Take Your Partners – Supply Chain Collaboration Present and Future

By Clyde Bennett, Manufacturing and Supply Chain Specialist, Microsoft Business Solutions

Today, obtaining and maintaining a competitive edge is not necessarily the concern only of an individual small to medium-sized enterprise (SME), but of an extended enterprise – in other words, an entire supply chain partner network. And the strongest way to leverage this competitive advantage is through marshalling a sound e-business strategy and connected infrastructure. With increasing pressure to adhere to shorter manufacturing lead times, this is more important than ever.

Once you have ensured a seamless flow of information within your immediate enterprise, and have automated everyday information processes, the next big push should be to ensure you can not only enjoy optimum back-office performance, but also help your organisation and your distributors, suppliers and customers by establishing a sound supply chain and e-business advantage.

Supply chain management (SCM) and the sharing of business information over the Internet in real time can offer the entire enterprise network benefits, including better overall supply chain visibility, product development, marketing strategy, inventory control, financials, order fulfilment, purchasing and accounts. It is all about better collaboration. And when a customer relationship management (CRM) solution is fully integrated within this extended enterprise, companies can not only improve their supply chain, improve capacity planning on the shop floor, revolutionise their sales and marketing strategy, and forge better strategic relationships with their resellers, they can also react and adapt better to changing buying patterns, enhance customer service and utilise better marketing potential. And don’t forget the benefits of analysis. By having the right mechanisms in place to scrutinise data gathered and compiled throughout the supply chain, all business participants can continue to develop and improve as businesses.

Now the importance of inter-enterprise supply chain integration is established, this leads us on to the issue of sundry proprietary IT solutions, platforms and protocol barriers potentially hindering the smooth flow of information over the extended enterprise. What is needed is a mechanism that facilitates seamless communication between proprietary systems and platforms over the Internet, intranet, and electronic data interchange (EDI), while also conforming to rigid standards of security. A framework that allows unhindered integration and access to various networks and software applications, as well as a raft of management services, has to be the way forward.

1 Some fundamental changes are likely to impact on the business and IT arenas over the next five or six years, including SCM. Not least of these will be the move towards a common interoperable platform, such as Microsoft’s .NET. The term to look out for is ‘interoperability’. In essence, this refers to the ability of various computer systems to communicate with one another and share data through common protocols. By utilising web platforms based on XML protocol standards, companies can access data without suffering hurdles due to the information being stored on various applications that would otherwise be unable to communicate with each other.

The important thing for the SME is to work towards a sound strategy focused on various business partners all geared to benefit from the use of more open architectures. The traditional proprietary IT solutions will become less long-term than the platform through which highly flexible point solutions can be integrated and exploited. And it will be possible for the functionality of these point solutions to be perfectly tailored to the specific requirements of a particular business or extended enterprise.

A number of business and communication-enhancing changes will occur in the world of supply chain collaboration. With this in mind, it is important for SMEs to form a strategy on how they will deal with, and benefit from, these changes. And interestingly, much of this strategy is likely to be more focused on business process rather than IT. Any IT plan needs to flow from the business strategy and not the other way round. Instead of largely focusing strategy around the need to avoid duplication of effort by connecting ‘islands’ of automated processes, what is needed is a more holistic approach – utilising a targeted portfolio of solutions and services that operate seamlessly on the .NET platform. In other words, SMEs will need to think more in terms of interoperability rather than an all-in-one integration.

The good news is that within five or six years SMEs will be able to achieve levels of flexibility that would make veterans of materials or enterprise resource planning methodology sing with delight. For example, if the point solution requirement for one business activity evolves with the business strategy, it may be required to deliver more or less functionality depending on the business objectives at a later time. It may even be required to deliver a wholly different area of functionality.

Once interoperable point solutions are widely available, a business’s emphasis can then naturally shift towards good business practice and strategic resources of the organisation. With a correct emphasis on business strategy, the focus will move from concerns about the right IT strategy to human capital and the ability to innovate new means of working and new products. Of course, some of this may still depend upon IT, but not necessarily to the same degree as has been the case in the past. One result of this shift in emphasis will be a substantial lowering of the point of entry for new supply chain ideas to become more

2 widespread over the business partner network. The human skills of working as a team, with partners, end-customers and stakeholders, will be used at many more levels of the organisation than at present, making these the main focus of strategic supply chain thinking. A further result of the shift in focus to human capital will be the need for SMEs to build leadership teams that will embody and champion this vision.

If an SME (and its business partner network) makes a commitment to this type of supply chain strategy, and to providing the resources to drive it, it can carefully examine the old strengths of IT infrastructure and remove the old assumptions that tie its hands from the best investment of organisational and inter-organisational effort – supply chain collaboration.

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