Four Strategies for a Web-Based Supply Chain
More than one strategy is needed to create and manage your online supply chain.
Sun, October 01, 2000
CIO
—
"Whatcha gonna do now?"
For most of the Fortune 1000, the bully posing that classic challenge is the Internet. The Internet is not just about buying books through a website anymore; the Internet can handle your entire supply chain. Do nothing, stand pat, and you risk seeing your competitors lure away your customers with Internet-based supply chains that are faster and cheaper, and can offer customers more information about their orders than you could ever dream about giving them in a memo or over the phone. Accept the Internet challenge, revamp your business processes, share your company secrets with customers, suppliers and even competitors, and you risk throwing your business into turmoil.
It's not really a choice. Right now, as supply chain technologies and business models evolve and customer tolerance for failure is high, is the time to take risks.
Some clarity has emerged from the cloud of hype that is the B2B revolution. Some universal strategies have been discovered for constructing a virtual supply chain, a rough outline for the future of business. The clear message so far is that you won't be relying on a single online strategy. The Internet supply chain will be a variety of means of communicating and doing business with suppliers and customers. Below, we outline four primary options.
1. Online procurement—your introduction to a Web-based supply chain
You need a chair, and you need it now. But no one in your department knows where their chairs came from, and nobody is quite sure who's in charge of buying them. And, anyway, what's the big deal? You go to the nearest office furniture store, pick out the one with the leather cushions (you've earned it, right?) and expense it.
You've just committed the cardinal sin of procurement: the maverick spend. The maverick spend makes it difficult for procurement departments to track costs. It makes it impossible to budget accurately. It turns forecasting into guesswork and ultimately destroys careers. If you're running a business, it's a very bad thing.
Jeff Campbell, vice president and chief sourcing officer at the Burlington Northern Santa Fe (BNSF) railroad company in Forth Worth, Texas, knows all about the maverick spend and has stamped it out. Office chairs, computers, pens, pencils and the like have stopped being random purchases. Campbell knows what BNSF wants in a chair, whether it be for a lounge (no swivel or tilt) or behind a desk (don't expect leather unless you're really special). He knows from whom you should be buying it, regardless of which state—of the 23 BNSF serves—you work in. He knows what it will cost. He knows all this because the only place BNSF employees can purchase these things is on the Web.
