The Analysis of an E-Commerce Model for Logistic Industry BIN Hou Traffic and Transportation Department , Central South University of Forestry & Technology, Changsha ,P.R.China, 410000 [email protected] Abstract: The widespread use of the World Wide Web (WWW) in recent years has greatly facilitated the development of the e-commerce, which in turn affects the traditional business model and causes profound changes in the business world. The current article develops a framework for an e-commerce model of logistics enterprises. The model includes e-marketplaces, logistics, informational system and organization analysis factors. Data used for research comes from a survey of small and medium logistics enterprises, including the distribution center, processing, warehousing, packaging and information service provider companies. Our study reveals relationships of essential variables for e-commerce in the logistics industry. These include transportation, inventory, delivery, product, buyer, market, information system and organization analysis. SPSS is used for data analysis, including the analysis of reliability, multiple regression and factor analysis. Keywords: Logistics, e-Commerce, Reliability Analysis, Multiple Regression

1 Introduction Electronic commerce can support most of the processes involving in the purchasing of physical goods and services. The effective connection of the virtual e-trading and the real merchandise delivery is a key factor in the rapid success of e-commerce. E-marketplace trading has become an important territory on the logistic industry to explore[1]. The logistic industry in Hunan province is still in the beginning stages with respect to e-market trading. How to effectively establish conditions, conduct analysis, and investigate other concerns which is related to logistic models of successful e-market trading has become an urgent issue for Hunan’s future e-commerce. This study explores relationships of e-marketplace, logistic, organization, and information systems. Based on the results of a questionnaire survey from various logistics companies in Hunan province, including distribution center, processing, warehousing, transportation, packaging and information service providers. We propose an e-business model to simulate the relationship among essential factors for the logistic industry in Hunan province.

2 Methods The preliminary e-Commerce model we developed for the logistic industry is shown in figure 1. The dimensions of this model as described in figure 1 include e-marketplace, distribution, organization analysis, and information systems. We analyzed the influence effectiveness and magnitude from each of the above factors on the e-Commerce logistic model.

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Dimensions of e-marketplaces Product Complexity of product Characteristic of product Product customization Product value

Supplier Capability of supplier Supplier s collaboration with company

Buyer Buyer population Buyer s cost of access Purchase criteria

’

’

Dimensions of Information System

Market Domain for emarketplace Market variability

Dimensions of Organization Analysis

Interface and communication devices Databases System architecture

Organizational culture

e Commerce Logistics Model

Organizational structure

Human resource

Dimensions of Logistics

Transportation

Storage

Loading & Unloading

Packaging

Delivery

Processing

Figure 1. An e-Commerce model for the Logistic Industry 2.1 Dimensions of e-Marketplaces This dimension provides supporting services for one to multiple, or multiple to multiple, trading activities in order to reduce cost and improve operational efficiency. The sub-dimensions in this area include: (1) Product
Complexity of product is based on the pricing and capital specialty to determine the probability of logistics in e-marketplaces.
Characteristic of product is a set of factors that are important for buyers to use the e-commerce for a special product.
Product customization adjusts the method of delivery service for different products to improve delivery efficiency.
Product value depends on development, creativity, and post-sale service[2]. (2) Supplier
In today’s world which rapid technological developments, supplier’s capability is influenced by company’s manufacturer production ability and user’s demand level.
With the help of e-marketplace, the suppliers are carrying out business collaboration with many companies. (3) Buyer 151




(4)

Buyer population is influenced by the fact that higher transaction and communication costs generate a higher demand for the use of e- marketplaces.
Buyer’s cost of access is defined by the cost of searching for information with regard to sellers and products[3].
Purchase criteria includes all factors of selecting sellers that may affect a buyer’s profit [4]. Market
Domain for e- marketplace is the domain for buyers and sellers to realize the cooperation, transactions, and the information exchange.
Market variability reveals the difficulties of both buyer and seller in accessing information.

2.2 Dimensions of Logistics (1) Transportation
Transportation procedure manages freight movement and the transportation cost.
Transportation management uses information technology to provide up-to-date information on goods movement. (2) Storage
Storage procedure manages the product through inventory checking and the use of inventory space for inventory control.
Storage management uses information technology to provide up-to-date information to reduce the inventory level.
In-coming product management manages all activities and uses information technology to exam the in-coming products for necessary processing[5]. (3) Loading & Unloading
Loading & unloading procedure manages all activities including loading and unloading for goods or facilities.
Loading & unloading management uses information technology to provide up-to-date information for goods movement. (4) Packaging
Packaging procedure manages goods outer packaging and inner packaging.
The regulations of goods packaging is different in each country.
Packaging management uses information technology to provide up-to-date information for the goods packaging. (5) Delivery
Out-going product management manages all activities, and uses information technology to exam products for out-going readiness, and moves products towards the out-going ready zone.
Delivery procedure involves all activities related to processing orders through the e-marketplace and the delivery of products from manufacturers or producers to the customers. (6) Processing
For the purpose of recovering the weakness of goods production, processing procedure should manage the following activities: marking, packaging, assembling, etc.
Processing management uses information technology to provide up-to-date information for the goods processing. 2.3 Dimensions of Organization Analysis (1) Organizational culture Organizational culture is a common belief in an organization that affects its employees’ behavior at work. It is viewed as a group behavior with consensus and understanding that brings together group resources towards a constructive organization goal[6]. (2) Organizational structure Organizational structure is described as a combination of work division and cooperation within

152

(3)

an organization in spiritual or physical deployment. It is defined as a special relationship among inter-related groups that share common goals[7]. Human resources Human resources emphasize arranging the activities of an organization in order to achieve its goal. It includes a series of management activities within an organization including recruitment, training, career development, and career planning [8].

