March 20, 2003

New Links in the Chain

As supply chain networks evolve and mature, managing their performance requires an increasing commitment to information and collaboration

by Mark Smith

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A New Intermediary Approach

The biggest question many organizations must answer is when to adopt a new project or method to manage supply chain performance. In fact, the software and hardware costs are the smallest portion of the overall project. The personnel costs of training, support, and management can be significant investments, which have ramifications on capital expenditures and risk. As a result, many companies are holding back on critical projects. Some organizations are reexamining hosted service models as an option for performance management projects that require interactions between suppliers, manufacturers, and retailers.

As an example, E.Intelligence Inc., which provides a collaborative demand planning solution, has offered a hosted business intermediary model for its customers since 2002. It now provides a service where a manufacturer and retailer can perform category-level analysis and planning to expedite the collaboration of forecasting and replenishment. By providing this service and charging by category, organizations can adapt and grow with the service incrementally, significantly reducing the risk and required capital. E.Intelligence is now beginning to connect manufacturers with retailers to form a performance management network that has great potential in 2003 and beyond.

Opportunity To Improve

New opportunities for you and your supply chain will arise when you follow the principles of performance management (efficiency, quality, and value) and promote existing and new investments to achieve higher levels of performance. Acting on these opportunities will require a sizable commitment to providing information integrated with collaborative mechanisms that can provide reporting and analysis as part of the process. Although the way that information architectures and applications will enrich the supply chain is still evolving, many of the early attempts now serve as learning experiences for the second round of technology providers. The performance mandate hasn't changed, but the technology and processes have made great strides in ameliorating the risk of adopting technology that can manage costs and improve productivity inside your supply chain.

Mark Smith [mark.smith@ventanaresearch.com] is the CEO and senior vice president of research at Ventana Research, an advisory services and research firm providing insight and education on best practices and technology performance management.

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