Adopting B2B e-commerce: Noble Jewelry Limited ( Hong Kong)

The author: Oliver B. YAU

Internatio nal Graduate Schoo l of Management
University of South Au stralia

Personal contact:
Correspondence address: Flat G, 6/F., Block 21, Laguna Verde,
8 Laguna Verde Avenue, Hung Hom, Kowloon, Hong Kong.
Telephone: (852) 90170009 E-mail: oliver@hongkong.com

Keywords: business-to-business, e-co mmerce, Internet, inter-organizational

informatio n systems, manufacturing, Hong Kong

Article Type: Case study

Abstract
This paper describes the ado ption processes of business-to-business (B2B) electronic
co mmerce (e-commerce) by Noble Jewelr y Limited (Hong Ko ng), a jewelry
manu facturer. By using a website of Noble Jewelr y Limited (No ble), iJewelry. com, a
B2B e-commerce p latfo rm 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 o f achieving cost saving s and improving operational

efficiency by adopting B2B e-co mmerce, Noble later becomes dr iven by a desire to
strengthen customer service and improve supp lier relatio nship. This paper outlines ho w
the later objectives are achieved by re-desig ning internal operation pro cedures and the
infor matio n flo w between Noble and its customers and suppliers. This results in
reducing the cost of co mmunicatio n, shortening production lead- times, improving
custo mer services, and strengthening supplier integration. Logistics and supply chain
systems are quick ly developed into highly efficient business networks when B2B
e-commer ce is adopted.
Introduction

In order to adapt to the co mpetitive manufactur ing environment, a manufactur er needs

to produce multiple and diverse pr oducts, upgrade and redesign its products in short life

cycles, and execute efficient production changeovers simultaneously (Abdel-Malek,

Das and Wolf, 2000). Facing the pressures fro m globalizatio n, particular ly in sho rter

product life cycles and over-supplied manu facturing environments, manufacturers need

to provide mo re value-added services to their customers (Bhatnagar and Viswanathan,

2000; Christiaanse and Ku mar, 2000; Kamel and Hussein, 2001; Meijboom, 1999; Yu,

Yan and Cheng, 2001). On the other hand, fast and flexible low-cost data processing

and infor mation systems have transfo rmed business operatio ns.

A review o f the related literature reveals that, although there has been considerable

research on the subject of Internet and e-co mmerce, insufficient attention has been

devoted to the process of B2B e-commerce adoption in manufacturing industries. This

paper considers a case of made-to-order manufacturer and the role of ado pting B2B

e-commerce to cope with mass customizatio n. The results of a case study on these

issues will be d iscussed and analyzed. The study fo cuses on No ble Jewelry Limited and

is concentrated on the jewelry secto r of the manufacturing industry, where traditionally

made-to-or der manufacturing arises. Fo llowing the Yau (2001) examination of both the

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process of B2B e-commerce adoption and its impact on business operations fro m the

viewpoint of a high-valu e jewelry manufacturer in Hong Ko ng, this paper co nsiders

problems and proposes solutions to jewelry manufacturers who want to adopt B2B

e-commerce in Hong Kong.

Noble Jewelry Limited (No ble) specializes in the designing, manufacturing and

exporting of high-value jewelr y. The Noble headquarters have been in Ho ng Kong

since 1980’s and its major manufacturing facilities are located in China. Given its

production sites in China and customers and suppliers fro m many co untries,

infor matio n regarding o rder status, production status, material requir ement, wastage

co ntrol, and resources planning is critical but at this time inadequate. To cope with

situation, Noble proposes to implement an integrated manu facturing information

system, which provided a real-time mo nitoring function through the integration o f B2B

e-commerce system with its existing Oracle enterprise resources p lanning (ERP)

system.

Data were gathered from several semi-structured interviews with members of the

management board of No ble in January to February 2002. The interviewees were the

chief executive officer (CEO) , the executive director, the director o f oper ations, and the

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general manager. They were selected on the basis of their r oles in the adoption of B2B

e-commerce and their experience and knowledge of information exchanges between

Noble and its customers. On completing each interview, a report was written and sent to

each inter viewee for checking for his/her review and clar ification. This ensur ed the

quality and valid ity of the responses.

