Collaboration is reshaping the competitive landscape through real-time communication, integration and responsiveness to changing market conditions.
The personal computer was originally designed to allow people to collaborate with each other through a central mainframe computer. Internal networks replaced the mainframe and now the Internet is allowing people to collaborate between companies, across borders and along entire supply chains.
Networks enable collaboration to be used for a wide range of tasks. Sharing information during new product development improves designs, reduces costs and speeds time to market.
Perhaps the most powerful use of networks for collaboration is to speed response to changes in consumer demand. Retailers need to make sure that they have the right stock available for the consumer to buy, whenever and wherever they want.
However, their traditional reliance on historical information for sales forecasting has created a push supply-chain that results in excess inventory in some products and stock-outs in others. Cisco estimates that $224 billion of excess inventory sits in the global supply chain, with carrying costs of more than $56 billion. Stock-outs cost 1% of total sales, which translates to nearly $45 billion in lost sales.
It is imperative to be able to react instantly to demand signals, by making more stock available. This means passing on information about increases in consumer demand back up the supply chain, so that more finished products can be quickly manufactured and passed straight down to the retailers' shelves.
We are seeing a transformation from 'push-driven supply chains' to 'pull-driven demand chains'. Consumer demand changes are sensed early and real-time collaboration initiated up the entire chain, which could include hundreds of companies.
This information must be distributed according to business rules to get the right information to the right person at the right time, creating an intelligent environment in which each member of the chain has the flexibility and agility to respond immediately. This consumer-driven replenishment allows them to minimise inventory carrying cost and maximise stock availability for the consumer.
Internet protocol standards make it easier for companies to aggregate data from a wide variety of systems into a single, comprehensive view of the supply chain, providing a consistent view and experience for every participant. As a result, the original equipment manufacturers, contract manufacturers and suppliers can easily operate from the same details of capacity, inventory, production, sourcing, delivery, forecasting and planning.
Agility is particularly important when managing marketing promotions. Consumer response can be very hard to predict and disappointment with lack of available stock can be damaging. The key is to change business processes to enable them to handle the information effectively. Every company, person and system within the supply chain has to become part of a single business process architecture that aligns resources, metrics and intelligence monitoring to a single goal.
Radio Frequency Identification tags on inventory contain electronic information on computer chips that can be read wirelessly as they move down the demand chain. They can automatically show what is happening at the edge of a system, instead of waiting for someone to check. It helps to show where products are in the entire system.
However, collaboration is not just about knowing what is happening, but knowing what is going to happen and when it will happen. This involves reaching beyond the storefront to monitor pre-shopping information, such as Web site, call centre and in-store kiosk activity, as consumers seek information and compare prices. Retailers must be able to identify those signals and push them up the demand chain.
Not only does the network allow integration of systems and processes, but it also enables people to work together in an ad hoc manner. Customers and suppliers can access each others diaries and conduct Web, audio and video conferences. They can communicate with the quality of face-to-face communication, regardless of location, connection or endpoint.
This is because the intelligence of the network is needed not just to ensure secure and reliable communications, but to ensure that the recipient can act quickly once it is received. This means they must have immediate access to the applications they need to process it, to other data with which to combine and compare it and knowledge with which to exploit it. It is in this way that intelligent networks create business benefit. Although much of the power and excitement of collaboration is between organisations, there are still major benefits from using it internally. Sharing information increases efficiency by streamlining processes through better knowledge management.
Cisco research has shown that e-working gives users 90% time savings, enabling better productivity. Change of that magnitude can be a big challenge for organisations where people are having to spend their time on administration and other tasks that do not add any value.
British Airways is using a raft of e-working initiatives to create a whole new culture and become the most Web-enabled major airline in the world.
“In the new world, one has to provide people with the information they need to make decisions,” says Hetti Barkworth-Nanton, Head of e-working for British Airways. “That is how we will achieve true business empowerment.”
It isn't just commercial organisations that benefit from collaboration. The Austrian government created a single workflow and electronic filing system for 17 000 users across 12 ministries. “One major advantage for employees, citizens and organisations is traceability,” says Kurt Fleck, Project Leader. “Users can pinpoint exactly what stage any procedure has reached within the workflow in the ministry that is dealing with it at the time.”
Users see the network as fundamental to improved ways of working, by interconnecting between inter-ministerial applications. “It is the enabler of e-government in Austria,” says Harald Neumann, Chief Executive Officer of the Federal data centre. “Without it, no e-government transformation would be possible.”
From anywhere on the campus, medical staff at Son Llatzer hospital in the Spanish Balearic Islands can make accurate decisions quickly through access to hospital and patient information. Vast improvements in communications with patients have reduced the number of missed appointments by 10%, meaning that an additional 12 000 patients receive medical care each year.
Integration of external information with a host of marketing, planning, distribution and e-commerce systems gives organisations new competitive tools. New demand chains are reshaping the competitive landscape. Organisations everywhere are raising the bar for communication, integration and real-time responsiveness to customers and changing market conditions. Organisations of all types are realising they must work together more openly or die.
Best practice
* Share design information to simplify products, reduce manufacturing costs and speed time to market.
* Develop rules for sharing demand signals.
* Seek pre-shopping information.
* Change internal and external business processes to create a single supply chain business process architecture.
* Create face-to-face communication quality by using Web, audio and video conferencing.
* Integrate internal information to streamline processes and improve knowledge management.
Networkers at Cisco Live! will take place at the Sandton Convention Centre from 1 to 4 December 2008. The central theme of this year's event is 'The Power of Collaboration'. Visit http://www.networkersafrica.co.za for more information.
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