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B2B Collaboration Method through Trust Values for e-Supply Chain Integrator: A-Case Study of Malaysian Construction Industry Norshakirah Binti Ab Aziz, Rohiza Binti Ahmad and P.D.D. Dominic, Computer and Information Science Department, Universiti Teknologi PETRONAS, Bandar Seri Iskandar, 31750 Tronoh, Perak, Malaysia. ABSTRACT Limited trust, cooperation and communication have been identified as some of the issues that hinder collaboration among business partners. The same applies to the acceptance of e-supply chain integrator among organizations that involve in the same industry. On top of that, the huge number of components in the industry also makes it impossible to include everyone in the integrator. Hence, this study intends to propose a method for identifying “trusted” collaborators for inclusion into an esupply chain integrator. For the purpose of constructing and validating the method, the Malaysian construction industry is chosen as the case study due to its size and importance to the economy. Thus, this paper puts forward the background of the research, some relevant literatures which lead to trust values elements formulation, data collection from Malaysian Construction Supply Chain and a glimpse of the proposed method for trusted partner selection. Besides, future work is also presented to highlight the next step of this research. Keywords: Collaboration, B2B, e-Business supply Chain, Trust and Integration.
1. INTRODUCTION Due to the rapid advancement of technologies in the field of Information and Communication Technology (ICT), many business organizations have taken the opportunity to use some of the technologies in conducting their business processes. Ecommerce and E-business are two examples of business applications that can be conducted on the Internet. E-business is a vast area of study. Some people use E-commerce and E-business interchangeably [1]. E-business encompasses electronic activities such as buying, selling, servicing customer (B2C), interaction with business partner (B2B) and intermediaries over the Internet technology without any boundaries. E-business allows exchange of information between parties or companies (B2B) [2] that give opportunities to expand worldwide at a small cost, and increase market share. These include the automation of the supply chain process (e-supply chain). E-business is always related to supply chain. E-Supply Chain is referred to Electronic Supply Chain[3] contains ICT and Knowledge management [4] that can integrate the entire supply chain components using Information Technology (IT)[5]. The term e-supply chain integrator basically means the integration of all organizations that involve in an industry which include the suppliers, the manufacturers, the distributors etc. According to [6], integration means combination of something in such a way that it fully becomes a part of something else. In terms of e-business integration, it can be defined as integration that integrates two or more businesses (B2B) [7-11]. Basically an integrated application can communicate with each other to transfer data for business [11]. No doubt, as mentioned by [10] and [12], the implementation of integration solution among enterprises is complex and difficult. However, the benefits of such integration outweigh its complexity. First and foremost, time and cost saving seems to be the main benefit offered to enterprises because it shortens the cycle of time for business transactions as compared to the conventional way [8-15]. In Malaysia, integration of the supply chain has been seen to be the way forward for the construction industry. As mentioned by [16], collaboration in supply chain by using the Internet technology helps and industry to grow. In addition, [17] and [18] suggested that collaboration is the solution to supply chain’s relationship problems. Both of authors [17-18] believe it can helps to form team building, trust and long term relationship among the related businesses in an industry. However to integrate businesses is easier said than done. Attitude issues like lack of trust and commitment are known to be some of the factors that hinder businesses from collaborating with each other [17-19]. As a matter of fact, the Malaysian industry Development Board (CIDB) had identified almost similar factors in their report [20] which stated that limited trust,
little corporation and poor communication are the culprits that hinder implementation of integration in the Malaysian construction industry. CIDB proceeded by suggesting that in order to counter the above problem, a new approach called “ partnering” is recommended in which only competent service providers should be engaged in the partnership. Thus in view of all the above, this study intends to suggest the possibility of choosing the collaborators for inclusion in an e-supply chain integrator (e-SCI). Hence, different organizations which use the integrator will see different collaborators; and, they are chosen based on “trust”. For the purpose of constructing and validating the collaborators identification method, the Malaysian construction industry is chosen as the case study. This is due to the industry being the most complex, fragmented, traditional and stubborn industry in Malaysia [21-22].
