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International Journal of e-Business Strategy Management February/March 2003 • 229

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IntroductionIn order to adapt to the competitive manufactur-ing environment, a manufacturer needs to beable to produce multiple and diverse products,upgrade and redesign its products in short lifecycles, and execute efficient productionchangeovers simultaneously[1]. Facing the pres-sures from globalization, particularly in shorterproduct life cycles and over-supplied manufac-turing environments, manufacturers need to pro-vide more value-added services to their cus-

tomers[5,8,10,15,21]. On the other hand, fast and flexi-ble low-cost data processing and informationsystems have transformed business operations.

Recent globalization and competition is forcingmany companies to undergo reorganisation andrestructuring in an effort not only to compete butin many cases just to survive. The adoption ofB2B e-commerce and the capability to keeppace with the changing manufacturing environ-

ment are particularly important to the success ofmanufacturing business in the global mar-kets[4,6,7,12,13,16].

A review of the related literature reveals that,although there has been considerable researchon the subject of Internet and e-commerce,insufficient attention has been devoted to theprocess of B2B e-commerce adoption in manu-facturing industries. This paper considers a caseof made-to-order manufacturers and the role ofadopting B2B e-commerce to cope with mass

customisation. The results of a case study onthese issues will be discussed and analysed. Thestudy focuses on Noble Jewelry Limited and isconcentrated on the jewelry sector of the manu-facturing industry, where traditionally made-to-order manufacturing arises. Following the Yau[19]

examination of both the process of B2B e-com-merce adoption and its impact on business oper-ations from the viewpoint of a high-value jewel-

Adoption of Business-to-Business ElectronicCommerce: A Case Study of a Hong KongJewelry Manufacturer

Abstract: This paper describes the adoption processes of business-to-business (B2B) electronic commerce (e-commerce) by Noble Jewelry Limited (Hong Kong), a jewelry manufacturer. By using a website of Noble Jewelry Limited (Noble),

iJewelry.com, a B2B e-commerce platform that links Noble with its customers and suppliers, the driving force for B2B

e-commerce adoption changed significantly and rapidly. Starting with the initial objectives of achieving cost savings and

improving operational efficiency by adopting B2B e-commerce, Noble later becomes driven by a desire to strengthen cus-

tomer service and improve supplier relationship. This paper outlines how the later objectives are achieved by re-design-

ing internal operation procedures and the information flow between Noble and its customers and suppliers. This results

in reducing the cost of communication, shortening production lead-times, improving customer services, and strengthen-

ing supplier integration. Logistics and supply chain systems are quickly developed into highly efficient business networks

when B2B e-commerce is adopted.

Received: January 2003

Oliver B. Yau, Flat G, 6/F, Block 21, 8 Laguna Verde Avenue, Hung Hom, Kowloon, Hong KongTel: +852 90170009, Email: [email protected]

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Keywords: Business-to-business, E-commerce, Internet, Inter-organisational information

systems, Manufacturing, Hong Kong



ry manufacturer in Hong Kong, this paper con-siders problems and proposes solutions to jew-elry manufacturers who want to adopt B2B e-commerce in Hong Kong.

Noble Jewelry Limited (Noble) specialises in

the designing, manufacturing and exporting ofhigh-value jewelry. The Noble headquarters arein Hong Kong since 1980’s and its major manu-facturing facilities are located in China. Given itsproduction sites in China and customers andsuppliers from many countries, informationregarding order status, production status, mate-rial requirement, wastage control, and resourcesplanning is critical but at this time inadequate. Tocope with inadequacies in the management ofinformation Noble proposes to implement anintegrated manufacturing information system,which provided a real-time monitoring functionthrough the integration of B2B e-commerce sys-tem with its existing Oracle enterprise resourcesplanning (ERP) system. This paper first presentsan analysis of the knowledge and experiencegained from applying a B2B e-commerce sys-tem in Noble, and then an analysis of proposedsolutions.

A conceptual framework for B2B-ECadoption in manufacturing industriesAs manufacturing environments become morecomplex and competitive, the need for tools to

assist in business-to-business collaborationbecomes greater. One of the biggest opportuni-ties and challenges faced by manufacturingcompanies in the 21st Century is the deploymentof B2B e-commerce (B2B-EC) with web-basedtechnologies. As a new channel for businesstransactions, B2B-EC may contribute freshsources of revenue and opportunities for manu-facturers with carefully structured strategies.

