Customer preference for Pacific Northwest hardwoods

Homecenter.com Two logs each of the Pacific Northwest hardwoods Oregon white oak (Quercus garryana) and bigleaf maple (Acer macrophyllum) were sawn into flitches, then sliced into veneer. The veneer was wrapped around molding stock. Veneer-wrapped molding of eastern red oak (Quercus rubra) and eastern maple (Acer spp.) was obtained. Samples from all four species were cut to 18-inch lengths and were either stained with light or dark finish or left unfinished as controls. These samples were used in face-to-face interviews of homecenter customers and professional homecenter buyers to determine preferences. Oaks were preferred over maples; eastern red oak was the most preferred species. The dark stain had a significant influence on customer preference; bigleaf maple was the most preferred species within this treatment. There were 43 of 59 customers who valued woods with "character" variation such as small knots or wavy grain patterns common to both Oregon white oak and bigleaf maple. Twenty-eight of those customers indicated that they have decorative trim or furniture resembling bigleaf maple or Oregon white oak, respectively, in their residences.

Previous marketing studies on hardwood specialty products have found that oak is the most preferred hardwood in the decorative hardwood market (2,5). However, these studies only assessed eastern hardwoods. Little information exists about customer preference for Pacific Northwest (PNW) hardwoods. This lack of information is understandable given that PNW hardwoods, except red alder, are not readily available. Although PNW hardwoods are currently used for a variety of products including cabinets and furniture, incomplete knowledge regarding the market performance of PNW hardwoods has contributed to the underutilization of this resource.

Niemiec et al. (6) provided the first regional survey of these commonly overlooked species. Inventories of California, Oregon, and Washington hardwoods show volumes of 2,170 and 463 million ft.3 for bigleaf maple (Acer macrophyllum) and Oregon white oak (Quercus garryana), respectively (6). However, studies on the feasibility of manufacturing and distributing decorative products made from these hardwoods are needed, especially as softwood harvests decrease and lumber prices rise.

Our overall objective is to add to the growing body of knowledge about the potential utilization of PNW hardwoods. In this study, we examined the feasibility of processing Oregon white oak and bigleaf maple into veneer for profile wrapping. We then used the veneer samples in a customer preference study to examine the market performance of Oregon white oak and bigleaf maple compared with two eastern hardwoods.

METHODS

VENEER WRAP STUDY We obtained two Oregon white oak logs of 8.5 and 11.9 feet in length and two bigleaf maple logs of 10.7 and 10.3 feet. Log volumes were calculated with Newton's formula (1). Although not commercially used because of the number of measurements required, it is reported to be the most accurate method of measuring the cubic volume of a log (1). The logs were then sawn on a Wood-- Mizer portable bandsaw to produce clear flitches approximately 1.5 to 1.75 inches thick and 5.5 to 6.0 inches wide. Oak flitches were dominantly quartersawn; maple flitches were quartersawn when possible, but were sometimes flatsawn to produce enough clear flitches of the appropriate dimensions. Lumber recovery factor (LRF) was calculated for each log as:

(lumber volume in cubic feet/ log volume in cubic feet) x 100

A sample of clear flitches was transported to the slicing mill. Flitches were placed on edge, separated with stickers, and conditioned in a concrete block chamber. Flitches were conditioned under a continuous cascade of hot water (180degF) for 48 hours, then were removed and transported to the slicer. Flitches were placed with the wide face down on a merry-go-round system where they were held down, with one flitch butted against the next. After one veneer was sliced, each flitch re-entered the hot water bath until it came around to be sliced again. Veneer was sliced lengthwise from the bottom of each flitch to a thickness of 21 to 22 thousandths of an inch; target thickness for wrapping was 20 thousandths of an inch. Veneer will shrink to about 19 to 20 thousandths of an inch during drying. A fleece backing was applied to add flexibility during wrapping. The fleece backing added approximately 3 thousandths of an inch to the thickness. Veneer was lightly sanded to the target thickness of 20 thousandths of an inch, then was transported to another mill for wrapping.

The Oregon white oak and bigleaf maple veneers were profile wrapped around molding stock. Wrapped samples were also made from veneers of eastern red oak (Quercus rubra) and eastern maple (Acer spp.). The veneer samples from the four species were transported to the Forest Research Lab, Oregon State University, where they were cut into 18-inch lengths and either stained with light or dark finish or left unfinished (control).

MEASURING CUSTOMER PREFERENCE

Sampling design. - We used a purposive sampling method, which consists of picking sample units based on their likely representation of the population of interest (3). The population of interest consisted of homecenter customers and professional buyers for the homecenter. A list of major central Willamette Valley homecenter and building material stores was compiled to access these two groups. Stores were located in Oregon at Corvallis, Albany, Salem, and Eugene. Six stores were chosen from these four cities; at least one store was visited in each city.

Interview design. - A questionnaire was developed for face-to-face interviews. We chose face-to-face interviews as the main survey method for two reasons. First, we could not compile a list of those who purchased from homecenters, since such a population is not fixed or readily accessible. Using face-to-face interviews with customers intercepted at the distributing location provided a way of surveying a population for which no list exists (4). Second, this was the only method that allowed the use of visual aids in the form of the molding samples. The questionnaire and interview format were first reviewed and tested by personnel at the Forest Research Lab. The questionnaire was then pretested on nine customers and one professional buyer at a local homecenter store.

Data was gathered on several Saturdays in the spring of 1996. Customers were asked to evaluate the finished (light and dark) and unfinished molding samples from all four species on the basis of their own personal preferences, while buyers were asked to evaluate what they thought their "average" customer would prefer. The same questionnaire format was used for both groups. Common names of the species were not revealed until the end of the interview to reduce potential bias. Factors such as price, availability, and product consistency were kept constant to further reduce bias.

In the first part of the interview, respondents evaluated the four species a total of three times. Both groups were asked to separately rate each species for light-stained, dark-stained, and unfinished sets of samples. For a particular finish, the respondent was shown one species at a time and asked to rate it on a 7-point scale (7 = very appealing; 1 = not appealing).

In the second part of the interview, both groups were asked to identify positive wood qualities of unfinished samples of each species. Additionally, customers were asked whether any of the species resembled decorative woods in their residences. If so, the product the sample matched was identified.

Analysis tools.- Analysis of variance (ANOVA) was used to analyze the results of the customer interviews (7). Differences in preference between stores were analyzed with a one-way design; a two-- way design was used to make comparisons of ratings among species across the light-stained, dark-stained, and unfinished samples. The analyses were followed by a multiple-range test to uncover specific differences. A regression approach was required to assess the interaction of species and finish. Preference was measured for statistical significance at the 0.05 probability level using Fisher's least significant difference.

Five professional homecenter buyers and 61 customers were interviewed. Not all interviews were complete; however, the interviews of at least 4 buyers and 59 customers were used in each analysis.

RESULTS

VENEER WRAP STUDY

The veneer wrap study provided insight into lumber recovery, internal stress, and slicing waste associated with manufacture. LRFs were calculated as 45.5 and 37.3 percent for the Oregon white oak logs and 60.5 and 47.0 percent for the bigleaf maple logs. Internal stress was evident in both maple logs, as boards "peeled" away from the cant during sawing. One board split lengthwise before being completely sawn from the cant. This exhibition of stress did not occur in oak logs.

Because of the sawing variation and other variables in the primary processing, sample flitches were not consistent in thickness. Different flitch thicknesses caused variations in the sliced veneer. Some of the first veneer sliced was unusable until the flitch thicknesses became equal. Mill management stated that the value of each slice of veneer wasted was from 40 to 50 cents. The maple veneer became wavy and would not lay flat during drying; however, Oregon white oak veneer remained flat. Although quartersawn when possible, some of the maple flitches were flatsawn. The mill manager stated that flatsawn veneer has more tendency to ripple while drying.

Veneer from Oregon white oak and eastern red oak had more defects after wrapping than did veneer from bigleaf and eastern maples. Unfinished samples of the oaks exhibited an increase in the severity of checks during the 3-week course of the survey. Most of the checks occurred near the contours of the molding; the Oregon white oak veneer even began to chip away from the core. The customers noticed the checks in Oregon white oak more than in eastern red oak. Oak is more susceptible to checking than is maple, but will not check when properly finished.

CUSTOMER PREFERENCE STUDY

Customer preference did not vary among the four store locations (p 0.05). There were significant differences (p 0.05) in customer preference among the four species for each of the three finishes. The two-way design showed that differences among species were somewhat dependent (p = 0.07) on the finishing of the samples. For each finish treatment, customer preference differed significantly among species. The rating scores were not significantly different between the light-stained and unfinished treatments. For both of those treatments, the order of most preferred to least preferred was red oak, Oregon white oak, bigleaf maple, and eastern maple (Figs. 1 and 2). Customers significantly preferred red oak over the other species and Oregon white oak over the maples for the light-stained and unfinished sets. There was no significant difference in customer preference between bigleaf maple and eastern maple in those treatments.

Dark stain was the only treatment that changed customer preference for a particular species. The mean ratings for the oaks and for eastern maple significantly declined as a result of the dark stain. Preference for bigleaf maple significantly increased above its preference in the light-stained and unfinished trials (Fig. 3). All dark-stained oaks had a muddy appearance, which may have caused them to be rated lower.

