Optimizing the e-Supply Chain: The Final Frontier?

by Ian S. Hayes

 

Of the myriad opportunities offered by the Internet, perhaps the one providing the most immediate benefit, and showing the greatest long-term promise, is supply chain optimization. The Internet's ability to remove inefficiencies, break down communication barriers, reach disparate audiences and foster collaboration is perfectly suited to managing and optimizing the diverse and distributed players in supply chains of all sizes.

Cutting edge e-supply chain examples abound. Dell Computer Corporation has achieved recognition and financial success for masterfully streamlining its supply chain and business processes while providing customers with personalized product options. Ford Motor Company, Daimler/Chrysler and General Motors have teamed to develop Covisint, an online marketplace for purchasing automotive parts and direct materials from their vast group of first tier suppliers. The PaperExchange, an Internet-based trade exchange, allows suppliers and buyers to offer and bid on paper products and pulp. Ford recently announced an initiative to share legacy-created product design drawings with its suppliers using an XML translation tool. Even industries that have traditionally been unaffected by supply chain issues, particularly services industries such as IT consulting, now find a host of online marketplaces and aggregators seeking to match buyers and sellers of services.

Little wonder that so many companies are excited by e-supply chain opportunities. Analyst predictions bear this excitement out. Boston Consulting Group forecasts that electronic, Internet-based business transactions will amount to $2.8 trillion by 2003, while Gartner Group predicts they will reach over $7 trillion. By 2002, Gartner Group expects 7,500 to 10,000 business-to-business (B2B) marketplaces will emerge. Giga Information Group and IDC estimate that these B2B marketplaces will offer savings of $180 billion to $480 billion in transaction costs and expenses come 2003. For the software, hardware and services vendors that would like a piece of the action, Jupiter Research believes that technology spending to operate B2B marketplaces will increase from about $2 billion in 2000 to $81 billion in 2005.

Truly integrated and optimized supply and demand chains offer significant benefits to their participants. To understand, imagine what would happen if your company knew in advance exactly when your top clients were going to make their purchases, what they intended to buy and where they needed the items delivered. Armed with these accurate forecasts, you could notify your suppliers of your precise needs, exactly when needed. Instead of buying raw materials at inopportune moments, you could plan your purchases to take advantage of favorable pricing. To lower overhead, you could manufacture and warehouse products in the most ideal location. With more insight into buying patterns, you could better predict customer needs, developing even more suitable products and services in collaboration with your suppliers. Finally, to expand your market, you could offer all of these products and services online, through one or more e-marketplaces. What company wouldn't want these benefits?

The Internet is elevating supply chain optimization to new levels, but the concept of supply chain management (SCM) is not new. Every company, no matter its industry, is part of one or more supply chains both as a supplier and buyer of goods. Supply chain investments, ranging from direct materials used to manufacture products to indirect materials such as PCs and office equipment, can be huge. Any efficiency that can be introduced into the supply chain has the potential to result in enormous cost savings. For manufactured goods, every dollar squeezed from the "cost of goods sold" is a dollar added to profits. Every reduction in carried inventory frees capital for other uses. Relying on techniques such as "just-in-time" inventory management and logistics planning, and applying automation where needed, many companies have started the process of integrating and optimizing their supply chains. Auto manufacturers now rely on automated systems to forecast and order parts mere minutes before they are needed on the assembly line, and retailers like Wal-Mart have squashed their competitors by developing sophisticated logistics, inventory management and distribution systems, all tightly coordinated with suppliers.

In many ways, modern day e-SCM efforts are an outgrowth of the enterprise resource planning (ERP) initiatives undertaken by many large companies over the past two decades. With the advent of ERP systems, it became much easier for companies to access production, scheduling and operational data -- precisely the information needed to tighten the supply chain. Companies of all sizes now have automated and rigorous procurement functions to reduce the overhead of purchasing and tracking indirect materials like paper, office supplies and furnishings. Advanced planning and scheduling systems are common across a range of companies and industries. These enterprise-level systems not only assist companies in integrating their supply chains, they also enable them to deconstruct their businesses, outsourcing inefficient or commodity functions to the most efficient suppliers. Suppliers now regularly take responsibility for managing their customers' inventory and stock rooms through vendor managed inventory programs, and third party service providers perform a range of logistics functions.

Why e-SCM?

