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Transcript of The Enterprise Alphabet Soup z1980s - JIT, TQM, MRP II, CIM z1990s - Convergence of TQM, Re-...
The Enterprise Alphabet Soup
1980s - JIT, TQM, MRP II, CIM1990s - Convergence of TQM, Re-
Engineering, Benchmarking, Change Management and Strategic Planning.
NOW - Convergence of Total Customer Experience, Network-Centric Enterprise, Virtual and Agile Enterprise, Knowledge Based Enterprise and Service Based Enterprise.
Traditional Enterprise
Vertically Integrated Self-sufficient; converted raw materials
to finished goods. Tight coordination among processes. Examples are, early automobile and
computer firms.
Virtual Enterprises
Concentrate on core competencies. Focus on processes at which the enterprise can
excel or be world-class.Partner companies perform other processes. Examples
CISCO concentrates on new product development and sales.
Auto manufacturers focus on vehicle design and final assembly.
Virtual Integration
New organization model for the information age.
Harnesses the benefits of two different business models. Coordination of a vertically integrated
enterprise. Focus and specialization that drive
virtual enterprises.
Vertical Integration
Use of technology and information to blur the traditional boundaries and roles in the value chain - suppliers, manufacturer and end users.
New levels of efficiency and productivity.
Example - Dell’s direct business model.
Dell’s Direct Business Model
Bypass dealer channels.Directly to customer and build
product to order.Eliminated reseller’s markup.Eliminated risks and costs associated
with large finished goods inventory. Focus is on delivering solutions and
systems to customers.
Virtual Integration
Combines pieces of contemporary business strategy in a unique way Customer focus, supplier partnership,
mass customization, just-in-time manufacturing.
Stitching together a business with partners that are treated as if they are inside the company.
Virtual Integration
Partnerships vs. Outsourcing.Dell sets quality measures and builds
data-linkages with partners to monitor performance.
Partners become part of the company.As few partners as possible.Partners must maintain leadership in
technology and quality.
Virtual Integration
Information shared with business partners in a real time fashion.
Share daily production requirements with suppliers.
Share design databases and methodologies with suppliers.
Time to market is dramatically reduced.
Virtual Integration
Challenges in establishing supplier collaborations Changing focus from how much inventory
to how fast it is moving. Inventory velocity is a key performance
measure. Long-term contracts just-in-time delivery. Example, Sony monitors for Dell computers.
Virtual Integration
Substitute information for inventory. Ship only when there is real demand
from real customers. Traditional model (computer
industry) stack up units in warehouse and then in
channel. Stuff channel to get rid of old inventory.
Virtual Integration
Partnerships with customers Customer segmentation is an important
element of Dell’s virtual integration with customers.
Segmentation takes the company closer to the customer.Better understanding of customer’s needs.Ability to produce better forecasts.Reduced inventories.
Vertical Vs. Virtual Integration
Vertical integration allows a company to be efficient under stable conditions.
Virtual integration allows a company to be efficient and responsive to change at the same time.
Value Webs
Forces Reshaping Value Chains Peripheral changes in the roles of value
chain members Customer/Consumer preference for
personal customization These forces morph value chains to
value webs
Value Chains Vs. Value Webs
Value chains do not motivate their members to develop an integrated infrastructure.
Value webs promote a fully integrated infrastructure that links together all the members.
Value Web Management (VWM)
A model of infrastructure that is capable of supporting the value webs.
Produced by the marriage of business and technical infrastructure.
An extension of the old Supply Chain Management.
VWM
Allows value web members to exchange critical information/knowledge in real time and synchronize their efforts to respond and produce the desired results also in real time.
VWM and SCM
SCM promotes logistics as the key mechanism to link the individual members of the value chain.
VWM promotes one integrated business system.
Key Concepts
Information/Knowledge: Value Web collects, archives, retrieves, creates, shares, and otherwise leverages information that can be translated into knowledge and wisdom.
Real Time: The best enterprises must manage their business in real time because of the dynamic and fast paced environment in which they operate.
Guiding Principles of the Value Web
Disintermediation: the removal of any intermediary node in the value web; a synonym for value chain collapse.
Reintermediation: change in role of any intermediary to better serve the value web.
Infomediation: the addition of new information/knowledge-based intermediaries.
Guiding Principles of the Value Web
Role Transformation: changes in the roles of value web members, individually and as a whole.
Dematerialization: the conversion of materials and material-related assets to bits and bytes.
Guiding Principles of the Value Web
Digitization: capturing all pertinent information/knowledge for the value-web members to be used efficiently, effectively and interactively.
Resource Exploitation: leveraging certain pre-specified skills, capabilities, competencies, assets, structures, and infrastructures of others within the value web.
Reference Articles
Andrews, P. P. and J. Hahn (199), Transforming Supply Chains into Value Webs, Strategy & Leadership. pp. 7-11.
Magretta, J. (1998), The Power Of Virtual Integration: An Interview With Dell Computer's Michael Dell, Harvard Business Review. pp. 73-84.
Hammer, M. (2000), The Rise Of The Virtual Enterprise. Information Week. pp. 152.