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Strategic Advantage

Win the supply-chain war with a strong business-process integration plan

Win the supply-chain war with a strong business-process integration plan

Today’s global economy has a new corporate battleground. It’s no longer company vs. company, but rather supply chain (or extended enterprise) vs. supply chain. A supply chain impacts every organization; every company has one, along with a corporate business-process integration (BPI) strategy if they wish to maximize its effectiveness.

Statistics confirm that those companies that collaborate, automate and optimize best will be the most competitive and reap the greatest rewards of higher productivity, profitability, client satisfaction and retention. According to my research, the average total return in 2007 for those companies that embraced the BPI philosophy across their demand and supply-chain domains was 11.46 percent higher than for those that didn’t. During the economic challenges of 2008, these same companies still enjoyed between 5- and 7-percent greater annual returns. Other studies, notably from Bain & Company, demonstrate that companies employing sophisticated BPI and supply-chain methods enjoy 12-times greater profit than companies with no or unsophisticated BPI methods.

BPI (and with it, supply-chain optimization) lies at the heart of modern commerce.

Defining BPI

In a nutshell, BPI is the glue that connects disparate processes and systems. It enables companies to synchronize their internal operations with those of global trading partners, integrating their front and back offices with desktop productivity and third-party applications. Internally, for those departments using different technology tools with common data requirements and processes, BPI unites these systems—which ultimately improves efficiency and reduces staffing and system-maintenance costs.

Information has flowed between systems and networks for decades, albeit with ever-increasing costs. When information transfers successfully without human intervention, it’s indicative of software, or systems, integration. Systems integration attempts to reduce overhead costs and effort by ensuring the flow of information is automated, repeatable and timely—and confidence in the data’s accuracy is high.

Businesses are now challenged to make complete, transparent, real-time information accessible to entire organizations. Many enterprise applications aren’t interconnected, so various divisions within an organization operate inside information silos. This creates data and process duplication and inconsistency, which can result in ineffective and inaccurate decision making. For instance, a sales division may formulate budgets and annual forecasts using annual revenue figures based on number of sales, whereas the corresponding finance division may make similar decisions based on revenue recorded (which would include discounts, returns and collections). This is an example of a small internal disconnect with potentially significant consequences when an enterprise isn’t integrated.

Dermot O'Doherty is the director of strategy and solutions at LANSA.



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