Information was also collected from secondar y sources. A var iety of published and

unpublished printed materials were collected including email, memos, letter s, press

releases, company r eports, financial reports, case studies, catalogs, and Internet-based

marketing infor matio n. Informatio n about Noble has been obtained from the websites

located at http://www.iJewelry.co m (see Figure 1) and http://www.noble.co m.hk.

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Figure 1 iJewelr y.com website

The case study

Manufacturing co mpanies differ in the way they meet their custo mer demand. Some

co mpanies deliver products to their customers from finished-goo ds inventories as they

anticipate customers’ orders; others, however, manufacture o nly in respo nse to

custo mers’ orders (Amaro, Hendry and Kingsman, 1999).

Fo r the high-value jewelr y industry, most of the products are unique in ter ms of design,

manu facturing process and techno logical requirements, and precedence constraints.

These manu facturers typically do not hold a finished goo ds inventory. After the

custo mer order is received, design and manufacturing activities will be started as the

lead-time required to co mp lete the orders is high. The pro cessing time is highly

uncertain because most of the processes are still manual. This high level o f uncertainty,

with respect to routings and processing times and uncertainty of customer orders,

results in the production p lanning and contr ol being difficult. I n all the above cases, it is

very difficu lt to predict customer requirements and specifications, so keeping a finished

goods inventor y is no t possible. All the above factor s increase the co mp licatio ns

involved in managing long lead-time manufacturing systems.

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Case Study Questions

This case study addresses s the questions stated below:

1 What are the special features of B2B fo r the jewelry indu stry?

2 How are adoption plans developed ? Why this way?

3 What are the pro cedures of ado ption?

4 What are the pro blems faced during the adoption process?

5 How are they dealt with?

6 What feed back co mes from users before and after adoption?

7 What are the results of adoptio n?

8 What are the recommendations that fo llow?

Trad itional pr oduction in the jewelr y indu stry is characterized by mass production with

mostly standardized designs. However the trend of globalization in recent years has

chang ed the traditional fo cus of jewelry productio n fr om mass production to mass

custo mizatio n. Each jewelry item may be unique and may have its own characteristic

difference even within the same design. As a jewelry manufacturer, No ble also faces a

similar situatio n to its competitor s.

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Jewelry manufacturers suffer fro m extreme irregu lar ities o f customer demand and can

have a long lead-time fro m quotatio n stage to receiving a definite order. This lead-time

sometimes can be two months or more. While holding high stock volumes to satisfy

custo mer demand, No ble also needed to hold high component stock volumes to cover

for manufacturing hold-ups. As a consequence, Noble held a high level o f inventory

stocks and operation efficiency was lo wer. In order to achieve co mpetitive advantage

thro ugh higher levels of customer service, No ble fo cused its impro vement strategies on

integrating its supply chain in order to maximize the efficiency of all internal and

external operations.

Factors Stimulating the move to B2B E-co mmerce

The CEO believed that what won orders for jewelry were co mpetitive price, speed and

reliability of delivery, product quality, flexibility in volume and product changes, and

custo mized design. For Noble, flexible manufacturing operations helped to achieve

sho rter productio n runs which was a co mmon goal. Additionally, ad vance notif ication

of productio n status gave No ble’s custo mers a sense o f co nfidence and reliability for

their orders. In general, closer relations with vendors and customers allow more

efficient production scheduling and faster response. The CEO summarized the

challeng e: “Manu facturers must make to day what custo mers will need tomorro w”.

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Noble too k the respo nsibility for the desig n and specification of products, the so urcing

and purchasing o f materials relative to the custo mer, and other logistics issues. In so me

cases the customer pro vided the design and the mater ials while in other cases

ever ything was left to the manu facturer.

The develop ment of B2B e-commerce system

Staff in Noble began discussing using the Internet for B2B e-commer ce in early 1999.