For e-SCM efforts to make sense, two overriding things must be present. First, all parties must have sufficient incentives to participate and make the investments needed to help the effort succeed. To thrive, most e-SCM efforts need a critical mass of participants. If prospective players perceive the effort as simply a means of driving down their prices, they have little incentive to join, dooming the project from the start. Second, supporting technology, hardware, software and processes must be available to ensure that the efforts actually can be implemented. Today, the abundance of supply chain software, hardware platforms and delivery options, from the Internet to ASPs to virtual private networks, has removed many of the technological barriers to implementing e-SCM programs.

e-SCM efforts can range from simple (an electronic catalog posted on an e-marketplace) to complex (a platform to enable product design and development between an entire supply chain). The benefits offered by each of these e-SCM projects will vary. For example, a supplier posting an electronic catalog on an industry-wide e-marketplace is not expecting to foster greater product development collaboration with its customers. In total, however, the benefits of e-SCM are plentiful. Depending on the position that a company occupies in the supply chain, these benefits can be broken down by the buyer's, supplier's and facilitator's perspective.

Buyer Benefits. In general, there are three classes of benefits that a buyer can derive from e-SCM efforts.

  • First, a buyer may be able to purchase both direct and indirect materials at a lower cost, primarily due to price transparency and competition. Buyers that purchase goods through an active e-marketplace populated by many suppliers hope to take advantage of competition and dynamic pricing opportunities to secure the lowest possible price for goods and services. Although larger buyers such as Wal-Mart and Ford already enjoy sufficient leverage to command price breaks and discounts, medium and smaller-sized buyers gain access to more favorable pricing when suppliers are bidding for their business via e-marketplaces and trading exchanges.
  • Second, a buyer is likely to achieve greater efficiency when purchasing goods and services, ultimately lowering the overall cost of conducting commerce. By automating the procurement function, offloading purchasing activities to end users, and integrating purchasing data with legacy accounting systems, companies can lower their transaction costs and overhead. For medium and smaller-sized companies, B2B marketplaces offer opportunities for price discovery that would be inefficient or prohibitively expensive to conduct through human effort alone.
  • Third, a buyer may be able to forge stronger ties with its suppliers, collaborating with them more closely in the design and development of goods and services, and in forecasting, scheduling and planning production activities. ERP systems have enabled many companies to share a subset of this information already. The collaborative software, middleware XML translators and more powerful customer relationship management (CRM) functionality available today promise to align buyers more closely with all participants in their supply chain.

Supplier Benefits. Supplier benefits generally fall into two classes, depending on the type of e-SCM program in which they participate. For e-SCM programs that concentrate on collaboration -- sharing product data, product designs, etc. -- suppliers have the potential to strengthen their forecasting ability, meet and exceed customer demands by offering the right combination of products and services at the right time, align their production schedules and manufacturing capacity with buying patterns to improve inventory management and more. For e-SCM programs that concentrate on commerce opportunities, the supplier's greatest benefit comes from participating in large, active online marketplaces. These marketplaces, if frequented by a critical mass of buyers, extend the supplier's market reach and potentially increase its overall sales. Because this extensive market reach is achieved at a fraction of the cost associated with other sales channels -- mass mailings, telemarketing, on site sales calls -- it is a more cost-effective way to market and sell goods and services. Suppliers can also take advantage of B2B marketplaces to gauge the demand for their goods and services and, using dynamic pricing features such as auctions and bids, the price that the market is willing to bear for these items. Although the price transparency fostered by online marketplaces may deter suppliers from participating at first, once a sufficient number of buyers and competitors are using the model, every supplier must eventually join. Marketplaces can be helpful with inventory management activities, allowing suppliers to auction off excess inventory to a large group of potential bidders.

Facilitator Benefits. A facilitator of e-SCM efforts is a party that provides some component or service integral to the effort. A software or hardware vendor is a facilitator, as is an ASP providing application functionality and/or Internet connectivity. In the case of a B2B marketplace, the facilitator is the market maker that establishes, administrates and operates the electronic marketplace, perhaps including services such as financial settlement, fulfillment, logistics etc. In general, the benefits to a facilitator are strictly monetary -- the software or hardware vendor receives license fees and the ASP normally receives monthly rental or usage fees. The market maker typically receives a percentage of each transaction; the PaperExchange marketplace charges 3% of each transaction completed by its members. If the market maker also happens to be a large purchaser, and participates in the marketplace as a buyer, then it will also enjoy all of the benefits that accrue to a buyer.

