Study on Optimization of Organizational Structure based on IT in Distribution Enterprise
Abstract
Based on the analysis of IT applied in distribution enterprises and related technology, thestudy demonstrated the relationship of modern IT and distribution enterprises and analyzedoptimization of 留學(xué)生MBAdissertationdistribution enterprises organizational structure based on IT including (BusinessProcess Reengineering) BPR meaning and revelation as well as the role of IT in BPR, and thenanalyzed the revolutions and optimization of traditional distribution enterprises organizationalstructure and the characteristics of distribution enterprises organizational structure inpost-revolutions, finally evaluated the revolutions of distribution enterprises organizationalstructure.
The study also studied how to transform and restructure the original organizational structureand processes of enterprises by the advantages of information systems to optimize theirinformation flow, logistics, capital flow and improve enterprise operational efficiency, so that theinformation systems become the organic component to make commercial enterprises operateefficiently, study of commercial distribution enterprises and other new technologies ine-commerce environment, how to structure and operation the new system, to develop newbusiness opportunities, look for new economic growth points，finally we studied of howdistribution enterprise make decision and monitor information based on information system, inorder to meet the requirements distribution enterprises on strategic and tactical levels.
The detail in each chapter is shown as follow:Chapter1 firstly discussed the connotations and classifications of distribution enterprises as
well as the scope of distribution enterprises in this article, and summed up the characteristics ofthe development of distribution enterprises, and the state and prospects on the application of IT indistribution enterprises.
Chapter 2 described modern IT related with distribution enterprises including the EDP, MIS,and database & data warehouse technology. After that, we introduced the meaning, structure,classification and characteristics of E-commerce.
In chapter 3, we demonstrated the inevitability of IT applied in distribution enterprises, aswell as the impacts, role, and value of IT in distribution enterprise, and then described theoperation mode of virtual enterprises.
Chapter 4 firstly explained the connotation of BRP, stated the role of IT in BRP, then made ananalysis of how to revolve and optimize distribution enterprises organizational structure based onIT and found the characteristics of new distribution enterprises. At the end of chapter, weevaluate the revolutions of distribution enterprises organizational structure.
At last, we concluded the content of the study and propose the defect and the outlook for thestudy in chapter 5.
The study try to put forward business organization and management modes, operational#p#分頁標(biāo)題#e#
processes and countermeasures for development adapt to the economic development of thenetwork, then make a comprehensive exposition about initiative of enterprises, openness,innovation, adaptability and sustainability with modern information technology.
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Content
Abstract ............................................................................................................................................ 1
CHAPTER1 INTRODUCTION ....................................................................................................... 4
1.1 Distribution and Distribution Enterprises ........................................................................... 4
1.1.1 The connotations of distribution and distribution enterprises .................................. 4
1.1.2 The classification of distribution enterprises ............................................................ 4
1. 2 Characteristics of Development in Distribution Enterprises .............................................. 7
1.2.1 Commercial capital is intensive, enterprises tend to be large-scale. ........................ 7
1.2.2 Small and medium distribution enterprises enhance the degree of organization in
order to survive and develop. ............................................................................................ 8
1.2.3 Competing around the world .................................................................................... 8
1.2.4 The concept of marketing becomes business's guiding ideology ............................. 8
1.3 Status and Trend of Application of IT in Distribution Enterprises ...................................... 8
CHAPTER 2 CONTENT, AIMS, OBJECTIVE, METHODOLOGY AND ORGANIZATION .... 11
2.1 Content and Aims .............................................................................................................. 11
2.2 Objectives ......................................................................................................................... 11
2.3 Methodology ..................................................................................................................... 12
2.3.1 Documentary .......................................................................................................... 12
2.3.2 Questionnaire ......................................................................................................... 12
2.3.3. Comparison ........................................................................................................... 12
2.3.4 Logical science ....................................................................................................... 12
2.4 Organization of the Study ................................................................................................. 13
CHAPTER 3 MODERN IT RELATED WITH DISTRIBUTION ENTERPRISES ....................... 14
3.1 Overview ........................................................................................................................... 14#p#分頁標(biāo)題#e#
3.2 Introduction of Modern IT Related with Distribution Enterprises ................................. 14
3.2.1 Electronic Data Processing (EDP) ......................................................................... 15
3.2.2 Management Information Systems (MIS) .............................................................. 15
3.2.3 Database and data warehouse technology .............................................................. 16
3.3 E-Commerce ..................................................................................................................... 18
3.3.1 Content and structure of e-commerce .................................................................... 18
3.3.2 Classification and characteristics of e-commerce .................................................. 18
3.3.3 Features of e-commerce ......................................................................................... 19
CHAPTER4 STUDY ON ADVANTAGES OF DISTRIBUTION ENTERPRISES BASED ON
MORDEN IT ................................................................................................................................. 21
4.1 The Inevitability of IT Operate in Distribution Enterprises .............................................. 21
4.2 Impact, Role and Value of Modern IT on Distribution Enterprises ................................... 21
4.2.1 The impact of modern IT in distribution enterprises .............................................. 21
4.2.2 Characteristics of modern IT affecting distribution enterprises ............................. 23
4.2.3 The effects of modern IT in distribution enterprises .............................................. 24
4.3 Virtual Enterprise .............................................................................................................. 25
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CHAPTER 5 OPTIMIZATION OF DISTRIBUTION ENTERPRISES ORGANIZATION BASED
ON IT ............................................................................................................................................. 27
5.1 Connotation and Revelation of Business Process Reengineering (BPR) in Enterprise .... 27
5.1.1 Connotation and analysis of BPR ........................................................................... 27
5.1.2 The role of IT in BPR ............................................................................................. 29
5.2 Revolution and Optimization of the Traditional Organizational Structure ....................... 30
5.2.1 Incentives for revolution of the organizational structure ....................................... 30
5.2.2 Principle of revolution in organizational structure ................................................. 31
5.3 Features of the New Organizational Structure in Distribution Enterprises Based on IT ... 32
5.3.1 Flexibility ............................................................................................................... 33#p#分頁標(biāo)題#e#
5.3.2 Virtualization .......................................................................................................... 33
5.3.3 Dynamic cooperation ............................................................................................. 34
5.3.4 Interaction of information ...................................................................................... 34
5.3.5 Boundless ............................................................................................................... 35
5.3.6 Flat structure .......................................................................................................... 35
5.4 Evaluation to Revolutions on Organizational Structure .................................................... 36
CHAPTER 6 CONCLUSION AND DISCUSSION ....................................................................... 38
6.1 Conclusion ........................................................................................................................ 38
6.2 Discussion ......................................................................................................................... 39
References ...................................................................................................................................... 40
Acknowledgment ............................................................................................................................ 44
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CHAPTER1 INTRODUCTION
In this chapter, we firstly discussed the connotations and classifications of distribution enterprisesas well as the scope of distribution enterprises in this dissertation, and summed up thecharacteristics of the development of distribution enterprises, and the state and prospects on theapplication of IT in distribution enterprises.
1.1 Distribution and Distribution Enterprises
1.1.1 The connotations of distribution and distribution enterprises
The Marxist concept of distribution includes two meaning: First, the overall flow of theprocess that united with the production process. Second, the distributed process that independentof production process (Liu Xingyuan, 2008). The former refers to the total process of capitaloperation; it is the study of the whole theory of social reproduction, which is the unity ofproduction process and distribution process. The latter refers to distribution process in a narrowsense, which does not include the activities of commodity exchange in production process
(Lambert, Stock, 2008). Distribution relates production with consumption in social, sites, date. Iteliminates social interval through the sale, eliminates work sites interval through the transportation,and eliminates the date interval by stock. The social interval refers that the producer and consumerare different, sites interval refers to the production sites and consumption sites are different, dateinterval refers the period of production and consumption are in different periods.#p#分頁標(biāo)題#e#
Distribution enterprises are the companies which specialized in commodities distribution and
commodity exchange in the process of social reproduction. The generalized distributionenterprises include catering business and the direct activities of service for the commoditiesbusiness. Distribution enterprises sent goods from the production areas to consumption areas to
achieve the value of commodities and meet the social production and people's needs as well asearn a profit through commodity trading activities. According to the position and role, distributionenterprises are divided into the wholesale enterprises and retail enterprises. According toenterprises scale, distribution enterprises can be divided into large-scale distribution enterprises,medium distribution enterprises and small-scale distribution enterprises (Xu Congcai, 2006).
1.1.2 The classification of distribution enterprisesRecently distribution enterprises generally include three categories as follow:
1.1.2.1Wholesale enterprisesWholesale enterprise is specializing in resale of large quantities of goods. It purchase goods
5 / 45from the production enterprise or other enterprises, then sales to other enterprises or manufactories
which is in the beginning or intermediate stages of commodity distribution. Its function is to putthe community into the distribution from production areas, links the manufacturing enterpriseswith the retail enterprise from the origin transported to the marketing. Wholesale enterprises arevery important for the entire distribution of commodities and they are tools for controlling themarket. According to the different nature of wholesalers, it can be divided into independentwholesalers, manufacturing wholesalers, co-wholesalers, wholesale and retailconcurrentlywholesalers, chain of wholesalers.
(l) Independent Wholesalers
Independent wholesaler is referred enterprise that is independent production sector. It owns
its funds, and purchases its own accounting organizations to obtain ownership of the goods, thensale commodity to other enterprises. The forms are mostly commercial enterprises, they purchasefrom producers so that save more cost than producer shipped the commodities to retailers directly,so the producers get more benefit. At the same time, the Independent Wholesalers providetransportation, storage, custody and other operations for retailers; therefore it is beneficial toretailers. Due to independent wholesalers specialized in wholesale business, they can studyexperience in commodities distribution and marketing techniques, providing services fordistribution. So, it facilitates the smooth passage of goods distribution, saves time and money indistribution results to be the most important form in a modern organizational structure ofwholesalers.
(2) Manufacturing WholesalersManufacturing Wholesalers refer the wholesale distributor that the production enterprises
establish in sales organizations. In Chinese commercial activities, partly of industrial sales belongsto this category.#p#分頁標(biāo)題#e#
(3) Co-wholesalers
Co-wholesalers refer to the wholesale that is co-organized by group of retailer enterprises inorder to compete with the department stores, chain stores and other large retailers, they aimed atusing bulk purchasing to save distribution costs and raising competitiveness.
(4) 留學(xué)生MBAdissertationWholesalers and retail concurrently wholesalers
They mainly refer to the enterprises both engaging in the wholesale business and retailbusiness. In the case of the fierce market competition, some wholesalers carry out diversificationof operations in order to enhance economic efficiency.
