New supply chain management technology allows companies to move toward real-time operation by sharing information and interlacing processes with trading partners. The chain is broadening into an ecosystem.
During the past decade, technology has enabled supply chain managers to:
Increase the efficiency of their supply chains
Reduce inventory by providing faster, more accurate information
Determine more accurately when and how much material and capacity must be purchased, produced or moved
Monitor events and inventory both within and outside the enterprise
Begin to link enterprises together electronically, instead of manually
Although enterprises have spent many years and millions of dollars optimizing and connecting the supply chain, further changes are expected. Enterprises are under pressure to work more closely with trading partners to gain an advantage over their competitors, or at least keep up with them. The technologies to enable ever-changing, real-time interactions between an extended community of participants are starting to emerge.
During the next five to 10 years, business structures and processes will evolve radically. Enterprises will begin to blend internal processes with those of their trading partners, revealing the inefficiencies of enterprise boundaries. Working as a single entity, entire supply chains will be able to satisfy increasingly rigorous customer requirements. Each organization will focus more on understanding and fulfilling the requirements of the end customer, rather than merely focusing on what its immediate customer requires. Linear, latent interactions will give way to interactions that occur at the same time, in parallel.
The trend toward business process outsourcing puts further pressure on the supply chain and its processes. Enterprises have started to disaggregate, spinning off assets and departments so that they can focus on what they perceive are their core competencies. An enterprise can no longer be defined by a discrete set of processes and departments. Even though it still needs to perform all its processes, it may not operate or manage them internally. Businesses are evolving toward the “virtual enterprise” – in which many organizations work together as a single organism. Disaggregation means that supply chains need to be even more agile and flexible.
To achieve this, enterprises and entire supply chains need to form alliances and deliver to specific customer requirements quickly. Supply chain management (SCM) is about the entire supply chain, yet few enterprises have really moved beyond limited point-to-point integration with a few select trading partners. These connections have not always led to more efficient execution of supply chain processes.
Electronic data interchange and Extensible Markup Language (XML) have been only partially successful in linking organizations. Incompatible or rigid IT architectures do not allow organizations to exchange useful information. SCM applications such as supply chain planning, warehouse management systems and transportation management systems have been built to support a single enterprise, rather than a group of enterprises.
Emerging technologies will not drive the changes within supply chains; they will make it easier for the changes to occur. Information exchange will make supply chains more efficient and effective, giving organizations an advantage over competitors.
“View From 2012: Supply Chains Evolve to Ecosystems” (http://www.gartnerg2.com/rpt/rpt-0103-0007.asp) Flexible, responsive, extended supply chains will grow from better communication. By Jorge Lopez and Cathy Spencer
“Multienterprise SCM Solutions Will Come of Age by 2012” – New SCM solutions will support bidirectional cooperation between enterprises. By Karen Peterson
“Maturing Open RFID Applications Will Reshape SCM” – Radio frequency identification will enable items to be tracked from manufacture to disposal. By Jeff Woods, Karen Peterson and Clare Hirst
“Configuring the Logistics Network for Volatile Environments” – Technology will link logistics networks dynamically, according to customer requirements. By Jeff Woods and Karen Peterson
“The Public vs. Private Debate Continues in E-Marketplaces” – Enterprises should ensure that their strategic business processes are not revealed through e-marketplaces. By Andrew White, Karen Peterson and Cathy Spencer
“New P2P Solutions Will Redefine the B2B Supply Chain” – Peer-to-peer computing will generate new forms of collaboration and communication between trading partners. By Andrew White, Karen Peterson and Benoit Lheureux
“Prepare for Web Services in Supply Chain Planning” – Web services will not replace electronic data interchange but will be critical to collaborative interactions. By Larry Perlstein, Karen Peterson and Whit Andrews
“Product Content and Data Management Promises Savings” – Standardized product data and metadata will be expensive, but worth it. By Andrew White, David Hope-Ross, Karen Peterson and David Ackerman
Recommended Reading and Related Research
“SCM5 Will Drive the Next Wave of Supply Chain Advantage” – Five key technology-enabled capabilities that enable enterprises to manage their supply chains. By Jeff Woods