2. BACKGROUND & NEED FOR RESEARCH Thus, this research is aimed to propose a noble method which is able to identify suitable and “trusted” B2B collaborators for e-supply chain integrator to integrate the Supply Chain (SC) components. The main problem is the lack of guidelines to assists e-SCI in selecting trading partners that suit their business process needs. This research will look into the trust values in trusted partners included the characteristics of the each values identified. From the characteristic identified, it will be transform into IT implementation (prototype).The difficulty construction supply chain components working together is because of the failure to manage trust and commitment [17-19, 23] issue among partners. What Malaysian Construction supply chain need is a solution to ensure entire construction supply chain collaborates and handle the crucial problem i.e. trust. To handle the attitude issues like trust and commitment, this study will provide an identification method for selecting trusted trading partners using trust values identified. Each groups of components for instance suppliers group, need to find the “Trusted Trading Partner” in order to collaborate in business. In collaboration is important to have B2B trusted relationship. As contribution, this study will design strategy and method to integrate entire supply chain components from Contractors.Is not easy to trust individual or organisation without preferences such as past experience, and good record which play role in the decision making process to select right trading partners. B2B requires trust to enables suppliers and contractors have smooth transaction process. The concept is the higher trust; the stronger the relationship and the speed of work or commitment will not affect [24] . Once we distrust our trading partner, the cost will increase-e.g. call/fax/transport, and speed of work-commitment wills decrease and will face behavioral issue.
3. METHODOLOGY There are three research methodologies commonly known, i.e. Quantitative, Qualitative and Mixed Methods [25-27]. However the most suits for this research is Mixed Method. For the research strategy, Sequential Explanatory Strategy (SES) is used. Mixed method consists of quantitative and qualitative methods. This method helps to answer two types research questions i.e. Qualitative and Quantitative research questions[27] and both data can be collect in phases or sequentially. The purpose is to use qualitative result is to assist explaining findings in quantitative study. For data collection procedures used are, survey and focus group discussion (FGD). The data analysis type is in statistical and thematic[27]. For instance, first part is quantitative research questions which research hypotheses been tested and the findings presented in statistical analysis. Second part is qualitative research question that helps to validate the findings in the first part. Besides, SES used in all activities likes collecting, analyzing, interpreting findings i.e. helps to meet objectives and answer all research questions by providing stronger inferences. In the SES, the priority is on the quantitative and follows by qualitative research method. The purpose of this two-phase, sequential methods study will obtain statistical, quantitative results from sample and then follow up with a few individuals from focus group discussion to probe or explore those results in more depth. In the first phase, quantitative research questions or hypotheses will addresses the trust values relationship as indentifying method to select trusted trading partner for collaboration in B2B business. In the second phase, this study used FGD to probe significant of quantitative results by exploring aspect of the trust values important in Construction Malaysian Industry. FGD is qualitative data that support findings from quantitative data. Normally FGD made up of people with certain commonality and heterogeneity characteristics and similar levels of understanding of a topic, rather than aiming for diversity [28-29]. For the size of FGD participants have been reported that have ranges in size, [28] agreed the group consist of between six and ten participants, [30-31] agreed it consist between six
and eight,[32-33] agreed it consist of six to twelve and [34] agreed it consist of ten to twelve participants. For mini groups range as few as three [33-34] participants to fourteen[34], four to six [34-35], four to as many as twelve [28-29] depending on research purposes. Smaller groups are more appropriate if the aim is to explore complex, controversial, emotional topics, sensitive issue or to encourage details accounts [36]. Overall small groups show greater potential [31]. Small focus groups or mini focus groups with four to six participants are becoming increasingly popular because smaller group are easier to recruit and host and they are more comfortable for participants [34]. Actually, small group may be advantageous if the topic is a very complex and if you are dealing with experts. Focus groups of a small size were successfully used by [30] in his study with consisting three participants. As advised by [34] more than ten participants are difficult to control, and they limit each person’s opportunity to share insight and observations. For this research, have 3 groups consist of 4 participants. The first group is the Researchers group which the participants are from Construction Research Institute of Malaysia (CREAM). The second and third group is the Industry components i.e. contractors and suppliers.