Networked B2B-EC applications, especiallyon the Internet and through inter-organisationalinformation systems, have resulted in manychanges in the way B2B transactions can becarried out. Benefits from such approaches

include rapid data exchange, low inventories andquick response times. All these require a highdegree of interaction and some degree of systemintegration between supplier and customer[4]. Akey challenge for B2B-EC is to overcome the dif-ficulty in data interchange between supplier andcustomer. Traditional ways of B2B commerce,such as by electronic data interchange, seembeyond the resource capacity of many small andmedium-sized manufacturers, but it is often arequirement for doing business with a large com-pany. The innovative B2B-EC provides a meansof achieving a desired degree of interconnectivi-ty without a huge investment of time, money andsophisticated technology. The diagram belowshows the environment manufacturers are cur-rently facing (see Figure 1).

The significance of the general nature ofInternet based B2B-EC is clearly highlighted inthe management literature[3]. It may replace someof the traditional forms of activity in the “manu-facturing supply chain”. One great advantage tothe manufacturers is that the informationexchange between them and their customersand suppliers can be direct and quick. A manu-

facturer can design, develop and deliver prod-ucts its customers quickly. This in turn may allowa manufacturer to move away from a production-oriented culture to a customer-focused one.Such focus may remove the need for a manu-facturer to hold a large stock of finished goods,thus avoiding the problem of being left withobsolete stock in an environment of fast-chang-ing consumer products.

230 • International Journal of e-Business Strategy Management February/March 2003

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The potential benefits of B2B-EC include onlinecommunication integrated with the informationsystems of business partners, which will lead tocustomised products and services, a more diver-sified global market, better understanding of cus-tomer needs, accurate, real-time information

exchange and cost-efficient productivity. Infuture, B2B-EC may influence supply chain sys-tems in various ways. First, it can be used as afast and efficient means of communicationbetween companies in the whole value chain.Customer orders, order confirmation, transportbooking, invoicing, may increasingly use B2B-EC. The same applies to planning information -sales forecasts, production plans, up-to-date

sales figures, and stock levels, for example – thatmay be accessed on-line by strategic partners[18].

According to Lucking-Reiley and Spulber[14],expectations about productivity gains from B2B-EC can be usefully divided into four areas:

1 possible efficiencies from automation of trans-actions,

2 potential economic advantages of new marketintermediaries,

3 consolidation of demand and supply throughorganised exchanges, and

4 changes in the extent of vertical integration ofcompanies.


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Figure 1: The

changing

manufacturing

environment[19]



The power of B2B-EC is that it allows a manu-facturer to reduce costs, and, even more impor-tantly, manipulate information from all sectorsalong the chain to exploit growth opportunities[11].

A conceptual model of B2B-EC for manufac-

turing industries illustrating the improved relation-ships of manufacturers and their strategic part-ners by improving information exchanges thatstreamline the manufacturer’s business opera-tions is outlined in Figure 2.

MethodologyAccording to Yin[20] (p.87), participant-observationis a special mode of observation in which theresearcher may not be a merely a passive observ-er, but may undertake a variety of roles within a

case study and may actually participate in theevents being studied. Participant-observationprovides certain opportunities for collecting casestudy data, but also involves major problems[20]

(p.88). The researcher can also gain access to


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Figure 2: A

conceptual

framework of

B2B-EC for

manufacturing

industries

(Yau, 2002)



events or groups that are otherwise inaccessibleto scientific investigation.

Semi-structured interviews and datacollection

Data were gathered from several semi-structuredinterviews with members of the managementboard of Noble in January to February 2002. Theinterview questions were derived from the litera-ture as discussed in the conceptual part of thepaper[19] (see Appendix 1).

The interviewees were the chief executive offi-cer (CEO), the executive director, the director ofoperations, and the general manager. They wereselected on the basis of their roles in the adoptionof B2B e-commerce and their experience and

knowledge of information exchanges betweenNoble and its customers. On completing eachinterview, a report was written and sent to eachinterviewee for checking for his/her review andclarification. This ensured the quality and validity

of the responses.Information was also collected from secondary

sources. A variety of published and unpublishedprinted materials were collected including email,memos, letters, press releases, company reports,financial reports, case studies, catalogues, andInternet-based marketing information.Information about Noble has been obtained fromthe websites located at http://www.iJewelry.com(Figure 3) and http://www.noble.com.hk.


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Figure 3: Website



The case studyAccording to Sekaran[17] (p.128), case studiesinvolve in-depth, contextual analyses of similarsituations in other organisations, where the natureof the problem and the problem definition happen

to be the same as one experienced in the currentsituation. Manufacturing companies differ in theway they meet their customer demand. Somecompanies deliver products to their customersfrom finished-goods inventories as they anticipatecustomers’ orders; others, however, manufactureonly in response to customers’ orders[2].

