Strategies for E-Procurement: Auto Industry Hubs Re-Examined

Amid the turmoil of the current economic crisis, the wild expectations for business-to-business electronic marketplaces or ‘e-hubs’ as transformative modes of exchange for all industries have subsided. However, e-hubs continue to elicit interest in industries such as car production. Yet, there is little research that investigates firms’ strategies for e-procurement in the automotive industry and the potential benefits of e-hubs to them. This research re-examines the transition from bespoke electronic data interchange to generic electronic procurement, and conflicting motivations and complex barriers at firm and industry level are revealed. The article develops a framework that examines the benefits and barriers to firms joining e-hubs, applies the framework to the car industry, and proposes an e-procurement matrix that offers alternative strategies. Six cases from vehicle manufacturers and component suppliers demonstrate a shallow industry structure that lacks supplier integration, where a particular concern is the emergence of consortium e-hubs that combine a transactional approach for reducing price, with a collaborative approach that requires sharing knowledge. While this dispels the myth of simplistic e-commerce models, the governance of e-procurement across collaborative supply chains is still uncertain.