Preparing For e-SCM

The benefits of e-SCM are so plentiful, and the potential synergies so compelling, that companies, vendors, service providers and investors have been dazzled by its promise. Pick up any publication, surf the Web or attend a conference and you'll find dozens of stories about existing and planned electronic supply chain endeavors. Ford is attempting to foster greater collaboration with its suppliers by simplifying and automating the process of sharing product design data. Tier 1 auto suppliers are developing their own design, collaboration and commerce exchanges to interact with their smaller suppliers. The dairy industry is launching a B2B exchange to auction perishable dairy products.

Businesses worldwide recognize the imperative of automating and tightening their supply chains through electronic mediums. They don't really have much of a choice. One by one, their competitors are doing it. Large buyers are using their leverage to demand better supply chain management. Just as one company puts pressure on its supply chain to increase efficiency and reduce costs, it is also pressured by its trading partners to make its own operations more efficient and its prices more competitive.

Without the Internet, e-SCM efforts would be on the slow track rather than the fast track. The Internet is the ideal platform for launching e-SCM because it shares many of the same characteristics of a supply chain. Both consist of a web of participants, communicating and sharing data and information in a standard way. The Internet simply makes this communication and data sharing more cost-effective through the use of standard protocols, a choice of relatively inexpensive connections and high adoption rates. An array of software products, translation middleware and XML are removing some of the last barriers to widespread exchange of data.

There are some fairly painless ways to get immediate benefits out of e-SCM. Participating in an e-marketplace as a buyer or seller is one method. Implementing an automated procurement system is another. To extract even stronger benefits out of e-SCM requires more complex and integrated solutions. These solutions take greater effort and investment, and depend on industry dynamics, competitors' activities and customer demands. Before embarking on an e-SCM project, consider these issues:

  • Leverage. Your company's size, relative to others in the supply chain, will determine who has the leverage to dictate terms. A small business customer does not have the clout to tell Staples how to construct its Web storefront; Staples makes that decision. Tier 1 auto suppliers, while individually large, do not have the leverage to refuse participating in the big 3 automakers' marketplace. Be aware of your position in the grand supply chain scheme.
  • The Tower of Babel. Communicating and sharing data between scores of supply chain partners is utter chaos. Most meaningful e-SCM solutions require a fair amount of integration between supplier systems including front-end sell-side, CRM, ERP and advanced planning and scheduling applications. Except in rare cases, these systems run on different platforms, use different technologies, store and manipulate data in different ways and have ill-defined or non-existent interfaces. Somehow, a modicum of standardization and definition has to be imposed on this Tower of Babel to enable accurate and timely data sharing. Many point-to-point ERP and electronic data interchange (EDI) implementations permit this type of sharing, but are not widespread enough to integrate an entire supply chain.

 

  • Collaboration and coordination. The more complicated the e-SCM solution, the more collaboration and coordination required among the participants. Leverage may determine who gets to run the show, but an uncooperative participant can wreak havoc on the project. Suppliers that are involved in multiple e-SCM initiatives, perhaps across several industries, will resist adopting conflicting, redundant or grossly expensive SCM approaches. Designing, implementing and testing a complex e-SCM solution between scores of players will stress any organization's program management abilities. Commitment and perseverance are essential to putting a large-scale e-SCM effort in place.

Categories of e-SCM Solutions

There are virtually hundreds of e-SCM solutions from which to choose, ranging from simple to complex and requiring different levels of investment, participation and integration. Electing to participate in an e-marketplace is a relatively straightforward decision. Creating a custom extranet to give suppliers access to your production data and sales forecasts is another matter.

e-SCM solutions range from "close" to "open." As illustrated, close e-SCM solutions are custom, private implementations, driven by one or more powerful buyers or suppliers. These point solutions are built to specification between several or many supply chain participants and may be quite complex, requiring a high degree of system integration. Close e-SCM solutions include early ERP and EDI implementations, but also encompass more functionally rich offerings. The primary purpose of these solutions is to foster rich information exchange, although they can also support commercial transactions and a range of specialized services. Although these close e-SCM solutions may be built using "out of the box" components, they also may offer a range of customized functionality not present in the public, commodity exchanges such as sharing of forecasting, sales, production, planning and scheduling data.

