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The Chain Gang

The Chain Gang

Deregulation. Globalisation. Electronic commerce. Information overload. These forces are churning up the waters of many industries - in fact, no one's left untouched. Banks are selling insurance; insurers are edging into banking. Travellers can skip past agents and find cheap flights on the Web. In chaotic times, some flourish while others flounder. It's increasingly clear that to survive in the new economy companies need to forge ever-stronger bonds with business partners; use IT as a linchpin; and create a chain that drives out costs and generates value.

Look around you, and clearly the business' focus is shifting inexorably outside corporate walls. Business process re-engineering, total quality management, one-stop enterprise software solutions and other trends have all essentially addressed the inner workings of the business. The next opportunity for advantage lies in the connection of each company's internal systems to those of its suppliers, partners and customers.

Today, supply chain experts are experiencing a surge in demand equal to what enterprise resource planning vendors, programmers and consultants have enjoyed over the past few years. Several forces are driving this rise to prominence. One is the rapidly growing capability of information systems to manage inventory that you can't see and don't own. Technologies such as the Internet, Web-enabled ERP software, transportation and warehouse management software, and many others provide opportunities to drive cost out of the delivery of products. Just as important are the softer management arts of partnering with suppliers and customers, re-engineering old stovepipe functions like procurement and accounting, and developing cross-functional, even cross-corporate, teams.

In this high-stakes game, some people had viewed the Internet as the wild card that would undermine the existing value chains of many companies - with "old economy" companies as the most likely targets. The thinking was that the investments in "bricks and mortar" that served as fortification against potential competitors in the 80s and early 90s would become dead weight in the new era of universal connectivity. Many pundits thought the Internet was going to catch these giants snoozing.

Not necessarily. April's "tech wreck" and the escalating dotcom body count illustrate that those "old economy" companies, which were a short time ago being relegated to the rubbish heap, are, in fact, the organisations most likely to reap benefits from the Internet. After all, you should never underestimate how much momentum a company can get when it has a few billion dollars of yearly revenues pointed in the right direction.

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