The world of business and commerce is highly complex and interconnected, and the smooth functioning of organizations often depends on the seamless exchange of information and resources between different entities. This is where interorganizational systems come into play. Interorganizational systems (IOS) are computer-based mechanisms that facilitate the exchange of data, information, and resources between different organizations. IOS range from simple email communication to more complex systems that enable collaborative planning and decision-making. These systems are designed to improve communication and coordination between organizations, enhance efficiency, reduce costs, and increase productivity. They have become an essential part of modern business, enabling organizations to work seamlessly with each other, exchange information in real-time, and adapt to changing market conditions.

Supply Chain Management Systems Are One Type Of Interorganizational System

Interorganizational systems (IOS) refer to systems that facilitate communication, information sharing, and collaboration among organizations. Such systems support the smooth running of business transactions and processes between organizations. One type of interorganizational system is the supply chain management system (SCMS), which focuses on managing the flow of goods and services from suppliers to customers.

SCMS involves coordinating the processes of procurement, production, warehousing, transportation, and distribution of products or services. The system allows organizations to efficiently manage their inventory levels and coordinate with their suppliers and customers in real-time. SCMS enables companies to reduce their costs, improve productivity, and enhance customer satisfaction by ensuring timely delivery and offering better quality products.

SCMS uses digital technologies such as electronic data interchange (EDI), enterprise resource planning (ERP) systems, and automated identification and data capture (AIDC) to manage supply chain activities. These technologies facilitate the exchange of information among different stakeholders involved in the supply chain, ensuring transparency and standardization of processes.

The importance of SCMS has increased with the globalization of business, where organizations have to deal with suppliers and customers from different parts of the world. SCMS also plays a crucial role in mitigating supply chain risks and ensuring compliance with regulations in different jurisdictions.

Overall, SCMS is an essential interorganizational system that facilitates the smooth functioning of supply chain activities and helps organizations to gain a competitive advantage in the market.

Supply Chain Management In 6 Minutes | What Is Supply Chain Management? | Simplilearn

Interorganizational system

An interorganizational system (IOS) is a system between organizations, or “shared information system among a group of companies.” The most common form of interorganizational system is electronic data interchange, which permits instantaneous computer-to-computer transfer of information.


Interorganizational systems allow the flow of information to be automated between organizations in order to reach a desired supply-chain management system, which enables the development of competitive organizations. This supports forecasting client needs and the delivery of products and services.

Interorganizational system helps to better manage buyer-supplier relationships by encompassing the full depths of tasks associated with business processes company-wide. In doing these activities, an organization is able to increase the productivity automatically; therefore, optimizing communication within all levels of an organization as well as between the organization and the supplier. For example, each T-shirt that is sold in a retail store is automatically communicated to the supplier who will, in turn, ship more T-shirts to the retailer.

An Inter-organizational system is an information system shared by one or more suppliers and customers

Organizations might pursue an interorganizational system for the following reasons:

  1. Reduce the risk in the organization
  2. Pursue economies of scale
  3. Benefit from the exchange of technologies
  4. Increase competitiveness
  5. Overcome investment barriers
  6. Encourage global communication

An examples of interorganizational systems is the Sabre (computer system).

“ understanding of environmental uncertainty are leading to the horizontal relationships across organizations.”


Further reading

  • F.J. Contractor, P. Lorgance [eds.]. Cooperative Strategies in International Business Lexington Books, 1988.
  • Haag, Cummings, McCubbrey, Pinsonneult, and Donovan. Information Management Systems for the Information Age McGraw-Hill Ryerson. 1996. p. 26-27
  • Nelson, Shaw. The Adoption and Diffusion of Interorganizational System Standards and Process Innovations University of Illinois. June 26, 2006. (online)

Retrieved from “”