 

Open e-SCM solutions focus on commerce between suppliers and buyers, and may also include ancillary services such as payment processing, fulfillment and logistics. These open solutions are available to and used by the public and typically revolve around a vertical industry such as healthcare or retail, a product or set of products such as electronic components, or a service such as travel. These solutions, which include e-marketplaces and trade exchanges, operate much like a financial or commodities exchange. Dynamic bids and sales are generally supported. Buyers may advertise RFPs or RFQs, or may invite sales proposals for commodity goods. Sellers may solicit bids for products or services. Price negotiations, sales and financial settlement are all conducted online.

Private SCM

Vertical Marketplace

Global Marketplace

One-to-many

Many-to-many

Many-to-many

Private

Public

Public

Collaboration and/or Commerce

Industry, product or service based

Commodity products/services

Rich info. exchange

Fosters liquidity, dynamic pricing

Fosters liquidity, dynamic pricing

Relationship building

Little info. exchange

Little info. exchange

High integration

Low integration

Low integration

There are a number of specific e-SCM solutions that fall within these two classes.

  • Basic Supply Chain Execution Components

Although many e-SCM systems focus on enabling communications and collaboration with external entities, there are a host of internal, back-office systems that help companies execute various supply chain-related functions apart from their suppliers and partners. These systems include custom-developed and packaged software systems that aid product design, order processing, inventory management, logistics (transportation, warehouse management, fulfillment), forecasting, planning and scheduling. In addition, companies rely on strategic planning tools to help them optimize their sourcing and other aspects of their supply relationships. Decision support tools are also used to access and manipulate the data produced by these systems. Software vendors such as i2 Technologies, SynQuest, McHugh, Logility and Optum provide supply chain execution solutions. Several IT consulting firms, such as Keane and Cap Gemini Ernst & Young, have dedicated supply chain practices to help companies implement supply chain execution components.

  • ERP/EDI

ERP systems standardize companies' internal applications and give them access to data generated across the enterprise, from accounting to operations to sales and marketing. This standardization enables companies to share data with suppliers and partners using similar paradigms. EDI implementations are generally custom interfaces built to exchange data between two parties' dissimilar systems. The type of data exchanged is generally product/inventory information, reflecting some sort of contractual agreement between the parties, however, many ERP vendors are adding specific supply chain functionality that allows for broader exchange of information and collaboration.

ERP solutions are expensive, typically costing millions of dollars to implement. They are advantageous, however, because they integrate all of the back-end systems that typically prevent companies from instigating meaningful SCM programs. Because of this integration, ERP systems provide companies with access to abundant data. While this feature makes ERP systems very powerful, it also makes integration with outside entities more complicated. Suppliers may not have the same type of ERP system, or any ERP system at all, so developing an interface is a complex proposal. As a result, companies usually devise point solutions, linking up their most important suppliers one-by-one. Historically, these interfaces have been implemented using EDI.

Software vendors offering ERP/e-SCM solutions include: SAP, Baan, Peoplesoft, J.D. Edwards, Oracle and Great Plains Software. Consulting help also abounds, especially from firms such as Accenture, PriceWaterhouseCoopers and KPMG to implement ERP packaged solutions and to design custom solutions.

  • Custom interfaces with trading partners

In addition to ERP/EDI solutions, some companies have devised customized interfaces with their trading partners, vendors and customers to share information and strengthen relationships. These custom interfaces may rely on extranets or virtual private networks that allow one-to-many interactions with third parties. These custom interfaces may involve data exchange -- sharing information to enable better materials planning, inventory management, etc. -- or may facilitate some form of commerce between the parties. Because these e-SCM solutions are implemented on a custom basis, they often rely on outside consulting assistance and may also incorporate some of the SCM vendor offerings listed throughout this section.

  • Web Storefronts

Although not thought of as a classic example of e-SCM, Web storefronts give companies another channel for selling to their customers. Depending on the sophistication of the storefront and the underlying technology and functionality (CRM, ERP, etc.), businesses may be able to accumulate significant information about their demand chains, that in turn can improve forecasting, scheduling and planning abilities. Although a storefront is advantageous for the seller, allowing it to reach a potentially huge audience, it is not as beneficial for buyers. These storefronts facilitate one-on-one transactions rather than aggregate buyers and sellers. A buyer that wishes to purchase goods or services through Web storefronts still must conduct extensive research and price discovery manually. Without dynamic pricing capabilities, buyers are not ensured of receiving the most favorable pricing terms possible.

