Collaborating across the supply chain

Software Magazine, Sept, 1998 by Debra O'Donnell

Opening up your enterprise to suppliers, customers, and partners may raise business hackles, as well as technology troubles. Here's how to keep your sanity.

Picture this scenario: Your distributor logs on to your Web site and orders 2,500 weed whackers. Instantly, your customer service application sends him a confirmation by E-mail; your order-entry application alerts your warehouse management application, which Signals personnel at the nearest warehouse to begin packing. If that warehouse has sold out its weed whackers, the signal is rerouted to another warehouse; and your transportation management app kicks into gear to determine which truck has space for the new order and how soon it can be sent. Simultaneously, your inventory system updates its count of weed whackers and transmits the key replenishment data to your suppliers of weed whacker parts and packaging materials, who can respond by inputting their newfound constraints so that your scheduling app will adjust, perhaps triggering a request to a backup supplier of 3/8-inch nuts. And all the information is sent to your forecasting app to feed new computations of expected volumes. Your financial module generates an electronic invoice, updates your ledger, and receives and records electronic payment from the distributor. All of this happens automatically, immediately, exactly as you have modeled the process, and virtually untouched by human hands.

Like the fictional weed whacker, all the pieces of this automated, integrated, extended enterprise may be available. But in order to get it to your shipping dock, you will not only have to "touch" your systems and your employees at multiple points but carry all of them with you over a number of intimidating hurdles. These barriers include the technical difficulties of letting partners in to just the fight degree -- neither so shallowly that they are missing key decision-making data because it has yet to be integrated internally, nor so deeply that they have access to inappropriate information. But perhaps even more daunting are the mindset and business-model changes that must take place.

On the technical side, one key barrier is the inadequacy of internal integration within each of the potential parties to cross-enterprise collaboration. The problem here is not only that companies may require one set of strategies and integration tools for their own assortment of systems and applications and another set -- or sets -- for their partners', but also that organizations with departmental ghettos may simply not have access to the kinds of corporate-wide information upon which supply chain-related decisions must be based. Moreover, if your order entry bone isn't connected to your accounts receivable, inventory management, forecasting, and replenishment bones, it does little good to connect your customers' and suppliers' bones to your piecemeal skeleton: They won't have the visibility they need for true collaboration, and you'll need human intervention everywhere you need it now.

As for the integration tools, although many purveyors of the new intra-enterprise middleware (see side bar, "Software for the Supply (and Demand) Chain," pg. 64) claim that their technology may be applied beyond the enterprise as easily as it can within it, Scott Lundstrom, director of research for enabling technologies at Boston-based Advanced Manufacturing Research, points out that "the technical hurdles to multi-company business processes go above and beyond integration. A lot of companies would like to experience the business benefits of collaboration, but they have concerns about how to supply just the right subset of data to suppliers or customers, and in general these technologies don't include robust security implementations." One exception, notes Lundstrom, is CrossRoute Software, which builds on the notion of separate public and private process models. "The public model is what we as partners agree happens in the middle," he explains. "Private is what we do internally." Lundstrom argues that, really, "all processes are by definition public," so the segregation may prove difficult to maintain, but given the business needs, all would-be inter-enterprise bridge-builders will have to address it at some point.

Companies who already exchange data electronically with multiple partners warn that, as technology stands today, any organization determined to bring a large array of partners into its fold must be prepared to take each integration on its own terms, styling itself a jack-of-all-tools. Just ask NECX, a Peabody, Mass.-based company that sells electronic components, computer products, and networking equipment to OEMs, systems integrators, manufacturers, and franchised distributors through its Private Exchange; and to corporate IT, higher education institutions, and consumers through its online Home and Office Computer Center. While NECX has been EDI-ready for a long time, many of the vendors included in the exchange are not. "There's a significant expenses in going with EDI," explains Buchanan, manager of business applications at NECX, "so you have to be doing great volumes" to make it worthwhile. So NECX finds itself using everything from FTP, to E-mail, to floppy disks that it reformats for EDI using its own proprietary apps. With the advent of new software products that translate and transmit EDI data over the Internet, allowing users to avoid bandwidth charges, vendors have even more options.