(5) Chain of wholesalers
Chain of wholesaler is the organization composed of many wholesalers. Such organizations
use such favorable conditions as the bulk purchasing, assemble of its following retailers, in orderto compete against the big retailers.
1.1.2.2Trade Center
Trade Center is open wholesale market located in the central city. It is commercial wholesale
market which breaks through the original three wholesale levels in distribution reform.
State-owned and collective industrial and commercial enterprises are the principal member, the
business activities are restricted by the national constitution, laws, policies, and the aims are
dredge channels of commodity distribution and promote the circle of expanded reproduction.
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Different enterprises can purchase and sale by themselves. The forms of trade Center mainly
includes three types as:
A. integrated wholesale consortium
B. economic entities engaged in both operation and services
C. enterprise providing wholesale service business
Trade Center could be self-employed and joint which can purchase sale, store, transport andprocess for other enterprise, it is an integrated multi-level trading market combined wholesale withthe lesser line trading, linked futures and spot.
1.1.2.3 Retailers
Retail enterprise is enterprises that specialized in the retail business. It supplies goods for theconsumption of urban and rural residents, or for the social group for non-productive consumptionand it is the end of the process of commodity distribution. The consumers buy goods from the
retail enterprise and the value of commodities is gain. Compared with wholesale enterprises, retailenterprises are small-volume, multi-batches in commodity trading, but it contacts consumersdirectly, most retailers sales in a relatively small space.
(1) Department Store
Department store is a comprehensive retail stores mainly operated daily Commodity. Themajorities are large and medium-sized generally, it operates in a wide range of commoditycategories almost with complete assortment. Goods in department store are soled in
commodities-based counter with professional management, actually department store is the jointof many professional shops, and it owns the strengths of professional shops and integrated storewhich meets a wide range of consumer selection and various requirements of purchase. Since itslarge-scale, well-organized and advanced equipment, it is conditional to use modern management#p#分頁標(biāo)題#e#
methods to improve the management level, create a complete product inspection system to
supervise product quality strictly, provide relatively complete services and facilities, and maintain
a high standard of service quality. Some are attached to non-trading sites, such as the lounge,
parking and other facilities. Generally it is located in major business districts in large cities.
Department first appeared in France in 1852, due to its improved operating techniques, clearly
marked, the guarantee for the quality of goods, selling goods by sector and other characteristics,
it is known as the first revolution in the retail business, and now has become a major form of
large-scale retail enterprises in worldwide.
(2) Professional Store
Professional shops retail stores that are operating one or several types of goods. Around one
or several types of goods, it forms a supply system to facilitate consumer choice includes the main
body, the major commodity and its accessories which are complete specifications and standard,
the color styles are numerous. There are also stores specialized in a certain type of customers, such
as children's products stores. According to operating characteristics of goods, professional store
can be divided into the following types: operating precious commodities stores (such as gold and
silver jewelry, handicrafts, etc.), durable goods stores (such as televisions, refrigerators and other
appliances commodities), demanding product specifications stores(such as hardware, electrical,
medical, etc.), people's daily necessary and part of specific commodities stores, as well as book
stores, sports professional shops and so on.
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(3) Supermarket
It is retail store with an implementation of open-type sales, customer self-service. The main
features are: open sales and customer self-service instead of sales services, customer can select
commodities randomly, widely used quantitative package, the sale of goods are packaged in
http://www.400190.com/dissertation_writing/MBA/accordance with a certain number and specifications with price tag and placed on the shelf by
category in order to carry easily, it is suitable for purchase of a greater number of goods once,
computer instead of manually in clearing settlement with high efficiency which saves expenses,
reduces errors and customer waiting time. The majority of supermarket is built in suburban areas,
with parking. Hand-held baskets or trolleys are ready at the entrance and customers will select
goods and put it on the basket or vehicles, then the customers come to the collection counter at the
exit settlement. Supermarket mainly operated food commodities but it is now extended to the daily
necessities, clothing, shoes, hats and other industrial products. Supermarkets are now the main#p#分頁標(biāo)題#e#
organization form of commercial distribution.
(4) Chain stores
Chain store is a large retail enterprise composed of a number of and various types of retail
stores (such as department stores, supermarkets, specialized stores), it is named enterprise groups.
The group's stores are located in various areas as the ring of the enterprise's chains, so they are
called chain stores. All the branches are belonged to the same investment system which are
managed and controlled by the system.
The purchase and selling programs, operating varieties, management style, service mode,
store renovation various branches of chain stores and so on are united by the enterprise, or even
the construction type of store, interior decoration must meet certain criteria in order to make
customer easy to identify the chain stores of same organization. The goods of various branches of
chain stores is supplied by the enterprise's centralized procurement, the enterprise purchase a large
number of commodities from manufacturers directly to enjoy a larger volume discounts but not
from wholesalers, which makes chain stores are more competitive than independent stores. At
the same time, the transportation is vehicle shipping which can save more cost, and supply sectors
given priority in the color varieties. At present in United States, the chain store sales have
accounted for over 60% in all the retail stores.
1. 2 Characteristics of Development in Distribution Enterprises
In highly developed commodity economy period with electronic computer automation as
signs and based on large-scale socialized production, distribution enterprises own a huge market,
it is more and more developed. Distribution enterprises development has shown the following four
characteristics:
1.2.1 Commercial capital is intensive, enterprises tend to be
large-scale.
In order to meet the growing scale of production expansion and the increasingly fierce market
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competition, commercial enterprises tend to expand the scale, large volume sales by opening new
branches, increase its market share as a means to seek survival and development. Therefore, after
the World War II, many countries emerged a number of large retail enterprises and wholesale
enterprises, such as Wal-Mart in United States, Carrefour in France. Such enterprises are not only
strong in capital, but also own thousands of stores around the world and become the well-known
large-scale commercial enterprise groups.
1.2.2 Small and medium distribution enterprises enhance the degree
of organization in order to survive and develop.
Although there are large-scale commercial enterprises, capital concentration and
monopolization in this stage, large department stores, supermarkets and other large commercial
enterprises compete to survive, they organize themselves as the form of chain stores and malls in#p#分頁標(biāo)題#e#
order to enhance competitiveness. In the fierce competitive market, a number of small and
medium distribution enterprises have also taken diversification to play their special characteristics
to contend with large-scale commercial enterprises, thus they can survive and develop.
1.2.3 Competing around the world
With the development of international trade and the emergence of transnational corporations,
the prices of variety commodity are not only based on one country's production price, but also
gradually based on the international value, which become an international producer prices. This
price is that cost in the international market plus the average profit in worldwide market.
Therefore, in highly developed market, the profits of enterprise have been converted to the
international average profits. Such profit becomes part of the world's surplus value.
1.2.4 The concept of marketing becomes business's guiding ideology
In a highly developed modern market, commercial business ideas neither are under a
production center that commodity in short supply and in "seller's market" situation, nor are in an
oversupply of "overproduction" conditions which only emphasis on strengthening advertising, but
with the advances in technology, products are increased rapidly, varieties are continuous innovated,
products are oversupply, people's consumption level, structure, and types are continuous
developed, marketing concept that all business activities must be based on customer needs as the
guiding ideology must be the guiding ideology of business.
1.3 Status and Trend of Application of IT in Distribution
Enterprises
With powerful technical support and perfect management, the United States, Japan, Britain,
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Germany, France and other developed countries have adopted computer management in
distribution enterprises, almost all shopping malls and supermarkets have applied the cash register.
Especially in the large and medium distribution enterprises, they applied a variety of advanced
information technologies, including POS-MIS system, electronic ordering systems (EOS),
electronic data interchange (EDI), wide area network data exchange (based on cable and satellite
networks, etc.), e-commerce based on Internet, information analysis and decision-making based
on data warehouse and so on (Duncan, 1995). According to statistics at the end of 2006, the
automatic collection and data processing technology applied in all of the distribution enterprise the
United States, Europe and other developed countries, in aspect of information management system,
data warehouse technology applied in more than 85% of the distribution enterprises in the United
States according to statistics at the end of 2008 (Tsung-Yi, 2008).
In the United States and Europe and other developed countries, there are more than 80% of#p#分頁標(biāo)題#e#
traditional enterprises has their own website to provide production and management and other
related services, including membership registration, tender publishing, online sales, production
describes, offer the solution, advice complaints, supply and distribution services that integrated
with internal information systems to form a complete production and management information
systems(Goranson, 1999). Such as Ford Motor Enterprise, Boeing in the United States, Siemens
AG in Germany, they have adopted e-commerce linked the global demand information to provide
services related to production and management online.
Large enterprises in the developed countries established a transnational information coalition
to carry out purchases the necessary materials on-line (Avison, Fitzgerald, 1995). Take some large
airlines as Air France, British Airways, American Airlines, China Airlines, United Airlines for
example, they established a B2B enterprises to sale the air supplies mainly as fuel, avionics
equipment, engine components, but not relate to air transport services. Other enterprise such as
World Retail Exchange (WRE) formed by America, British and France, GNX (Global-
NetXchange) founded by Sears in the U.S., Carrefour in France, Sainsbury in Britain and German
Metro commerce website, its aim is to form global trade network, purchase in joint to save cost
and monopolize the market and maximize profits. In addition, aircraft manufacturers Boeing,
BAE-systems, Lockheed Martin, Raytheon and automobile industry Ford, General Motors,
Dailmer Chrysler have already set up an information Alliance Business website.
Electronic ordering is applied through the value-added network / Internet inter-enterprise
with supplier, including electronic agreements, orders and other documents management (Edwards,
Newing, 2000). The commodities requests information of chain stores and distribution centers is
achieved through internal networks including daily requests and emergency replenishment and
other processing.
Modern distribution center have modern sorting technology, transmission technology,
stacking technology, they form a highly efficient modern distribution technology portfolio (Jagdev
H, Browne J, 1998). Take Wal-Mart for example, it has dozens of logistic distribution center in
worldwide, each distribution center is larger then 10000 square meters with professional staff and
advance automation of distribution equipment for the distribution of nearly 100 stores, it is located
in the centre of the 100 stores, the service radius is 250- 300 km, the food and daily necessities are
the main commodities, operating more than 40,000 kinds of varieties. Because of the perfect
distribution centers network, operations in ordering, distribution center and delivery process are
more quickly so that reducing the standard delivery time.#p#分頁標(biāo)題#e#
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Perfect network service systems are supported for customer. Suppliers, transporters are
connected through network and after-sales maintenance, consulting, benefits and other services are
provided. Such as the customer can know the purchased quickly and delivery time through the
network.