There are hundreds of software vendors (Ariba, Commerce One, BroadVision,) that provide components of a web storefront from catalog/content management, to credit card processing, to fulfillment, etc. Many of these solutions are also offered on a hosted, ASP basis by companies such as PurchasePro, USInternetworking and Interliant. Almost every Internet and IT consulting firm can perform the interactive design work and the technology/infrastructure components required by a Web storefront.

  • Procurement Systems

Standalone corporate procurement systems, typically implemented over an intranet, are used to distribute the purchasing function to end users. Information about supplies and electronic catalogs from pre-approved vendors are posted on the intranet. These vendors usually have some minimal agreement with the company about price discounts, volume purchases, etc. Procurement systems also allow authorizations, rules and approvals to be specified and applied automatically as end users perform their purchasing activities. Purchases conducted over the procurement system are fed into back-office accounting and legacy systems, which helps to reduce overhead and potential data entry errors. Companies generally use procurement systems to lower transaction costs rather than obtain the lowest price possible for supplies. Because procurement systems work with a set of pre-approved vendors and do not support dynamic selling or bidding, they are not designed to force prices down. The cost of implementing a procurement system and maintaining electronic catalogs puts it outside of the reach of small and medium-sized companies, however, ASP offerings may be more cost-effective.

Software vendors offering procurement systems include Ariba, Commerce One, i2 Technologies and Trilogy. ASPs offering procurement software include PurchasePro, Clarus and USInternetworking.

  • E-Marketplaces, trading exchanges, etc.

E-marketplaces, also known as trading exchanges, trading hubs, trading communities, etc., support many-to-many relationships between buyers and sellers. Members of these communities conduct commerce, offering and purchasing commodities, products and services. Marketplaces may be private or public and may be formed around a product or service, the needs of a large supplier or buyer, or a particular industry. They may include electronic catalogs of suppliers' wares, or simply a posting board where offers, bids and requests are broadcast, similar to a financial exchange. Most marketplaces have dynamic pricing features that allow suppliers and buyers to conduct auctions, offers/counteroffers and other types of price negotiations online. In addition, ancillary services such as financial settlement, fulfillment, logistics, transportation, etc. are increasingly being offered through the marketplace.

Marketplaces are established, administered and managed by a large buyer, seller or neutral third party called a market maker. The market maker recoups its costs by either taking a percentage of each transaction and/or by participating as a seller or buyer in the market and enjoying the associated benefits. These marketplaces require a critical mass of buyers and suppliers for the model to work.

ASPs offering marketplace services include PurchasePro and VerticalNet. Software vendors include CommerceOne, Ariba, i2 Technologies and Manugistics. There are many consulting firms including Keane, Intelligent Information Systems and Sapient, that work with e-marketplace participants to integrate their back-office systems with the marketplace transactional data.

  • Collaboration Platforms

Many companies are looking for ways to enrich their communication and relationships with the important players in their supply and demand chains. These initiatives are based more on collaboration than they are on commerce, and are meant to optimize supply chain operations, particularly in the product design, planning and forecasting areas. Ford's effort to improve the sharing of product design information with its suppliers is one example. Kmart's trial of CPRF (collaborative planning, forecasting, and replenishment) with its suppliers is another example. Software collaboration vendors include Syncra, Manugistics, i2 Technologies, Logility and webPLAN.

e-SCM Enabling Technologies

Whether joining a marketplace, establishing a private extranet with trading partners or collaborating on product design with a supplier, it is clear that e-SCM solutions demand a high degree of systems integration. Some solutions may require that supply chain participants integrate their systems and data with other participants; other solutions may require that a participant's back-end systems be able to handle new sources of data. Because e-SCM solutions are so widespread, affecting the systems and data of many organizations, some type of standard is required that will enable participants to interact in a common manner, and to understand the data and information underlying those interactions.

Using the Internet as a platform for e-SCM solutions establishes standards for connectivity and communication. But standards must also be defined for the data that will be exchanged via e-SCM solutions. XML (Extensible Mark-up Language) is emerging as the de facto standard for data exchange over the Internet, creating common data definitions and formats. Many software vendors, such as XML Solutions, Hostbridge Technology and PFN offer translation tools that allow companies to translate their internal data into XML so that it can be widely shared and understood by others in the supply chain. Several IT consulting firms, such as Intelligent Information Systems, also specialize in data translation tasks.

