The e-synchronized supply chain

By William C. Copacino -- Logistics Management, 4/1/2000

The idea of an integrated, extended supply chain that is electronically linked and operated has been long envisioned. Much like Dick Tracy's telephone watch in the old comic strip, it allowed us to imagine the future and its benefits but seemed a distant dream. Well, the realization of both of those dreams may not be far away.

What I call the "e-synchronized supply chain" is a concept that links suppliers, manufacturers, distributors, customers, and carriers in an Internet-enabled electronic network that allows for coordinated planning, real-time exchange of information, bidding and negotiation, transaction execution, and performance reporting. It will enable profound improvements in efficiency and effectiveness. No company has an e-synchronized supply chain yet, but pieces are rapidly being put in place and within two years, many companies will be there. (I plan to revisit this prediction in my April 2002 column.)

As evidence of the fast pace of progress, consider the following developments:

Business-to-business (B-to-B) exchanges are rapidly evolving in almost every industry, and there often are many competing exchanges within individual industries. They come in many forms: seller-centric (one seller to many buyers), buyer-centric (one buyer to many sellers), or true exchanges in which many buyers are able to interact and conduct transactions with many sellers. These exchanges extend to transportation and logistics service providers as well as to all of the players in a vertical channel.

Supply chain software has expanded its horizons, becoming "Web-centric" and offering powerful capabilities in the areas of e-procurement, supply chain planning, product development, and collaboration with trading partners.

The number of business service providers (BSPs) that offer integrated supply chain solutions at a cost advantage will grow rapidly. These companies will keep logistics costs variable while offering best-in-class efficiencies.

Companies' willingness to focus on core competencies and outsource non-core capabilities will increase. The ability to form outsourcing partnerships and alliances will become increasingly important.

Sometimes I need to ask myself whether e-synchronized supply chains will become a reality, particularly when I am still seeing evidence of poor basic execution at many companies-specifically functional disharmony, an inability to fill orders effectively, and chronic inventory imbalances. Then I look at the best of the best and see what is possible and what they will make the standard of the future. The e-synchronized supply chain is real; it will transform supply chain economics, and it will create powerful competitive advantages for the leaders. "Come in, Dick Tracy. Are you there?"

William C. Copacino is managing partner of Andersen Consulting's Strategic Services Practice for the Americas. 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 William St., Wellesley, MA 02181. Phone (617) 454-4480.