2.4 Dimensions of Information System Kalakota and Robinson (2002) defined an information system as inter-organizational information sharing. Davenport et al. (1996) and O’Brien (2002) described the information system as a system that uses information and communication technology to perform inter-organization operations. It combines necessary resources by using employees and communication networks to collect, exchange, and distribute information[9]. Advantages of information system operations which are reported in the literature can improve the information exchange and the development of e-marketplace. Sub-dimensions in this area include:
Interface and communication devices, such as e-mail, electronic data interchange(EDI), groupware collaborations, and location tracking tolls.
Databases, for example, legacy databases, relational databases, object databases, datamarts, groupware databases, and data warehouses locating at various systems are owned by different trading partners.
System architecture. The design of information technology architecture should align well with the business vision and process, and should consider people and technology issues.

3 Results and Discussion In 2007, a questionnaire survey was conducted for logistic companies which were located in Hunan province with 86 respondents. Among these, 31 companies were not active in e-business trading, thus were excluded from the study. The breakdown of the remaining 55 companies in terms of their businesses category and associated market share is listed in Table 1. Table 1. Number of Companies Surveyed and Associated Market Shares. Market share in Hunan Business Category Companies Surveyed(Percentage) Within the Category Distribution center 9 (16.4%) 79.8% Processing 7 (12.7%) 36.9% Warehousing 13 (23.6%) 59.6% Transportation 17 (30.9%) 81.3% Packaging 6 (10.9%) 48.7% Information service 3 (5.5%) 75.5% provider

SPSS was used for data analysis, including the analysis of reliability, multiple regression and factor analysis. 3.1 Reliability Analysis Reliability measures the exactness and accountability of the data collected. In order to reach a reasonable level of reliability, it is commonly believed that the standard reliability value of Cronbach’s should be at least more than 0.5, or more than 0.7, for high reliability standard[10]. Cronbach’s value for reliability of each dimension in our logistic model is reported in table 2. The overall reliability of the questionnaires collected in this research is 0.8326. Except the Cronbach’s values for product (0.7517) and organization analysis (0.7413), the rest of the measurements are at least more than 0.8 which indicates the existence of the internal consistency.

α

α

153

α

Table 2. Cronbach’s Dimension Market Transportation Inventory Product Delivery Buyer Information system Organization analysis e-Business Model

α value for Reliability Analysis Cronbach’s α Value 0.8127 0.8624 0.8231 0.7517 0.8941 0.8549 0.8452 0.7413 0.8326

3.2 Multiple Regression The e-commerce model that describes the operations as proposed in this research treats the logistic industry as a dependent variable. The eight independent variables and their significance tests are reported by SPSS in Table 3. Pearson’s product-moment correlation analysis is then conducted to examine the inter-relationships among the eight independent variables and their respective impact on the model as a whole. The result of this analysis is reported in table 3. Table 3. Analysis of Pearson’s Product-moment Correlation Pearson’s product-moment correlation Product Buyer Market Transportation Inventory Delivery Organization analysis Information system e-Business Model

Product

Buyer

Market

Transportation

Inventory

Distribution analysis

Organization system

Information system

e-Business

1 0.051 0.187 0.153 0.412 0.151

0.051 1 0.315 0.271 0.593 0.469

0.187 0.315 1 0.107 0.361 0.354

0.153 0.271 0.107 1 0.375 0.478

0.412 0.593 0.361 0.375 1 -0.112

0.151 0.469 0.354 0.478 -0.112 1

0.351 0.578 0.387 0.481 0.431 0.497

0.413 0.357 0.343 0.572 0.362 0.631

0.247 0.453 0.317 0.506 0.458 0.512

0.351

0.578

0.387

0.481

0.431

0.497

1

0.203

0.219

0.413

0.357

0.343

0.572

0.362

0.631

0.203

1

0.573

0.247

0.453

0.317

0.506

0.458

0.512

0.219

0.573

1

From the last row in Table 3, the e-Business model in Hunan province appears to be affected more by (1) information management system (r=0.573), (2) distribution management procedures (r=0.512), (3) transportation management (r=0.506), (4) inventory management procedures (r=0.458), and (5) buyer’s behavior and environment (r=0.453). It is somewhat influenced by the market domain and variability(r=0.317), and is slightly influenced by both organizational structure, culture, and quality of manpower (r=0.219) and product complexity, characteristic and value (r=0.247). Table 3 also indicates that the buyer’s behavior, inventory management, and distribution system are closely related to the organizational structure and culture. It also reveals that the information system used is related to delivery, transportation and product. Inventory, on the other hand, is closely related to both the buyer’s behavior and product.

4 Conclusions In conclusion, the e-commerce model is dominated by logistic, the information system and the

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organization behavior structure. Entrepreneurs believe that logistics is the most important factor in a successful e-commerce trading. This is because no virtual business can sustain itself without the support from an effective and efficient logistic system. Our studies indicate that companies in the logistic industry need to develop fine information systems to carry out business management. Support from high-level management is also important for successful implementation of e-market trading.

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