When speaking about innovative electronic business (e-business) organizations, we normally think of web pioneers such as Amazon.com, E*TRADE, and eBay. 1 Yet, e-business is radically changing the way many so-called brick-and-mortar companies (i.e., traditional organizations with extensive sales staffs and internally controlled business processes) conduct operations in the current business environment. Caterpillar Incorporated is typical of such evolving organizations. The 75-year-old manufacturer of construction and farming equipment is radically changing its supply-chain operations through a Web-based makeover. This initiative will allow Caterpillar’s customers to order and configure heavy machinery and related products through an Internet connection. In order to facilitate timely fulfillment of the many combinations of equipment that may be ordered, Caterpillar is also opening up access to key sales and business data for use by its suppliers. These suppliers work closely with Caterpillar to ensure parts and materials are available on an as-needed basis without interruptions on assembly lines.
Why would Caterpillar make such a radical change? Well, for starters, there is the anticipated savings of $100 million in costs during the first year the system is fully in place. Second, there is the newly created ability to allow customers actually to customize products and to provide them with build-to-order models not previously available.