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CHAPTER 2 CONTENT, AIMS, OBJECTIVE,
METHODOLOGY AND ORGANIZATION
2.1 Content and Aims
From the above analysis, we found that: commodity distribution play an important role in the
national economy and people's life. In traditional enterprises, the organizational structures are so
complex and rigid to manage and dynamically cooperate with other enterprises; the business cost
including management cost, labor cost, storage charges and so on are too high. If IT is applied in
distribution enterprises, the structure will be more flexible and the cost will be reduced in a
considerable extent.
Based on the development, open and innovative ideas, this study analyzed existing
distribution enterprise organization, management and operational processes, combined the
organization and management mode and operation processes of distribution enterprises in
developed countries, and analyzed technical characteristics, application requirements, the
influence and impact of modern information technology, in particular of e-commerce on the
traditional distribution enterprise, researched operation mode, operation processes in distribution
enterprises under the conditions of information technology, put forward business organization and
management modes, operational processes and countermeasures for development adapt to the
economic development of the network.
The aims of the dissertation are shown as follow:
(1) Knowing the way to apply IT in distribution enterprises and optimize organizational
structure and revolve the traditional workflow from the perspectives of information flow, logistics,
and capital flow.
(2) Knowing the relationship of modern IT and distribution enterprises, the IT impact on
distribution enterprises and enterprises organizational structure.
(3) Understanding the methods to optimize organizational structure based on IT and make an
assignment on the revolution.
2.2 Objectives
The study tried to solve the following key issues based on the analysis of related details about
distributions enterprises and IT.
(1) Studying the methods of distribution enterprises to reengineer their organizational
structure based on IT, and finding the factors that IT has impact on the reengineering.
(2) Optimizing organizational structure in distribution enterprises, and listing the criteria of
distribution enterprises reengineering their organizational structure on strategic and policy.
(3) Analyzing the features of new organizational structure in distribution enterprises based on#p#分頁標(biāo)題#e#
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IT, and establishing a method to evaluate the effects of new organizational structure.
2.3 Methodology
The dissertation studied the optimization of organizational structure in distribution
enterprises based on IT with methods such as documentary, questionnaire, comparison and logical
science.
2.3.1 Documentary
In the dissertation, almost all of the chapter adopt documentary in order to clear the situation
and development trend of distribution enterprises, in another word, we can know the basic concept
and technology from other literatures and list the advantage and disadvantage for distribution
enterprises organization. In the fist chapter, there are some definitions about different distribution
enterprises, most of which come from other literatures. Additional, there is an overview about
modern IT related with distribution enterprises, and then this study introduces the classic IT in
distribution enterprises, especially in e-commerce in the third chapter, here, many literatures
supply some very important knowledge for the chapter. At last, BRP is an important concept
which is resourced from some books in the dissertation.
2.3.2 Questionnaire
Questionnaire is adopted in the fifth chapter. In this chapter, the dissertation makes an
evaluation for revolutions on organizational structure. In order to quantification of qualitative
indicators which lack corresponding quantization attribute, the study determines confirmed
grading system by brainstorm
2.3.3. Comparison
Comparison is an important method in the dissertation, for the study compared modern
distribution enterprises based on IT with traditional distribution enterprises. The dissertation
makes a comparison between traditional distribution enterprises and distribution enterprises based
on modern IT to find the factors that have impact on the reengineering of distribution enterprises.
At last, we try to evaluate the effects of new organizational structure in distribution enterprises
with qualitative indicators and quantitatively indicators, there are also some comparison in the
evaluation.
2.3.4 Logical science
The whole text are organized by logical science, though we have no enough data and perfect
theory to evaluate the effects on new organizational structure in distribution enterprises.
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2.4 Organization of the Study
The organization of the study is shown as Fig 1:
Fig 1-1 the organization of the study
Analysis of status and application of IT
in distribution enterprises
IT related with distribution
enterprises
Relationship of Modern IT
and Distribution Enterprises
Optimization and evaluation of distribution
enterprises organization based on IT
Conclusion and discussion
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CHAPTER 3 MODERN IT RELATED WITH
DISTRIBUTION ENTERPRISES#p#分頁標(biāo)題#e#
This chapter described modern IT related with distribution enterprises including the EDP, MIS,
and database & data warehouse technology. After that, we introduced the meaning, structure,
classification and characteristics of E-commerce.
3.1 Overview
Modern information technology laid the foundation for the development of the information
age, while it promote the arrival of the information age, particularly in the late twentieth century,
the rapid development of information technology and applications of internet affect the global
economic and cultural(ZHOU, BESANT, LEACH, 1997 ). Information Technology is engaged in
a revolution and it will cause a huge industrial revolution and social revolution, and change human
life and work again. It brings a new civilization life that our society facing a huge leap and the
most profound remembers about social upheaval and creative redevelopment.
IT refers to all relevant technologies involved in the production, processing, storage,
distribution and application, that are dynamic technology based on the combination of
micro-electronics- computer technology and telecommunications technologies which can achieve
the sound, images, text, and numbers and a variety of sensor signals information, then apply them
to processing, storage, dissemination and using (Irani, Love, 2002).
Modern information technology is a very broad technical base of modern information
technology, the development process of IT shows that modern information technologies closely
related to with the distribution enterprises include: electronic data processing (EDP), management
information systems (MIS), network technology (including Internet technology), database and
data warehouse technology, modern logistics technologies, as well as the most influential
e-commerce technology.
3.2 Introduction of Modern IT Related with Distribution
Enterprises
The applications of Electronic data processing, management information systems, bar code
technology, and data warehouse technology and other modern information technology in the
distribution enterprises is inevitable for social development and business development (Irani, Love,
2001). Now the commodities are very rich, the quality of commodities, goods variety and quality
of service requirements is increasing; the distribution enterprises have been inseparable from the
information technology. Information technology achieve automation such as electronic cash
registers, electronic card payment, purchasing management, inventory management, accounting
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treatment, cost computing in distribution enterprises, and improve the management level of
distribution enterprises comprehensively.
3.2.1 Electronic Data Processing (EDP)
Application system of computer is mainly to highlight how to use electronic technology to
handle, manage and transmits local data, it primarily focused on a variety of computer technology#p#分頁標(biāo)題#e#
tools (such as document management systems, data processing systems and telephone network
communication system), handling various types of data separately. So, the system is known as
electronic data processing systems (EDP).
The application of computer technology, communications technology and data processing
technology are the mainly in conventional EDP, generally without any forecasting, planning,
regulation and control management, conventional EDP primarily aimed at processing the data
which improve data processing speed and efficiency and accuracy of information transmission
(Kanet, 1999). Generally, the information processed by EDP are detailed, specific, well-structured,
accurate and with large volumes. For example, data statistical systems, data processing systems,
data update and status reporting system are typical of EDP. The process of EDP is composed of
people and computers, including a series of operations as the importation, classification,
consolidation, storage, processing, output and control.
For the EDP is mainly aimed at management to assist management in data processing (such
as inventory, sales, accounting, etc.), so EDP is mainly based on alone system or local network
with less demanding on the hardware and software, it provides a partial result. It is not only a
simple and effective information processing techniques and methods, but also the basis
information systems.
Currently the EDP processing enterprises mainly uses MSEXCEL, TSP package, special
software in distribution enterprise. Its processing is based on computer hardware, system software,
and data-processing software package which are statistics for various types of data, computing,
accounting treatment or reporting tax. EDP owns the daily high processing speed, great storage
capacity and very extensive areas of application which show great vitality of the EDP. It replaces
the daily manual information processing systems, and solves the case that people wanted to do by
hand without the ability to process data, analysis of information which provides a wealth of useful
information for management decision-making and brings benefits for the enterprise. With the EDP
developing to the management information systems, data processing have also changed data
management, EDP approach has been gradually embedded into the management information
system.
3.2.2 Management Information Systems (MIS)
As deepening of people's understanding on information processing as well as extensive and
successful of EDP's application, from late 60s and early 70s on the 20th century, management
information systems (MIS) was appeared, and expanded on the entire management distribution
enterprises rapidly, currently MIS technology has been widely used to realize the management and
decision analysis on Invoicing information (Hardwick, et al., 1996). Management information#p#分頁標(biāo)題#e#
16 / 45
system is a system which collects stores and analyzes information and provides the useful
information to the manager in the organization. It is characterized by information sharing and
rapid processing, providing a variety of information for management needs. Therefore, MIS is
based on network and computer to share information, it uses database technology to manage,
analyze and make decisions for the different levels (senior management, middle management and
operational management). MIS owns an information center with structured information
organization and information flow to assist managers at all levels, it can process electronic data
centralized according functions with strong inquiry and report capabilities. MIS is designed based
on understanding of a system of information objectively in the practical processing and it is
improved in the organization of information processing and technology. Client / server model (C /
S mode) is the main structure, the server-side is used of medium and large database management
systems (such as ORACLE, SYBASE, SQL—SERVER, etc.) and Unix or Windows operating
system, the networks are built by high-speed Ethernet technology, and client-side software is
designed and developed with methodology of object-oriented and corresponding tools (such as
Delphi, PowerBuilder, etc.). The application of MIS in the commercial distribution enterprises
emphasizes the core Invoicing as information flow, capital flow and logistics management. The
integral part of information are sharing server hardware, operating systems and database systems,
the point of sales (POS) system as electronic cash registers (ECR) is the core of the sale part,
contract management, purchase auditing, quality management and inventory management are
based on all of the workstations, financial management and information analysis system are the
important elements.
With the continued deepen application of MIS, some people gradually begin to consider how
to bring the information systems technology into business activities at the highest level: the
support of decision-making functions. G.A. Gorry and M. Scott Morton (1989) from
Massachusetts Institute of Technology proposed the concept of decision support system (DSS) in
1971 which promotes the application of information system in the management to a higher stage.
DSS technology is applied to the distribution enterprises is the development needs of MIS and on
their own requirements for enterprises development. Therefore, a number of DSS systems are
researched and developed, and then they are applied in the existing business information system
platform and achieved good effects (Alavi, Joachimsthaler, 1992).
In addition, with the development and application of Internet, Browser / Server based on
WEB has been applied on MIS, MIS is combined with the various types of distributed database#p#分頁標(biāo)題#e#
management systems and data warehouse technology to achieve the wide, fast and huge amount of
information processing and services.
3.2.3 Database and data warehouse technology
Business environment is complexity and dynamic which requires business managers to have
a keen insight and response rapidly for inside and outside changes that have occurred in
enterprises, and requires enterprises to have rapid and comprehensive information processing
system which provides comprehensive, timely and effective information for managers to make
decisions. Data warehouse technology based on a relational database, parallel processing and
distributed technology is a possible tool for handling such a massive, distributed, heterogeneous
data quickly and efficiently (Sheth, Larson, 1990).