They expected this could provide a lo w-cost communications medium and Inter net

technolog y would per mit a more interactive and easier way to co mmunicate with its

custo mers and suppliers. This approach was expected to provide Noble with an

alternative to the tr aditio nal way o f data exchange by high-co st, VAN-based EDI. They

also had concer ns about security and speed of transmission and these mad e Noble

cautious about using this new medium. The management in Noble decided to take a

systems approach and fo rm a strategic plan to broaden the use o f B2B e-co mmerce and

to include the Internet as a medium o f information exchange with major business

partners.

Fr om the beginning, Noble’s objective was to integrate intranet, extranet and Internet

applications as much as possible. Therefore, Noble maintained only one ser ver as both

intr anet- and Internet-server. The back bo ne for all applications was No ble’s

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self-developed ERP system based o n Or acle 8i, and was based o n several Oracle

relatio nal databases that were distributed on two database servers located in Hong

Ko ng. The majo rity o f Noble’s Web pages were created dynamically on demand and

provided up-to-date info rmation fro m these databases. All Noble intranet and Internet

applications were integrated and accessed the ERP system as a backbone.

The website

Having started in 1998 with a pure information server provid ing general corporate

infor matio n and an electronic pr oduct catalogue, they continu ed to extend its Web

services. I t added “pro duct showroom” functionality in late 1999 and after March 2000

offered an auto-quotation and online ordering module.

This setting up of a comprehensive website to provide informatio n about the jewelry

industr y, products, and services was the first step in Noble’s plan to adopt an

Internet- based e-commer ce application. With a fo cus on both its customers and

supplier s, Noble developed informatio n o n its Web page which concerned specif ic

issues such as jewelry co nsignment, order status, and detailed product information from

December 2001. The o bjective of the iJewelry.co m website aimed to become a portal o f

B2B e-commerce for the jewelry industry (see Fig ure 2).

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Figure 2 iJewelry.co m website

Tracking and tracing by VIP entry

Thro ugh the iJewelry.com p latfor m and by means of username and password,

authorized custo mers could gain access to individual o rder info rmation. Lists o f all

quotations, outstanding consignment, sale o rder history, and statements of curr ent

production status were displayed individually fo r each cu stomer. Status for each order

in progress could be indicated, including whether the system was alr ead y assemb led,

and if the corresponding parcel had left Noble. All production steps fro m order

acceptance to packag ing were disp layed. This transparent pro cess was thought to make

custo mers feel more convenient and to improve Noble’s relatio nship with customer s.

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Given that Noble maintained only one database, customers using the Inter net accessed

the same database as accessed by Noble emp loyees. A Web request was always a

database request. The only difference was in the result/output of the submitted query.

Hence, the database had to be user-sensitive - the informatio n that was presented

depend ed on who made the request. Noble d istinguished three kinds of users, “B2C

(business to consu mer) customer”, “VIP (B2B) customer” and “employee”. After

checking an individual username and password with the internal database, the system

delivered an electro nic product catalogue that displayed prices accor ding to predefined

conditions, available in Noble’s ERP system.

The design process and customizatio n

The design department comprised two sectio ns, namely “orig inal design creatio n” and

“desig n simulatio n”. The work of “o riginal desig n creation” started by a strong

interaction with both the warehouse and the purchasing departments. The material

requ isition repo rt was generated by the ERP system. The purchase wo rk started as soon

as raw materials were needed and ordered from suppliers in order to fulfill the material

requ ir ements of certain series of jewelry. The purchasing department communicated

the delivery times for raw materials to the design department to enable them to plan the

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jewelry manufacturing. The database of material co des was also released to the

warehouse to gain the mater ials necessar y to produce orders.

After the approval of an original design, the actual creation would be handed over to

“desig n simu lation”. The cooperation between design and purchasing was continu ed in

this phase o f design, as the feasib ility of a new creation was not just a matter of mar ket

potential. Feasibility also needed to check the availability of raw materials of the right

quality and suppliers with suff icient reliability. Fo r this reason, No ble purchased only

from appointed suppliers from within Hong Kong or directly from their buying office in

India.

During the process of jewelr y design, some computer aided design systems (such as

JCAD and Jewelry CAD) were introduced so that many o f the detailed attributes in the

design process wer e r emoved. The computer aided desig n systems were integrated with

co mputer aided manu facturing systems so that the designs could be automatically

translated into plastic mould s by the prototyping machines (such as Model Maker II

and/o r Pattern Master).