In addition to rating the individual species, each respondent was asked to comment on positive wood qualities such as grain, color, and special features of the four species. Special features included wavy grain and knots, which were the dominant features of the Oregon white oak and bigleaf maple samples, respectively. Unfinished samples were used for this question. Most customers interviewed provided remarks about these wood qualities. Forty-one (69%) of the respondents liked the knots in bigleaf maple; of those, 16 (27%) would not be willing to buy a wood with knots unless the knots were evenly dispersed through the grain. Forty (68%) of the respondents liked the wavy grain variation in the Oregon white oak samples; however, 12 (20%) said they rated Oregon white oak lower because they did not like its greenish-blue color.

Twenty-eight customers (47%) said that Oregon white oak and bigleaf maple resembled decorative wood in their residences; 7 respondents (12%) claimed that Oregon white oak resembled wood furniture in their homes (Fig. 4). Oregon white oak did not resemble any interior structures, such as paneling or flooring, nor did it resemble any cabinets in the respondents' homes; 13 (22%) felt that bigleaf maple resembled their trim.

Respondents did not typically recognize the maples. They often thought bigleaf maple was cherry, birch, or cedar. Eastern maple was often mistaken for hemlock, which is one of the most commonly used woods in trim work. This may explain why a large proportion of respondents matched eastern maple with trim in their homes. Respondents had a more difficult time distinguishing between the oaks. Several respondents knew they were looking at oak, but could not distinguish between red oak and Oregon white oak.

Customers did not show as strong a preference for red oak and eastern maple as buyers thought they would. Buyers felt that customers would significantly (p <>

DISCUSSION

It is technically feasible to use Oregon white oak and bigleaf maple for veneer and in trim applications. Better control over primary processing will produce flitches of acceptable size variation. As with most applications, a finish should be applied to oak before it begins to check. Such improvements would increase acceptance by manufacturers and customers.

Conditional preference for bigleaf maple demonstrates both the highly variable nature of its wood characteristics and customer acceptance of that variability. Almost 70 percent of respondents interviewed preferred bigleaf maple when the knots were well dispersed. The pattern of knots in wood cannot be controlled, however. Thus, only 40 percent of customers seeking a decorative wood with knots might actually prefer bigleaf maple, holding price and availability constant. This could make bigleaf maple more of a market risk than Oregon white oak.

We found that knots were an attractive feature to customers who preferred bigleaf maple. Grain variation was also favored by those who preferred Oregon white oak. Our results are consistent with the results of Idassi et al. (5); the customers interviewed in that study rated straight/even grain and the absence of surface flaws as contributing less to overall product value than perceived by producers. In our study, customers preferred decorative woods that had "character," which indicated to them that they were looking at real wood. The proliferation of artificial-grain products that resemble red oak may be a contributing factor to this preference among customers. The buyer-customer discrepancies may be due to the inability of the buyers to recognize some of the wood attributes that their customers actually prefer.

Integrating Oregon white oak into a marketplace dominated by red oak is problematic for both manufacturers and customers wishing to use local products. Several respondents said they would prefer to buy Oregon white oak over red oak once they were told where each species came from. However, a large proportion of respondents already had trim, interior structure, and cabinets that resembled red oak. Oregon white oak would not match well with red oak in such applications.

Targeting the furniture market might be a better marketing option for Oregon white oak. Respondents did not match their furniture with red oak as often as they did for Oregon white oak (Fig. 4). The unfamiliarity of Oregon white oak made many respondents feel uncomfortable about its workability. Customers might not have this discomfort if they could see finished furniture made from Oregon white oak.

CONCLUSIONS

Successful marketing of Oregon white oak and bigleaf maple to PNW residents will require appropriate strategies. Marketing of bigleaf maple should take advantage of its broader resemblance to other popular woods and its greater appeal when darkly stained. Visual demonstrations of dark-stained bigleaf maple at the point of sale might help in this regard. Marketing of Oregon white oak should address its association with furniture-- based products and its greater appeal when lightly stained.

This study indicates that there are opportunities for successfully developing markets for PNW hardwoods in veneer-- wrapped applications. However, market development efforts must acknowledge the differences between PNW and traditional species. Targeting consumers who value the unique characteristics of PNW hardwoods is key to success.

Effects of UPC barcoding on the relationships between homecenter buyers and wood products suppliers

Homecenter.com

Over the past two decades, the adoption of communication technologies that link marketing channel members has led to modified buyer/supplier interactions and structures. These technologies, termed interorganizational systems (IOS), are electronic buyer/supplier information exchanges that facilitate business transactions and increase the efficiency, competitiveness, and profitability in channels. Universal Product Code (UPC) barcoding, an IOS technology, was researched in the context of effects on channel relationships. UPC barcoding allows retailers to point-of-sale (POS) scan merchandise at the customer checkout and is an essential tool for inventory control and management. Retailers strongly encourage, and in many cases require, suppliers to provide UPC-barcoded products. As a component of the product offering, UPC barcoding is a non-core attribute that strongly influences supplier choice criteria.

OVERVIEW OF THE BUYER/SUPPLIER ENVIRONMENT

Research hypotheses were tested using data collected from wood products suppliers and retail homecenter buyers. In the homecenter industry, a number of interorganizational system (IOS) technologies are being adopted. These technologies link them with wood products suppliers and result in shortened order cycles and improvement in inventory replenishment and management (19). Wood products suppliers to these homecenter retailers are expected to adopt IOS technologies in order to remain competitive, since homecenter retailers may select only those wood products suppliers capable of IOS technology.

An emerging IOS technology important to homecenters is Universal Product Code (UPC) barcoding of individual products for point-of-sale (POS) scanning at the cash register. Vlosky and Smith (21) report that homecenter retailers implement UPC barcode POS scanning for a number of specific reasons, all of which are intended to increase efficiency, profitability, and competitiveness.

IOS TECHNOLOGY AND BUYER/SUPPLIER RELATIONSHIPS

IOS systems are based on information technology that transcends organizational boundaries. IOS technologies such as electronic data interchange EDI)1, barcoding for inventory management and control, and UPC barcoding support new approaches to managing product flow based on just-in-time (JIT) or quick response (QR) logistics strategies (24).

IOS technology adoption changes the way companies interact. Before addressing specific relationship impacts, we will present a brief review of buyer/supplier relationship research. Generalized models describing relationship interactions have been proposed. These models discuss antecedent conditions and processes for buyer/supplier exchange relationships (9,11-13,15). In addition to generalized models, specific channel dyadic interactions and relationships have been studied. For example, in the manufacturer-distributor context, models and conceptual frameworks that investigate relationship structures and success factors have been developed (2-5). In the manufacturer-homecenter retailer arena, Wortzel and Venkatraman (27) examine relationship linkages that support homecenter retailer competitive strategies and performance and manufacturer support activities.

With regard to effects of IOS adoption on relationships in channels, Clemons and Row (6) found that new IOS technology intended to coordinate business activities between buyers and suppliers are often met with distrust, ambivalence, and open resistance by exchange partners. They believe that some companies may never realize the potential benefits of cooperation and coordination between supplier and buyer that accompanies IOS technology. Taking a longer term perspective, Han (11) and Han and Wilson (12) see technology as the foundation in the development of structural bonding which, in addition to social bonding, constitutes the basis for relationship development. Accordingly, it is hypothesized that in the long term, adoption of IOS technology can affect the stability of channel relationships by developing structural bonds.

CORPORATE STRATEGY AND IOS

Vlosky and Smith (21) suggest that IOS technology represents a means by which products may be differentiated and business relationships enhanced and may serve as the basis for long-term and sustainable competitive advantage. Porter (18) cited technological change as one of the principal drivers of competition and competitive advantage in the value chain. In addition, he suggested that technology can shift the bargaining relationship between an industry and its buyers, create buyer/supplier interdependencies, and generally modify industry and channel structures. Parsons (17) describes a "strategic gap" that exists when companies do not implement available advanced information technology. He suggests that competitively, firms in industries where channel relationships are being altered by technology must be concerned with 1) consequent effects on relative power; 2) how technology affects the rate of new entry into industries by negating existing entry barriers or creating new ones; and 3) how technology changes industry structures by affecting rivalry bases among competitors within an industry. In addition, Konsynski and McFarlan (14) suggest that IOS technology improves the ability to compete by facilitating cooperation and partnership development with exchange partners. Partnerships may provide for shared investments in hardware and software, lead to reduced risk in leading-edge technology adoption, and serve as a new basis for supplier differentiation.

However, as exchange partners make the transition from paper-based to electronic-based communication, a number of events take place. IOS technology impacts all functional areas in channel organizations including documentation requirements, business procedures, personnel role modification, communication channels and modes, and transaction cost structures (25). As channel and business procedure practices progress to an electronic environment, these changes can create short-term system stresses.