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Data warehouse is data congregation, it is subject oriented, integrated, stable, and used in the
decision-making process to support management. Data warehouse not only stores a large variety
of detailed current and historical data, provides a large number of integrated data and information
and guides the establishment of a variety of topics, but also organizes and stores data from the
development and historical perspective, integrates a variety of analysis tools that can solve
complex quickly and make decision.
Although the data warehouse is developed on the basis of the original relational database, it is
different from the organizational structure of the database system, the basal and comprehensive
data from the original operational databases are divided into a number of different levels,
including the present basic data, historical fundamental data, mild comprehensive data, highly
integrated data and metadata. Highly aggregated data is the highest level and it is a
quasi-decision-making data. Metadata does not contain any actual data in operations database,
which is responsible for organizing the organizational structure of the entire data warehouse.
Data warehouse system consists of three main components: data warehouse (DW), data
warehouse management system (DWMS) and data warehousing tools, including data warehouse
data warehouse is the core of the system (Dasgupta,1999 ).
Data warehouse management system includes follow parts:
(l) The definition components, it is responsible for the design and definition of data
warehouse database, and defines the data sources.
(2) Data acquisition components, it extracts data from the source system.
(3) Management unit, it is responsible for, data maintenance, data safety, archiving, backup
and recovery work in the data warehouse.
(4) Information directory components, the data catalog of data warehouse is consist of the
technical catalog, business catalog and information engine.
(5) DBMS components, because the data warehouse storage form is a relational database, so#p#分頁標(biāo)題#e#
it needs a high-performance database management system.
Data warehousing tools include query tool and mining tool. The former refers to the query for
the analytical requirements, typically includes visualization tools, multidimensional analysis
(OLAP) tools, etc. the latter is mining knowledge with regularity from a large number of data,
which requires data mining tool.
Data warehouse technology have been widely used in Distribution enterprises to analyze the
large amount of data in information systems at all levels, guide purchasing and commodity
business restructuring. Such as analysis the relationship of the sales of goods in different time,
local, season, regional prices, evaluation commodity over the years (Haines, 1998).
When distribution enterprises determine to establish a data warehouse, they should consider
the following factors:
(l) Enterprises organizations are in volatile and highly competitive markets.
(2) Get a thorough understanding of customers and closer to customers.
(3) Opportunities to get revenue and / or improve the efficiency of products or services based
on information.
(4) Existing information systems of enterprise are adequacy and information data is stored in
many different locations and s.
(5) Called for more effective and more detailed queries, report and decision support.
(6) The situation of financial and technical staff, application awareness and level of
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managers.
Data warehouse can establish a structured environment without re-entering processing system,
it moves output (decision support) into a new environment (data warehouse), and builds
conceptual model (logical data model), internal model (historical documents) and external models
(data warehouse) environment.
The direct value of data warehouse is providing a comprehensive understanding of internal
and external environment of the short-term needs for the manager, while reducing the burden on
the maintenance of existing systems. The long-term value of data warehouse is enable enterprises
to shift from legacy systems to adapt to changes in the structure of high-speed enterprise
environments through the business data. As the enterprise's survival depends on the ability of
despondence to market changes, so it has an extremely important significance for the enterprise in
the information age.
3.3 E-Commerce
3.3.1 Content and structure of e-commerce
Since the 90s of 20th century, the development of network technology is unprecedented.
People began to try to conduct electronic information technology in the commercial activities on
cyberspace, this results e-commerce system (Kalakota, Robinson, 1999). Despite the development
time of e-commerce is not long, but the pace of development is very fast, the application was very
broad and it had a tremendous impact on the distribution enterprises. E-commerce refers to the#p#分頁標(biāo)題#e#
way people use electronic means for business, trade and other business activities, it is the
electronic, networking and digital in commerce. Electronic means include electronic technology,
tools, equipment and systems, as well as the earliest telegraphy and telephony, TV, fax, e-mail,
electronic data interchange, computer, communication networks, today's credit cards, electronic
money, Internet and so on. Business activities include inquiries of quotes, negotiation, contracting,
payment and settlement, business transactions, internal and external trade and other economic
activities.
E-commerce is mainly web-based business activity which is a new mode of business
operation. E-commerce has been start as early as before internet technology was is appeared, some
enterprises exchange data, tables and other information by electronic means in the local or
value-added online, the most typical and the widely popular technology is electronic data
interchange (EDI). However, EDI is B2B form based on the needs of enterprises, it must follow a
uniform EDI standards and a dedicated computer network. The emergence and development of the
Internet make the interactions of computer in different network environment possible which is
more efficient and convenient. E-commerce based on internet provides inter-electronic data
interchanges between individuals, businesses, government entities that are fast, easy and low-cost.
3.3.2 Classification and characteristics of e-commerce
Typically, classification of e-commerce based on the involved objects can be classified three
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kinds as business to business (B to B), business to consumer (B to C) and consumer to consumer
(C to C) (Doukidis, et al, 1998). Here the enterprises include enterprises, financial institutions and
government departments.
(1) B to B e-commerce
B to B e-commerce is the most important and most valued form to enterprises, enterprises
can find the best partner for each transaction from the internet or other network to complete all
transactions from the order to the settlement including orders to suppliers, contract, receive
invoices and the use of electronic funds transfers, letters of credit, banking methods such as
payment collection, as well as other issues such as claims management, and transportation of
goods to send tracking in the course of the business (David Ernst,2001). The earliest form of B to
B e-commerce is electronic data interchange EDI based on private or value-added network.
B to B e-commerce also includes the various services between enterprises and government
agencies, such as approval of various procedures between enterprises and government, a list
released by government through the Internet, enterprises response with electronic way, taxing to
the exchange of business and electronic transactions by electronic way on-line and so on, it#p#分頁標(biāo)題#e#
became the approach of government agencies publish its affairs. B to B is the main form of global
inter-enterprise electronic transactions with the greatest potential and fierce momentum, it has
been widely used in developed countries.
(2) B to C e-commerce
B to C e-commerce is the form that consumers participate in economic activities online
directly which is similar with commercial e-retail business. A variety of virtual stores and virtual
enterprises provide various services related sales business based on internet. The commodities
bought and sold through the virtual store can be materialized, such as databases, software and all
kinds of goods based on knowledge. It also provides a range of services as arrangements for travel,
online medical diagnosis and tele-education, etc. In addition, these applications also including
applications between consumers and government agencies, such as personal taxes, fees by
e-commerce and so on.
(3) C to C e-commerce
C to C e-commerce refers to users’ trade directly to each other freely, at present the main
form is commodity auction online. The practical implementation and operation of C to C
e-commerce is complex, it not only involves the user's credit and hobbies, but also requires the
relevant laws and regulations to protect.
3.3.3 Features of e-commerce
Compared with the traditional business activities, e-commerce has the following
characteristics:
(l) Virtualization in Trading
The trade is done through the internet represented with computer network, the participates
without the need to conduct face to face in the trade from negotiations, contract signs and payment
in the trade, all the process are completed through the computer and network, the entire
transaction is virtualization fully (HARDWICK,1996). The sellers can request the domain name
from the network administration, make their home pages and organize product information online.
The virtual reality, online chat, and other new technological developments enable a buyer to
20 / 45
choose ads based on their needs, and feedback information to the sellers. Through the interaction
of information, the electronic contract is signed, the transaction is completed and then pay with
electronic way. The entire transaction is taken in the virtual environment.
(2) Low transaction cost
E-commerce allows much lower transaction costs for buyers and sellers, this manifested
specifically in: ① the farther away the lower of cost on the network transmission of information
compared with the letter, phone, fax. In addition, shorten time and reduce duplication of data entry
also reduces the information costs. ② Buyers and sellers conduct business activities through the
network without participate of intermediaries which reduces the relevant cost in the transaction.
③sellers advert through the Internet for product introduction, promotion which saves a large#p#分頁標(biāo)題#e#
number of costs in the traditional manner such as products advertisement. ④ E-commerce is
"paperless trading" which can reduce 90% of the document processing costs. ⑤ the internet
allows buyers and sellers to communicate instant information on supply and demand, so that
non-stock and non-inventory sales are possible which saves inventory costs. ⑥"Paperless office
(OA)"in enterprises by internet improves the internal information transmission efficiency which
saves time and reduces management costs (Aerts, 2002). Linking the corporate headquarters,
agents and distribution subsidiaries in other countries, branches together through internet to
respond to local markets in time, product in time, and sales in time reduces inventory costs,
provides delivery services with an efficient and fast distribution company, all of these can reduce
product costs. ⑦Traditional trading platform is a ground-shops, while the new e-commerce
trading platform is home or office.
(3) Transaction efficiency
Because trade commercial message is normal in internet, so that commercial messages can be
passed around the world instantaneously with the computer automated processing, the raw
material procurement, production, demand and sales, bank exchange, insurance, cargo shipping
and reporting procedures are completed without intervention of human in the shortest period of
time(Thoben,2001). Traditional trade approach such as letters, phone and fax transmission of
information should be participated with people, and each link must be taken a lot of time.
Sometimes, due to the matters as cooperate and work time conflict, the trade will be delayed so
that the best business opportunities are loosen. E-commerce overcome shortcomings of traditional
trade patterns such as the high cost, error-prone, slow processing speed and so on, which greatly
reduces transaction time and make the whole transaction very quick and easy.
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CHAPTER4 STUDY ON ADVANTAGES OF
DISTRIBUTION ENTERPRISES BASED ON MORDEN IT
Here, we explained the inevitability of IT applied in distribution enterprises, as well as the impacts,
role, and value of IT in distribution enterprise, and then described the operation mode of virtual
enterprises.
4.1 The Inevitability of IT Operate in Distribution Enterprises
As development of distribution economic and formation of global business environment with
"full open, large circulation, big competition" as well as wider use of e-commerce between
developed countries, traditional distribution enterprises must apply modern IT to transform the
existing organization and management model to improve the management level and to improve
efficiency (Szirbik, et al, 2000). The application of E-Commerce (EC), Electronic Data
Interchange (EDI), electronic ordering systems (EOS), data warehouse (DW) and so on are not#p#分頁標(biāo)題#e#
only the reality of distribution in the virtual environment, but also a complete revolution that
brought the concept of operations and consumption (Szirbik, et al,1999). Modern information
technology applied in the distribution enterprises is the inevitable product of globalization
economic and requirements. The global markets are competed fierce, a major factor to occupy the
markets is that access enterprise information rapidly, and thus the enterprises gain a competitive
advantage. The acquisition and processing of such information is inseparable from a global
network and high-speed huge amount of information processing technology. Information is the
key factor that affects the development of economy and it will affect the survival and development
of distribution enterprises. The emergence of the internet provides the conditions to pass the fast
and wide for information so that the global e-commerce is possible.