The design process co uld be sig nificantly enhanced through the participation of

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custo mers. Customers could bring their design ideas to No ble and this was co nsidered

to be an input to the product develop ment. In so me cases, designer s fro m No ble could

send the design image or file to customers for comment and approval, enabling product

designs that effectively met the needs of the customers. This close communication with

custo mers allo wed Noble to develo p custo mer-oriented service and customized

products. One o bject of this clo se co-o peratio n could be the develop ment o f better and

more long-term manufacturer- customer relationships. Products designed by Noble not

only co uld meet current customer needs but could be saved or mo dified to meet the

futur e needs of those customers.

Many o f No ble’s designs were focused specifically on an indiv idual custo mer’s

requ ir ements. In most cases product design needed to be clo sely integrated with the

production process. The need for fast and effective design meant that the traditio nal

appro ach of having all new pro ducts routed and tested through a desig n area had to be

eliminated, as this centralized approach led to delays, misunder standings, and a lack of

co -o peratio n between the design area and the pro duction floor. The design process

need ed to be integrated with the manufacturing pro cess to diminish the impact of these

issues. Products could be mo dularized to allow configuration rather than the separate

design o f each pro duct, thus simplifying the design process.

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Pro duction status and pro cess control

The cho ice on the level of pro duct customization had direct implications o n the delivery

lead-time Noble could provide - the greater the degree of custo mization, the longer the

delivery lead-time, as more activities had to be performed after receiving the order.

Before the adoption of B2B e-commerce, the production schedule was manually

ad ju sted for o utstanding productio n or ders according to the change of customers’

requ ir ements and delivery time.

One significant difference between No ble and other traditional jewelry manufacturer s

was Noble’s co nsistent use o f a computerized systems for process control. Technical

and techno logical advances in oper atio n also could impr ove efficiency, pro ductivity,

and quality. The co mplicated process and operation pro cedures were standardized and

recorded by the ERP System and all in fo rmation on every material such as precious

stones (diamo nd, ruby or emerald), metal (18 karat gold, Pentium 900 or silver) and

other materials was also standardized and reco rded as bills-of-mater ial. All key po int

of the operation process was recorded in the system, which could show who carried out

which pro cess at what period of time, how metal and stones were used, and ho w gr eat

the wastage during the production process was.

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Resource and capacity planning

To reduce the costs associated with unexpected rescheduling, a mechanism needed to

be established fo r the early detectio n of po tential problems. Such problems included the

unavailability of raw mater ial and pro duction over-capacity. The resources planning

module under the ERP system was designed to enhance higher pro ductivity thro ugh

scheduling impro vements that enabled prior check ing of materials and routings. The

availability o f resources such as productio n capacity and materials then could be

assessed before a job was assigned to the production process.

In a traditional jewelry business, each party to the overall process

(supplier- manufacturer-wholesaler) is responsible only fo r its own resource planning.

An inter-organizatio nal system o f dep loying resources is non-existent. This may lead to

over- or under-estimation of the need for reso urces.

Noble’s integratio n with major business partners promoted an overall reso urce

planning. This o verall p lanning could help to estimate the necessar y resources

accurately and better search for the appro priate resources and hence organize and

manage the reso urces more effectively. Po rtfolio s of reso urces that supported the

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manu facturing and distribution activities could then be established. The full pro duct

range co uld be planned, pr oduced and transported to the custo mer within

custo mer-acceptable deliver y time. This also meant that the pro duction could be

directly controlled by cu stomer orders and the finished goods inventory co uld be kept

minimal.

Fr om the ad ministrative po int of view, pro duction orders were generated at the location

where the actual production took place, but headquarters carefu lly controlled the entire

inventory/material flow. The headquarters was kept informed abo ut the progress during

processing in the China p lant, and when a batch of products was co mp leted, this was

reported to headquarters and the products transferred to Ho ng Kong. The system

provided the status of each manu facturing process based on progress along the

manu facture and deliver y r outing. From the infor mation that the system received from

the routing, it wo uld deter mine if the routing was available to receive further

assignment. A r outing mig ht have enough capacity left to meet a demand but still be

co nsidered as not available for assigning new jo b o rders if any capacity within the

routing for med a bottleneck. The infor matio n o n production status and capabilities was

easily accessible in the ERP system.