For the high-value jewelry industry, most of theproducts are unique in terms of design, manufac-turing process and technological requirements,and precedence constraints. These manufactur-ers typically do not hold a finished goods inven-tory. After the customer order is received, designand manufacturing activities will be started as thelead-time required to complete the orders is high.The processing time is highly uncertain becausemost of the processes are still manual. This highlevel of uncertainty, with respect to routings andprocessing times and uncertainty of customerorders, results in the production planning andcontrol being difficult. In all the above cases, it isvery difficult to predict customer requirementsand specifications, so keeping a finished goodsinventory is not possible. All the above factorsincrease the complications involved in managing

long lead-time manufacturing systems.

Research QuestionsThis case study examines the following questions:

1 What are the special features of B2B for the jewelry industry?

2 How are adoption plans developed? Why thisway?

3 What are the procedures of adoption?4 What are the problems faced during the adop-

tion process?5 How are they dealt with?6 What feedback comes from users before and

after adoption?7 What are the results of adoption?8 What are the recommendations that follow?

Traditional production in the jewelry industry ischaracterised by mass production with mostlystandardised designs. The trend of globalizationin recent years has changed the traditional focusof jewelry production from mass production tomass customisation. Each jewelry item maybeunique and may have its own characteristic dif-ference even within the same design. As a jewel-ry manufacturer, Noble also faces the same situ-ation like other counterparts.

Jewelry manufacturers suffer from extremeirregularities of customer demand and can have along lead-time from quotation stage to receiving adefinite order. This lead-time sometimes can betwo months or more. While holding high stock tosatisfy customer demand, Noble also needed tohold high component stock to cover for manu-facturing hold-ups. As a consequence, Nobleheld a high level of inventory stocks and operationefficiency was lower. In order to achieve compet-itive advantage through higher levels of customer

service, Noble focused its improvement strate-gies on integrating its supply chain in order tomaximize the efficiency of all internal and externaloperations.

The research sequenceIn general, many articles have commented onhow B2B e-commerce can be used as a tool toreduce costs and gain competitive advantage[3,14].


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Without exception, these articles provide theoret-ical frameworks to explain how B2B e-commercewill generate benefits.

Noble takes the responsibility for the designand specification of products, the sourcing and

purchasing of materials relative to the customer,and other logistics issues. In some cases the cus-tomer provided the design and the materials whileon other cases everything was left to the manu-facturer.

The CEO believed that what won orders for jewelry were competitive price, speed and reliabil-ity of delivery, product quality, flexibility in volumeand product changes, and customised design.For Noble, flexible manufacturing operationshelped to achieve shorter production runs whichwas a common goal. Additionally, advance notifi-cation of production status gave a sense of confi-dence and reliability for their orders to Noble’scustomers. In general, closer relations with ven-dors and customers allow more efficient produc-tion scheduling and faster response. The CEOsummarised the challenge: “Manufacturers mustmake today what customers will need tomorrow”.

The development of B2B e-commercesystemStaff in Noble began discussing using the Internetfor B2B e-commerce in early 1999. They expect-ed this could provide a low-cost communications

medium and Internet technology would permit amore interactive and easier way to communicatewith its customers and suppliers. This approachwas expected to provide Noble with an alterna-tive to the traditional way of data exchange byhigh-cost, VAN-based EDI. They also had con-cerns about security and speed of transmissionand these made Noble cautious about using thisnew medium. The management in Noble decid-

ed to take a systems approach and form a strate-gic plan to broaden the use of B2B e-commerceand to include the Internet as a medium of infor-mation exchange with major business partners.

From the beginning, Noble’s objective was to

integrate intranet, extranet and Internet applica-tions as much as possible. Therefore, Noblemaintained only one server as both intranet- andInternet-server. The backbone for all applicationswas Noble’s self-developed ERP system basedon Oracle 8i, and was based on several Oraclerelational databases that were distributed on twodatabase servers located in Hong Kong. Themajority of Noble’s Web pages were createddynamically on demand and provided up-to-dateinformation from these databases. All Nobleintranet and Internet applications were integratedand accessed the ERP system as a backbone.

The websiteHaving started in 1998 with a pure informationserver providing general corporate informationand an electronic product catalogue, they contin-ued to extend its Web services. It added “productshowroom” functionality in late 1999 and afterMarch 2000 offered an auto-quotation and onlineordering module.

This setting up of a comprehensive website toprovide information about the jewelry industry,products, and services was the first step in

Noble’s plan to adopt an Internet-based e-com-merce application. With a focus on both its cus-tomers and suppliers, Noble developed informa-tion on its Web page which concerned specificissues such as jewelry consignment, order status,and detailed product information from December2001. The objective of the iJewelry.com websiteaimed to become a portal of B2B e-commercefor the jewelry industry (see Figure 4).


