Logistics and Supply Chain Management, 4th Edition

Figure 7.1 depicts the difference between the conventional supply chain with lim-

ited transfer of information and the synchronous supply chain with network-wide

visibility and transparency.

The extended enterprise and the virtual supply

chain

The nature of business enterprise is changing. Today’s business is increasingly

‘boundaryless’, meaning that internal functional barriers are being eroded in favour

of horizontal process management and externally the separation between vendors,

distributors, customers and the firm is gradually lessening. This is the idea of the

extended enterprise, which is transforming our thinking on how organisations com-

pete and how value chains might be reformulated.

Underpinning the concept of the extended enterprise is a common information

‘highway’. It is the use of shared information that enables cross-functional, hori-

zontal management to become a reality. Even more importantly it is information

shared between partners in the supply chain that makes possible the responsive

flow of product from one end of the pipeline to another. What has now come to

be termed the virtual enterprise or supply chain is in effect a series of relationships

between partners that is based upon the value-added exchange of information.

Figure 7.2 illustrates the concept.

The notion that partnership arrangements and a mentality of co-operation are

more effective than the traditional arm’s-length and often adversarial basis of

relationships is now gaining ground. Thus the supply chain is becoming a con-

federation of organisations that agree common goals and who bring specific

LOGISTIC S & SUPPLY CHAIN MANAGEMENT

142



Planning and scheduling: Material positioning/visibility, advanced planning,

scheduling, forecasting, capacity management.



Design: Mechanical design, electrical design, design for supply chain, compo-

nent selection.



New product introduction: Bill of materials management, prototyping, design

validation, testing, production validation, transfer to volume.



Product content management: Change generation, change impact assess-

ment, product change release, change cut-in/phase-out.



Order management: Order capture/configuration, available to promise, order

tracking, exception management.



Sourcing and procurement: Approved vendor management, strategic sourcing,

supplier selection, component selection.

Source: Cookson, C. ‘Linking supply chains to support collaborative

manufacturing’, Ascet, Vol. 3, 2001, www.ascet.com

THE SYNCHrONOUS SUPPLY CHAIN

143

CustomerOEMTier 1Tier 2

(a)

OEM

Customer

Customer

Tier 1

Tier 2

Tier 1

Tier 2

(b)

Key:

OEM = Original equipment manufacturer

Tier 1 and 2 = Supplier echelons

Figure 7.1 Achieving synchronisation through shared information: (a) before

synchronisation; (b) after sychronisation

Sources

Suppliers

Converters

Distributors

Retailers

Consumer

Product and service flow

Information flow

Funds flow

Figure 7.2 The extended enterprise and the virtual supply chain

Source: A.T. Kearney