4.2 Impact, Role and Value of Modern IT on Distribution
Enterprises
4.2.1 The impact of modern IT in distribution enterprises
Traditional distribution activities are based on physical shop and commodities, enterprises
sale commodities and provide services in different regions. The mode of distribution enterprises
operation is displays of goods and services provision, customer selection and identification of
tangible goods to buy (Bakos, Y. 1998). Modern information technology change and broaden the
traditional concept of business completely, including trade approach and content. It also affect and
change the concept of spending and shopping habits of customer.
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As the Internet expand the scope of physical distribution, the number of internet users are
increasing rapidly results online store, this direct selling methods with low-cost, no space
restrictions, quick and easy, day and night operation changes people's concept of the traditional
distribution enterprises, and leads to a new, highly competitive and vitality of distribution
enterprises.
The e-commerce changes is marked with the license and transfer of intangible property, such
as computer programs, games, books, music, all kinds of images as well as the kinds of
information that can be digitized. Compared with traditional trade, although such transactions own
the characteristics of a sale, the substance of sales was changed. The same number of books, we
can use CD-ROM in the form of electronic publishing. Today, the development of international
internet achieves buying behavior of non-occurrence physical products which makes the purchase
of books and CD-ROMs become unnecessary, consumers can only purchase the right to download
the data information, receive the knowledge in multi-volume encyclopedia without having to
move multi-volume encyclopedia back to home.
Modern IT will affect the existing mode of distribution enterprises operation so that#p#分頁標(biāo)題#e#
enterprises use of all resources including network (physical network, alliance network, marketing,
etc.) and information fully and effectively based on the original mode, then develop to the
e-commerce, chain operation in order to obtain the largest profit (Brown, Vessey, Powell, 2000).
Modern IT owns networking, intelligent, quick-oriented, distributed processing,
information-sharing and other features which provide a global transactions environment, detailed
decision-making information, rapid exchange of information on cross-channel, virtual online mall
and so on for distribution enterprises. These factors have a great effect on distribution enterprises
organization and management model and challenges to the original tree-level corporate-style
organizational structure and the traditional management-oriented approach based on internal has
also encountered difficulties.
In the traditional technological conditions, the organization structure of distribution
enterprises is a multi-level function of the tree-line model and the manage right of enterprise is
highly centralized and the information is not easy exchange of between various departments based
on this structure (Sumner, M. 1999). In order to face fierce global market competition, distribution
enterprises are not only required a high degree of sensitivity and rapid response capabilities to the
market and access technological resources, and various departments are required to exchange
information quickly. Because in the information age, sometimes seizing resource (opportunity)
is more important than to make good use of resources and exchanging and accessing information
is a major factor in success or failure of enterprises. Therefore, it is necessary for distribution
enterprises with complex hierarchical structure to draw a small accounting unit, expand the span
of management, enhance the communication between managers, departments so that organization
structure showing a flat mesh management model.
Some modern distribution enterprises are virtualization that can be operated through the
network without a fixed place or tangible enterprises organizations. The virtual organization way
affects the organization and management model of the traditional distribution enterprises and
changes distribution enterprises management ideas and methods.
Modern information technology broadens management method and objects of distribution
enterprises, extends the traditional internal personnel and financial management mode to a new
mode that information and financial are the main objects, internal management and external
23 / 45
management are the main content. In this management model, distribution enterprises pay
attention on acquisition, management and application of information, highlights the management
and utility of talent, the original analog information system is replaced by a integrated initiative#p#分頁標(biāo)題#e#
wide-area information systems that combines internal management and external interaction.
IT transmission the traditional business strategy based on experience to scientific decisions
based on information analysis. At the same time, e-commerce forces distribution enterprises to
take operations and development strategies, formulate policies and ideas to face the challenges of
different distribution enterprises as online shopping malls, logistics and distribution and achieve
greater development opportunity.
The traditional business intermediaries, such as agents, wholesalers and so on are affected by
IT, at least their subsistence lifestyle will change. In particular, development of e-commerce
deflects infrastructure and commodities in commodities distribution. The development courier
companies, payment companies, information service companies, as well as security products,
advertising, business software show an accelerating trend. It should be said, modern information
technology could weaken the traditional function of commercial distribution, this does not mean
weakening of the role of commercial distribution, but demonstrates the distribution of
commodities need to integrate modern information technology and find a new mode.
Enterprise information systems can provide full support decision on purchasing, inventory
management and other specific tactical, so no inventory or minimum inventory sales, the best
marketing mix and the minimum capital investment are possible to realize.
The model that global order, and orders based on the global information alliance based on
internet allows enterprises purchase at the lowest price and win a competitive advantage for
enterprises and achieve high efficiency.
E-commerce provides a timely, economical and effective interactive communication
environment and way for producers and consumers which make more and more manufacturers
directly involved in distribution activities, producers participate and control the commodities
distribution process to shorten the length of the supply chain (Handfield, Nichols, 1999). The
direct distribution replaces partially traditional distribution enterprises which are intermediary
status gradually and then forms a new pattern.
Application of modern IT in supply chain management enable the seamless connection of
industry and enterprises be possible, it provides a new way for supply chain management. It not
only achieves optimal choice in the number in inventory, stock location, distribution and
transportation, but also deliveries goods to consumers at the right time, place and at the right price
and convenient way. Logistics supply chain technology in e-commerce can link manufacturers,
retailers together via the internet, then occupies larger market and build the biggest supply chain.
4.2.2 Characteristics of modern IT affecting distribution enterprises#p#分頁標(biāo)題#e#
Because consumers can purchase directly from the internet based on modern information
technology, producers, wholesalers, retailers and online sellers can create their own website and
sale their commodities, part of goods is no longer distributed accordance with the original
industry, and no longer follow the traditional business to purchase, store, distribute and operate.
Since breaking the boundaries of time and space, the business district of traditional sense was
broken, the customer suddenly extended to the whole country and the world, the true sense of the
24 / 45
international market was developed which not only enhance selectively of consumers greatly, but
also make commercial competition fiercer. Some on-line commercial agencies brought "zero
profits selling" concept, that means traditional enterprises make a profit from the price and the
selling price, while the online enterprises down such a price difference to zero, and some even
make commodities selling price below the cost of production, and their commercial profits is no
longer achieved from the commodity price difference in the acquisition, but from online
advertising, services, sponsors, and other high-margin goods.
In addition, retailing is an organizational form in accordance with difference of market, such
as department stores, comprehensive supermarkets, 24-hour convenience stores, specialized stores,
warehouse supermarkets. In recent years, non-store sales are raised as a new mode, such as
telephone reservation shopping, letter shopping, online shopping is the most growth potential. It is
said in the current U.S. macroeconomic statistics, e-commerce accounted for a little market
compared with the overall market (less than 10% of total retail sales in the USA), but the
momentum of its development should be paid attention to (Markus, Tanis, 1999).
In most cases, online shopping often be combined with other non-store shopping methods as
consumer choice of commodities on the Internet, order by telephone and letter, delivery the
commodities by a specific company and sent them to home, such stores are presented only on-line
without physical store, not even their own business situation. They are specializing in the release
of commodity information and accept the consumer purchase request. The warehousing,
distribution and delivery operations are the responsibility of the third enterprises. According to
official announcements in the United States, such sales methods account for l / 4 of the online
trade.
4.2.3 The effects of modern IT in distribution enterprises
Modern information technology has a huge impact on traditional economic system, especially
on the economic activities in the distribution area. The impact is expressed in:
Firstly, the information flow of goods and services is divided from the traditional distribution#p#分頁標(biāo)題#e#
markets and appeared on the network market. This is because the information flow online is lower
in cost than traditional markets, the velocity of information on the internet is faster than in the
traditional markets, the coverage of information flow online is greater than in the traditional
markets.
Secondly, production, circulation and consumption of information goods have shifted to the
Internet, thus the producer of information goods, consumers and the markets are divided from the
real economy and enter into the Internet economy.
Thirdly, the capital flow is far away from the traditional markets and depended on network.
With development of technology and strengthening of security, e-money will be appeared. In
future the traditional currencies will eliminate, capital flow will be divorced from the traditional
markets completely and cash flow will not exist in the real economy.
25 / 45
4.3 Virtual Enterprise
At present there are several main definitions about virtual enterprise.
(l) Kenneth • Preiss and Steven Goldman (1991) explored of virtual enterprises for the first
time, they have made a agile manufacturing mode base on virtual enterprise, that is selection of
partners according core competencies and reputation to form dynamic alliances in order to
enhance the overall competitiveness of enterprises and improving organizational agility to adapt to
environmental change and to meet customer needs.
(2) John Byrne (1993) defined the virtual enterprise in the "Business Week" as: the virtual
enterprise is the relationship between alliance partners, and it is no clear organizational structure,
but a temporary network posed by the number of independent companies connected by
information technology and sharing technology, cost, and other markets. He also pointed out two
important features for the virtual enterprise: First is temporary, that is, once the initial objectives
of the Alliance are achieved, the dynamic alliance that is dissolved by itself. The second is that the
virtual enterprise is built based on credit.
(3) Harris, L.C. and Ogbonna, E (2001) defined the virtual enterprise from the core abilities
as: virtual enterprise is a core group as the center, it implements key features, and the remaining
features are completed by temporary or contract employees or by an alliance formed with the core
organization and other organizations.
Virtual enterprise has the following characteristics:
(l) Enterprise Property Virtualization. As the enterprise managers and technical staff groups
continuously improve corporate control, the ownership is no longer belonged to the absolute
owner of the possession; property rights have become virtual and blurred.
(2) Enterprise management functions Virtualization. Virtual enterprise makes a gradual
differentiation of peeling in management functions within the enterprise. Management is not#p#分頁標(biāo)題#e#
entirely a part of the responsibilities of the enterprise functions of the task, but shared with other
companies.
(3) Enterprise organizational structure virtualization. Traditional enterprise group is linear,
hierarchical and there are some obstacles because of the functions of over-refinement and middle
management staff, transmission of information effectiveness at the senior and junior ranks or at
the same level and between the various functional departments (Berger, Lester, 1997). Virtual
enterprise used integration of external resources strategies through co-operation with the outside
and eliminating some of the production processes or other organizations link to achieve the
streamlining of organizational structure of enterprises, resulting in multi-enterprise organization
structure is composed of two or more companies, it is no longer a completely separate entity.