In addition to XML, there are a host of middleware products to assist companies in communicating with their supply chain participants. These solutions include messaging and communication products, integration services, database and server products offered by companies such as Oracle, Progress Software, BEA Systems, Neon Systems, Unify and Vitria.

e-SCM Implementation Considerations

Implementing an e-SCM solution can be simple -- such as joining an e-marketplace -- or complex -- such as implementing an ERP package and establishing a proprietary, collaborative platform to share production data. Not surprisingly, the most beneficial e-SCM solutions are usually more difficult to implement, and may require a significant investment depending on the state of a company's existing infrastructure and systems. Massive integration with multiple suppliers' systems, the installation of brand new software systems, hardware upgrades and consulting assistance are often necessary.

Depending on a company's need, it can select a custom, package or ASP solution. Custom development is an expensive option, but it is the only alternative for highly unique requirements or for situations where the SCM software itself will provide a competitive advantage. A growing number of package solutions are available to handle a wide range of SCM requirements. Packages decrease time-to-market for gaining SCM capabilities, allow multiple companies to share the same functionality and reduce the cost of maintenance. These solutions are appropriate for companies with the resources and desire to operate their own software, but no need for unique SCM functionality. By combining software, hardware and support into a single monthly fee, ASPs often offer the fastest and least capital-intensive means of gaining an SCM solution. ASP solutions exchange unique functionality for ease of implementation and operation. As such, many medium and small-sized companies may find an ASP solution is the most cost-effective option, particularly for e-SCM solutions such as procurement systems and e-marketplaces.

Integration issues take front stage in almost any e-SCM implementation. First, in-house supply chain systems must be integrated to optimize internal supply chain operations. Second, these systems must be integrated with those of outside parties such as trading partners and/or customers to share important data. Finally, internal processes must be upgraded to reflect the changes introduced by the e-SCM systems. True integration requires in-depth understanding of the data produced by different systems. To provide the most meaningful data to a supplier, it may not be enough to just provide access to inventory information. It is often necessary to draw information together from diverse sources, which were never designed to work together, to give an accurate view of the data. In addition, a company must determine the appropriate integration approach for its systems. Is it best to upgrade systems so they work in concert? Should a central data repository be used? Should new applications be written to access and manipulate this data? Should an end-to-end integrated software package be preferred over best-in-class, point solutions? Most organizations are advised to seek outside consulting assistance to help determine which options are feasible and make the most sense given a company's particular situation.

A number of other, important issues will affect an e-SCM implementation. Whenever data is shared with third parties, issues of security and privacy become paramount. Companies closely guard their customer, sales and forecasting data, and want to ensure that the e-SCM applications producing and exchanging this data can prevent unauthorized access.

Companies must also have appropriate management structures in place to oversee the e-SCM implementation. Any program that involves multiple parties, spanning organizational boundaries, is bound to have coordination problems. Representatives from all affected organizations must participate, and they must have the clout to reconcile differing schedules, agendas and technologies and resolve any impasses. Testing an e-SCM solution across multiple organizations is no small feat, a fact observed by many Year 2000 programs. As with everything, the party with the most leverage will greatly influence the direction and implementation of the e-SCM program.

Looking to the Future

e-SCM solutions today are still in their infancy. Nevertheless, they are delivering impressive ROIs, a fact that bodes extremely well for the future of e-SCM.

What e-SCM areas promise to be hot in the future? E-marketplaces will continue to evolve until the best economic model surfaces. Because it is crucial for these marketplaces to attain a critical mass of suppliers and buyers to survive financially, there will have to be sufficient incentives for companies to join. Marketplaces that revolve around large buyers and/or suppliers with a great deal of leverage are likely to be the most successful. Integrating internal procurement systems into marketplaces, and services such as financial settlement, logistics and fulfillment, will give many companies the impetus to conduct more of their commerce through marketplaces. Medium and small-sized companies will find it economical to join these marketplaces, since the market maker absorbs all of the set-up costs, however, their lack of leverage will not bring them the big gains enjoyed by the larger players.

Perhaps the most exciting future direction for e-SCM lies in the collaboration area. Several fortuitous events are converging. First, companies have developed a mindset and culture that is open to optimizing the supply chain by working with partners and customers. Second, an increasing number of platforms, packages and technologies have appeared to allow meaningful collaboration from sharing product design data, to developing joint forecasts and customer reward programs.

The time is ripe for e-SCM, and the future promises even greater returns and rewards to its practitioners. Whether your company is at the vanguard, designing and implementing cutting edge e-SCM solutions, or being pulled into e-SCM initiatives by its partners, embrace e-SCM because it is here to stay.