A MODEL OF IOS-IMPACTED RELATIONSHIPS

The transition to an electronic business environment has distinct short- and long-term effects on channel relationships that occur in different stages. (Fig, 1) (23). The relationship before IOS adoption (to) is assumed to be stable and to have gone through the expansion phase in the relationship development process, as described by Dwyer et al. (9), where exchange partner roles are firmly established and performance requirements are mutually satisfactory. A benchmark level of commitment (Co) exists at this stage. It is proposed that IOS technology introduction into the relationship leads to disequilibrium and reduces relationship satisfaction and level of commitment (C1) for both parties (t1). It is not until later in the IOS technology-impacted relationship process (t2) that realized expectations of long-term relationship stability lead to strengthened structural bonding. Adjustment and accommodation typify the process toward re-establishment of trust, interfirm bonding, and commitment (C2) at or above pre-IOS adoption levels. With the introduction of IOS technology into the relationship, commitment drops and then regains ground in the long term (Co > C1 <>

The factors that determine pre-IOS relationship strength, countered by relationship stressing impacts, determine the width and duration of the "Relationship Satisfaction Gap" depicted as the trough in t1. Vlosky and Wilson (24) identified IOS-induced relationship stresses that create the "Relationship Satisfaction Gap" and gap counter forces. This gap is minimized when exchange partners are cooperative and exhibit a high degree of understanding and commitment to the other party through the IOS implementation process. Additional factors that minimize the gap include trust that has evolved in the relationship over time, the existing mutually accepted power balance, the level of importance that the exchange partner represents from a strategic perspective, and the general relationship structure.

A number of possibilities exist that may explain short-term relationship disruptions. First, both homecenter retailers and their wood products suppliers make investments solely to accommodate linking technology requirements. Specific investments such as these are of considerably less value outside the focal relationship (13). By making idiosyncratic investments in a relationship, channel members create incentives to maintain the relationship (1).

Homecenter retailers that scan UPC barcodes make specific technology investments by installing POS barcode scanning capabilities that require supplier support to function effectively. Wood product suppliers also make specific investments in developing UPC barcode application capabilities to satisfy customer requirements.

In addition to the financial costs, implementing unfamiliar technologies may have other negative effects on wood products suppliers. The typical supplier behavior to accommodate customers is an example of exercised power, as distinguished from latent or potential power. The customer mandating to the supplier to meet their IOS technology needs is consistent with the definition of channel member power given by E1-Ansary and Stern (10): The ability of a channel member to control marketing strategy decision variables of another member in a given channel at a different level of distribution.

From the buyer's perspective, short-term relationship stresses stem from a sense of frustration that wood products suppliers are not reacting swiftly or efficiently enough in implementing IOS technology. Konsynski and McFarlan (14) found this to be the case with many companies that initiate EDI. These companies were often shocked to find partners unable to assimilate even modest data technologies and applications. Homecenter buyers are also often frustrated at supplier lack of understanding regarding IOS technical fundamentals and implementation.

HYPOTHESES

The propositions and hypotheses center around the notion that short-term relationship disruption is due to differences in perceptions between wood products suppliers and their homecenter customers on how IOS technology should influence the relationship. These perceptual differences were tested in hypotheses H1, H2 and H3. First, homecenter customers, the initiators of technology, may perceive themselves to be in a position of power in the relationship as wood products suppliers attempt to respond quickly to their technical requirements. However, wood products suppliers that successfully satisfy customer IOS requirements early in the technology process may believe that they are in a favorable position because the IOS technology they provide is available in the short term from only a few wood products suppliers.

P1: The short-term channel relationship deterioration that results from IOS technology adoption is caused by the differences in how buyers and suppliers perceive the dependence that exists after IOS technology adoption.

H1: The greater the difference in perception of dependence, the greater the relationship deterioration.

Significant idiosyncratic investments may be made by both buyers and sellers when IOS technologies are implemented. These investments may be a means for improving process efficiencies that, in turn, make a positive profit contribution , or may simply be strategic costs of doing business incurred to maintain or develop market position. In any event, these investments are not readily redeployable to alternative business activities. One issue that complements the specific investment issue is the question of value that should be received for making these investments. One measure of value, the incremental price for implementing a customer-mandated IOS technology, was examined.

P2: The short-term channel relationship deterioration that results from IOS technology adoption is caused by the differences between how buyers and suppliers perceive the value of the IOS technology to the other partner.

H2: The greater the difference in buyer/supplier perception of IOS value, the greater the relationship deterioration.

IOS technology implementation can be an exasperating experience for companies that have little or no prior experience. Frustration can be compounded for wood products suppliers if technology adoption is customer mandated with seemingly impossible deadlines or when the technology is in the early phase of adoption in their industry. Wood products suppliers in this study faced both circumstances.

P3: The short-term channel relationship deterioration that results from IOS technology adoption is caused by disparate buyer/supplier perceptions of appreciation by the other exchange partner for the effort required to implement IOS technology.

H3: The greater the difference in perception of effort required to implement IOS, the greater the relationship deterioration.

Although there may be exchange partner frustration in the short term, the reward often is the expectation of a strengthened long-term relationship. The wood products industry is characterized by commodity products offered by many suppliers in an intensely competitive environment. Those suppliers that adapt to customer technology requirements believe that their market position will eventually be secured and anticipate subsequent future relationship stability. Homecenter buyers are also thought to initiate IOS technology with preconceived expectations of long-term relationship stability.

P4: In the long-term, after periods of disruption and relationship readjustment, IOS technology adoption strengthens channel relationships (t2 in Fig. 1)

H4: As more time passes after IOS implementation, the channel relationship becomes stronger.

The homecenter retail industry is but one customer base for wood products suppliers. Most wood products are used for construction and industrial applications that do not require the application of UPC barcodes. In addition, not all homecenters require wood products suppliers to barcode their products. Buyers and sellers that continue to conduct business in a non-IOS environment do not experience technology-induced relationship disruptions and, as such, should have better short-term relationships with exchange partners.

H5: The short-term relationship between buyers and suppliers who have not adopted IOS technology is stronger than between IOS technology adopters.

METHOD

DATA COLLECTION AND RESPONSE RATES

The study sample consisted of the 500 largest (by sales) homecenter retail companies in the United States. The National Home Center News "Annual Retail Scoreboard" (16) was used to identify and select sample frame members. The Directory of Home Center Operators and Hardware Chains (8) was used to identify key employees of sample frame companies. The sample design was determined to be most appropriate due to the belief that larger, more influential homecenters are early adopters of IOS technologies (22,26), a premise that was found to be statistically significant (19). The sample of the 500 largest firms represents 67 percent of the 1992 $67 billion homecenter industry, with the range of sales revenue by firms in this group from $7,148 million to $12 million (16).

On the supplier side, the sample consisted of the 597 largest (by sales revenue for distribution intermediaries and by volume for manufacturers) wood products companies in North America taken from 8 supplier populations (manufacturers of 7 major product groups: softwood lumber, hardwood lumber, treated lumber, softwood plywood, particleboard, medium density fiberboard, and oriented strandboard/waferboard, as well as distributors/wholesalers), Industry directories were used to identify and select sample frame members and to identify key employees. As is the case with homecenter retail buyers, the purposive (judgment) sample design was determined to be appropriate (20).

The study was conducted using mailed surveys. Survey development and implementation followed methods and procedures recommended by Dillman and described as the Total Design Method (TDM) (7). Accordingly, the mail questionnaire procedures, including pre-testing, pre-survey notification of the initial mailing, a post-survey reminder, and 2 additional survey mailings resulted in an adjusted response rate for homecenters of 35 percent (177 usable surveys from 500 firms) and an adjusted response rate for wood products suppliers of 50 percent (272 usable surveys from an adjusted sample size of 540 firms).

There were 54 wood products suppliers capable of using UPC barcoding and 16 homecenter retailers. The low number of IOS-capable companies indicates the early stage of adoption in this industrial channel.

PROFILE OF RESPONDENTS

The 1992 average sales for the 177 homecenter retail respondents was $177 million and ranged from $12 million to $7.1 billion. The 177 responding homecenter companies represented $30. billion in total sales in 1992 or 33 percent of the entire homecenter industry (16). To illustrate the importance of large multi-store companies in the homecenter industry, just 15 percent of homecenter respondents (26 companies) account for 88 percent ($28.3 billion) of total 1992 respondent sales. Point-of-sale scanning homecenters are characterized as large (sales > $100 million) multi-store chains (20).

Respondents for the seven wood products manufacturing sectors surveyed represented an unweighted average of 47 percent of total North American production in 1992 across all sectors (22). Distribution intermediary respondents represented over $18 billion in revenue in 1992. As is the case with homecenter retailers, large wood products supplier companies lead in implementing UPC barcode technology to serve the homecenter customer base, with respondent UPC barcoding company production being 218 percent higher on average than that of non-UPC barcoding companies in 1992 (19).

MEASURES

Homecenter retail customers and wood products suppliers responded to questionnaire items to assess short- and long-term effects of technology adoption on their business relationships. The following measures were used: dependence-power, short-term commitment, long-term commitment, supplier adaptation to customer technology requirements, and sensitivity to supplier technology implementation challenges and customer technology needs. Items used 5-point scales indicating varying levels of agreement (1 = strongly disagree; 3 = neither disagree nor agree; 5 = strongly agree).

Paired questions were asked of buyers and wood products suppliers for each of the key measures and although these pairs conceptually are parallel, question wording was problematic. An attempt was made to minimize confusion by presenting results in a paired format.