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Tracking and tracing by VIP entryThrough the iJewelry.com platform and by meansof username and password, authorised cus-tomers could gain access to individual order

information. Lists of all quotations, outstandingconsignment, sale order history, and statementsof current production status were displayed indi-vidually for each customer. Status for each orderin progress could be indicated, including whetherthe system was already assembled, and if thecorresponding parcel had left Noble. All produc-tion steps from order acceptance to packagingwere displayed. This transparent process was

thought to make customers feel more convenientand to improve Noble’s relationship with cus-tomers.

Given that Noble maintained only one data-

base, customers using the Internet accessed thesame database as accessed by Noble employ-ees. A Web request was always a databaserequest. The only difference was in the result/out-put of the submitted query. Hence, the databasehad to be user-sensitive; the information that waspresented depended on who made the request.Noble distinguished three kinds of users, “B2C(business to consumer) customer”, “VIP (B2B)


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Figure 4

iJewelry.com web-

site



customer” and “employee”. After checking anindividual username and password with the inter-nal database, the system delivered an electronicproduct catalogue that displayed prices accord-ing to predefined conditions, available in Noble’s

ERP system.

The design process and customisationThe design department comprised two sections,namely “original design creation” and “designsimulation”. The work of “original design creation”started by a strong interaction with both thewarehouse and the purchasing departments. Thematerial requisition report was generated by theERP system. The purchase work started as soonas raw materials were needed and ordered fromsuppliers in order to fulfill the material require-ments of certain series of jewelry. The purchasingdepartment communicated the delivery times forraw materials to the design department to enablethem to plan the jewelry manufacturing. Thedatabase of material codes was also released tothe warehouse to gain the materials necessary toproduce orders.

After the approval of an original design, theactual creation would be handed over to “designsimulation”. The cooperation between design andpurchasing was continued in this phase ofdesign, as the feasibility of a new creation wasnot just a matter of market potential. Feasibility

also needed to check the availability of raw mate-rials of the right quality and suppliers with suffi-cient reliability. For this reason, Noble purchasedonly from appointed suppliers from within HongKong or directly from their buying office in India.

During the process of jewelry design somecomputer aided design systems (such as JCADand Jewelry CAD) were introduced so that manyof the detailed attributes in the design process

were removed. The computer aided design sys-tems were integrated with computer aided man-ufacturing systems so that the designs could beautomatically translated into plastic moulds bythe prototyping machines (such as Model Maker

II, Pattern Master). The design process could besignificantly enhanced through the participation ofcustomers. The customers could bring theirdesign ideas to Noble and this was consideredan input to the product development. In somecases, designers from Noble could send thedesign image or file to customers for commentand approval, enabling product designs thateffectively met the needs of the customers. Thisclose communication with customers allowedNoble to develop customer-oriented service andcustomised products. One object of this closeco-operation could be the development of betterand more long-term manufacturer-customer rela-tionships. Products designed by Noble not onlycould meet current customer needs but could besaved or modified to meet the future needs ofthose customers.

Many of Noble’s designs were focused specif-ically on an individual customer’s requirements. Inmost cases product design needed to be closelyintegrated with the production process. The needfor fast and effective design meant that the tradi-tional approach of having all new products routedand tested through a design area had to be elim-

inated, as this centralised approach led to delays,misunderstandings, and a lack of co-operationbetween the design area and the production floor.The design process needed to be integrated withthe manufacturing process to diminish the impactof these issues. Products could be modularizedto allow configuration rather than the separatedesign of each product, thus simplifying thedesign process.


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Production status and process controlThe choice on the level of product customisationhad direct implications on the delivery lead-timeNoble could provide – the greater the degree ofcustomisation, the longer the delivery lead-time,

as more activities had to be performed afterreceiving the order. Before the adoption of B2B e-commerce, the production schedule was manu-ally adjusted for outstanding production ordersaccording to the change of customers’ require-ments and delivery time.

One most significant difference between Nobleand other traditional jewelry manufacturers wasNoble’s consistent use of a computerised sys-tems for process control. Technical and techno-logical advances in operation also could improveefficiency, productivity, and quality. The compli-cated process and operation procedures werestandardised and recorded by the ERP Systemand all information on every material such as pre-cious stones (diamond, ruby, emerald, etc.),metal (18 karat gold, Pentium 900 or silver) andother materials was also standardised andrecorded as bills-of-material. All key point of theoperation process was recorded in the system,which could show who carried out which processat what period of time, how metal and stoneswere used, and how great the wastage during theproduction process was.