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As a high-value jewelr y manufacturer, Noble needed proper management and co ntrol

of inventory. This was crucial to the success o f business. Investigation o f the

stockhold ing situation revealed that appro ximately HK$35 millio n was tied up in the

low usage and obsolescent stocks. This lo cked-up capital mig ht explain the stock turns

as low as 1.5 times per year that No ble had been exper iencing. Traditionally, product

specifications were viewed as d iscrete tasks performed by salespeople and product

engineers respectively. The salesperson identified a customer ’s requirement and then

liaised with product engineer s and pr oductio n planner s to produce a product

specification and quotation. Unfo rtunately, this process was both time consuming and

error prone, with a high potential for miscommunicatio n of requirements and

misinterpretation of product info rmation.

By pro viding customer s with a new way for product specification, No ble enabled the

custo mers to configure product requirements for their specific o rders. The system

automatically validated the usage requirements and translated these into material codes.

Regular week ly orders could be sent as product codes with required quantities through

the Internet directly to Noble’s order-processing system. Noble re-processed the

product codes in a “factory phase” of the product specifications to pro duce the

bills-o f- material list of standard assemblies required to meet the order. Assembly and

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shipment could be within days. Every month, Noble sent an electronic update via the

Internet with the latest products and optio ns for the product specificatio ns. Instead of

made-to-sto ck that dominated in the past, it was replaced by made-to-order.

Supplier interface and just- in- time purchasing

Information exchange between supplier and manu facturer is now mo re open and

extensive than in the past. Co-operative planning efforts are more commo n in major

industries than in the jewelry sector. In the ear ly stage o f ado ption, the situatio n o f B2B

e-commerce with supp lier s did not help to improve the relationships with the supp liers.

Noble believed in a tr aditio nal appr oach to manage suppliers, insisting that suppliers

met irratio nal demands at sho rt notice, or Noble cou ld look for other supplier s.

Information given to suppliers was of little help to suppliers in planning their own

production and stockhold ing. The poor commu nication between the two parties

resulted in a common practice by Noble to order mater ials at shor t notice, with

supplier s su ffer ing the “shock” demands placed on them. Noble had almo st 80

supplier s. Of these 20 wer e used every month, with only 10 using No ble’s schedu ling

module under Oracle ERP system. Some materials had only one possib le supp lier,

potentially causing difficulties in guar antee of supply. This could be so if No ble’s

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co llaboration with selected supplier s was not ideal. The traditio nal way of managing

supplier s meant that unpredictable orders were being placed o n suppliers at short notice,

leading to guesses by these suppliers in predicting No ble’s requirements when planning

their own production and stockholding.

The management of Noble realized that no stock contro l solutio ns would be effective

without substantial input from supplier s. The next focus became that o f improving

supplier relationships to help gain this input. Discussio ns with supp liers pr ovided

information about their requirements and capabilities in responding to Noble’s needs.

The aim was to provide suppliers with as much useful ordering information as possible,

thereby allo wing them to plan in advance and co ntrol their own pro duction. This led to

the design of a new schedule format that provided more accurate information about past

demands and expected future requirements. The new control strategies were then

discussed in detail with suppliers in order to determine the impact on both parties and

the associated benefits.

As a result o f the co ntinuing system improvement by Noble and the collaboration with

its suppliers, co mmunicatio n was strengthened through mor e frequent exchange of

infor matio n. Suppliers became mor e willing to respond to Noble’s demands as they had

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a clearer idea of custo mers’ d emands. This new scheduling procedure was initially

intr oduced to 10 selected suppliers that controlled 50 per cent of the purchased items

co vering between 200 and 300 material codes in the Noble schedule. Success have led

to the partnership approach to schedu ling being implemented with 15 major supp liers.