RESULTS

In testing hypotheses related to short-term channel relationship disequilibrium, the items in Table 1 were used. (All results in Table 1 are for technology adopter respondents.)

Dependence was measured with questions regarding exchange partner importance in the relationship, general dependence, and specific technology investments made. All measures are statistically significant at a = .05 for 1-tailed t-tests, except for the degree of importance that buyers and sellers ascribe to themselves due to the volumes of product they buy or sell to technology-capable exchange partners. Differences are greatest in perceptions of supplier adaptation to customer IOS requirements and in the degree of specific technology investment.

Perception of value to the other partner was measured by asking whether a premium should be paid by customers for barcoded products. Buyer/supplier disagreement on whether such a premium should be paid is strongly significant at a = .05 for a 1-tailed t-test.

Effort expended was measured by asking homecenter retailers if they appreciate the technical challenges that wood products suppliers face in supplying barcoded products to them, and by asking wood products suppliers if they believed their customers in fact appreciated the challenges they face. The difference in buyer/supplier perception is significant at a = .05 for a l-tailed t-test.

Long-term strength of relationships was tested in two ways. First, by using both summary and detailed measures found in Tables 2 and 3, and second, by doing an analysis of variance (ANOVA) for an index of relationship measures for four successive time periods since implementation.2

Both buyers and suppliers were asked questions regarding their short- and long-term relationships with exchange partners. Table 2 compares the answers of buyers to suppliers and shows that the two groups did not statistically differ in the degree of agreement regarding short and long-term relationships. Table 3 compares the answers regarding a short-term situation with the answers for a long-term situation. When asked to compare their relationships with UPC-capable customers versus non-UPC customers, suppliers indicated that their relationships would be better with UPC customers in both situations, but the degree of agreement was significantly stronger (a = .05) when considering the long term. For buyers, agreement was also stronger in the long term, although the difference was not significant at a = .05. However, a p-value of.08 and t-value of -1.45 lend support to this hypothesis for buyers. This lack of significance at a = .05 is attributed to a lack of statistical power due to a small sample size (n = 16).

ANOVA yielded significant differences between relationship strength and the time period of UPC adoption for both buyers and suppliers at a = .05. Relationship strength was measured by indexes of relationship questions for both buyers and suppliers at the four different time periods. Even with small sample sizes, a strong positive linear relationship existed between relationship strength and time since companies began barcoding. Figures 2 and 3 show that the pattern of means for respondent companies for selected relationship questions over the four successive implementation periods further support our model. In some cases, relationship strength declines and rebounds over time; in other cases, relationship strength is positively related to length of relationship over all four time periods.

Short-term relationship quality (H5) was tested using the items in Table 4. UPC-capable buyers did not significantly differ from non-UPC buyers in their degree of agreement with selected relationship items. The same was true for suppliers, except for the item regarding the investment of time and expense. Although differences were detected and all are directionally as hypothesized, Hs was rejected at a = .05. It is important to note that, because both wood products suppliers and buyers are in the early stages of UPC implementation, the sample sizes of implementers are small vs. non-implementers (homecenter buyers: 16 implementers vs. 161 non-implementers; suppliers: 73 implementers vs. 143 non-implementers).

DISCUSSION

The results from this study suggest a number of implications regarding the impact of IOS technology on the relationships between homecenter buyers and wood products suppliers. Four of the hypotheses were supported reasonably well by the data, indicating that channel relationship deterioration does occur during early stages of IOS technology adoption. The data reveal a number of factors that contribute to this disequilibrium. The primary reason for relationship disruption is the chasm between buyer and supplier perceptions of the relationship status. In the short-term, there appears to be little sensitivity and understanding regarding exchange partner efforts to adopt this channel technology. Buyers are wary of supplier commitment to developing solutions in a timely manner and suppliers feel pushed to quickly adopt an unfamiliar technology without adequate customer support. Financially, wood products suppliers think their customers should compensate them for their efforts, but customers are vociferous in their opposition and are steadfast in not paying a premium for barcoded products. Over the course of time, relationship strength and satisfaction increase as exchange partners adjust to IOS technology. As channel members become accustomed to the relationship as it has been modified by IOS technology, the shocks to the relationship system seem to dissipate.

A realization that IOS technology is not extraordinary and that it is becoming a requirement for doing business leads to the anticipation of a higher quality relationship in the future. Both homecenter buyers and wood products suppliers feel that they will indeed have better business relationships with their technology-capable exchange partners in the long term than they have with them today.

LIMITATIONS AND FUTURE RESEARCH

Although this exploratory analysis identified a number of issues, limitations exist in the study. First, the analysis was conducted post-hoc using data collected as part of a broader research study. Second, a single IOS technology was studied in one channel. In order to generalize the stated conclusions, parallel studies should be conducted that examine other IOS technologies in this and other channels. Third, IOS technology in the wood products supplier and homecenter buyer channel is in the early stage of adoption, which does not allow for confirmation that long-term relationships eventually stabilize or exhibit relationship strength higher than found at pre-implementation. As technology adoption diffuses to other channel members, a temporal study might be conducted to examine long-term relationship stability. As a result of this channel being in the early stages of technology adoption, there is a small homecenter buyer sample size. Buyer data supported our hypotheses but the small sample size (n = 16) has low statistical power.

There are significant opportunities to build on this exploratory research, such as studies to investigate if other building material industries and marketing channels experience short-term relationship disruption as a result of IOS technology adoption and to identify underlying reasons for differences in buyer and supplier perceptions identified in this study. Although this study generates a number of questions, it has shed new light on implications for IOS technology adoption for wood products suppliers and their homecenter customers.

Internet technologies in the homecenter industry

Homecenter Coupon Codes As competition intensifies in the $127 billion homecenter industry (1998 data), homecenter retailers are implementing electronic commerce technologies in order to generate and maintain competitive advantages. Internet technologies give companies an alternate method of expanding their trading communities, thus creating a streamlined supply chain and reducing costs (6). This research was designed to explore how internet technologies are impacting a key retail channel for forest products: the homecenter retail industry. The study sample consisted of the 500 largest homecenter retail companies (by sales) in the United States. This group of large homecenters represented over 75 percent of the total homecenter industry sales in 1998 (10). Study results show that 87 percent of the homecenter respondents had access to the Internet in 1998 and 57 percent of these companies used the Internet for company promotion via home pages. Results also showed that in 1998, 32 percent and 13 percent of respondents had intranets and extranets, respectively. As expected, large homecenter retail respondents are lead adopters for these important Internet technologies.

The homecenter market is driven by the repair and remodel demand sector, which includes expenditures by both doit-yourself (DIY) customers and professional (PRO) contractors (15). In 1998, homecenter industry sales totaled $127 billion, with the two largest homecenter chains, Home Depot and Lowe's, combining for 33 percent of total homecenter sales (10). In addition, the top 500 retailers had over 75 percent of the total homecenter industry sales in 1998 (10).

As the homecenter industry continues to grow, homecenter retailers are fiercely competing for market share through the strategic location of stores, aggressive pricing, larger warehouse-style shopping venues, and more sophisticated promotional materials such as displays, point-of-purchase (POP) literature, and interactive information technologies. Many homecenters recognize that the effective use of electronic technologies will likely improve their logistics efficiency and as a result, will reduce their costs, thus securing a more competitive position in the marketplace. This paper focuses on internet technologies, an emerging form of electronic commerce (EC), including home pages, intranets, and extranets.

THE INTERNET

"The body of interconnected computer networks that today is collectively known as the Internet" is the largest and most powerful computer network on the planet (17). In 1993, there were only 90,000 Americans with Internet access (1). This number increased more than 900 times to 81 million Americans by early 1999 (1).

The World Wide Web, the fastest growing part of the Internet, is "touted increasingly as the great new marketing medium of our time" (13). It allows twoway communication, which makes it a powerful marketing tool. According to a study by Silvia Watkins-Castillo (20), "the most common use of the Internet by companies is ... for information purposes, either to gather information or to disseminate information."

In 1998, there were 829 million Web home pages (1). This number is projected to reach 1.45 billion by 1999 and 7.7 billion by 2002 (1). Ted Blackman (4) has stated that websites mostly contain information about the company and its activities, therefore focusing more on marketing the firm, not its products. For example, WTD Industries' Vice President, Bob Riecke said, "our website is useful for news and financial information (which) has been very popular" (4).

The Internet is dramatically altering the way companies do business with each other, even for those already using electronic commerce to improve productivity (6). The Web allows companies to present information on the Internet using attractive graphics, text, sounds, and videos that can be found by very inexperienced computer users (6). Companies are attracted to the Internet because of its user-friendliness, but also because it offers the following: 1) open connectivity: the Internet is compatible with nearly every computer from personal computers (PCs) to mainframes; 2) a global presence: by creating a website, a company's information can be accessed by any computer in the world; and 3) economic value: the Internet can be used to lower marketing and logistics costs and potentially increase sales and revenue by creating new distribution channels (6).

INTRANET

An intranet is a network of computers within an organization that are connected using standard Internet protocols (12). An intranet can be as small as two computers or as many as a thousand computers spread around the world. Companies with intranets usually limit access to a select target of users ( 12).

