To sustain reengineered business processes (that at last abandon the functional orientation of the past), many progressive companies have been replacing inflexible, poorly integrated systems with enterprise-wide systems. Yet too many of these companies will find themselves victims of the powerful new transactional systems they put in place. Unfortunately, many leading-edge information systems can capture reams of data but cannot easily translate it into actionable intelligence that can enhance real-world operations. As one logistics manager with a brand-new system said: “I’ve got three feet of reports with every detail imaginable, but it doesn’t tell me how to run my business.” This manager needs to build an information technology system that integrates capabilities of three essential kinds. ( .) For the short term, the system must be able to handle day-to-day transactions and electronic commerce across the supply chain and thus help align supply and demand by sharing information on orders and daily scheduling.

From a mid-term perspective, the system must facilitate planning and decision making, supporting the demand and shipment planning and master production scheduling needed to allocate resources efficiently. To add long-term value, the system must enable strategic analysis by providing tools, such as an integrated network model, that synthesize data for use in high-level “what-if” scenario planning to help managers evaluate plants, distribution centres, suppliers, and third-party service alternatives.

Despite making huge investments in technology, few companies are acquiring this full complement of capabilities. Today’s enterprise wide systems remain enterprise-bound, unable to share across the supply chain the information that channel partners must have to achieve mutual success. Ironically, the information that most companies require most urgently to enhance supply chain management resides outside of their own systems, and few companies are adequately connected to obtain the necessary information. Electronic connectivity creates opportunities to change the supply chain fundamentally—from slashing transaction costs through electronic handling of orders, invoices, and payments to shrinking inventories through vendor-managed inventory programs.

Aval Sethi