The key to success in supply chain management lies in the sharing of information. Writes the Economist:
Suppliers benefit greatly when they can see their customers’ production schedules and sales data, because they can then plan ahead for the volume and timing of the orders. They can react at once, rather than waiting for news to trickle down. The Internet (along with its associated technologies) allows such communications to take place among many suppliers, big and small. It also makes information available simultaneously all the way along the supply chain. Once this happens (and it is only just starting), it becomes more appropriate to think in terms of a supply network than a chain.
Hau Lee, director of the Global Supply Chain Management Forum at Stanford Business School sees companies moving through four stages (as described in the Economist): exchanging information to allow better planning, exchanging of knowledge, exchanging the right to take decisions, and finally, exchanging work and roles.
How does all of this help the organization? In the words of Intelligent Enterprise:
Supply chain management begins with the simple notion that processes interact: and that to reduce costs, improve service, build higher revenues, and bring ideas into the commercial marketplace faster, businesses must understand the interactions… Intelligent SCM fits nicely with the concept of “agile” manufacturing, where companies support mass customization with short, easily changed production runs. Advanced SCM, agile manufacturing, and fast logistics increasingly depend on a closed information loop that provides immediate visibility into interacting processes. The ultimate vision is to bring front office, high-touch e-Customer Relationship Management (eCRM) applications into the loop, to create highly responsive end-to-end chains.
A view of the future of e-business comes from Ray Lane, former president of Oracle Corp. and now a general partner at venture capital firm Kleiner Perkins Caufield Byers: “Supply chains of the future will ‘own’ the companies, not vice versa. Companies will be asking themselves: ‘What’s my role in that supply chain? What do I bring to it?’ ”
Summarises Nuala Moran in the Financial Times, “The supply chain will become a dynamic artery, feeding through information in response to customer demands, telling the manufacturer if the chain has the ability to produce the goods, at what price, and in what timescale.”