INTRODUCTION
The role of corporate portals as tools for managing organizational knowledge has been constantly changing throughout their short lifetime. An important recent advancement in the functionality of portals is their ability to connect companies together, joining internal and external knowledge sources to assist in the creation of valuable knowledge. Nowhere is this increased functionality and utility more evident than in the use of portals to manage the supply chain.
A common trend in supply chain management (SCM) is the formation of one central strategy for the entire production network, which involves going beyond an organization’s external boundary. This represents a shift from a commodity-based approach to SCM to a more collaborative and relationship-building strategy. As this “extended enterprise” comes into being, an extended IT infrastructure is needed. Systems, such as portals, that assist in spanning organizational boundaries and ensuring a timely information exchange can help support this strategy. Portal technology allows the IT infrastructure of one firm to span multiple organizations and be utilized by many (Dyer, 2000). The globalization of supply chains also presents an opportunity for the utilization of portal technology (Tan, Shaw, & Fulkerson, 2000). Geographically dispersed organizations have an increasingly greater need to share information, even though they experience issues with systems spanning different processes, cultures, and vast distances. A portal’s ability to utilize the Internet can assist in the networking of such distributed firms.
The fundamental resource required for these extended organizations is knowledge, whether it is knowledge of markets, supply conditions, manufacturing, and logistical strategies, or of a supply partner’s needs and capabilities. As knowledge is a resource characterized by “perfectly increasing returns” (Dyer, 2000, p. 61), knowledge can flow within a supply network and dramatically add value for all members. A small innovation at one end can often have a ripple effect through the supply chain, and result in a significant development at the other end. All forms of supplier networks require supporting technology to facilitate the creation and utilization of supply knowledge, and portal technology is often fulfilling this need.
BACKGROUND
Supply chain management can be defined as ” … a set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system-wide costs while satisfying service level requirements” (Mak & Ramaprasad, 2003, p. 175). This, in essence, states that SCM must create an infrastructure of knowledge and information that facilitates the integrated operations of supply chains. Knowledge supply chains emerge that are “… integrated sets of manufacturing and distribution competence, engineering and technology deployment competence, and marketing and customer service competence that work together to market, design, and deliver end products and services to markets” (Mak & Ramaprasad, 2003, p. 175).
Handfield and Nichols (2002) stress the importance of relationships in a supply chain, which they define as ” … the integration and management of supply chain organizations and activities through cooperative organizational relationships, effective business processes and high levels of information sharing to create high-performing value systems…” (Handfield & Nichols, 2002, p. 8). In this view, the supply chain should encompass the management of information and knowledge systems in order to be successful.
Simply, a supply chain consists of the following processes within the network: buying raw materials, making and designing products, inventory management, selling to customers, and delivery of products (Poirier & Bauer, 2001). Whether done by one stand-alone firm (known as a vertically integrated firm), or a network of firms (dispersed in their business functions), each of these processes contributes to the product design, manufacturing, selling, and delivery to the customer. Portals, through their unique enterprise-wide architecture, contribute to the information and knowledge-sharing needs of each process. The following sections will examine the potential contribution of portal technology.
THE DEVELOPMENT OF SUPPLY CHAIN
portal technology
Portal technology has emerged as an enabler of supply chain strategies, offering increased distributed access to partners through standard technology applications and processes. Initially, many larger organizations adopted electronic data interchange (EDI), an electronic messaging standard defining the data formats for the exchange of key business documents across private networks or the Internet. The Internet became important during the mid 1990s with the emergence of the World Wide Web and the adoption of HTML. Companies began to convert their EDI information exchange technologies to HTML, and later standardized XML formats in order to take advantage of greater selection of business applications, and the increased availability to all partners offered by the Internet. But for many organizations, the Web connection has become a strategic tool that strengthens the buyer-supplier relationship through establishing broad information connections that have a major impact on the overall supply strategy (Zank & Vokurka, 2003).
Initially, portals were used as an intrafirm system linking various functional areas of an organization together to share information. Usually linking various modules of an enterprise resource planning system (ERP), they allowed information to flow between the traditional silos of a business. Purchasing, engineering, manufacturing, logistics, and accounting could now receive and utilize data from all points along an internal supply chain (Handfield & Nichols, 2002).