Resource and capacity planningTo reduce the costs associated with unexpectedrescheduling, a mechanism needed to be estab-lished for the early detection of potential prob-lems. Such problems included the unavailability ofraw material and production over-capacity. Theresources planning module under the ERP sys-tem was adapted to enhance higher productivitythrough scheduling improvements that enabled

prior checking of materials and routings. Theavailability of resources such as productioncapacity and materials then could be assessedbefore a job was assigned to the productionprocess.

In a traditional jewelry business, each party tothe overall process (supplier-manufacturer-whole-saler) is responsible only for its own resourceplanning. An inter-organisational system ofdeploying resources is non-existent. This maylead to over- or under-estimation of the need forresources.

Noble’s integration with major business part-ners promoted an overall resource planning. Thisoverall planning could help to estimate the nec-essary resources accurately and better search forthe appropriate resources and hence organiseand manage the resources more effectively.Portfolios of resources that supported the manu-facturing and distribution activities could then beestablished. The full product range could beplanned, produced and transported to the cus-tomer within customer-acceptable delivery time.This also meant that the production could bedirectly controlled by customer orders and the fin-ished goods inventory could be kept minimal.

From the administrative point of view produc-tion orders were generated at the location wherethe actual production took place, but headquar-ters carefully controlled the entire inventory/mate-

rial flow. The headquarters was kept informedabout the progress during processing in theChina plant and when a batch of products wascompleted, this was reported to headquartersand the products transferred to Hong Kong. Thesystem provided the status of each manufactur-ing process based on the progress along themanufacturing and delivery routing. From theinformation that the system received from the


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routing, it would determine if the routing wasavailable to receive further assignment. A routingmight have enough capacity left to meet ademand but still be considered as not availablefor assignment if any capacity within the routing

formed a bottleneck. The information on produc-tion status and capabilities was easily accessiblein the ERP system.

As a high-value jewelry manufacturer, Nobleneeded proper management and control of inven-tory. This was crucial to the success of business.Investigation of the stockholding situation revealedthat approximately HK$35 million was tied up inthe low usage and obsolescent stocks. Thislocked-up capital might explain the stock turns aslow as 1.5 per year that Noble had been experi-encing. Traditionally, product specifications wereviewed as discrete tasks performed by salespeo-ple and product engineers respectively. The sales-person identified a customer’s requirement andthen liaised with product engineers and produc-tion planners to produce a product specificationand quotation. Unfortunately, this process wasboth time consuming and error prone, with a highpotential for miscommunication of requirementsand misinterpretation of product information.

By providing customers (at home or abroad)with a new way for product specification, Nobleenabled the customers to configure productrequirements for their specific orders. The system

automatically validated the usage requirementsand translated these into material codes. Regularweekly orders could be sent as product codeswith required quantities through the Internetdirectly to Noble’s order-processing system.Noble re-processed the product codes in a “fac-tory phase” of the product specifications to pro-duce the bills-of-material list of standard assem-blies required to meet the order. Assembly and

shipment could be within days. Every month,Noble sent an electronic update via the Internetwith the latest products and options for the prod-uct specifications. Instead of make-to-stock thatdominated in the past, it was replaced by make-

to-order.

Supplier interface and just-in-t imepurchasingInformation exchange between supplier andmanufacturer is now more open and extensivethan in the past. Co-operative planning efforts aremore common in major industries than in the jew-elry sector. In the early stage of adoption, the sit-uation of B2B e-commerce with suppliers did nothelp to improve the relationships with the suppli-ers. Noble believed in a traditional approach tomanage suppliers, insisting that suppliers metirrational demands at short notice, or Noble couldlook for other suppliers. Information given to sup-pliers was of little help to suppliers in planningtheir own production and stockholding. The poorcommunication between the two parties resultedin a common practice by Noble to order materi-als at short notice, with suppliers suffering the“shock” demands placed on them. Noble hadalmost 80 suppliers. Of these 20 were used everymonth, with only 10 using Noble’s schedulingmodule under Oracle ERP system. Some materi-als had only one possible supplier, which could

have caused difficulties regarding guarantee ofsupply, particularly as Noble’s collaboration withselected suppliers was not ideal. The traditionalway of managing suppliers meant that unpre-dictable orders were being placed on suppliers atshort notice, leading to guesses by these suppli-ers in predicting Noble’s requirements when plan-ning their own production and stockholding.