Intranets are linked to the outside world through the Internet, where special software called a "firewall" protects the company from unauthorized visits by monitoring the incoming and outgoing information (14). Users of an intranet can access the Internet but Internet users cannot access an intranet without permission (or the password). The danger of unauthorized access is a concern and security is often an issue both inside and outside the company.

The major benefit of an intranet is its ability to efficiently share information such as management and safety policies, newsletters, memos, bulletins, trip reports, schedules, calendar of events, product descriptions, customer information, job training, and job postings (12). Shared intranet information is available to the people who need it, when they need it, and in the form they need it (14). Other benefits of an intranet include "speeding up activities, reducing the need for paper documents, making continually updated material available, and automating repetitive documentation processes" (14).

EXTRANET

"When a company makes its intranet available to customers outside its security firewall, it creates an extranet" (14). An extranet is often viewed as an extended intranet. A more formal definition is a collaborative network of computers that uses Internet technology to link businesses with their supply chain. A company creating an extranet usually opens or allows members of its supply chain to view parts of its intranet; therefore a solid intranet is required before a company can have a usable extranet (8).

"Businesses today are under incredible pressure to trim time and costs from their supply-chain processes, as well as to increase market share and revenues" (6). Many companies are noticing that extranets are creating business opportunities (9). Benefits of extranet business activities include improving customer service, gaining product and marketing information, reducing costs, reducing paperwork, shortening order cycles, increasing the efficiency of inventory management, and reducing errors (9,14).

Extranets allow for easy sharing of ideas, easy access to product information, pricing, company information and policies, and can therefore be used to train and support value-added resellers and manufacturers' representatives. Companies are also using extranets for electronic data interchange (EDI) because there are no compatibility problems (2). "EDI generally uses expensive, proprietary communications and data-handling technology which companies hesitate to abandon in favor of extranets" (14). However, extranets can incorporate most forms of EDI with software that translates information between systems (14).

ELECTRONIC COMMERCE AND THE HOMECENTER INDUSTRY

To reap the full benefits of Internet technologies and electronic commerce, the entire supply chain should be included. Therefore, homecenters are increasingly making electronic information system linkages a requirement in their vendor selection (16). As a result, wood products suppliers who adopt these technologies can improve their ability to sustain or develop market position with this essential customer base.

Internet technologies allow easy, quick, and cost-effective access to EC, thus allowing companies to achieve the benefits of electronic technologies and the synchronization of supply and demand. Internet EDI is less complex than traditional EDI, therefore making EC less intimidating for first-time users as well as flattening the learning curve (6). As a result, it can improve productivity for both EC veterans and novices (6). The Internet creates business opportunities for anyone who can access the information regardless of the type of computer, database, or web browser (2,6). The $27.4 billion business-to-business volume that was transacted with Internet EC in 1998 is expected to reach an astonishing $978.4 billion by 2003 (1). This increase supports the projection that extranets will replace 40 percent of the business-to-business EC applications by 2002 (6).

This research was designed to explore how the Internet is impacting a fundamental channel for U.S. building materials, that is, the U.S. homecenter industry. The specific research objective was to examine "Internet presence" of homecenters by assessing the extent to which companies use various Internet technologies such as home pages, intranets, and extranets for their business activities. Based upon previous work that found "large" homecenters to be lead adopters of EC technologies, the top 500 U.S. homecenter respondents were divided into large and small homecenters according to their 1997 annual sales (18,19).

METHODOLOGY

SAMPLE DESIGN AND SAMPLING

The 500 largest homecenter retail companies (by sales) in the United States, representing over 75 percent of total homecenter industry sales of $127 billion in 1998 (10), were used as our study sample frame.

DATA COLLECTION AND RESPONSE RATE

The 1998 Home Center Operators & Hardware Chains CD-ROM Directory (5) was used to identify our sample of homecenters, as well as key informants and titles at their corporate headquarters. Pre-testing of the research instrument was conducted with six faculty members with extensive knowledge of this industry and two homecenters in central Pennsylvania. Survey implementation followed a modification of Dillman's Total Design Method (7). This procedure included an initial survey mailing, a reminder postcard, and a second survey mailing, resulting in the return of 135 usable questionnaires and an adjusted response rate of 27.3 percent.

To ensure that the largest and most influential homecenters were included, pre-survey notification and follow-up phone calls were made to the top 20 homecenter retailers (by sales) to encourage participation and increase their response rates. The top 20 homecenters represented 53 percent ($57 billion) of total homecenter industry sales in 1997 (5). These additional primary data collection efforts resulted in 16 of the top 20 homecenters responding to our study. NONRESPONSE BIAS

The Kruskal-Wallis one-way analysis of variance (ANOVA)' technique and a two-tailed t-test2 were used to test for non-response bias by comparing the first 45 respondents to the last 45 respondents (3). The assumption in this methodology is that late respondents, who respond only after increased follow-up efforts, tend to be similar to non-respondents. No significant differences were found between early and late respondents in terms of firm size or the adoption of Internets, home pages, intranets, or extranets at a 95 percent confidence level. As a result, non-response bias concerns were set aside.

RESULTS

PROFILE OF RESPONDENTS

Sales and locations. - Respondents represented a total of $57.2 billion in homecenter sales (n = 135) in 1997 resulting in a 72 percent weighted response rate (by sales) and representing 53 percent of the total homecenter retail industry sales that year. Average sales for responding homecenters were $424 million and ranged from $17 million to $24 billion. Homecenter respondents had an average of 29 locations and ranged from I store to 656 stores.

The top 500 homecenter respondents were divided into two groups: "large" (n = 20) homecenters with 1997 sales ranging from $200 million to $25 billion and "small" homecenters (n = 115) with 1997 sales ranging from $17 million to $199 million. In 1998, there were 35 U.S. homecenters in the study sample of top 500 homecenters that had sales greater than $200 million (5).

INTERNET

Of the 135 homecenter respondents, 86.7 percent (n = 117) had Internet access in 1998 and an additional 4.4 percent (n = 6) were planning to be on-line by 2000 (Table 1). The 117 companies with Internet access represented 99 percent ($56.6 billion) of the total respondent revenue while the 6 companies that were planning to implement Internet access by 2000 represent an additional 0.3 percent ($171 million) of the total respondent revenue.

One hundred percent (n = 20) of the large homecenter respondents had Internet access in 1998 (Table 1). Eighty-four percent (n = 97) of the small homecenters had access to the Internet in 1998 with an additional 5.2 percent (n = 6) planning to be on-line by 2000.

The large and small homecenter respondents with Internet access were compared using the Kruskal-Wallis oneway ANOVA statistical technique. This non-parametric test for nominal data computes a statistic with a chi-square distribution under the hypothesis that the groups have the same distribution (11). Using this test, Internet access between our large and small homecenter respondents differed significantly at x = 0.058 (Table 1).

Of the 117 homecenters that had Internet access in 1998, over half (n = 67) used the Internet to promote their company (Fig. 1). Other key Internet uses by respondents included providing on-line services (n = 36), to make purchases (n = 31), and for sales (n = 28).

As expected, all 67 responding homecenters that used the Internet to promote their company also indicated that they had home pages (Table 2). These 67 homecenters represented 86.7 percent ($49.6 billion) of the total respondent revenue. An additional 33 companies (24.4%) were planning to create a company home page by 2000 and represented 11.0 percent ($6.3 billion) of the respondent revenue.

Of the large homecenter respondents, 85 percent (n = 17) representing 90.3 percent ($47.4 billion) of the large homecenter respondent revenue had home pages in 1998. The other three large homecenter respondents were planning to create a home page by the year 2000. Forty-three percent (n = 50) of small (n = 115) homecenter respondents had home pages in 1998, with an additional 26.1 percent (n = 30) planning to create a home page by 2000. Home page usage by large and small homecenter respondents differed significantly at (x = 0.001 (Table 2).

INTRANET

Of the 135 homecenter respondents, 31.9 percent (n = 43) had implemented an intranet in 1998. These 43 firms represented 79.1 percent ($45.3 billion) of the total respondent revenue (Table 3). Sixty-five percent (n = 13) of the large homecenter respondents and 26.1 percent (n = 30) of small (n = 115) homecenter respondents were using intranets in 1998. The implementation of intranets by large and small homecenter respondents differed significantly at alpha = 0.001.

Homecenter respondents that had intranets were asked to indicate the types of information contained or provided on their intranet (Fig. 2). Of the 43 homecenter respondents that had intranets, 20 (46.5%) of the intranets included access to phone directories and memos. Homecenter respondents' intranets also frequently have access to schedules, management policies, price lists, and calendars of events.

EXTRANET

Thirteen percent (n = 18) of the 135 homecenter respondents had implemented extranets in 1998 and an additional 16.3 percent (n = 22) were planning to implement extranets by 2000 (Table 4). The 18 companies that had extranets represented 58.2 percent ($33.3 billion) of the total respondent revenue while the 22 companies that were planning to implement an extranet by 2000 represented an additional 26.5 percent ($15 billion) of the total respondent revenue.

The large and small homecenter respondents with Internet access were compared using the Kruskal-Wallis oneway ANOVA statistical technique. This non-parametric test for nominal data computes a statistic with a chi-square distribution under the hypothesis that the groups have the same distribution (11). Using this test, Internet access between our large and small homecenter respondents differed significantly at x = 0.058 (Table 1).

