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How Does Information Technology Shape Supply Chain Structure?: Evidence On The Number Of Suppliers

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Executive Summary

This research investigates the relationship between a manufacturer's use of information technology (particularly electronic procurement) and the number of suppliers in its supply chain. Will a manufacturer use more or fewer suppliers due to the increasing use of IT? Based on data from a sample of 150 U.S. manufacturers, the authors find no direct relationship between e-procurement and number of suppliers at the aggregate level. However, when they distinguish the type of goods purchased, they find that the use of electronic procurement is associated with buying from more suppliers for custom goods but from fewer suppliers for standard (or commodity) goods.

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