Julie Fraser: Strategic applications shift from enterprise to industry networks

The era of enterprise systems' strategic role is ending. In its current form, core ERP is not likely to provide full support for critical business processes, let alone strategic advantage. That's because acting as a stand-alone enterprise is no longer a competitive strategy. Most manufacturers must now function as members of industry networks.
By Julie Fraser May 1, 2008

The era of enterprise systems’ strategic role is ending. In its current form, core ERP is not likely to provide full support for critical business processes, let alone strategic advantage. That’s because acting as a stand-alone enterprise is no longer a competitive strategy.

Most manufacturers must now function as members of industry networks. Business strategies such as specialization in core competencies and globalization have engendered these industry networks.

Current business conditions require everything to move faster than ever. The product innovation and production cycles must become as short and responsive as the supply chain fulfillment cycle. Demand, supply, product, production, and logistics cycles must tie together more tightly than ever for companies to succeed in a real-time, to-order world.

Industry networks are complex and largely different from traditional enterprise operations on several dimensions.

  1. Many companies: Companies now rely on people who are part of vastly different reporting structures, and may have different goals and performance metrics.

  2. Many networks: Each company participates in multiple networks, often with different roles, partners, rules, and documentation—even for the same product and same transaction.

  3. Rapid change: Regulations are changing and business partners are learning how to be effective as they go along, meaning processes must change quickly to reflect new realities.

  4. Multifunction processes: Departments such as design engineering, planning, production, logistics, and finance must link seamlessly to support sound business processes.

    1. So what should companies look for in their application software to improve their ability to streamline processes in this industry network environment? No need to rip out ERP—just add to that foundation.

      B2B applications : These fall into several categories, including Web-based automated EDI as from ANX, GXS, InterTrade, SPS Commerce, and Sterling Commerce; PLM sharing as from Arena, CoCreate, Dassault, IFS, Omnify, Oracle, PTC, and Siemens; global trade management as from TradeBeam, Management Dynamics, Infor, and SAP; and trading exchanges such as Agentrix, E2Open, Exostar, Neoforma, Quadrem, and Supply Chain Connect.

      Visibility and control : Supply chain tracking across multiple partners as from HighJump, i2, IBM, Kinaxis, Manhattan, and RedPrairie. Leaders also are using MES from Camstar and Visiprise for detailed product and production data visibility among trading partners.

      Configurability & rapid reconfiguration : The trick is to find software vendors building in small chunks with highly configurable workflow connecting the application bits. Many simply “wrap” old, larger modules, but HP, IBM, Microsoft, Oracle, and SAP all tout new software tools such as service-oriented architecture to enable more granular, configurable approaches.

      Category-spanning : The most interesting and innovative software applications today span categories to achieve new results. Solutions for specific industry verticals demonstrate the opportunity but are too numerous to list here.

      Just as your company has partners for its industry network, software buyers need a team of people from every function to create specifications for an application structure that will serve up information for the network. Buy it in small pieces or in larger swaths. Be sure it works in today’s network environment, ready to support the business strategy as it changes.

      Author Information
      Julie Fraser is Principal Industry Analyst for Cambashi Inc., and has been an industry analyst, consultant, and marketer for more than 20 years, specializing in manufacturing value network processes and systems. Julie can be reached through Manufacturing Business Technology, or email at Julie.fraser@cambashi.com .