Supply chain portals evolved to become the first interfirm portals to be commercialized and are now central to addressing the challenges of interfirm portals. Facilitating the flow of information and knowledge through every supply chain business process, supply chain portals extend the capability of members to share information and plan operations based on each other’s activities. As production supply chains become more integrated as a result of increased information flows, the initial stage in the production chain, the product design and development stage, is increasing its level of interfirm information and recently knowledge sharing. Both formal and informal sources of knowledge contribute to the successful design and development of new products and processes, and much of this information must come from sources external to the organization such as customers and supply chain partners (Paquette & Moffat, 2005).
COLLABORATION IN SUPPLY CHAINS
In a supply alliance or collaborative agreement between two companies, the goals may include a reduction in transaction costs, the maximization of profit or increased learning, and knowledge transfer (Kogut, 1988). This knowledge transfer allows for supplier knowledge, engineering, and manufacturer capabilities to be an input into the product design process, which impacts the performance of new product development (Hong, Doll, Nahm, & Li, 2004). Supply-chain knowledge transfer requires integrating the flow of information and knowledge between various members of the supply chain to allow for the optimal management of supply.
Two different models of SCM are currently practiced in most industries (Paquette & Moffat, 2005). In traditional commodity-based supply-chain management, as practiced by most North American firms, suppliers are kept at arm’s length in order to minimize commitments and dependence on specific suppliers and to maximize bargaining power. This commodities supply chain model is widely used with the goal of achieving cost savings under competitive pressures. In this model, supplier relationships are very limited to minimize switching costs. Networking technologies (such as portals) may be used to overcome the barriers of supply cost and complexity (Williams, Esper, & Ozment, 2002) and make decisions based upon efficiency benefits.
The commodity model operates in contrast to the “close collaboration” supply-chain model, which is based on the Japanese practice of creating strong partnerships through close collaboration with long-term supply partners. In the collaboration model, supply partners share more information and coordinate more tasks, use relation-specific assets to maintain lower costs, improve quality and increase speed, and rely on trust to govern the longer-term relationship (Dyer, Cho, & Chu, 1998). A key factor in the success of the collaboration approach is the close task integration between supply partners, which is enabled by the transfer of information and knowledge.
In this model, closely integrated and strategically developed supply networks with well-connected relationships at the core of the supply structure can be used to produce a strategic advantage (Williams et al., 2002). The same interfirm networking tools, including supply chain portals, are becoming the key enablers of supply-chain integration. Knowledge becomes a valuable asset and is shared through the use of these portal technologies, along with critical supply-chain information. Toyota, who has established portal-linked supplier knowledge networks that create shared goals, promote knowledge-sharing activities, and exchange best practices, is an excellent example. Not only is valuable knowledge created through the use of technology, but relationships within the supply chain are strengthened. The results have been output per worker increasing 14%, inventories reduced by 25%, and defect rates 50% lower than operations that supply Toyota’s rivals (Dyer & Hatch, 2004).
SUPPLY CHAIN COLLABORATION WITH PORTAL TECHNOLOGY
As previously discussed, a supply chain incorporates processes involving buying, making, inventory, selling, and delivery. Each of these processes canbenefit from an extended enterprise structure supported by portal technology. Through the increased information and knowledge sharing provided by portals, these functions can evolve into mature processes offering an organization a competitive advantage.
The buying function of a supply chain procures the necessary materials required for the product of the goods and services. In order to lower costs by leveraging combined purchasing volumes, a portal can link the network’s buyers into one central purchasing function, allowing for controlled costs and the ability to negotiate lower costs based on volumes from the entire network. Standardized items can be designated, allowing for further standardization throughout the network. Tracking information for purchases can be made available to the entire network, allowing for production and sales planning at the other end of the supply chain. Notification of supply shortages or delays can be shared with network participants, allowing them to plan their schedules accordingly. Ultimately, a purchasing partnership may emerge, which is “… an agreement between a buyer and a supplier that involves a commitment over an extended time period, and includes the sharing of information along with a sharing of the risks and rewards of the relationship” (F.-R. Lin, Huang, & Lin, 2002, p. 148).