Virtual enterprise need to have a stable outsourcing networks in order to change the combinations
to suit specific needs at any time in diversification of production.
(4) Business technology virtualization. Enterprises begin to virtual manufacturing process
according to market information once produce a product, the first is virtual human resources, the
human resources and external enterprises human resources complement each other based on their
own strengths and weaknesses (Bond, 1991, Bond, 1986,).A number of corporate executives from
different enterprises constitute the development team by information networks in collaboration
division of a particular research or technical innovation. As the disintegration of virtual enterprise,
the career comes from different companies and legal persons in relation to partnerships come to an
26 / 45
end, so these members are the key of the success of virtual enterprise.
(5) Core competencies in their respective areas. Members of the alliance only focus on their
most competitive business, virtual enterprise has a unique competitive advantage through
integration of all members of the core competencies and resources, in management, technology,
resources, in order to achieve win-win situation objectives and obtain greater opportunities
through sharing of market opportunities and customers.
(6) The main management mode of virtual enterprise is project management and horizontal
management. Project management develops from traditional mode to infiltrate business operations
and marketing project management and other business areas. The traditional group-based project
management is a process-oriented way. Virtual project management is based on the
results-oriented. Project management and virtual enterprises have a lot of common points and the
combination of them can produce the advantage that traditional management does not own.
Project management explained the control process, while the horizontal management stresses a#p#分頁標(biāo)題#e#
kind of division of labor models for each task of block-based collaboration. With the widespread
application of computer technology, the traditional middle layer of oversight and coordination
function is weakening gradually and it will be replaced by computer networks. Corporate strategic
management and task execution layer will replace the traditional vertical management by
achieving communication through computer networks eventually.
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CHAPTER 5 OPTIMIZATION OF DISTRIBUTION
ENTERPRISES ORGANIZATION BASED ON IT
This chapter firstly explained the connotation of BRP, stated the role of IT in BRP, and then made
an analysis of how to revolve and optimize distribution enterprises organizational structure based
on IT and found the characteristics of new distribution enterprises. At the end of chapter, we
evaluate the revolutions of distribution enterprises organizational structure.
5.1 Connotation and Revelation of Business Process
Reengineering (BPR) in Enterprise
Since the 90s in the last century, economic in worldwide is downturn, the competitive
pressures is growing, coupled with heavy investment in information technology has been
disappointing results in 80 years, all of these prompt people to find ways to play the effectiveness
of information technology. The American management scientist M · Hammer(1990) published the
study " Reengineering Work：Don’t Automate，Oblitera " in "Harvard Business Review" for the
first time in 1990 that the concept "Business Process Reengineering" was first Proposed. This
theory brought about a revolution in business management in the United States and Western
developed countries. The theory re-examined enterprises based on the idea of a recycling, as well
as questioned the division of labor theory which is the basis of the traditional management and it
was a great transformation in `management development history.
5.1.1 Connotation and analysis of BPR
Reengineering was defined as a fundamental reflection and a thorough design to enterprises
business processes, so that enterprises achieve amazing leap in terms of important indicators that
can characterize of enterprises performance such as cost, quality, service and speed in the book of
"Reengineering" by M. Hammer and J. Charnpy (1993). In addition, there are many academic
papers related to BPR, in these papers the above definition is the mainstream, in particular, the
four Key words as process oriented, fundamental reflection, thorough design, amazing leap are
acknowledged to be the essence of BPR.
Process oriented means that the operation activities such as customer order fulfillment, new
product development, marketing strategy and other business activities are no longer confined to
the border of organizational functions and specialization in the designated practice, but start from#p#分頁標(biāo)題#e#
these operations objectives and the overall process to get a comprehensive analysis and system
optimization.
Fundamental reflection is evolved from long-term accumulation, it is reflecting to the
28 / 45
business process, organization and management mode and operation mechanism in people's minds
which have been blind, the mechanisms and operations do not meet business objectives and
strategic orientation which is centered on customer satisfaction were found in order to conduct a
revolutionary transformation and innovation.
Thorough design must set aside the existing organizational structure and the impact of
business processes completely, introduces new organizational models, business processes and
working methods.
As mentioned earlier, BPR leaps performance of enterprises will be mainly reflected in Time,
Quality, Cost and Services - that is TQCS. BPR is no longer focus on gradual incremental
improvements, but gain excellence and sustained competitiveness in performance through
aforementioned efforts.
Therefore, reengineering theory suggests that reengineering is hardly a reform movement, but
a significant mutation-style reform. This is mainly manifested in the following: (l) Reengineering
challenges the basic beliefs. (2) Business Reengineering transforms the original modes thoroughly.
(3) The reforms must achieve significant improvements in business performance.
There are three basic guiding ideologies in BPR (Changchien, Shen, 2002):
(1) Customer-centric. The division of labor theory divides the complete process into several
tasks, and then each task is allocated to specific personnel to be completed. Under the influence of
such theory, the focuses are on the task, thereby the final goals - to meet customer needs are
ignored. Customer-centric restores the entire process and the direct benefit is to make everyone
fully aware of the personnel responsibilities which are to provide customers with a higher value.
(2) Employee-centered. BPR directly changes organizational structure, flat management have
become a new model instead of traditional pyramid-type structure, after transformation, the
enterprise is mainly based on process groups whose team members must be versatile and
professional that need to full with knowledge, integrated concepts and professionalism, this
objective calls for members learning to achieve challenging goals.
(3) Efficiency and effectiveness are the center. The enterprise reengineering improved
productivity and efficiency, for example, IBM Credit Corporation decreased 90% of operating
time and greatly reduced labor costs, and increased 100 times volume of business through
reengineering.
Examples of failure abound in the reengineering process, but these are not always a result of
the theory, the key is that a number of matching factors are overlooked in the process of#p#分頁標(biāo)題#e#
reengineering in different enterprises. Therefore, reengineering will be successful also depends on
two factors ultimately. First, it must depend on an effective team. Reengineering will encounter a
variety of obstacles, including those from the staff, organizations, groups and societies, etc.
Overcoming such resistance is a critical element in enterprise reengineering. The communication
between staff can be enhanced in a highly efficient team and this team encourages their employees
to work towards a common objective, thus the barriers in reengineering process can be eliminated
completely.
Secondly, there should be a charismatic leadership. John Kotter (1998) believes that if
reengineering is failed, in large part is because the leadership and organizational are effective.
Therefore, a charismatic leader is suitable for this important responsibility. As the staffs are
willing to accept the command of leaders because of their ability and moral and such leaders are
often not rigidly adhered to reason and tradition, they will become a major force for change.
29 / 45
5.1.2 The role of IT in BPR
IT plays a key role in BPR. The reengineering of process-oriented can not be realized without
IT, and many innovative organizational design programs can not be achieved. The role of IT in
BPR is shown as follow:
1. IT is the prerequisite and basis for the success of BPR.
The traditional process design is showing their drawbacks Along with changes in the
environment: ① some entire process has been divided into different functional department
according the nature of the tasks and knowledge, ② some processes that should be decentralized
have coming together due to strong internal ties. BPR shapes the processes that adapt to the new
environment within the enterprise and outside the local environment. On the one hand, the
development of information technology expand the demands for BPR, BPR's success is
inseparable from information technology. Many enterprises merged, and compressed the original
process or even sent the specialized staff to be responsible for the entire process after BPR, but
there must be information technology. Development of information technology also improved a
variety of equipment utilization and staff productivity. On the other hand, functionality and cost
of information technology are restrictions to the implementation of BPR. BPR must ensure that
the new process is feasible in technology; otherwise it would be difficult to be implemented
effectively. Therefore, the implementation of information technology in BPR is both an
opportunity and a challenge.
2. Information technology provides a number of advanced tools and techniques for the
implementation of BPR that can help and facilitate the successful completion of BPR.
Each step in the BPR, the roles of information technology are shown as follow: ①#p#分頁標(biāo)題#e#
Identifying and selecting the design process. This requires the behavior of collection, analysis
processes to have adequate information. Information technology provides powerful tools for the
analysis such as models for process simulation, analysis of survey data, structural evaluation, all
of these can contribute to increase the quantity and quality of information. ② Identifying
constrained conditions designed by process. In deed, IT is one of the constrained conditions of
BPR, but it will identify other conditions, for example, expert systems and technical databases
provide current and future human resources, organizational structure change information. ③
Determining the business strategy and processes. It should know strengths and weaknesses of the
business, structure and opportunities of market. IT can help identify the constraints of business
process, so that the open, creative discussion through the computer is possible. ④ Understanding
and evaluation for the current process structure and internal process. Understanding and
evaluating the existing process is the key to the implementation of BPR. IT can form results of the
analysis to a flow chart or flow chart, and provide modeling tools to help understand the existing
processes. In addition, both in the information gathering process or post-collection, IT can provide
decision makers with tools to evaluate processes, so that evaluation of the process is more
objective and comprehensive. ⑤ Designing and improving process. When completed the above
four steps, and enter the phase of design and improve process, IT can not only provide a graphical
tool for showing the process flow (including logistics and information flow), but also can analysis,
identify potential difficulties and limitations that help to improve poor prototype in time. ⑥
Introduction of new processes and related systems. Project management tools, tools based on the
product life-cycle development methodology and the rapid development of application software in
30 / 45
IT can help identify, evaluate all the relevant BPR activities.
5.2 Revolution and Optimization of the Traditional
Organizational Structure
Revolution of organizational structure is a kinds of activities that distribution enterprises
revolves the organizational functions and structure to achieve the organizational objective, in order
to adapt to market conditions and its stage, business scope, business characteristics and other
environmental factors (Hong, Kim, 2002).
With the development of knowledge economy, the new technological revolution information
technology is the forerunner is driving another revolution following the industrial in human
society. Great changes taking place in modern society changes the habits of human survival and
development models in large-scale, has a significant impact on organizational structures inevitably#p#分頁標(biāo)題#e#
and proposes new requirements, so the existing organizational structure of distribution enterprises
are facing the challenges and innovation.
