Glean Supply Chain Tips From NYSE

All the secrets to maximizing supply chain management lie in a fairly well-known entity called the New York Stock Exchange. By closely examining the way this exchange works, you can be privy to all the tricks of the trade that will have your supply chain running on overdrive. Hint: Think information sharing.

Supply chain management in today's economy has as much to do with process as it does with procurement. Companies that expect to be successful in the future will have their arms firmly wrapped around collaborative and systematic sourcing as a core competency of doing business. The need for change in the way companies look at supply chain management is directly parallel to the evolving business world during the past three decades.

In the 1980s, business was focused on systems integration – automating functions with computer technology. The 1990s brought business integration – broadening the application of technology to processes and functions throughout an organization.

As the new economy evolves, we are entering the age of market integration. Therefore, successful companies will need to use Web technology to seamlessly integrate four key internal and external market constituencies: customers, suppliers, investors and employees.

If you apply this mind-set to supply chain management, you will see that it is not enough to set up supply chain processes for your products. Instead, it takes a holistic market integration approach, involving not only products but information and cash-flow supply chains as well. The following focuses on the information supply chain.

The key realization to be made is that technology is only part of the equation. New technological developments can help you link efficiently to other organizations, but failure to align Internet business processes is the crux of everything holding your business back from maximizing efficiency. Forward-looking organizations will examine how they can develop one seamless operation across multiple organizations by aligning all processes inside their four walls with the processes of their key partners.

All businesses should strive to achieve a fluid flow of information between their company and other stakeholders. For this to happen, your sales force must be aligned with the other company's supply chain and vice versa. Your communication processes should align.

Another requirement is talking in a consistent language about product part numbers, physical locations for delivery and demand so you can react to changes in real time. This is where the NYSE example comes into play. As earlier referenced, the NYSE applies these principles in case-study fashion. With extreme transparency of supply and demand, all participating parties know exactly where each stock stands and can act immediately as the market ebbs and flows. Additionally, each trade is measured in the same way and rated with a consistent vocabulary.

Without an alignment in organizational processes, the result is often inventory shortages or overflows. A lack of information and transparency in the supply chain process renders companies helpless to the inefficiencies of guesswork. It would be like having to wait for two weeks to see whether your trade was executed and at what price.

So, understanding the power that lies in aligning business processes and managing the information supply chain, you may think you are behind in the count, with many of your competitors well on their way to making this work. Don't bank on it. Although a vast majority of companies think that they are making strides in their supply chain management processes and that they are operating at a satisfactory level of efficiency, most are not seeing reality for what it is.

How many companies are taking full advantage of the opportunities to maximize efficiencies through supply chain management? Zero. That means there is still much work to be done in every company. This is probably one reason why some sources predict that the worldwide market for supply chain services is on track to clear $80 billion within five years.

In the near future, market-integrated supply chain management will become an everyday requirement for organizations that wish to remain competitive. Therefore, this is one investment that you must make if you do not want to watch your market crash around you.

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