Quantifying the value of web services in supplier networks

Purpose – The purpose of this paper is to develop an approach for quantifying the operational value of IT‐enabled reliability improvement in a supplier network. Design/methodology/approach – Specifically, the paper investigates an e‐procurement scenario involving emergency material purchases where web services provide for real‐time response, a dynamic supplier set, and the ability to perform cross‐enterprise purchase processes in an inter‐operable fashion. The paper proposes engineering reliability models for three network configurations as a basis for quantifying the value of web services, and develops a numerical illustration to both test its usefulness and to derive preliminary insights into supplier network design in this environment. Findings – This research finds that a stand‐by model is descriptive of reliability in networks where suppliers are identified and managed using web services, and that this approach quantifies operational improvement in this type of e‐procurement system. The research also finds that the benefit derived from using web services for emergency purchases depends on the characteristics of the supply network itself, specifically the failure frequency of the existing suppliers and the time to restore operation after a failure occurs. Originality/value – These findings are important to information system managers when assessing the financial and technical benefits of real‐time and dynamic information technologies, as well as supply chain managers seeking to implement a dynamically configured supply network. Future research directions include extensions of the reliability models, data acquisition for specifying their parameter values, and investigation into the usefulness of this approach in hardware decisions of web services applications in business.