Of the 117 homecenters that had Internet access in 1998, over half (n = 67) used the Internet to promote their company (Fig. 1). Other key Internet uses by respondents included providing on-line services (n = 36), to make purchases (n = 31), and for sales (n = 28).

As expected, all 67 responding homecenters that used the Internet to promote their company also indicated that they had home pages (Table 2). These 67 homecenters represented 86.7 percent ($49.6 billion) of the total respondent revenue. An additional 33 companies (24.4%) were planning to create a company home page by 2000 and represented 11.0 percent ($6.3 billion) of the respondent revenue.

Of the large homecenter respondents, 85 percent (n = 17) representing 90.3 percent ($47.4 billion) of the large homecenter respondent revenue had home pages in 1998. The other three large homecenter respondents were planning to create a home page by the year 2000. Forty-three percent (n = 50) of small (n = 115) homecenter respondents had home pages in 1998, with an additional 26.1 percent (n = 30) planning to create a home page by 2000. Home page usage by large and small homecenter respondents differed significantly at (x = 0.001 (Table 2).

INTRANET

Of the 135 homecenter respondents, 31.9 percent (n = 43) had implemented an intranet in 1998. These 43 firms represented 79.1 percent ($45.3 billion) of the total respondent revenue (Table 3). Sixty-five percent (n = 13) of the large homecenter respondents and 26.1 percent (n = 30) of small (n = 115) homecenter respondents were using intranets in 1998. The implementation of intranets by large and small homecenter respondents differed significantly at alpha = 0.001.

Homecenter respondents that had intranets were asked to indicate the types of information contained or provided on their intranet (Fig. 2). Of the 43 homecenter respondents that had intranets, 20 (46.5%) of the intranets included access to phone directories and memos. Homecenter respondents' intranets also frequently have access to schedules, management policies, price lists, and calendars of events.

EXTRANET

Thirteen percent (n = 18) of the 135 homecenter respondents had implemented extranets in 1998 and an additional 16.3 percent (n = 22) were planning to implement extranets by 2000 (Table 4). The 18 companies that had extranets represented 58.2 percent ($33.3 billion) of the total respondent revenue while the 22 companies that were planning to implement an extranet by 2000 represented an additional 26.5 percent ($15 billion) of the total respondent revenue.

SUMMARY

This study reports the status of Internet EC among the top 500 homecenter retailers in 1998. Study results showed that nearly 87 percent of the 135 responding homecenters had access to the Internet in 1998. Over half of these 135 homecenters had home pages that were used to promote their company. Approximately one-third of U.S. homecenter respondents had intranets in 1998 and only 13 percent of responding U.S. homecenters had implemented an extranet with their suppliers.

Study results show that large homecenters are leading the adoption of Internet-based EC. Also, results show that large and small homecenter respondents implemented their extranets for different reasons. Large homecenter respondents rated cost savings and business relationships as their primary reasons to implement their extranet, while small homecenters rated corporate strategy and vendor transactions as their top two reasons for implementing their extranet.

Although businesses are increasing their use of the Internet, this study suggests that the use of the Internet for business-to-business activities was not yet firmly established among the top 500 homecenter retailers in 1998. However, since 87 percent of our 135 respondents had Internet access, it seems that the foundation has been set for future expansion of Internet-based business activities.

CONCLUSIONS

Internet-based electronic commerce can drastically alter the way companies do business. Because the Internet is compatible with any computer, language, or web browser, it offers a myriad of business opportunities. Therefore, Internet EDI via extranets can be transacted between current users of EDI and non-EDI users. As a result, business-tobusiness transactions over the Internet are expected to increase dramatically.

The Internet is a revolutionary tool that allows companies to perform a multitude of business functions. A company can use a home page for cost-effective promotion. For example, LouisianaPacific's website is designed primarily to enhance communication and serve their customers' informational needs such as the companies' financial data, growth strategies, company news, and environmental programs (4). In contrast, Crestbrook Forest Industries' website includes product availability information for their customers to access inventory in real time and at their convenience rather than waiting for a weekly fax (4).

The forest products industry and the homecenter industry are rapidly expanding their use of the Internet. Companies that fully utilize the Internet's potential for business activities at the corporate level have opportunities to increase their competitive position within the marketplace.

eBusiness exchange between homecenter buyers and wood products suppliers

Homecenter.com eBusiness is the application of Internet-based technologies for conducting business. It includes eCommerce (i.e., the actual transaction activities) as well as other business-oriented applications such as logistics, order entry, information sharing, and transmission of information between exchange partners. This study examined eBusiness exchanges between homecenter retailers and wood products suppliers in the United States from the homecenter perspective. In 1999, 78 percent of respondents had a website, compared to around 34 percent of forest products manufacturers in the United States in the same year. Seventy-one percent of respondents said that they planned to develop or improve their website over the following 12 months. Respondents used an array of business applications facilitated by the Internet. Although regular mail and fax were the most common methods of transmitting business documents for respondents, e-mail, electronic data interchange (EDI), and websites were becoming more prevalent. This is an indication that the homecenter industry was poised to adopt eBusiness strategies and capabilities.

The Internet offers a revolutionary tool for business development and management. Companies are currently crafting Internet business development and marketing strategies. Through the Internet, many barriers to new markets, resources, and competitive positioning can be reduced or eliminated. The Internet levels the playing field as it allows small/ large and rural/urban companies alike to participate (7).

eBusiness is the application of Internet-based technologies for conducting business. It includes eCommerce (i.e., the actual transaction activities) as well as other business-oriented applications such as logistics, order entry, information sharing and transmission of information between exchange partners (7). Electronic business is forcing more companies to scrutinize their supply and distribution channels, looking for new ways to deliver products faster and more efficiently. The trend is generating a flurry of activity in the market for supply-chain management applications, which are used to coordinate the flow of material between businesses and their suppliers and distributors.

A study by Deloitte Consulting revealed that business-to-business purchasing (eProcurement) is delivering real and dramatic returns on investment (ROI). In fact, the ROI reported by more than 200 survey respondents averaged 300 percent over the first 2 to 3 years, based on an average implementation cost of $2 million to $4 million and annual procurement savings of nearly 9 percent over the first 2 years (1).

This is an area ripe for widespread automation. Companies that transition away from manual methods of procurement will start to see some gains in efficiencies and cost savings, according to a report from The Hackett Group, a division of AnswerThink Consulting Group (5). Of the companies that are using eProcurement solutions extensively, the vast majority (85%) is highly satisfied with the resulting benefits. And, in contrast with companies' experiences with other technology investments, the returns from eProcurement are meeting expectations.

This study reported herein examined the homecenter industry perspective regarding Internet-based technologies to conduct business with solid wood products suppliers. Internet-based technologies were studied in the context of implementation strategies across a number of wood products (lumber, plywood, particleboard, etc.).

AN OVERVIEW OF THE HOMECENTER INDUSTRY AND EBUSINESS

Each year National Home Center News publishes an overview of the homecenter industry. According to the 2000 edition, total industry sales were $200.7 billion in 1999, an increase of 10.9 percent from 1998 (2). Home Centers/lumberyards accounted for 64 percent of the industry ($128 billion). The top 500 companies accounted for $109 billion in sales in 1999 represented by the following company types: warehouses: 54 percent; pro dealers: 25 percent; homecenters with lumberyards: 7 percent.

The importance of wood products, particularly lumber and plywood, to industry sales is highlighted in Figure 1. This category contributes the highest percentage to industry sales. In addition, the percentage of home improvement retailers in the top 500 that stocks wood products is high (Fig. 2). Nearly 80 percent of the top 500 stocked lumber, plywood/panels, and doors/windows in 1999.

The homecenter industry is dominated by two players: Home Depot and Lowe's (Fig. 3). These two companies account for 49 percent of top 500 sales. The market leverage for Home Depot in particular is staggering. It is often considered a coup to develop an account with Home Depot although the service and program requirements can be daunting.

Overall, 13 percent of the top 500 companies sold some type of product over the Internet in 1999. As is often the case, this could be simply using e-mail or a website to facilitate communication between the merchant and customers. Because this is a sell situation, the transaction is between the merchant and consumers/builders/contractors. Fifty-six percent of the top 500 companies had a website in 1999. For the same year, only 34 percent of U.S. solid wood products manufacturers had a website (8).

Until recently, the forest products industry has taken a wait-and-see position with regard to eBusiness adoption. In addition, despite a steady drumbeat of public announcements from high-profile partners gathering millions of investor dollars, eCommerce providers to all industries are still far away from wide-- spread rollouts and real life applications of their programs (2).

Large companies have established Internet-based initiatives in both the business-to-consumer and business-to-- business marketplaces (6). Home improvement products currently account for a minuscule portion of what is purchased on-line (3).

Business-to-business eCommerce is where the majority of large dealers and suppliers have concentrated their efforts and expenditures on the grandest scale; consortiums are being formed to develop huge eMarketplaces over which all facets of business could be transacted. The most prominent of these so far have been Global NetXchange, which includes Sears, Carrefour, Metro, and Sainsbury; Construction Supply Exchange, made up of state and regional dealer groups; and Channelinx; and ForestExpress, the exchange constructed by Georgia-Pacific, Weyerhaeuser, Mead Corporation, Willamette Industries, Boise Cascade Corporation, and International Paper (3).