This co vered approximately 65 to 70 per cent by value of the purchased items. Benefits

for suppliers included mo re reliable schedules, reduced finished goods sto cks,

increased visib ility o f customer requirements and a more accur ate understanding of the

true customer demand. For Noble, benefits included incr eased customer service levels,

reduced sto cks, increased stock tur no vers, impro ved delivery service from supp liers

and an overall min imized r isk of running o ut of raw material stocks.

An ultimate aim for Noble was to achieve just- in- time purchasing, with raw materials

being ordered from suppliers as these were assessed from customer demands. Fo r this

reaso n, Noble redesig ned the flow of supplier interface by the system integration B2B

e-commerce and the ERP system. A material-requirements su mmar y was generated

from the Oracle ERP system on a weekly basis and sent out to majo r suppliers. Because

of the B2B e-co mmerce system quotatio ns were received from material supp liers

within minutes or hours rather than days. By speed y data transmission the system

enabled Noble’s purchasers to fo cus more on the str ategic task of pricing negotiations

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rather than attending to repeated clerical work such as data entry.

The process of B2B e-co mmerce adoption

The process of B2B e-co mmerce adoption proved to be co mp lex and d ifficu lt. The

issues of system design and the need for standard operation flow pro ved difficult

activities, especially when there was no stro ng commitment fro m business partners. In

addition to these techno logical issues, complexity o f the o perating pro cedures with

business partners, which involved differences in bu siness practice and system

integration, also needed to be co nsider ed.

Initially, the need to impro ve current business processes by adopting a new way of

doing business that achieved significant savings and improve efficiency was the major

motivation in Noble. As the Internet increased in p opularity, major custo mers began to

demand or expect to use this appro ach in business. Noble responded by setting up a

system integrated with its existing ERP system, ho ping that this would provide a

significant competitive advantage as well as br inging Noble closer to its customers.

Although the first objective was achieved, the second one was no t as successful. No ble

did manage to achieve closer links with some of its customers, but this strategy did not

work equally well with all business partners.

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Different technologies have different levels of comp lexity, which may affect the

success o f adoption. In this case, Noble needed to learn and adapt to the new

technologies. The more complex systems such as B2B e-co mmerce system demanded

far gr eater effort during the system integration with other NT-based and Unix-based

ERP systems. Since bo th NT-based and Unix-based co mputer networks were used in

Noble for internal business processes well before they were extended to

inter-organizational activities, compatibility problems – in terms o f bo th hardware and

software - aro se between existing systems and the new ones that were develo ped

specif ically for electro nic trading. To make the existing systems co mpatible with B2B

e-commerce, Noble created an infr astructure for new interfaces, as well as system

integration with existing ERP system.

The adoptio n of B2B e-co mmerce in Noble ultimately involved changes in the way the

co mpany conducted business. The management evaluated its existing business

processes and addressed the impact of the adoption. Factors such as organizatio nal

structure, management practice, system feasibility, corporate culture, internal data

flows, app licatio ns affected, and trading partner relationships were all co nsidered.

Educating user personnel about how the company, as well as how individu al emplo yees,

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would benefit from the adoption was also critical. As with any organizational change,

to p management’s visible commitment to the ado ption process played a key role in the

process of B2B e-commerce being su ccessfully adopted.

Prior to the ado ption o f B2B e-commerce Noble needed to make minor changes to its

hardware. While the networ k operated on several Unix servers and these required no

chang es, commu nication links ( in terms of mo dems and networ ks) needed to be

upgraded. The network was upgraded to 256 kilo byte international private leased

circuit (IPLC) lines for faster transmissio n. Noble had introduced just-in-time and

mater ial requisition planning models for its distribution and deliver y requirements.

These were integrated o nline into the B2B e-co mmerce system, which in turn reduced

lead times to customer s, and also from suppliers. This approach also helped to keep

inventory levels low.

Within the period of ado pting B2B e-commerce, the researcher was invo lved directly in

identifying, trouble-shooting, and training for information exchange co ncerns and with

specifying, testing, and distributing custo mer and sales and management reports. The

process o f B2B e-commerce adoption in No ble addressed the need o f a mainly

manu facturing enterprise to reduce info rmation processing time, improve informatio n

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flow as a value-added ser vice, and enhance information exchang e with business

partners to reduce processing and distribution costs and also lead-time. In other words it

dealt with enhancement of the information supply chain as an important entity in itself,

performance and optimization of which had significant effects on the efficiency and

performance of the manufacturing enterprise.

