Mill.
Mobile technology adoption and deployment in the
Mill-Supplier relationship
The most recent and advanced technological addition to the
business relationship is the mobile system. The main idea is to
use the mobile system to speed up inventory control, test-
report transmissions and other non-routine communications.
In a technological sense, the system is based on wi-fi
infrastructure and employs handheld computers such as
PDAs as wireless devices. The system employed was acquired
from a local mobile system developer that had earlier provided
some IT systems for Supplier and Mill. Basically, the mobile
solution renders manual and paper-based strength measuring
and reporting of results obsolete. This solution transforms
Figure 3 Order of the delivery process at the beginning of the relationship (Salo, 2007)
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reporting into a digital form that is easier to process for both
parties of the relationship. Before this new system was
adopted, reports were first carried out by writing required the
steel strength information down on a form, inputting this
information to a system, printing the report and then sending
it to Mill’s administration by post, where it was then filed.
This took a considerable amount of time and caused both
internal and inter-organizational information coordinationfailures.
Now the mobile system enables information to be input
directly into a PDA which updates Supplier’s ERP system and
provides, for example, e-mail notifications to Mill about the
new reports, which are essential for the documentation of the
steel solutions delivered to customers. Furthermore, Mill can
now receive information about Supplier’s hardening capacity,
which is crucial for generating new sales. In the past, a
hardening capacity check was manual and the information
received by Mill’s sales department was usually too outdated
to be relied upon, and thus information needed to be re-
checked. This caused delays in the production and
information flow, and caused a loss in sales. Currently,
Mill’s employees, with access codes to Supplier’s system, cannow obtain information from the real-time database updated
by Supplier’s employees and the mobile system. Figure 4
depicts the order-to-delivery process after implementing the
mobile solutions.
As mobile technology is integrated to the internal systems of
both companies it enables wider inter-organizational
coordination. Thus, strong technology-based bonds are
created that are here referred to and categorized as
technology sub-bonds, labeled a mobile bond. In other
words, it is created by the mobile IT solution employed,
which tightens the relationship and creates exit and
investment barriers for the parties to the relationship.
To summarize, each party of the business relationship made
changes to their existing procedures and routines by making
the information gaps smaller and even forcing them to close.
These adaptations were relationship-specific to a great extent.
Internal coordination within Supplier was been altered
considerably, and it is currently handled in a timely manner
and more effectively. Mill has been a forerunner in IT
deployment for long time but still, opening up internal IT
systems for this type of inter-organizational coordination is a
laborious task. Both parties handled internal coordination
well; inter-organizational efforts to coordinate IT and mobile
technology were very fruitful. Mobile technology usage is the
latest addition to this relationship. Of course, this would have
not been possible without the warm and trustful relationship
between the parties. Most importantly, the adoption of the
internet and mobile technologies has made the business
relationship more effective and efficient (“doing the rightthings” and “doing things right”). It is evident that this
transform ation has not been cheap and easy. B oth
organizations have learned considerably and Supplier has
acquired a lot of information technology. Moreover, both Mill
and Supplier have gained directly from the implementation
and usage of information technology. Mill is now more
responsive to end customer needs and Supplier is more
transparent to Mill and can fill an increasing amount of orders
more quickly. Supplier has already announced it they will
invest in extra capacity to be able to fill orders in the near
future.
Discussion and research implications
As discussed earlier, technology bonds may emerge naturally
in a business relationship or they can be created through the
intentional development and management of technological
bonds. Here, it is visible that besides traditional technological
bonds based on manufacturing, new ones have emerged that
are based on mobile technology. Therefore, it is suggested
here that adaptations made to business relationships to
accommodate changes brought by new mobile business
solutions create a new sub-bond type labeled a mobile bond.
This bond can be seen as an extension of the technology bond
concept. The bond formed in the case in this study is best
presented in the Cell 2 in the mobile technology grid
(Figure 2). Hence, internal coordination and inter-
organizational coordination is improved to a great extent by
the deployment of mobile technology. New ways of using
mobile technology will, for the time being, improve the
competitive advantage of a relationship even though
sustainability is not guaranteed. These sub-bonds of
technology bonds can also be discussed as the 12th type of
bond under labels like digital or information-technology
based bonds. It is acknowledged that strong bonds like thosepresented in Cell 2 are only recommended for key or first-tier
relationships, as the bond is costly to establish and also to exit.
The paper has closed, to some extent, the research gap by
showing how mobile technology influences bonding inbusiness relationships. This study illustrated how mobile
technology adoption and usage creates bonds in therelationships. Future research could elaborate, for example,
on case studies of how mobile bonds are created in othercontexts in order to detail the other cells presented in the
mobile technology usage grid. Research is also needed to
understand under what conditions and why bonds appear inIT usage, and how these bonds are different from other
bonds. More importantly, how these bonds impact onbusiness relationships and networks is of crucial interest to
both managers and academics. Other contexts such as thewood and paper and chemical processing industries, which
also use also mobile solutions to improve coordination at
many levels, could also be studied.
Managerially, this study has opened up a discussion of the
possible usage of mobile technology to improve relationships.
The case illustrates how a wi-fi based system was used
effectively to cut costs and streamline the order-delivery
process as well as the interfacing parts of that process. On the
one hand, with the help of the system deployed, Mill was able
to sell more steel solutions to its customers as hardened steel
solutions play a pertinent role in its total offering. On the
other hand, Supplier was able to treble its sales to Mill with
the mobile technology employed. One thing to remember is
this: it is not a question of how much IT we have in a
company – i.e. how much we invest in IT – but the quality of
IT and how we use it that that creates competitive advantage.
For managers interested in mobile solutions and how to
proceed with these ideas, a good reference point is an articleby Aungst and Wilson (2005), who suggest 11 issues that
should be covered when planning to adopt and use mobile
solutions. The five most important are:
1 the coverage (wi-fi or longer distance);
2 the mobile device platform;
3 the upgrade path;
4 the mobile application; and
5 issues with integration.
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Mobile systems such as m-ERP, mobile supply chain
management and wi-fi based internal system provide
innovative tools to create leaner and meaner machines of
any organization that has the wisdom to grasp and hold onto
mobile systems that create the mobile future. Of course not all
problems require a mobile system, but mangers ought to
understand and, more importantly, recognize their problems
and ponder whether mobile systems might provide a solution
to their problems. The main limitation of this research is theexploratory and qualitative nature of the study. The second
limitation is that only one business relationship in the steel
industry context was studied.
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About the author
Jari Salo is a Professor of Marketing at Oulu Business School.
He holds a DSc (Economics & Business Administration)
degree from the University of Oulu. Before joining the faculty
he worked as a manager in the clothing and retailing industry.
He is Adjunct Professor at the Aalto School of Economics
(formerly Helsinki School of Economics). Jari Salo has over
100 publications, some in journals such as Industrial
Marketi ng Management , Computers in Human Behavior ,
Journal of Business & Industrial Marketing and Business
Process Management Journal . He holds several editorial
positions and he is also the Editor in Chief of Journal of Digital Marketing . As well as his academic activities, Professor
Salo has several expert positions in Finnish companies and he
is also the head of the board of the consulting company
Intercircum, which specializes in digital business and
marketing solutions for leading companies. Jari Salo can be
contacted at: [email protected]
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