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?
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