The management of Noble realised that no


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stock control solutions would be effective withoutsubstantial input from suppliers. The next focusbecame that of improving supplier relationshipsto help gain this input. Discussions with suppliersprovided information about their requirements

and capabilities in responding to Noble’s needs.The aim was to provide suppliers with as muchuseful ordering information as possible, therebyallowing them to plan in advance and control theirown production. This led to the design of a newschedule format that provided more accurateinformation about past demands and expectedfuture requirements. The new control strategieswere then discussed in detail with suppliers inorder to determine the impact on both partiesand the associated benefits.

As a result of the continuing system improve-ment by Noble and the collaboration with its sup-pliers, communication was strengthenedthrough more frequent exchange of information.Suppliers became more willing to respond toNoble’s demands as they had a clearer idea ofcustomers’ demands. This new scheduling pro-cedure was initially introduced to 10 selectedsuppliers that controlled 50 per cent of the pur-chased items covering between 200 and 300material codes in the Noble schedule. Successhave led to the partnership approach to schedul-ing being implemented with 15 major suppliers.This covered approximately 65 to 70 per cent by

value of the purchased items. Benefits for suppli-ers included more reliable schedules, reducedfinished goods stocks, increased visibility of cus-tomer requirements and a more accurate under-standing of the true customer demand. ForNoble, benefits included increased customerservice levels, reduced stocks, increased stockturnovers, improved delivery service from suppli-ers and an overall minimized risk of running out

of raw material stocks.An ultimate aim for Noble was to achieve just-

in-time purchasing, with raw materials beingordered from suppliers as these were assessedfrom customer demands. For this reason, Noble

redesigned the flow of supplier interface by thesystem integration B2B e-commerce and theERP system. A material-requirements summarywas generated from the Oracle ERP system on aweekly basis and sent out to major suppliers.Because of the B2B e-commerce system quota-tions were received from material suppliers with-in minutes or hours rather than days. By speedydata transmission the system enabled Noble’spurchasers to focus more on the strategic task ofpricing negotiations rather than attending torepeated clerical work such as data entry.

The process of B2B e-commerce adoptionThe process of B2B e-commerce adoptionproved to be complex and difficult. The issues ofsystem design and the need for standard opera-tion flow proved difficult activities, especiallywhen there was no strong commitment frombusiness partners. In addition to these techno-logical issues, complexity of the operating proce-dures with business partners, which involved dif-ferences in business practice and system inte-gration, also needed to be considered.

Initially, the need to improve current business

processes by adopting a new way of doing busi-ness that achieved significant savings andimprove efficiency was the major motivation inNoble. As the Internet increased in popularity,major customers began to demand or expect touse this approach in business. Noble respondedby setting up a system integrated with its exist-ing ERP system, hoping that this would providea significant competitive advantage as well as


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bringing Noble to its customers. Although thefirst objective was achieved, the second one wasnot as successful. Noble did manage to achievecloser links with some of its customers, but thisstrategy did not work equally well with all busi-

ness partners.Different technologies have different levels of

complexity, which may affect the success ofadoption. In this case, Noble needed to learnand adapt to the new technologies. The morecomplex systems such as B2B e-commercesystem demanded far greater effort during thesystem integration with other NT-based andUnix-based ERP systems. Since both NT-basedand Unix-based computer networks were usedin Noble for internal business processes wellbefore they were extended to inter-organisation-al activities, compatibility problems – in terms ofboth hardware and software – arose betweenexisting systems and the new ones that weredeveloped specifically for electronic trading. Tomake the existing systems compatible with B2Be-commerce, Noble created an infrastructure fornew interfaces, as well as system integrationwith existing ERP system.

The adoption of B2B e-commerce in Nobleultimately involved changes in the way the com-pany conducted business. The managementevaluated its existing business processes andaddressed the impact of the adoption. Factors

such as organisational structure, managementpractice, system feasibility, corporate culture,internal data flows, and applications affected,and trading partner relationships were all consid-ered. Educating user personnel about how thecompany, as well as how individual employees,would benefit from the adoption was also critical.As with any organisational change, top manage-ment’s visible commitment to the adoption

process played a key role in the process of B2Be-commerce being successfully adopted.

Prior to the adoption of B2B e-commerceNoble needed to make minor changes to itshardware. While the network operated on sever-

al UNIX servers and these required no changes,communication links (in terms of modems andnetworks) needed to be upgraded. The networkwas upgraded to 256 kilobyte international pri-vate leased circuit (IPLC) lines for faster trans-mission. Noble had introduced just-in-time andmaterial requisition planning models for its distri-bution and delivery requirements. These wereintegrated online into the B2B e-commerce sys-tem, which in turn reduced lead times to cus-tomers, and also from suppliers. This approachalso helped to keep inventory levels low.