5.2.1 Incentives for revolution of the organizational structure
1. The variety of market environment is the main reason for resulting the changes of
enterprises organizational structure. Every enterprise exists in a certain market environment and it
must suit with present market environment, the present market is moving toward a buyer's market
with globalization and fierce competition. As technology advances, the people's living standards
are rising and their values of consumption are changing rapidly. Their requirements on product
quality, performance have become increasingly high, and also requested the product has a clear
personality or character, all of these make the consumer demands are tend to personalized and
diversified, thus cause to accelerate product upgrading and reduce new product development
cycles. The market environment force the enterprises shift its value orientation and attention from
the commodity-oriented to customer-oriented. As the diversification and timely access to customer
needs are the most important features, thus flexibility and time are become the strategic focus of
enterprise competition. Therefore, the structure that pursuit of economies of scale and low-cost are
competitive strategy reveals its shortcomings:
(l) Decision-making process is slow for it is hierarchical, multi-level.
(2) Each department is self-centered, so it is difficult to coordinate.
(3) It is not conducive for employees to play an active nature and creativity.
2. IT accelerated the revolutions in organizational structure
Organizational structures in distribution enterprises mostly started from the pyramid structure.
However, with the development of information economy, the requirement for reaction ability and
coordination among trans-regional departments and enterprises are improved, the revolutions of
organizational structures is imperative, and the IT is just the high-efficient and cheap tool for
communication and coordination in new organization and make this kind of revolution natural
(Themistocleous, Irani, 2000). Therefore, IT is the catalyst that impels organizational structures to
reform.
31 / 45
The development of information technology has a major impact on organizational structure in
distribution enterprises and it affects the basic properties of enterprises organization. In nowadays
society, information is one of the most important bases for decision-making in enterprises
management. In the absence of information, any smart enterprises decision-makers find it difficult
to make the right decisions. As dependence on information is increasing, enterprises must be able
to keep abreast of dynamic information, use of a variety of useful information effectively to make#p#分頁標(biāo)題#e#
business decisions timely, reduce operational risks. So levels of organization must be reduced and
management range should be expanded to form a streamlined and effective organizational
structure.
Development of IT improve the decision-making quality and speed of management which
results the decision-making power move upward at the enterprise level and the forms a more
centralized management. In the enterprise business activities, the information was constantly
breeding, processing, transmission, conversion and storage from start to accept orders and product
design. In traditional enterprises, these information-processes are performed as meeting, reports,
records, documents and so on. At all levels of the organization in all functional departments, there
are a considerable number of people are specified in copying, transmission and logging and other
paperwork. These works are cumbersome and inefficient but they are an important and
indispensable part. As developed of information technology and computer technology, these works
could be completed by information network in the enterprise. As the automation of information
processing, communication from the top to the front-line staff is more direct, some departments
can be cut or merged to shorten the distance of information processing and increase efficiency
greatly. Additional, IT can also unify information processing method in the various departmental
to share information resources. So it can conclude that the future distribution enterprises must be
based on a high degree of automated processing.
5.2.2 Principle of revolution in organizational structure
1. Miniaturize the organizational structure to enhance the vitality of enterprises.
With the level of specialization and cooperation of the social production are raising and the
size of distribution enterprises is increasing, these result some problems such as structural rigidity,
bureaucracy, poor information, and managements are inconvenience. Miniature organizational
structure can overcome such disadvantage (Wortmann, Szirbik, 2001). Miniature organizational
structure decentralizes decision-making as much as possible, disperses large companies into a
number of relatively independent business unit, branch or sub - company as much as possible to
devolve powers to the grassroots level. It sets up a number of additional organic structures, such as
committee or project team to make the organization more flexible and able to cope with a variety
of mutations and adapt to various changes of the environment. It is obvious that the miniature
organizations are also beneficial to technological innovation, because interpersonal
communications are more convenient and information is more freely. At the same time,
responsibilities and rights are clear in miniature organizations so that the employees are creative#p#分頁標(biāo)題#e#
and innovative.
2. Simplify the organizational structure to improve the efficiency of distribution enterprises.
Present enterprise-scale is developed to the two poles, one is a miniature business
organization, and another is very large multinational companies or enterprise groups with huge
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scale. The organizational structure of distribution companies should reduce the number of
institutions and personnel to a minimum under the premise of meeting the operational needs to
ensure the business objectives so that the size and organizational structure are suited with the tasks
undertaken. In general, the more levels of management, the slower of response speed to
environmental change of information transmission in the organization, the lower the efficiency of
the organization. One of the symbols in miniature structure is to minimize the intermediate level in
the organizational structure in order to get a faster speed in commands issued and the transmission
of information and maintain the effective implementation of the decision-making and
management.
3. Make the organizational structure flexible to increase enterprises adaptability.
The development of modern information technology leads a continuous introduction of new
products, shortening product life cycles and more fierce market competition. Distribution
enterprises must adjust its development strategy constantly to adapt to the changing environment
and flexible organizational structure is to ensure that enterprises can adapt to these changes.
Flexible organizational structure include: maintaining flexibility in structure, department structure
and positions according with changes in the environment.
4. Ensure scientific organizational revolution and make full use of information technology
IT is cause of revolution in distribution enterprises organization, and at the same time it
provides the material foundation and methodological tools for organizational revolution in the
enterprises to ensure that the organizational structure revolution is scientific (Yip, 1992).
Application of IT in distribution enterprises organizational revolution brings many benefits, for
example, IT can make management and decision-making be more scientific. The traditional
organizational structure is bureaucratic pyramid structure, it is limited by time and space,
information delivery and exchange are slow and decision-making is unscientific. IT makes the
organizational structure flatter, more conducive to scientific decision-making. The scientific
management is inseparable from information technology. The application of information
technology also allows distribution companies to communicate and integrate with the external
environment.
5 Improve quality and innovative of managers based on enterprises organizational information.
Support and investment by leaders on IT which is a technical tool is very important for the#p#分頁標(biāo)題#e#
successful application of IT. Awareness of strategic opportunities and long-term vision of senior
leadership is a key factor on application of IT. The application of IT must have a huge impact on
traditional operating ideas and methods. Leaders should reform and dare to innovate and use new
technologies and new ways to operate and manage the enterprises. With development of
commerce and moved forward of business information technology process, enterprises should
form a high level of technology, progressive thinking in management and a relatively stable team
to develop business application systems.
5.3 Features of the New Organizational Structure in Distribution
Enterprises Based on IT
Revolutions on organizational structure of distribution enterprises involves the extent of
centralization and decentralization, management range, collaborative approach, reward systems,
33 / 45
identification systems of performance evaluation and control and command systems, foremost
among which is the issue of centralization and decentralization, which is the foundation of the
other revolutions. According to prediction by organizational theorists, there are seven important
characteristics on new organizational structure of distribution enterprises, such as flexibility,
virtualization, and dynamic collaborative, interaction of information, boundless, diversity and flat
structure (Broadbent,. Weill, Neo, 1999). Although the true sense of the informational distribution
enterprises may not exist, some enterprises organizations already have some or even most of the
features.
5.3.1 Flexibility
The new organizational structure of distribution enterprises is based on flexibility which will
shift, adapt and change with changes in the environment. New types of organizations are not afraid
of change but craving change. The core of an organization must reflect the external business
environment for it means that it will contact with the outside more quickly, especially the
enterprises restructure around its basic capabilities. The successful flexibility should be a part of
organizational culture. An organization must be such adaptive. At present, autonomy or ownership
is the rule that is still followed by the "old" organization, and it is turning to matrix management.
After the revolutions, we will be able to adjust flexibility with the changes in business
environment. Recently, the customers ask that our services should have a variety of composite
structures, so we must prepare fully to adapt to customer requirements quickly. Obviously, to do
all of these areas requires everyone considers the value of flexibility as part of the organization.
Flexibility is a variable of organization, which makes the whole process of innovation in business
organizations have certain flexibility. Because innovation requires a variety of programs,#p#分頁標(biāo)題#e#
flexibility and rapid response, which is due to new ideas are emerged through a random and often
highly perceptive intuitively and discovery of unexpected problems. Measurement on success of
an organization or the allocation of rewards is based on results-based, but not on whether to insist
on plan. Therefore, responsible to pre-determined action hampered the flexibility for innovation.
5.3.2 Virtualization
One of the important characteristics of new distribution enterprises organize is virtualization.
New distribution enterprises can well be regarded as “virtual enterprises” which reflect virtual
organizing characteristic to distribution enterprises organization.
Virtual distribution enterprises have the following characteristic (Davidow, Malone, 1992):
The first is virtual organization. Virtual enterprises can purchase and sell in invisible tissue
through network and it does not have a fixed business place or tangible enterprise organization.
The second is that part of distribution functions is virtualization. Virtual enterprises only have
key function to realize the goal in market, such as purchase or pay and settle account etc. Other
functions are support by information technology to link resource of other enterprises to realize the
operation on internet. The virtual function can make enterprises realize the high-efficient operation
with lower cost and disperse the market risk.
Thirdly, the region is virtualization. The virtual function and organization and supported by
34 / 45
strong communication and information technical Internet make distance between trade flows and
information flows no longer be the obstacle of trading. In this way, each relatively independent
distributed and networked virtual enterprise is supported by internet and e-commerce technology
to carry on effective cooperation, thus they overcome the obstacle on various geography in
different enterprise's cooperation under the traditional mode and realize the high-efficient
operation in distribution enterprises.
5.3.3 Dynamic cooperation
“Team " is one of most extensive word in organization activities. a team is breaking the
existing department's demarcation by staff, passes the middle administrative structure, faces
customers and enterprise's overall goal directly and gain the high efficiency and advantage
cooperating. In the new organizational structure in distribution enterprises, the project team takes
shape with appearance of the project, and is adjusting constantly according to the change of the
留學(xué)生MBAdissertationenvironment while the project is carried on in order to utilize each member's advantage fully and
completed the task with high-efficient and excellent quality.
Team should have the following characteristics in order to contribute to the distribution#p#分頁標(biāo)題#e#
enterprises:
(l) The team needs to have a kind of clear goal which must be what all members hope, and
they would like to work hard in order to realize this goal.
(2) Suitable, consistent exchange, that is clearly explain one's own view to others.
(3) Flexibility. It is very important for the team to response other care and suggestion flexibly
and positively, in fact, this makes most people believe that the team is working for the
organization to get most benefit.
(4) Persistent. Insisting the same route is very important, and the attentions were changed
without explain or one new direction was put forward at will would lose influence that gain
already and be difficult to get lost “manor “.
(5) Participation. it is not enough that only members of the team participate in offering the
suggestion of improving, if a team really wants to change the working way in organization, it
needs to make other people participate in this revolution too. The more participate in, the more
ideas will be. The team has enormous potentiality to contribute to organization, so, some
potentiality of the team lies in the hiding variety human resources that the group has excavated out.
The team can train staff's flexibility, sense of participation and high efficiency. Team work can
improve the appearances of enterprises completely.
