Much has already been said about using information technology to integrate and network knowledge not only within the enterprise, but also between business part-ners found along the supply chain continuum. While it is absolutely critical for today’s enterprise to architect tightly integrated internal business organizations empowered by information technology, simply reengineering functions, rational-izing processes, and removing redundancies will barely provide the necessary fuel the engines of competitive advantage in a global economy. The really significant gains in productivity are about integrating and normalizing the processes that link companies to their channel trading partners.
The process change described here is not about simply outsourcing a peripheral function: it is about architecting a collaborative community of trading partners collectively driven by a common mission to deliver the highest level of customer service possible at any node in the supply chain. This movement from a company
and product-centric strategy to a customer-centric, channel network strategy will require the constant aligning and optimizing of the value delivered by the entire supply chain and not just an individual company. Realizing this strategy requires the adoption of new technologies and new roles forcing management and the work-force to adapt, expand, and transition to meet the requirements of an effective inter-enterprise architecture.
Although this book looks at the application of integrative information technol-ogies to each component of today’s business environment—sales and service man-agement, manufacturing and supply chain planning, procurement, warehousing, and logistics—as separate entities, in reality, the boundaries are artificial. The same can be said of the distinctions between enterprise and supply partnerships, between demand chain and supply chain. In fact, the basis of business today is, in realty, the application of repositories of integrated, networked information and resources, whether its source be customers, trading partners, market information, or products, to establish a collaborative medium where people can now communicate directly to other people in the network regardless of physical location so they can work more efficiently and productively. The promise of today’s integrative information technologies is that it provides for the cross-enterprise unification of databases that can be used in an almost infinite variety of ways to provide a different rich-context to every accessing entity. In such a unified inter-enterprise environment there is no distinction between employee, partner, and customer portals. They are all windows into the same repository of information, differing only in the roles that are defined for each user, the interactions that are associated with each role, and the level of access permitted for each role.
Such a vision of inter-enterprise unity requires that all members of the supply chain be closely integrated and their databases and information flows closely syn-chronized to eliminate distortions and the “bullwhip effect” in the communication of information. Architecting inter-enterprise structures capable of synchronous information flows requires channel planners to develop and constantly attended to a joint strategy that seeks to utilize the best technology toolsets to realize targeted individual company and supply chain objectives. Such a program involves the fol-lowing critical processes.
1. Architecting a Shared Inter-enterprise Vision. The development of an infor-mation technology strategy in isolation from the challenges of integrating with channel trading partners is destined to failure. While it is true that the shared vision emanating from inside the organization provides companies with a cohesive force to drive a common direction, focus, and personal and team motivation, strategists must be careful to include a vision of how the internal functions of the company are to fit into a much wider supply chain vision. Such an undertaking requires a comprehensive knowledge of inter-nal and partner core competencies, technology capabilities, and commitment to supply chain collaboration. The goal is not only to structure a functional
system of cross-channel business, but also to use the framework as method to leverage the entire business ecosystem to discover breakthrough propositions made possible by the common shared information platform. The process [8]
used to guide this analysis is straightforward: an optimized or “green field”
architecture is envisioned and documented. Next, the existing “as is” structure is matched against the optimized architecture. Strategists then perform a gap analysis, uncovering where resources and competencies in the existing supply chain occur. Finally, a model of the inter-enterprise architecture should emerge that can be used as the basis for all subsequent e-SCM strategy enhancements.
2. Inter-enterprise Business Modeling. Once the inter-enterprise (supply chain) vision and strategy has been completed, companies can then begin the task of establishing the enterprise-facing portion of the business model. The inter-enterprise business model provides a high-level description of the technology integration points connecting each business in the supply chain network.