Within the period of adopting B2B e-com-merce, the researcher was involved directly inidentifying, trouble-shooting, and training forinformation exchange concerns and with speci-fying, testing, and distributing customer andsales and management reports. In addition, theresearcher interviewed several other boardmembers in Noble who were involved with thisproject.

The process of B2B e-commerce adoption inNoble addressed the need of a mainly manufac-turing enterprise to reduce information process-ing time, improve information flow as a value-

added service, and enhance informationexchange with business partners to reduce pro-cessing and distribution costs and also lead-time. In other words it dealt with enhancement ofthe information supply chain as an importantentity in itself, performance and optimization ofwhich had significant effects on the efficiencyand performance of the manufacturing enter-prise.


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Analysis of resultNoble established B2B e-commerce platformfrom which both Noble and its customers bene-fited. However, only a very small portion ofNoble’s incoming sales orders arriving over its

Internet-based B2B e-commerce system. Themajority of orders still came via telephone or fax.The main reason for this was usually the “tradi-tional” purchase process on the customer’s side.The technical decision-maker used the Internet tofind all information about the product, the lead-time or the price and then handed it over to a pur-chasing person. This purchasing person, beingoriented to paper-work, preferred the traditionalway of ordering via mail, fax or phone.

From January 1999 Noble installed a fully inte-grated MRP system in the headquarters in HongKong and manufacturing facilities in China, andadopted a computerised inventory control sys-tem with sales teams at various locations outsideHong Kong. Noble exercised effective inventorycontrol, by obtaining real-time information oneach location’s inventory level, transaction vol-ume and inventory movement. In order to limit itsexposure to gold fluctuations, Noble also main-tained a minimum base inventory of gold that wasreplenished on a daily basis. The inventory had a34% decrease and its financial cost was reducedby 60% in fiscal year 1999/2000.

The case study has demonstrated the wide

range of different contexts in which adoption ofB2B e-commerce may have significant impact onoperation performance and supply-chain man-agement. The case study shows that there arepotential benefits from the adoption of B2B e-commerce in the manufacturing industries. Theseinclude faster communication, cost savings andaccuracy, reliability, closer supplier relationships,reduction in material inventories, fast and flexible

customer response, reshaping buyer-supplierrelationship, improving core business processes,providing electronic intermediation, and reachingnew segments and markets.

ConclusionMany industries and markets require greater flex-ibility and speed from their manufacturers. Theneed to manufacture small quantities of highlycustomised products with high quality and reli-able on-time delivery at a low cost is forcing com-panies to change from old ideas of mass produc-tion. To compete and thrive in a changing andunpredictable marketplace, companies need toadopt flexible manufacturing methods. Thesemethods require highly integrated and flexibletechnologies of production, not necessarily high-tech methods, but highly capable ones.

To adequately address their customers’ fast-changing and focused needs, Noble’s staff had tobe highly educated and trained, and significantlyempowered within the constraints of a clearvision and delineated company principles andgoals. Noble itself had to have the ability to adaptto changes rapidly, have highly flexible manage-ment structures, and comprehensive methods ofintroducing change and prospering from it.

Implications for business practitionerDespite the profound interest of prospective

managers and researchers, B2B e-commerceadoption in Hong Kong industries has a long wayto go. The real challenge before Hong Kong man-agers is to establish priorities among potentialB2B e-commerce techniques to achieve bestpossible advantage of system adoption in HongKong industries.

For the adoption of the proposed infrastruc-ture, companies could look at the entire chain


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and identify areas for revolutionary or evolutionarychange. The significance contribution of thisresearch is its concern with the provision ofinsights in the design of the infrastructure forbuilding a supply chain information network,

which allows easy sharing of data in distributedplatforms. This proposed infrastructure isfavourable to the enrichment of responsivenessand flexibility into the supply chain network usingthe latest distributed object technology and isexpected to influence the design of the futuresupply chain information system to be deployed,particularly in manufacturing areas.

Internet-based solutions need to focus on thewhole process, including pre-transaction oppor-tunities such as demand forecasting and invento-ry management, and post-transaction reconcilia-tion and management analysis[11]. Adoption ofB2B e-commerce is not just a technologicalissue. It also provides a new way of doing busi-ness and changes our traditional business mod-els. The use of B2B e-commerce not only resultsin increased operational efficiency and effective-ness, but can facilitate the re-engineering of busi-ness processes as well. However, the benefits ofB2B e-commerce cannot be realised withoutproper adoption strategies, both technical andorganisational. Further investigation could test thefeasibility of B2B e-commerce adoption in jewel-ry manufacturers, consider problems in the adop-

tion process, and make recommendation to othermanufacturers. The process of B2B e-commerceadoption can apply to many industries, not justthe jewelry industry.