5.3.4 Interaction of information
The information structure in management organization services for the decision mode.
Centralized decision requires all information of the decision mode to concentrate the supreme
level which is the only decision center in organization, so it needs level type information structure
relying mainly on longitudinal channel. The decentralized decision structure means the decision
point in the management organization is changed from single point to multi-point. Analysis in
information structure, this kind of transition indicates that the organization turns from an original
35 / 45
information centre into a lot of information centers. There must be close connection between these
information centers and this kind of connection surmounts grades, it is that one kind is criss-cross,
mutual connection from head to foot. Interaction of information means that information structure
in organization is networked. The main characteristic of the networked information structure are
shown as follow:
(l) Collecting and dealing with information dispersive. There are a lot of root in network
structure but the information centre is not unique and clear, information collection and information
processing can't be totally centralized. So, every decision center in organization must process and
analyze information according to the needs of themselves, thus a lot of information centers are
formed.
(2)The information transmission channel is criss-cross, which remove the restraint of the#p#分頁標(biāo)題#e#
information structure of authoritative grade chain.
(3) Export-oriented information structure. Network structure allows all nodes as contacting
the external information source to include in the information system in organization to make
organization and environment touch with multi-level interactive information, this enable the
management organization owns open system.
In a word, the networked information structure is that one kind information structure accords
with decentralized of management decision and an information structure that contribute to
effective decision in enterprises organization based on information.
5.3.5 Boundless
The bound of organization includes the outside bound and internal bound in enterprises. On
one hand, the new organizational structure in distribution enterprises adopts team work mostly.
Organizational structure based on project has high-level dynamics and can be reconstructed, the
internal bound in enterprises organize is fuzzy day by day. On the other hand, IT breaks the trade
bound so that distribution enterprises, supplier or even rival unite into a temporary network with
their relative advantages in order to realize the fast reaction to market demand and the win-win
situation, thus the external bound of enterprises organization is decreased progressively.
5.3.6 Flat structure
Flat structure is an organizational structure that reduces middle level just, increase manage
range and promote transmission and communication. The vertical high pyramid type
organizational structure on the basis of specialization in division of labor as principle is difficult to
meet reality with fast changing demand ,technology changing and information emerging in an
endless stream for there are many levels and too meticulous in division, complicated and rigid
relationship, so, organization revolutions were carried on in some developed countries such as the
United States and Japan and so on, that is "middle level revolution "which could get the flat
organizational structure. The structure has the following advantages:
(l)Reduction of the organization level cause a reduction of the administrative staff
correspondingly, the direct result is reducing the cost of organizing, more important is shorten
"The information chain ", which makes the transmission of information is more direct and make
36 / 45
the administrative staff represented by general manager take the task to the person engaged in
work actually even more directly and rapidly.
(2) Expanding responsibility range and policy-making power of the middle managers, the
decline of the decision level have realized the centralization and decentralization of power to make
management of enterprises more rationally and more efficient.
(3) Avoiding the contradiction between middle managers and dispelling the conflict of#p#分頁標(biāo)題#e#
departments. In traditional organizational structure with rigid grade, every department only pays
attention to the interests of it owns department, conflicts and contradiction existed between each
other occasionally. “The middle level revolution” can solve these problems.
(4)Customers are primary service object. The performances of middle managers are no longer
evaluated by general manager but reflect customer satisfaction.
So, the customer has really occupied the important status in middle manager's mind, and they
just become the concrete real object in service.
5.4 Evaluation to Revolutions on Organizational Structure
In the course of revolution the organizational structure in distribution enterprises, enterprise's
policymaker should introspect in time, compare with anticipated revolution result, discover the
problems in time and carry on essential adjustment. When a revolution cycle was end, enterprise's
policymaker should make a thorough review on the whole course and evaluate the organization
according to certain evaluation index system in order to develop a more high-level revolution
(Golany, Kress, 1993).
In order to appraise organizing efficiency, enterprises must set up some appraisal criteria
which can be called sub goal from the systematic viewpoint. The designed appraise criterion
should reflect the impact on sub goal by revolution of organizational structure on one hand and on
the other hand should consider that whether there are obvious connections between the sub goal
and total goal (Themistocleous, Irani, 2001) . Such a criterion can be designed as:
(l) Resources efficiency criteria. It identifies whether the organizational structure can fully
utilize the extant resources in enterprises.
(2) Efficiency criterion of market. It exams whether organizational structure could
coordinates the profit of all department in different enterprises on the supply and sale market.
(3) Efficiency criterion of the course. It evaluates whether organizational structure could
adjust mutual dependence in process of production.
(4) Efficiency criterion of encourage. It means whether organizational structure can
encourage the staff to make their goal keep the same with enterprise's goal.
Therefore, distribution enterprises must set up scientific evaluation index systems for
organizational structures in order to carry on longitudinal appraisal to the revolutions of
enterprises organizational structures, meanwhile, they can also compare with the organizational
structures of other distribution enterprises horizontally. The study puts forward a preliminary
appraisal method combines the result of our survey.
The evaluation to organizational structures of the distribution enterprises can be done from
four respects as following:
(1) Coordinates ability of department: Defined by interdepartmental coordination intensity.#p#分頁標(biāo)題#e#
(2) The high-efficient work ability: Weighed by organizing working efficiency.
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(3) Business treatment level: Weighed by regulatory intensity and flexibility intensity.
(4) Leaders’ ability: Weighed by levels of making decisions.
For the four respects mentioned above, we can set up corresponding evaluation indicators
including qualitative indicators and quantitatively indicators respectively, then define a weight for
every respect and define another corresponding weight for each indicator in every respect.
In terms of qualitative indicators, because of lacking corresponding quantization attribute,
they can be confirmed grading system determined brainstorm, and then be carried on quantization
according to the concrete evaluation result. For example, we can describe the assessment of
indicators of making policy as follows:
Table 5-1 Relationship between decision level and point (Harrington,1998)
Decision level Point
Low decision level, train of thought of management is fuzzy 0
Disability to solve problems, objectives are recently, no farther objective 2
Able to solve part of problems, lacking policy to support farther objective 4
Able to solve all problems, recent and farther objectives are good 6
Excellent to solve problems, policy are excellent for operation >8
In terms of quantitative index, we can evaluate quantitatively through linear interpolation,
take organizing working efficiency for example, the delivering on time is one indicators to
evaluate the situation to customer's phoning, online shopping in distribution enterprises, the
assessment process is shown as follow:
Table 5-2 Relationship between Rate of delivery on time and point
Rate of delivery
on time
>99% 95% 90% 85% 75% <60%
Point 10 8 6 4 2 0
In addition, according to the evaluation system designed in enterprises, we can carry on the
longitudinal assessment to the revolutions of enterprises’ organizational structures. We examine
every indicator and compare every indicator of organizational structures and then analyze the
result that organizational structures according to evaluation system strictly to offer direction and
guidance for further organizational revolutions in distribution enterprises. Meanwhile, because we
consider the whole applicability of evaluation system in the distribution enterprises during the
process of making the system, we can also compare organizational structures of other enterprises
with this evaluation system and horizontally in order to summarize our deficiency.
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CHAPTER 6 CONCLUSION AND DISCUSSION
In this last chapter, we conclude the content of the study and propose the defect and the outlook
for the study.
6.1 Conclusion
The dissertation analyzed methods of distribution enterprises to reengineer their
organizational structure based on IT and finds the factors that IT has impact on the reengineering#p#分頁標(biāo)題#e#
in the fifth chapter. And then optimization of organizational structure in distribution enterprises
was completed, and the criterions of distribution enterprises reengineering their organizational
structure on strategic and policy was listed. At last the dissertation discussed the features of new
organizational structure in distribution enterprises based on IT, and established a method to
evaluate the effects of new organizational structure. All of the objectives were discussed in details
as follow:
Based on the development, open and innovative ideas, the study analyzed existing
distribution enterprise organization, management and operational processes, combined the
organization and management mode and operation processes of distribution enterprises in
developed countries, and analyzed technical characteristics, application requirements, the
influence and impact of modern information technology, in particular of e-commerce on the
traditional distribution enterprise, researched operation mode, operation processes in distribution
enterprises under the conditions of information technology, put forward business organization and
management modes, operational processes and countermeasures for development adapt to the
economic development of the network, then make a comprehensive exposition about initiative of
enterprises, openness, innovation, adaptability and sustainability with modern information
technology.
First of all, the study discussed the connotations and classifications of distribution enterprises
as well as the scope of distribution enterprises in this article, and summed up the characteristics of
the development of distribution enterprises, and the state and prospects on the application of IT in
distribution enterprises. Then we described modern IT related with distribution enterprises
including the EDP, MIS, database and data warehouse technology. After that, we introduced the
meaning, structure, classification and characteristics of E-commerce. In chapter 3, we explained
the inevitability of IT applied in distribution enterprises, as well as the impacts, role, and value of
IT in distribution enterprise, and then described the operation mode of virtual enterprises. Based
on the above analysis, the study analyzed optimization of distribution enterprises organizational
structure based on IT including BPR meaning and revelation as well as the role of IT in BPR, and
then analyzed the revolutions and optimization of traditional distribution enterprises
organizational structure and the characteristics of distribution enterprises organizational structure
in post-revolutions, finally the revolutions of distribution enterprises organizational structure were
evaluated.
The study also studied how to transform and restructure the original organizational structure
39 / 45
and processes of enterprises by the advantages of information systems to optimize their#p#分頁標(biāo)題#e#
information flow, logistics, capital flow and improve enterprise operational efficiency, so that the
information systems become the organic component to make commercial enterprises operate
efficiently, study of commercial distribution enterprises and other new technologies in
e-commerce environment, how to structure and operation the new system, to develop new
business opportunities, look for new economic growth points，finally we studied of how
distribution enterprise make decision and monitor information based on information system, in
order to meet the requirements distribution enterprises on strategic and tactical levels.
6.2 Discussion
In developed countries, IT applied in distribution enterprises for a period of time, but in
developing countries, many distribution enterprises do not combine IT with its business model to
give full play to the characteristics of IT and utilize the strengths of IT in distribution enterprises
organizational structure, so distribution enterprises are not developed in developing countries.
Due to some objective reasons, there are some shortcomings in this paper mainly as follows:
1. we did not evaluate the affections of IT applied in the distribution enterprises in
developed countries
2. The evaluation methods lacks some examples to support its theory, there are evaluation
methods in the study
Though the shortcomings mentioned above have no greater impact on the objectives of the
study, we will soon resolve these problems in our future work to improve the study.
40 / 45
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Acknowledgment