Extended Supply/Value Chains
The extended supply/value chain platforms work almost entirely behind the scenes and are invisible to end consumers (Hoque, 2000). The ultimate aim of these applications is to share enterprise information with suppliers, buyers and business partners so as to enable supply planning, demand planning, production planning, and logistics to occur in real time.
Eventually the traditional isolated supply chain model breaks down and new value grids are created where enterprises of all kinds share information to provide each of them important strategic advantages over their competitors.
Cox (1999) indicates that value chains improve with age. The longer they’ve been around, the more value they add to an organization and the older the chain within an organization, the more likely it will be used on a daily basis. Today, these supply chains are being integrated in a process or workfl ow sense as well as electronically so they can be managed as an integrated overall process with appropriate end-to-end measures. More important, a manufacturer can confi gure multiple supply chains to deal with the many supplier, distribution, and customer service channels needed to effectively reach a variety of customers around the globe. Value chains are being made into multiple-path, multiple-node value webs.
Customers searching for the highest product and service value, and their urgent desire to reduce the time they waste in their daily routines, are driving the value web/supply-chain revolution. At the same time, today’s advanced value webs (for example see the Byte Idea on Cargill this chapter) are getting easier to create and operate effectively because:
• Standards continue to make it easier for disparate information systems to plug and play effectively.
• Data communications capability has undergone astounding advances – from 64-KB/sec telephone circuit speed to today’s 2.5-billion-B/sec high-speed networks, thus allowing manufacturers to communicate throughout the value web and accommodate the constant changes that occur in today’s volatile business environment.
• Computer processing power has gone up by a factor of 100,000 since 1971, and this rate of change shows little sign of abating. Data storage capability has shown equal performance gains.
• Middleware has emerged to knit together communications between disparate systems and databases.
• Object-based software programming in a component-based architecture lets software be more fl exible and scalable.
• There is a growing awareness of the power of process thinking as a basis for software design or confi guration. Sound, effi cient business processes mirror the way customer- focused work is accomplished. These processes must be robust and repeatable to ensure quality, low cost, and customer satisfaction. Common business processes then allow common information systems, which greatly reduce operating, maintenance, and training costs.
• Enterprise-wide software application packages, such as those from PeopleSoft, and SAP that cover most of the traditional functional and process activities core to a business’
operations, are pervasive in the majority of large and midsize manufacturing companies.
• The internet, with its browser-based technology as a global communication medium that can readily communicate with any computing platform, has provided a quick and inexpensive base for electronically enabled business models and applications – whether B2B or B2C – and for interpersonal communication.
Change Management
Many people still don’t understand why things in the business have to change. Management has to vigorously seek and absorb information about the business and technical worlds, and to personally mix with customers and suppliers around the world to appreciate the intensity of global competition and rate of new knowledge discovery and application today. Even when people know why they have to change, there’s still the universal human resistance to doing so.
Moving from the familiar and comfortable to the new and uncomfortable is still a challenge for all of us.
To meet the challenges to business that are being laid down by the eLandscape, managers should maintain a constant quest for new ideas, customer feedback and suggestions, and best practices from external to the company – in the home industry and, more important, from other industries. In reality, process-focused, customer-focused, and time-based performance metrics will play an increasingly key role in pulling a company toward world-class performance. The recipe for success is:
1. A Systems viewpoint. That is, a closed-loop control and feedback mechanism (Chapter 2) is essential in understanding the interactions between activities and business processes within and external to a company.
2. Process-based thinking. Here, activities are initially viewed independently of who or what function performs the work. Where it gets done geographically is also critical as intricate, tightly coupled, and real-time business processes are developed across companies and around the world.
3. An appreciation of the value of time. Specifi cally, the need for real-time responses to customers which has become possible with real-time information that aids fact-based decision making and communication to accommodate today’s increasingly volatile business environment.
4. An appreciation of the internet’s role. In enabling a team-based business environment in which knowledge can be shared and leveraged to more effectively serve the customer.