© Winthrop Publications Limited 2003

References[1] Abdel-Malek L. et al (2000), “Design andimplementation of flexible manufacturing solu-tions in agile enterprises”, International Journal ofAgile Management Systems, Vol 2 Issue 3,

pp.187-195.

[2] Amaro G. et al (1999), “Competitive advan-tage, customisation and a new taxonomy for nonmake-to-stock companies”, International Journalof Operations & Production Management, Vol 19Issue 4, pp. 349-371.

[3] Angeles R. (2000), “Revisiting the role ofInternet-EDI in the current electronic commercescene”, Logistics Information Management, Vol13 Issue 1, pp. 45-57.

[4] Archer N. and Yuan Y. (2000), “Managingbusiness-to-business relationships throughoutthe e-commerce procurement life cycle”, InternetResearch: Electronic Networking Applicationsand Policy, Vol 10 Issue 5, pp.385-395.

[5] Bhatnagar R. and Viswanathan S. (2000), “Re-engineering global supply chains – Alliancesbetween manufacturing firms and global logisticsservices providers”, International Journal ofPhysical Distribution & Logistics Management,Vol 30 Issue 1, pp.13-34.

[6] Cann C.W. (1998), “Eight steps to building abusiness-to-business relationship”, Journal ofBusiness & Industrial Marketing, Vol 13 Issue 4/5,pp. 393-405.

[7] Cheng E.W.L. et al (2001), “An e-businessmodel to support supply chain activities in con-struction”, Logistics Information Management,


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Vol 14 Issue 1/2, pp. 68-78.

[8] Christiaanse E. and Kumar K. (2000), “ICT-enabled coordination of dynamic supply webs”,International Journal of Physical Distribution &

Logistics Management, Vol 30 Issue 3/4, pp.268-285.

[9] Hussey J. and Hussey R. (1997), BusinessResearch: A practical guide for undergraduateand postgraduate students, MacMillan Press Ltd.

[10] Kamel S. and Hussein M. (2001), “The devel-opment of e-commerce: the emerging virtualcontext within Egypt”, Logistics InformationManagement, Vol 14 Issue 1/2, pp. 119-127.

[11] Keeffe M.O. (2001), “Myths and realities of e-commerce in the perishable foods industries:unleashing the power of reputation and relation-ship assets”, Supply Chain Management: AnInternational Journal, Vol 6 Issue 1, pp. 12-15.

[12] Klein L.R. and Quelch J.A. (1997), “Business-to-business market making on the Internet”,International Marketing Review, Vol 14 Issue 5,pp. 345-361.

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transtec AG”, Logistics Information Management,Vol 14 Issue 1/2, pp. 54-67.

[14] Lucking-Reiley D. and Spulber D.F. (2000),“Business-to-business electronic commerce”,eCommerce Research Forum, Sloan School ofManagement, Massachusetts Institute ofTechnology as a working paper and published on

their website <http://e-commerce.mit.edu/cgi-bin/viewpaper?id=94> on 1st November 2000.

[15] Meijboom B. (1999), “Production-to-orderand international operations: A case study in the

clothing industry”, International Journal ofOperations & Production Management, Vol 19Issue 5/6, pp. 602-619.

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[17] Sekaran U. (2000), Research Methods forBusiness: A Skill-Building Approach, John Wiley& Sons, Inc.

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BiographyOliver B. Yau joined Objective ManagementConsulting (OMC) as Managing Director inJanuary 2003. OMC, founded in 1989, is a HongKong-based consulting firm engaged in

Enterprise Resource Planning (ERP) systems,accounting and taxation, corporate governance,and ISO consulting and implementation. OMC isone of the leading local consulting firms in HongKong. Prior to that, Oliver worked with manymajor manufacturing companies in Hong Kongas Director of e-Business, Financial Controller,and Management Accounting Manager.

Oliver holds a Master of BusinessAdministration (MBA) degree from the Universityof Leicester (awarded in 1993). He is an associ-

ate member of the British Computer Society, amember of the Chartered Management Institute,and an associate member of the CharteredInstitute of Logistics and Transport in Hong Kong.He also holds a Post-graduate Diploma in

Marketing and is a member and CharteredMarketer of the Chartered Institute of Marketing.Oliver is currently studying for a Doctor ofBusiness Administration with the University ofSouth Australia and expects to graduate byMarch 2003. His research is concentrated in theareas of supply-chain management, system inte-gration and e-commerce development in themanufacturing industries in Hong Kong. Oliverhad some publications on the e-commerce web-site of MIT.edu in 2001 and 2002


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