THE STUDY

RESEARCH CONTEXT

This study examined current and potential use of Internet-based technologies to conduct forest products procurement by home improvement/building materials retailers. Internet-based technologies were studied in the context of implementation strategies across a number of business types and industrial sectors. A sample of the top 250 companies was surveyed. The sample frame was selected from the National Home Center News Top 500 Scoreboard (2).

Respondents were asked to discuss their current or planned Internet procurement strategies and impacts that are perceived to exist with Internet-facilitated linked suppliers. Objectives were to:

1. Examine current and potential Internet-facilitated buyer/seller exchange between home improvement/building materials retailers and solid wood products suppliers;

2. Discern the general readiness of the home improvement/building materials industry to do business through Internet-based technology;

3. Identify concerns and perceived opportunities from participation in Internet-facilitated business practices.

RESEARCH METHODOLOGY

Data collection. - Mail questionnaires were used because they are a cost-effective method of data collection for examining industry structures and business applications. The method affords a high degree of anonymity and is less limited by rigid time constraints that can impede the effectiveness of other survey methods.

A questionnaire was developed that tested concepts using questions developed by the authors and adapted from other sources (10,11). The survey was reviewed and revised by the researchers. An iterative process resulted in the final instrument. Survey development and implementation followed methods and procedures recommended by Dillman and described as the Total Design Method (4). Pre-addressed, postage-- paid envelopes and a signed cover letter were included with the questionnaire. The cover letter also promised summary results of the study to participants who completed and returned the questionnaire, a tactic that has been used successfully by the researcher in many previous studies. Pre-notification and reminder postcards were also sent to targeted companies. The study results are based on two mailings. All surveys were sent to either the highest-level manager available or the Forest Products Procurement Manager.

RESULTS AND DISCUSSION

Demographics. - Figure 4 shows that the respondents for this study represented all regions of the United States. The figure also shows the number of respondents initially sampled, the adjusted sample size after accounting for undeliverable surveys (due to company closures, change of address, or deceased) and adjusted response rate. All industry survey respondents were surveyed at the corporate headquarters level. Given that typical response rates for industrial studies range from 15 to 30 percent, a response rate of 29 percent in this study is considered to be good.

Non-response bias is a common concern in survey research. In mail surveys, the bias associated with non-response is generally due to two factors. First, people with an interest in the subject matter are more likely to respond than disinterested parties. The second major bias is that better-educated people usually return questionnaires faster than less-educated people. Because late responders tend to behave like non-responders, bias due to non-response can be evaluated by comparing those who responded to the initial mailing with those who responded as a result of subsequent mailings and other follow-up efforts.

By examining differences between the two mailings using two-tail t-tests, statistically significant differences (at alpha = .05) were found for only 3 of the 85 paired questions in the study. No differences were found for company size, geographic location, wood products purchased, reasons for eBusiness implementation, purchasing distribution channels, etc. This lack of difference between the groups reduces the concern about response bias.

The largest companies in the sample frame did not respond to the survey. As a result, respondents represented smaller companies, which are more common in this industry. Although 30 percent of the respondents had 1999 sales of $10 million to $49 million, 24 percent of companies had sales greater than $100 million.

Similar to total industry figures, a significant majority of respondents stock wood products (Fig. 5). All major primary solid wood products are represented in respondent sales.

Lumber and plywood account for approximately 19 percent of sales for the industry as a whole. For respondents, this figure averaged 55 percent of sales. This is likely a function of the profile of respondents being skewed to small- and mid-size companies that rely more heavily on forest products in the sales mix.

One-third of respondents purchased forest products directly from manufacturers, while 60 percent of purchases were made through distribution intermediaries such as wholesalers (27%), brokers (18%), and stocking distributors (15%).

Respondent use of eBusiness. -Much of eBusiness deals with electronic transmission of business documents. Business documents most often processed by respondents with forest products suppliers are purchase orders and invoices (Fig. 6). Respondents annually processed over 3 million documents with forest products suppliers. Regular mail and fax were the most common methods of transmitting business documents for respondents (Fig. 7). However, e-mail, EDI, and websites were becoming more prevalent, whereas they were not used to any discernible degree only 5 years ago. EDI is computer-- to-computer electronic transmission of business documents between business trading partners. The documents are in structured formats that can be processed by each party's computer application software. This is an indication that this industry is poised to adopt eBusiness strategies and capabilities.

Seventy percent of invoices received and purchase orders sent by respondents were entered directly into computers, indicating a significant comfort level with using desktop PCs. To a lesser degree, order acknowledgements (27%), order status (26%), and shipping notices (24%) were received or entered directly into computers. The balance of these documents went through a two-step process of writing down the information by hand and then entering it into computers.

Twenty-four percent of respondents said that they currently used the Internet to support forest products purchases. There was no correlation between Internet purchases and company size, indicating a consistent level of usage across the industry.

All respondents were asked to rate benefits that they felt the Internet could offer to their companies (Fig. 8). The first five benefits focused on information exchange and supplier/product discovery. The next set of benefits included adding value for the company, lowering costs of doing business, and greater access to the company by customers and suppliers. Benefits ranked just below neutral (3.0 on a 5-point scale) indicated that respondents generally were indifferent in their belief that the Internet can improve relationships with suppliers (2.9), or that the Internet can enhance their company's image (2.9). The lowest-ranked benefit indicates that respondents did not believe that the Internet allows them to charge higher prices to vendors (2.5).

A set of questions focused on the respondent company's own web capabilities. Seventy-eight percent of respondents had a website. Sixteen percent of respondents said that their website was integrated into their company business systems. Seventy-one percent of respondents said that they planned to develop or improve their website over the following 12 months.

Of those companies that had websites, 54 percent of the sites were developed in either 1999 or 2000. If 1998 is included, the figure is 78 percent of respondents. These homecenter respondents, on average, developed web capabilities later than the forest products companies surveyed in research previously conducted by the senior author (8,10).

The most used function of respondents' websites was promotion/advertising (91% of respondents). Second was customer service (31%), followed by operational functions (11%), and last, eCommerce (7%).

In the past, security was the major concern for both buyers and sellers considering participation in eBusiness (10, 11). In this survey, the number one concern was the loss of relationships with exchange partners (8,9) (Fig. 9). Respondents clearly rated this as their number one concern. Second ranked was the concern that the investment is not warranted because there are not enough forest products exchange partners that use the Internet to conduct business. Third was the perceived high cost of doing business on the Web.

IMPLICATIONS AND LIMITATIONS

The importance of wood products to the homecenter industry cannot be understated; they contribute the highest percentage of any category to industry sales. Nearly 80 percent of the top 500 homecenters in the nation stock wood products. Results of this study suggest that there is potential for growth in the ability of homecenter retailers and their wood products suppliers to conduct eBusiness. Although the main benefits that respondents felt the Internet could offer focused on information exchange and product searches, many believed that the Internet is an attractive new channel to purchase products.

Although not used extensively by the respondents, eBusiness promises to make an impact on the purchase of wood products by the homecenter industry. As wood products sectors increase rates of eBusiness adoption, the industry as a whole will be better poised to participate in bilateral Internet-facilitated exchange with homecenter trading partners. A gap in technology trajectories between these two sectors is a limitation to eBusiness adoption.

One significant limitation to this study is that the top homecenter retailers in the industry did not respond. As mentioned earlier, Home Depot and Lowe's Companies, Inc. alone account for 49 percent of top 500 homecenter sales.

Making the Space Station a Home

Homecenter.com

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2009 by Hearst Communications Inc

Prepping the International Space Station for a larger crew is the ultimate in high-end home remodeling.

It takes some planning to prepare a small space for new roommates, especially if the apartment is 220 miles above the planet. NASA engineers have been developing space-ready versions of familiar fixtures to prepare for an expansion of the International Space Station's crew, which this year will double to six. Engineers must build household items that balance space, power consumption, weight and repairability. "Those tradeoffs were made at the very beginning [of the gear's design]," says Marybeth Edeen, who heads vehicle hardware development for NASA's ISS program. The systems that rely on chemistry and fluid dynamics, such as plumbing, are tougher to develop than a new bedroom. "In microgravity, solids don't go down and gas bubbles don't go up," she says. "Everything just goes where it wants." These pieces of orbital home design, most delivered in a single space shuttle trip late last year, provide a realistic glimpse of what it's like to live in space.

Orbital Renovation

Kitchen

The crew's galley has to be expanded; new items include suitcase-shape warmers that gently close around as many as 12 metallic foil bags holding prepared foods. The sink, based on the space shuttle's, has its own hot-water heater for bags of stew or cups of instant coffee.

Exercise Equipment

The Advanced Resistive Exercise Device uses vacuum canisters and ropes to create resistance that mimics weights. The ARED provides the equivalent of 600 pounds of weights that can be used for dozens of exercises. Astronauts' muscles and nerves can deteriorate if they don't work out.

Bedroom

ISS residents each have individual 3 x 3.5 x 6-ft quarters with laptop connections. "They're living in a closet," Edeen says. "And it's not a walk-in."

Astronauts have just enough space to dress.

