Extending Applications

Now that we understand some of the higher-level concepts, let's now focus on how supply chain integration relates to application integration.

To consider supply chain integration is, in reality, to consider extending the enterprise. Just as an extended family might include aunts, uncles, second cousins, and other distant relatives, the extended enterprise comprises all of the members in a company's supply chain, such as the various legal units within the company, suppliers, supplier vendors, and customer organizations.

Extending the enterprise demands leveraging technology, such as application integration-enabled middleware and traditional application development technology. For example, common network infrastructures must be in place, such as those offered by VANs, proprietary wide area networks (WANs), or the Internet. A significant benefit of the Internet is its ability to level the playing field for smaller organizations seeking to leverage the power of supply chain integration. By taking advantage of the common links of the Internet and the common platform of the Web, organizations can become part of a set of informally connected systems.

Although some organizations may fight against this evolution, they are fighting a losing battle. The Internet has, on a fundamental level, already accomplished the task by creating its own natural supply chain.

Consider a typical direct-order apparel company. Consumers access the company's Web site, where they are able to browse the available merchandise. The consumer can get an immediate price for an order, including tax and shipping charges, along with a ship date, the estimated time of arrival, and a confirmation number to track the order as it progresses through the chain. The value this capability provides to the consumer is the ability to shop without sales pressure and time constraints, with an enormous amount of information about the costs, timing, and status of the order. These benefits are part of the reason that online storefronts are doubling their sales every year and, in the process, adding value to the concept of the supply chain.

Web-enabled commerce benefits the company as well as the consumer. With orders collected directly from the consumer, point-of-sale data is immediately available to the supply chain systems. This data provides real-time feedback to various points within the organization's business processes. For example, suppliers are made aware of the demand for a particular garment, enabling them to adjust production. Sales departments know the success or failure of a product line before its effect reaches the bottom line. A company that has automated its own business processes and integrated its systems with the systems of the supply chain partners becomes part of a team, and can build a mechanism for dealing automatically with the volatility of the most aggressive markets.