Case Outcomes

Noble established a B2B e-commerce platfo rm fro m which both Noble and its

custo mers benefited. However, only a ver y small portion o f No ble’s incoming sales

orders arriving over its Internet- based B2B e-commer ce system. The majority o f or ders

still came via telephone or fax. The main reason fo r this was usually the “traditional”

purchase process on the custo mer’s side. The per sonnel fro m sourcing department used

the Internet to find all in fo rmation about the product, the lead-time or the price and then

handed it over to a purchasing person. This pur chasing perso n, being or iented to

paper- work, prefer red the traditional way of order ing via mail, fax or phone.

Fr om Januar y 1999 Noble installed a fu lly integrated MRP system in the headquarters

in Hong Kong and manufactur ing facilities in China, and ado pted a computerized

inventory control system for sales teams at various lo cations outside Ho ng Ko ng.

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Noble exercised effective inventory co ntrol, by obtaining real-time information on each

locatio n’s inventory level, transaction vo lume and inventory movement. I n o rder to

limit its exposure to gold fluctuations, Noble also maintained a minimum base

inventory o f gold that was replenished o n a daily basis. The inventory had a 34%

decrease and its financial co st was reduced by 60% in fiscal year 1999/2000.

The case stud y has demonstrated the wide range of d iffer ent co ntexts in which adoption

of B2B e- commerce may have significant impact on operation performance and

supply-chain management. The case study sho ws that there are potential benef its from

the adoptio n of B2B e-commerce in the manu facturing industries. These include faster

co mmunicatio n, cost savings and accuracy, reliability, closer supplier relatio nships,

reduction in material invento ries, fast and flexible customer response, r eshaping

buyer-supp lier relationship, improving core business processes, providing electronic

intermed iation, and reaching new seg ments and markets.

Conclusion

Many industries and markets require greater flexib ility and speed from their

manu facturers. The need to manufacture small quantities o f highly cu stomized

products with high quality and reliable o n-time delivery at a lo w cost is for cing

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co mpanies to change fro m old ideas of mass pr oductio n. To co mpete and thrive in a

chang ing and unpred ictable marketplace, co mpanies need to adopt flexib le

manu facturing methods. These methods require highly integrated and flexible

technolog ies of pro duction, not necessar ily high-tech methods, but highly capable o nes.

To adequately address their customers’ fast- changing and focused needs, Noble’s staff

had to be highly educated and trained, and significantly empo wered within the

co nstr aints o f a clear visio n and delineated co mpany principles and goals. No ble itself

had to have the ability to adapt to chang es rapidly, have highly flexible management

structures, and co mpr ehensive metho ds o f introducing change and prospering fro m it.

Implications for business practice

Ado ption of B2B e-commerce is not just a technolo gical issue. It also provides a new

way of doing business and changes o ur traditional bu siness mo dels. The use of B2B

e-commerce no t o nly results in increased operational efficiency and effectiveness, but

can facilitate the re-engineering of bu siness processes as well. However, the benefits of

B2B e-commerce cannot be realized witho ut proper adoption strateg ies, bo th technical

and organizational. The pro cess of B2B e-co mmerce ado ption can apply to many

industr ies, no t just the jewelry industry.

25
Teaching Questions
Abdel-Malek L., Das S.K. and Wo lf C. (2000), “Design and imp
Question 1.ofWhy
lementation B2B e-co mmerce adoption is important
flexible
manu
to thefacturing solutions in agile enterprises”, International Journal
manufacturing
of Agile ies?
industr
Management
Question 2.Systems,
What are Vol the
2 Issue 3, pp.187-195.
benefits of B2B e-co mmerce
adoption
Amaro G.,inHendry
the manufacturing
L. and Kingsman B. (1999), “Competitive
supply chain?
advantage, customisation
Question
and a new3.taxonomy
How No fobler develo ped B2B e-commer
no n make-to-stock ce
companies”,
system? nal Jo urnal of
Internatio
References

Operations
Question 4. & How
Productio
No blen Management, Vol 19 Issuefrom
shifted its production 4, pp. 349-
make-
371.
to-stock to make-to -order?
Question 5. What is the pr ocess of B2B e-co mmerce
Angeles R. (2000), “Revisiting the ro le of Inter net-EDI in the
adoption?
current electronic
Question
co mmerce6.scene”,
WhatLogistics
are the Info
implications to the manufactur
rmation Management, Vol 13
ing industries?
Issue 1, pp. 45-57.

