Moving on to the next supply-chain frontier

By William C Copacino -- Logistics Management, 2/1/1998

Our world certainly is changing at lightning speed. Fifteen years ago, in 1983, I wrote the first published piece (that I am aware of) on the concept of an "extended supply chain." I called it "intercorporate logistics." Back then, it was just a concept, since we lacked the operational and systems infrastructure to make "intercorporate logistics" happen.

At the end of the 1980s, Procter & Gamble and Wal-Mart provided a vivid demonstration of the extended supply chain's power. They collaborated on a level that the industry--to that point--had only imagined. As a result, their costs and inventory performance improved to unmatchable levels. Today, many companies participate in an extended supply chain to some degree. Over the past three years, in particular, applications of the extended supply-chain concept have increased geometrically.

Recently, many of the decision-support software firms have developed conceptual frameworks that define the stages of a multi-enterprise integration. Numetrix, for example, favors a five-stage model (see diagram shown above).

Likewise, Manugistics and Microsoft, also prominent providers of logistics decision-support software, have developed their own, equally thoughtful, concepts.

All of these approaches are valuable, providing useful frameworks for assessing the state of development of an extended supply chain and identifying the opportunities it offers. It interests me that many companies already have moved beyond the basics of supply-chain management. They no longer are focusing on how to achieve functional excellence, cross-functional integration, or timely and reliable data. These companies now are focusing on how best to execute advanced supply-chain approaches, such as the extended supply-chain concept. They are raising the competitive bar higher and higher, and have moved the debate over supply-chain management to an entirely new arena.

I find that companies are splitting into two groups: those struggling to put in place the basics of supply-chain management, and those that have mastered the basics and are experimenting with advanced approaches. As supply-chain management increases in strategic importance, companies that are struggling to make the basics work will be at an increasing disadvantage. If your company is not playing in this arena, you had better move fast, as many of your competitors already are moving on to the next supply-chain frontier.

William C. Copacino is the managing partner, strategic services, Americas, of Andersen Consulting's Strategic Practice in the Northeast. A frequent speaker before business and professional groups, Mr. Copacino has a number of publications to his credit, including the book Supply Chain Management: The Basics and Beyond (The St. Lucie Press, 1997). He is based in Andersen Consulting's Boston office, 100 Williams St., Wellesley, MA 02181. Phone (617) 454-4480.