The making of goods and services, which would include the product design and development functions, can gain a great deal of value from portal technology. In supply chains following the collaborative model, network partners face the challenge of connecting with their partners to exchange product requirements information (Lin, Hung, & Wu, 2002). Portal applications supporting production chain collaboration should allow for the acquisition, sharing, optimization, and utilization of these requirements between customers and partners to detect any discrepancies or gaps within the requirements. Concurrent engineering (Mclvor, Humphreys, & McCurry, 2003) supports collaborative product design processes through connecting multifunctional teams comprising of design and manufacturing employees and customers and suppliers. Portal technology linking supply chain applications can play a major role in supporting such concurrent engineering. Collaborative work applications implemented by all partners across the supply chain can be instrumental in the development of specifications, creation of interchangeable parts, part standardization or simplification, and part exclusion, all of which contribute towards cost reduction. Huang and Mak (1999) describe such a system consisting of “virtual consultants” in “virtual teams” organized within a “virtual office” equipped with “virtual design board,” available to all participants no matter where they are located, whether internal or external.
Cycle time is a key measurement for determining the efficiency of inventory processes. The goal is to reduce the time raw materials are delivered to customers in the form of finished products. Location of inventory can be a factor in reducing cycle time and ensuring prompt responses to a customer’s needs. As well, excess or safety inventory must be managed through demand forecasting and tracking. Information and knowledge sharing can easily locate needed inventory stocks that maybe have been “hidden” to other partners in the past, or highlight ways to reengineer processes in order to speed the movement of inventory through the supply process. Initiatives, such as a continuous replenishment program (CRP), vendor-managed inventory (VMI), or quick response program, all rely on the dissemination of shipping and manufacturing information to externally distributed parties (Tan et al., 2000). Recently, portals have begun to play a key role in facilitating this information and knowledge sharing and enabling such programs.
The selling and marketing processes of the organization’s goods and services are a large benefactor of portal technology. To ensure the products are targeted towards the correct markets, knowledge must flow across an organization’s external boundary from its customers. Knowledge on product uses, market information, and channel information is necessary for the development of new successful products and services (Paquette, 2005). Information contained within customer relationship management (CRM) applications can also be supplied through portal technology to all members of the supply chain, ensuring a focus on the customer and consistent information throughout. Many supply chains with a mature portal technology infrastructure can directly link customers into their systems, allowing for point-of-sale ordering that creates an instant response and a rich stream of information (Kahl & Berquist, 2000).
In processes involving product delivery, logistical issues such as shipping dates, route mapping, delivery costs, and the development of a physical supply network arise. Just-in-time delivery has become a goal for many companies who wish to not only minimize the costs of carrying inventory, but manufacture and deliver the product based on information received from a customer. This requires all partners within the chain to have access to the same customer and manufacturing information, and an efficient supply network capable of handling such timely requests. Portals support this information, as when a customer order is received, all aspects of the chain can prepare for manufacturing and delivering the item, reducing the time for delivery and increasing customer satisfaction. Companies evolve from make-and-sell strategies to sense-and-respond capabilities (Bradley & Nolan, 1998). Trends in orders can be identified through this information, and capacity plans, material allocation, and supplier notification can all be adjusted accordingly (Handfield & Nichols, 2002).
COLLABORATIVE CHALLENGES
A common challenge with the networking of a supply chain is the integration of many technologies and applications that must work together to share similar information and knowledge (Cohen & Roussel, 2005). This problem of systems complexity can be minimized through the use of portal technology that integrates multiple applications and platforms in order to eliminate “application islands.”