4. TRUST AND WHAT IT MEANS Collaboration exists when two or more people have common objective, interest, assets and professional skills to promote. Clearly we can see usually organization do not collaborate but the people itself collaborate, and people trust people not the technology [7] but technology evolves into trust relationship [37]. Therefore we can say, the key for relationship is trust [38]. Furthermore people collaborate based on trust because it help people commit to work [39], and trust is like the heart for collaboration which its need to be built and gained. It’s also easy to diminish and break, but hard to gain. Trust has been claimed by [24, 40-42], as the main important thing in business and the key factor for relationship success [38-39, 43]. Indeed collaboration needs trust [44] and without trust, collaboration will end/disappear anytime soon. To have long term business relationship, trust is needed because it will assure the commitment among each others as promised. Trust can be explained in many ways e.g. psychology sociology, political, science, economics, anthropology, history and social biology [45-46]. Basically it’s according to individual perspectives or filters [45] i.e. IT, Business, knowledge [47] experience and environment/domain. The main focus of this study is to look into the Trust in collaboration with trading partners. Trust among trading partners is important for business which is key for long term relationship. Trusted partner may face evaluation process which the assessment criteria is decided by organization itself. It may different between companies. Trust always related to belief, faith on other party to do what they say or promise or walks the talks.
5. RESULT AND DISCUSSION 5.1 Trust Values As mentioned earlier, in identifying the trust values, literature survey including books, and journals have been conducted. From the survey, six characteristics of trust were mentioned which are competence, openness and honesty, reliability, identification, benevolence and goodwill. Based on the literatures survey more than 70 articles done, the most selected values mentioned in all literature are Competence, Openness, Reliability and Identification. This is found to be in lined with the survey result reported in [40]. However, the four trust values ranking and wieghtage may different from the each domain tested but the values element or factor still same. The four trust values were validated in eight different countries around the world and named as Organization Trust Index (OTI) [40]. However there is additional trust value reported by [40] which is Concern for Employees; but this fifth factor was not mention by any other research referred. The literature survey contributes values of trust. Even though the term used in each of journals and books are different, but as long as they bring the same meaning as referred from four Synonym Dictionaries [48-51], it is consider as the trust values. Using four trust values identified, a survey becomes as prerequisite to validate whether they are also applicable to the construction industry in Malaysia. A few researchers [16, 38, 40, 42, 46, 52-53] agreed survey methodology as one of the ways to measure trust and this study follow the same methodology. Below are the definitions for four trust values identified that also explained for each characteristic in the Fig. 1. Reliability : This value is related to commitment and consistency in behavior, quality and continuous in performance. In other words, reliability means ones must “walk the talk”.