The objective of the model is to detail the for the supply chain as a whole the following marketplace dynamics:
Target market/market segment, including expected share, profitability,
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service goals, customer retention, and new customer acquisition
Products and services, including product line profitability, life cycle
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management, new product/service introduction, and manufacturing strategies
Financial elements, including return on assets (ROA) management,
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return on investment (ROI) management, potential revenue growth, and internal productivity cost measurements
Product distribution, including logistics management, depth of
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channel integration, cost structure, levels of automation, and cost management
A critical element in the inter-enterprise model is the information archi-tecture. It is the responsibility of the each channel partner’s information architects to configure and maintain a repository of computerized process components that enable the desired levels of communication and networking among channel members. By effectively designing these technology compo-nents, solution developers can integrate internal business work rules, roles, tasks, and policies with those of their channel partners as well as rapidly respond to supply channel business environmental changes.
4. Inter-enterprise Process Modeling. Once the inter-enterprise vision and busi-ness model have been formulated, the next step is to detail the process model that describes the external processes that govern daily supply chain functions.
Developing the process map requires strategists to know precisely which busi-ness functions are going to be inter-enterprise processes, what technology infrastructures must be in place, and how the organizational structure should be constructed. Constructing effective inter-enterprise processes is a critical project consisting of the following steps [9].
Engineer Trading Partner Processes.
◾ The task of generating the desired
inter-enterprise linkages must involve the full participation of customers and suppliers regardless of the desired complexity of the proposed con-nectivity. For example, the interaction of information driven through an EDI system will be different than the use of a Web-based system. While a significant degree of process standardization is the target, architects must be prepared to fashion process components that are customizable to meet individual buying service requirements. For example, Internet buy-ing process components, such as the work flows associated with internal request for quotation (RFQ), sourcing, approval, and order management, must be able to interact with complementary work components resident in the supplier’s technology infrastructure architecture.
Degree of Process Interaction.
◾ A robust architected system will provide
com-panies with multiple levels of connectivity depending upon the business requirements of their trading partners. At the lowest level can be found the loose coupled model. This level of connectivity between trading part-ners utilizes information technologies, such as EDI and the Web, simply as a medium to replace paper-based information documents. At the next level, process handoff, the technology connectivity has been architected to permit transactions to automatically trigger processes in the systems of trading partners. For example, a sales transaction posted in a retailer’s system will trigger a replenishment notice in the planning system of a first-tier supplier. At the highest level, virtual enterprise, the process com-ponents are used jointly and operate in real-time. This level of architecture provides each linked node in the supply chain full access to information across the channel network galaxy. For instance, information concerning a customer would be available to every trading partner, thereby removing unnecessary database redundancies and suboptimizations.
Internal Infrastructure and System Reengineering.
◾ Regardless of the level of
supply chain connectivity deployed, the work force will be required to func-tion in a cross-enterprise mode, and not simply according to the needs of a single company. Technology-wise, supply chain interoperability will require enhancements to existing systems or the purchase of point solutions, such as business-to-business (B2B), to supplement legacy system deficiencies.
Normally, this process will require customization of the “wrapper programs”
of existing ERP/SCM systems to accommodate the linkages needed to work with new packaged software, portals, and other interoperability solutions.
e-Application Architecture
◾ . The technology architecture that emerges should support the inter-enterprise business strategy. According to Hoque [10],
e-application architecture involves determining individual integration
•
points between the application and data sources, the application and back-end installed software, and between multiple back-end systems.
Every decision should be made with a good deal of attention toward not only the functionality of the application the day it is rolled out, but also the ability of the platform to scale up to support heavy usage, added business attributes, new users, and additional functionality in later revisions.
The e-application architecture should determine which inter-enterprise pro-cesses components will constitute the final platform. The completed archi-tecture should contain the definition of what the networked infrastructure should look like, how networked resources will be accessed, the source and type of the data the networked resources will utilize, and resolution of data, hardware, process, and human resource ownership ambiguities.
Pilot, Go Live, and Iterate.
◾ The challenges of developing and implementing
a comprehensive inter-enterprise technology solution are fraught with dif-ficulties, potentially enormous expenses, and significant trauma to even the best of organizations. Most experts caution against trying to do too much in the first round. Implementers should view the process as iterative: utilize a minimalist approach and begin with the easiest processes or the ones that provide the biggest payback. The goal is to keep expectations, costs, and trauma to the organization realistic and doable while ensuring the com-pany is pursuing a path that keeps it at the forefront of the competition.