How Far Will Your Supply Chain Extend?

SAN MATEO (03/27/2000) - It seems that every week the economy's majordomos create another online business-to-business exchange for industrial heavyweights and their suppliers to procure materials, negotiate contracts, and deliver goods. But these high-powered partnerships -- such as the auto exchange combining Ford, General Motors, and DaimlerChrysler's economic force -- are only half the story.

Supply-chain management and execution, once in the category of million-dollar ERP (enterprise resource planning) implementations, is finding its way upstream to smaller suppliers through low-scale trading networks. As detailed in our Page One article by Eugene Grygo and Geneva Sapp, these exchanges could add one more ripple of Internet-driven automation to interconnected businesses.

Clearly, consumer-centric networks, such as America Online, Yahoo, and MSN, won't offer the rich services of a large-scale trading infrastructure. But the simpler it is for small and midsize business partners to get online, the better large companies can address supply-chain complexity down the line.

The wider a trading network expands, the more flexibility companies' supply chains can introduce in their processes, such as delivering a tailored product to customers the moment they need them. Competition among suppliers and distributors brings price pressures, too.

The technology needed to integrate disparate systems beyond a superficial level can get very complicated. Large companies can benefit from smaller suppliers getting online, yet the smaller partners need many ways to hook into a supply chain. This will require an open network architecture, that will facilitate access to exchanges geared at small and midsize companies. Ideally, a perspicacious data exchange model will let even a mom-and-pop outfit submit a text-based purchase order or process information.

Bringing more suppliers into the fold will also dramatically increase the complexity of business relationships.

What's your company's vision for the extended supply chain?

Write to martin_lamonica@infoworld.com.

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