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

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

Integration isn’t any single product, but rather a philosophy, or architecture, that envelopes people, processes and technology. It’s as much a way of thinking—an approach to business and IT projects—as the middleware products that let users build service-oriented architectures (SOAs), enterprise service buses (ESBs) and the modernization suites that extend and expose existing business functionality through rich Internet applications and other user-targeted experiences and mediums.

Industry analysts often talk about the benefits of integrating IT systems: the nirvana of so-called end-to-end business processes. Such integration enables CIOs and IT directors to drive through business-process-optimization projects and give business managers the capability to look at customers, suppliers and all manner of business metrics from one comprehensive dashboard.

BPI by the Numbers

According to a 2008 study, the worldwide application, infrastructure and middleware software market revenue grew to $14.1 billion (£7 billion) in 2007—an increase of 12.9 percent on the previous year. The study also found that growth has been driven by strong demand for products that support process-centric applications and SOA.

According to other analyst surveys, the perceived technical and business benefits to business and systems integration are changing. For example, in 2006, improving competitive edge was the biggest business benefit of integration (67 percent). By 2008, improving consistency of service (72 percent) was regarded as the main benefit, according to a study (http://tinyurl.com/y8ph7kn). Larger companies are more likely to name a reduction in transaction costs (71 percent) and helping the organization meet regulatory compliance (61 percent) as a benefit of integration. Views on the technical benefits of integration have also changed. In 2006, 67 percent of IT decision-makers considered the consolidation of systems as the main technical benefit. Two years later, the capability to rapidly adapt IT to changes in the business was seen as the top technical benefit (70 percent), followed by consolidation (62 percent).

In the past, the supply chain relied heavily on people and manual, paper-based linear interactions, which often resulted in miscommunication between the stakeholder’s front- and back-end processes. The supply chain has re-engineered itself over the past two decades and IT has been instrumental in this transformation. Today’s supply chain is a sophisticated, collaborative global marketplace linking manufacturers, warehouses, wholesalers, exchanges, retailers and consumers.

IT has brought a host of benefits to supply-chain management: communications, the capability to overcome language barriers and time-zone differences, Just In Time techniques, production and distribution planning, logistics, and business intelligence. The biggest benefit technology has given the supply chain is collaboration. These collaborations are designed to mutually benefit all parties within the chain. For example, a consumer-goods supplier can link up via the Internet to one of its distributors whenever supply volumes become low and automatically place an order. This means the distributor never has to worry about running out of a product and disappointing customers—and the supplier doesn’t have to worry about maintaining a large inventory in expectation of demand. Similar systems have also been constructed to send out multiple requests to vendors when an order is placed. Collaborating this way makes for better use of existing resources and paves the way for a larger profit margin on all sides of the equation.

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



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