Identification: Identification means similarities, which may be on the shared value/purpose, experience, objective, environment product or services that has positive relationship with trust for collaboration. Competence: Competence it’s about the ability to perform a task physically and intellectually. For instance, competence is use in evaluating the skills, experience, capabilities and quality of performances. Competence is a value that can be used to measure how the company can survive in the marketplace [40]. B2B relationship is heavily depends on competence [54].Those who have this value definitely understand their capabilities and works to overcome weaknesses. Openness: This value important to be present during communication among partners and for decision making process [40]. Openness related to honesty, integrity in relationship that can improve collaboration and helps in reduction of uncertainty. Without this value, business relationship become difficult to communicate and a lot of conflicts will happen. Identification
Openness
Similarity
Honesty
Connection
Communicatio n
TRUS T
Competence
Reliability
Capability
Consistent
Efficiency
Commitmen t
Figure 1. Trust values characteristics 5.2 Data Collection and Analysis There are 500 questionnaires distributed using mix mode survey. However only 100 collected and can be used for data analysis as in [55] rules of thumb for the minimum acceptable sample size, and agreed by [56]. The questionnaire was designed based on the four trust values identified using Likert scale rating (17 items). The 17-items Organizational Trust Index (OTI) and Individual Trust Index (ITI) were tested and validated using statistical software (SPSS-Multiple Regression Analysis, Stepwise method) for confirmatory factor analysis. Table 1 shows the descriptive statistic for 100 respondents feedback collected. The respondents profile for this study are from Malaysian Construction supply chain components, Manufacturers (6%), Suppliers (2%), Contractors(62%) and others (30% -i.e. consultants, architect, distributors, retailers and etc.) For the collaboration level, result shows only 47% score for Fairly collaborative which shows the supply chain components are not fully collaborate among them. This may contribute to the Success level rate only 60% as partial success and only 8 % for Absolute success.To understand how they look trust in their business relationship, the respondents was asked to measure the degrees of trust on two condition i.e percentage Trading Partner Trust Me and I Trust My Trading Partner. For the first condition, they believe their trading partner trust them with 80% trust and second condition, with 80% also. It shows that the highest degrees of trust among them are only 80% for both conditions which the 20% balance is distrust. Table 1 Descriptive Analysis Descriptions Organization Type Manufacturer Supplier Contractor Others Collaboration Level Highly Adversarial Fairly Adversarial Neutral Fairly Collaborative
Frequency
Percentage
6 2 62 30
6.0 2.0 62.0 30.0
1 2 42 47
1.0 2.0 42.0 47.0
Success Level Absolute Failure Not sure Partial Success Absolute Success Trading Partner Trust Me 50% 60% 70% 80% 90% 100% I Trust My Trading Partner 50% 60% 70% 80% 90% 100%
1 31 60 8
1.0 31.0 60.0 8.0
2 6 12 32 31 17
2.0 6.0 12.0 32.0 31.0 17.0
7 9 10 38 20 16
7.0 9.0 10.0 38.0 20.0 16.0
Table 2 shows multiple regression analysis on trust values i.e tested in the Malaysian Construction domain. The values are Identification, Competence, Openness and Reliability. The weightage for each value are shown in Beta column. The each value are dependent each other to ensure the Trust is fulfill. Table 2 Multiple Regression on Trust Values Analysis Adjusted Beta Predictor R R Square Variable R Square Identification .881a .776 .774 .881 Competence
.956b
.914
.913
.433
Openness
.994c
.987
.987
.388
1.000
1.000
.200
Reliability
1.000
d
*Model= P < 0.05
*R2: 0.78 to 1.0 0
1 Weak Strong Percentage of variance in trust for collaboration can be explained by measure the R2 or coefficients as in R Square column. All four variables can explain 78% to 100% the variance of Trust for B2B collaboration. Alpha reliabilities for the four subscales are acceptable because the ranging is from 0.78 to 1.0. Results of confirmatory factor analysis and structural equation modeling provided strong evidence that OTI & ITI is valid and did not differ by supply chain components group (manufacturer, supplier, distributor, contractor & etc). In other words, the instruments measures what it claims to measure. Figure 2 shows the link between each value to become solid trust for B2B collaboration. Results strongly support a model which indicates that reliability, identification, competence and openness are strong predictors of trust for B2B collaboration, which in return influences for integration.
Figure 2. Proposed Model - Trust Values for B2B Collaboration
6. CONCLUSION AND FUTURE DIRECTION This study is ongoing study which, intends to create a strategy and method to integrate entire SC components in e-business SCI. The strategy and method can be as guidelines for anyone to be Integrator in industry. It also can be a good model that can be extended to other industries or business with similar process. The most important thing is to find the strategy or method to identify trusted partners among SC components. Using the trust values identified, the strategy and method will be construct and validate by identified personnel-CIDB. Once, the trust values, strategy and method identified then the collaboration can be implementing. The integration in SC also depends on the collaboration that built from trusted partners. The collaboration combining or linking entire SC components into one centralize centre or the application can interact each other. All the transaction can be done easily from the initial/beginning transaction until completed as one full cycle.
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