Bhatnagar R. and Viswanathan S. (2000), “Re-engineering glo bal

supply chains -
Alliances between manu facturing firms and global logistics
services pro viders”,
Internatio nal Jo urnal of Physical Distributio n & Lo gistics
Management, Vo l 30 Issue 1,
pp.13-34.

Christiaanse E. and Ku mar K. (2000), “ICT-enabled coordination

of dynamic supply
webs”, Internatio nal Journal o f Physical Distribution & Logistics
Management, Vol 30
Issue 3/4, pp. 268-285. 26

Kamel S. and Hussein M. (2001), “The development of e-

commerce: the emerging
virtual context within Egypt”, Logistics Info rmation Management,
Vol 14 Issue 1/2, pp.
119-127.
Lucking-Reiley D. and Spulber D.F. (2000), “Business-to-business electro nic
co mmerce”, eCo mmerce Research Forum, Sloan School of Management,
Author biography
Massachusetts Institute of Technolog y as a work ing paper and published o n their
website <http://e-commerce.mit.edu/cgi-bin/viewpaper?id=94> on 1st November
2000.
Oliver jo ined LJ Internatio nal as Assistant to COO in June 2002. LJ Inter national is a
NASDAQ-listed
Meijboo m B. (1999), co mpany. His first assignment
“Production-to-order is to r eview the
and international o peration
operations: A of Company
case study
and implement
in the a tailor-made
clothing industr EnterpriseJournal
y”, International Resources Planning (ERP)
of Operations system to
& Production
streamline
Management, its operation.
Vol 19 IssuePrior
5/6,topp.
that,602-619.
Oliver worked with Noble Jewelry Limited as
Director of e-Business.
Sekaran U. (2000), Research Metho ds fo r Business: A Sk ill-Building Appro ach, John
Oliver
Wiley & hoSons,
lds a Master
Inc. of Business Administration ( MBA) degree fro m University of
Leicester in 1993. He is an associate member of the British Computer Society, a
member of the Chartered Management Institute, and an associate member of the
Chartered Institute of Logistics and Transpor t in Hong Ko ng. He also ho lds a
Post-graduate Dip lo ma in Marketing and is a member and Chartered Marketer with the
Chartered M.
Warkentin Institute
, BapnaofR.Marketing.
and SugumaranOliver is currently
V. (2001), studying networks
“E-knowledge for a Doctofor r of Business
Ad ministratio n with
inter-organizational University
collaborative o fsiness”,
e-bu South Australia
Logistics and expecting
Informatio graduation Vol
n Management, by March
2003. His r esearch
14 Issue 1/2, MCB is concentrated in the areas of supply-chain management, system
integration and e-commerce develop ment in the manufacturing industries in Hong
Yau B.O.Oliver
Ko ng. ( 2001),has“Business-to-business
some publications with electronic co mmerce (B2B
the e-commerce e-commerce)
website of MIT.eduand in 2001
its potential
and 2002. app licatio ns in the manufacturing industries (a review of literature)”,
eCommerce Research Fo rum, Sloan School of Management, Massachusetts Institute of
Technolog y as a working paper and published on their website
<http://e-commerce.mit.edu/cgi-bin/viewpaper?id=145> on 15th September 2001.

Yin R.K. (1994), Case study research: design and methods, Sage Publication.

Yu Z., Yan H. and Cheng T.C.E. (2001), “Benefits of informatio n sharing with supply
chain partnerships”, Industrial Management & Data Systems, Vol 101 Issue 3, pp.
114-121.

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