Bathroom

The ISS received a new toilet that NASA purchased from Russia. A gentle vacuum pulls waste into a funnel that leads to a solid-liquid separator. Urine gets converted into clean water in a recycling system. Water quality is tested in space and on the ground.

The Design of Everyday Life: Homecenter

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People become "human-non-human hybrids" (Bruno Latour's term), members of a complex network Ln which "competence Is embedded Ui and distributed between tools and materials and many other sources Including people, DIY manuals, and the Internet" (p. 57). [...] DIY is not routinized, mindless labor, but instead qualifies as "exploratory" work because of aU the uncertainties involved: new problems Ui the home are revealed with each project, new skills learned, the capabilities of new tools and building products understood.

Carbon Neutral On a Shoestring; [House & Home/Style Desk]

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Copyright New York Times Company

THE floor tiles made from smashed television screens did not, in the end, work out. Neither did the pulley system Petz Scholtus's boyfriend rigged to haul her stuff up three very steep flights of stairs to her new apartment in the Barri Gotic, or old city, when she moved in over a year ago. But the move itself -- by bicycle through the streets of the oldest and most cinematic neighborhoods here -- was a carbon-neutral success. (It helped that Ms. Scholtus had no furniture then.) So, too, were other elements of her eco-renovation.

That is the phrase Ms. Scholtus, a 28-year-old product designer from Luxembourg, has been using to describe the ongoing restoration and decoration of a one-bedroom apartment in the 18th-century building where she lives and works. In Barcelona, a city that has long prized the new and the glossy, Ms. Scholtus's project amounts to a countercultural effort.

"Here people have an idea that sustainable is for the rich or that it's something horrible and low-quality hippy," Ms. Scholtus said. "I wanted to see if it was possible to make it inexpensive but also, you know, cool."

As Americans fumble with their green goals and begin to cast a critical eye on sustainable practices on many levels -- from a cap on industrial emissions to the use of fluorescent light bulbs -- Ms. Scholtus's experiences (which she recounts on her blog, r3project.blogspot.com) are an object lesson in how fully one can realize green ideals on a budget in an existing home in any city.

On a dark, raw February morning, Ms. Scholtus's apartment was bright, if not exactly toasty, from the fluorescent bulbs tucked into her handmade Bidon lamps. The English translation of bidon is jerry can or container; Ms. Scholtus found a few on the street and fitted them with compact fluorescent bulbs and PVC-free wiring. One was hanging over a door frame; another sat on a rug like a small pet.

There was a voluminous beanbag chair made from recycled car-seat fabric by a company called Waste; a planter made from an old tire; a chair found nearby at the Placa George Orwell and decoupaged by Ms. Scholtus with newspapers; and floor-to-ceiling stenciled shelving made from fiberboard (planks of recycled sawdust) certified by the Forest Stewardship Council and painted with pigments low in volatile organic compounds (V.O.C.'s). On the terrace, worms were quietly gnawing through Ms. Scholtus's kitchen scraps, making compost for her herb garden.

Ms. Scholtus, who grew up on a farm in Luxembourg and studied eco-design at the University of London, arrived in Barcelona five years ago. She was teaching English and eco-design, creating products (collapsible felt storage containers called Stuff Bumps, developed in partnership with the green resource and news blog TreeHugger, for whom she is a contributor), art installations and other projects for folks like Chicks on Speed, a German electropop art band.

Rents were high, but purchase prices in the Barri Gotic, where the newest buildings date from the 18th century and require extensive renovation, were relatively low. Still, this apartment, which Ms. Scholtus bought for 235,000 euros in 2006 (just under $300,000), was hardly a steal: it had no plumbing, no electricity; no glass in its windows; the toilet was in a closet on the terrace; and what would become the bedroom was closed off by a bearing wall (the only entrance was from the terrace). The massive ceiling beams were pocked from wood lice and encrusted with paint in many colors, layered in over the centuries.

Because Ms. Scholtus had challenged herself to be environmentally responsible during every stage of home ownership, she began by researching green financing. To buy the place, she obtained a mortgage from what is known as an ethical bank. Ethical banks -- a rara avis in this country (they are more common in Europe and Canada) -- invest only in socially or ecologically responsible businesses and projects.

Triodos, a Dutch ethical bank established in 1980, had just opened a branch in Barcelona. Maria Felipe Larios, a spokeswoman for Triodos Spain, described its core business as financing "companies and organizations from the social, cultural and environmental sectors," citing organic farming, sustainable tourism, welfare and fair trade organizations as examples.

Ms. Scholtus's loan, Ms. Felipe Larios said, was a departure for the bank, "the first eco-mortgage we have given here." Technically, the bank extended Ms. Scholtus a professional loan, as if she were a company or an organization.

"We are still developing residential products in Spain," Ms. Felipe Larios said. "She was very proud of what we've been doing, and we're very proud of what she's done in her home."

Ms. Scholtus became an apartment owner on Buy Nothing Day, an anti-consumerist holiday celebrated in the United States the day after Thanksgiving and 24 hours later elsewhere. The coincidence, she said, made her feel ill.

"I called Graham Hill," Ms. Scholtus said, referring to the founder of TreeHugger, "and he said, 'For goodness sake don't put that on TreeHugger.' "

IN making her new home livable, Ms. Scholtus's challenge to herself was to hew as closely as possible to the three R's of environmentalism: reduce, reuse, recycle. (Restore and respect are the other R words listed on her blog, but she liked R3 as a title for the project because her street address is 3.) Could she find products that were made close to home, were produced without a huge environmental impact, could be dismantled after her tenancy (following the cradle-to-cradle recycling model) and did not use too much energy? Oh, and all for under 30,000 euros (about $38,000)?

There were hits and misses, but the budget didn't waver.

One miss: The smashed-television-screen floor tiles she found for the kitchen and bathroom in off-white turned out to be a sickly beige. When she phoned the company that sold them to her, she was told that the color she had chosen was no longer being made. She quickly found ceramic tiles made by a local company that had its own water-treatment plant -- that was the good part. But because they were ceramic, they could only be installed with grout -- in other words, the old-fashioned permanent way, not ideal for a cradle-to-cradle proponent.

"The only way to remove them is to smash them," Ms. Scholtus explained.

To save on rent during the demolition, she embarked on six months of couch surfing and house-sitting, working from her laptop and wearing summer clothes long past August.

She found a contractor who claimed to be a green builder. Unfortunately, as she discovered later, just before she fired him, the green projects in his portfolio had been cut from magazines and represented the work of other builders.

"I was going to be the real example for his portfolio," she said. In over his head, the contractor was relieved to be let go, she continued. Truth be told, he had handled the demolition part just fine, sandblasting the woodwork (a nontoxic alternative to using chemical strippers), hauling out the rubbish and obtaining the environmentally friendly materials that Ms. Scholtus had located (like cork flooring that fits together like a jigsaw puzzle, without glue).

An electrician from Colombia became her lieutenant and then her full-time contractor, though he initially mocked her instructions to find things like PVC-free pipes for the new plumbing (PVC, or polyvinyl chloride, is a ubiquitous building material; environmentalists are concerned about toxic emissions during its manufacture and disposal.).

"In the beginning, he couldn't understand why I'd go through the trouble of finding PVC-free pipes when the standard PVC ones are easy to find and very cheap," she said. "In the end, he got into it, and asked me, 'Is this sustainable?' or 'Why is this not good?' "

Ms. Scholtus delights in making do with materials at hand. She and Mette Bak Andersen, a Danish designer who lives in Barcelona, have devised a workshop called Materialize Me that they hold at schools like the Elsivava Design School here and the Krabbesholm School in Denmark.

In the workshops, students are challenged to make products from materials that are close at hand, like leaves, scrap metal or their hair. At one workshop in Krabbesholm, a team scooped waste from a sewage treatment plant and made bricks out of it ("they were very brave," Ms. Scholtus said admiringly); another team hacked CDs to bits and baked them into the shape of a classic Danish lamp.

Ms. Scholtus's dining room table is a glass slab she found in the rubble of her apartment. "The workers kept complaining that it was too big to remove," she said. So she found trestles on the street, painted them and placed them under the slab to make a table. Dismantled wine boxes await deployment as the doors to her Ikea kitchen cabinets; ancient drawers rescued from the street, which smell of incense -- "I think they must have come from a church," Ms. Scholtus said, wrinkling her nose -- sit on casters and hold magazines.

To heat the apartment and the water, Ms. Scholtus purchased an efficient condensing gas boiler, which she tucked into the closet on her terrace where the toilet once lived. But only after researching a solar solution, her first choice.

"There are more solar panels per capita in Luxembourg than here," she said, "and where is there more sun?" Ms. Scholtus's apartment, however, is two floors below the building's roof, so solar heating was not a viable option, according to a few companies she contacted.

She also dreamed of radiant floor heating, but its cost pushed her toward radiators. She chose Low-H2O radiators (which use two liters of water, rather than 20, a big energy saver), made by the stylish radiator company Jaga.

The other day, though, when an American visitor stopped by, none of them were in use. Spoiled by years of environmental indolence , the visitor shivered a bit. Ms. Scholtus, grinning in her sweater, offered her coffee, a European's best retort to the energy crisis.