Electronic marketplaces versus enterprise resource planning: a comparison and decision methodology for supply chain management

This paper addresses a firm's decision of whether to rely on the supply chain capabilities of enterprise resource planning (ERP) systems or to make use of electronic marketplaces (EMPs). The functionalities provided by the technologies, their costs and benefits, and strategic considerations are discussed as variables relevant to this decision. The tradeoff also depends on the firm's current level of capabilities and the processes that ensure its competitive advantage. Upon the analysis of these decision factors, the paper develops a decision methodology for the selection of these information technologies. The qualitative and quantitative decision models that are developed can together be used to make the decision between ERP systems and EMPs and the mix of internal and external supply chain capabilities. The qualitative model aids in the choice between an ERP system and an EMP and is based on a lifecycle approach. The quantitative model, a nonlinear mixed integer programme, can be used to mix and match different ERP systems or parts thereof with or without EMPs.