Article: Is Your Supply Chain Partnered?

Internet-enabled supply chain

The Web offers your supply chain enormous potential and entirely new methods for streamlined coordination between your business and channel partners, including third- and fourth-party providers.

Put simply, the Internet enhances supply chain performance and supply chain is crucial to your e-commerce success. As the supply chain evolves in the information age, the Internets capability to support tight coordination between business and channel partners means that all the information, transactions, and decisions that are the essence of synchronized supply chains will flow through the Web. Using the Internet to connect the systems of your supply chain partners will become the medium through which the essential processes of managing and synchronizing your supply chains are carried out.

This has become necessary due to customers’ ever increasing demands. Customers whether they are business customers or individual consumers are looking beyond cost as the sole arbiter of value. They are demanding innovation and personalization of not only the products but of the associated service and delivery.

Supply chains in all industries are encountering new requirements for competition in the e-business environment, characterized by mass customization, massive scalability, faster and more flexible fulfillment and the ability to develop new channels that attract and serve larger customer bases. Traditional supply chain initiatives alone, such as strategic sourcing, contract manufacturing and joint product development do not sufficiently prepare organizations for eBusiness competition.

As you know, in the traditional supply chain, buying and selling materials means establishing long ­term relationships with vendors, distribu­tors and retailers, with multiple inventory sites, long lead-times and fixed margins. Yet today, the marketplace, being the oldest of all business activities, is being reinvented. Companies can now buy and sell across a wide spectrum of emerging Internet ­enabled marketplaces.

This traditional approach will no longer be enough to continue to compete, what with shrinking product lifecycles that requires you to partner with customers and a broader range of suppliers to better customize product to those customers demands in substantially reduced time-to-market periods.

The message of the Internet-enabled supply chain is that the Internet will not replace supply chain management. Rather, it is an incredible medium that allows supply chain activities to be carried out in a truly synchronized fashion. Internet enabled tools and solutions allow development of cost efficient, service effective supply chains. However, speed is the key capability that defines the new supply chain in the Internet age. Speed, cost reductions, and customer service are all impacted by availability.

This will be accomplished through better information to manage product flows from orders being placed online by your sales agents, call centers and clients to reducing inventory by outsourcing fulfillment and by greater collaboration between your supply chain partners to increase speed and flexibility, and the ability to create entirely new supply chain operations in conjunction with e-mediary deals.

Unfortunately, many companies continue to focus on improving supply chain performance by reducing costs and/or improving customer service. While effective for certain traditional channels and markets, the Internet enabled supply chain requires a whole new approach to gaining and sustaining competitive advantage. Consider what your core competencies are and seek out third-party providers to use in such areas as call centers, manufacturing and logistics. Be agile, be innovative and above all – partner. – John Shenton – February, 2003