Specifically, the network of partners must come to an agreement on system interfaces and standards. Three kinds of system interfaces can create issues: (1) the agreement on or standardization of the interfaces of business processes that facilitate supply chain integration; (2) the agreement on or standardization of the interfaces of the systems and components that together constitute the product and services the supply chain delivers to the markets; and (3) the agreement on or standardization of the interfaces of the information systems that support the collaboration and integration of the supply chain’s operations. Portals have an advantage through their use of “portlets,” or small applications, that manage the interface with other applications and portals to allow for seamless information and knowledge sharing. All aspects of the portal’s system interface must be in agreement and well developed in order for the supply chain’s collaborative effort to be cost effective and efficient (Mak & Ramaprasad, 2003).
Access and security becomes a challenge when dealing with such a distributive network. As the access points of the system increase, so does the possibility of unauthorized or improper access to confidential information. Portals utilizing proper security measures, including firewalls, digital certificates and encryption, and virtual private networks (VPNs) for transmitting across public Internet networks, can minimize the risk of revealing proprietary and strategic information to competitors (Lee & Wolfe, 2003).
FUTURE TRENDS
As the role of information and knowledge becomes more important in the management of a supply chain, so will the role of portal technology. The demand for information to be timely, accurate, and detailed allows a portal to connect various members of a supply chain and deliver such information.
Previous research on the portal industry and its role in supply chains (Paquette & Moffat, 2005) has demonstrated that portal vendors will have to continually improve the functionality that both supports secure high-volume inter-firm interaction across large geographical distances, and also functionality that supports the exchange of tacit and experiential knowledge to enable learning. New portal functionality specifically for collaborative design development and real-time test during the creation of new products will enhance the ability of portals to improve the efficiency and effectiveness of a company’s new product development and delivery processes. Creating a shared environment that supports white-boarding, 3 -D drawing support, video conferencing, document coauthoring and sharing will be part of a portal’s role in supporting the collaborative supply chain.
CONCLUSION
As supply chains continue to move away from a commodity-based and more towards a collaborative model, their need for timely and accurate information throughout the supply network will increase. This demand allows for portal technology to be deployed in order to meet the interfirm information and knowledge-sharing needs. From the design and development of new products to their marketing and delivery, portals can supply the supply chain with the information required to meet the cost and time requirements of customers.
Portal technology can create a competitive advantage for a supply chain by enabling its information and knowledge-sharing capabilities to provide organizations with up-to-the-minute information regarding new products, customer demand, inventory status, and production schedules. As Internet technologies, and in particular portal applications, become more common amongst supply-chain members, their ability to create, identify, and utilize critical supply information will lead them to new levels of service, innovation, and success.
KEY TERMS
Collaborative Relationship: A form of supply-chain management relationships where supply partners share large quantities of information and coordinate many tasks, use relation-specific assets to maintain lower costs, improve quality and increase speed, and rely on trust to govern the longer-term relationship. A key factor in its success is the close task integration between supply partners that is enabled by the transfer of information and knowledge.
Commodity Relationship: A form of supply-chain management relationships where suppliers are kept at arm’s length in order to minimize commitments and dependence on specific suppliers and to maximize bargaining power. It is widely used with the goal of achieving cost savings under competitive pressures by keeping supplier relationships very limited to minimize switching costs.
Just-in-Time Inventory: The process where inventory is delivered to the factory by suppliers only when it’s needed for assembly. It facilitates the cost-effective production and delivery of only the necessary parts in the right quantity, at the right time and place, while using a minimum of facilities, equipment, materials, and human resources. Its purpose is to eliminate any function in the manufacturing system that causes overhead, slows productivity, or adds unnecessary expense.
Supply Chain: The integration and management of supply chain organizations and activities through cooperative organizational relationships, effective business processes and high levels of information sharing to create high-performing value systems.
Supply Chain Management: A set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time, in order to minimize system-wide costs while satisfying service level requirements.
Vertical Integration: A supply-chain strategy whereby one business entity controls or owns all stages of the production and distribution of goods or services. It is the extent to which a firm owns its upstream suppliers and its downstream buyers. Control upstream is referred to as backward integration (towards suppliers of raw material), while control of activities downstream (towards the eventual buyer) is referred to as forward integration.
Virtual Private Network (VPN): A data network that uses public telecommunications infrastructures, such as the Internet, but maintains privacy through the use of a tunneling protocol and security procedures. A VPN gives a company the same capabilities as a system of owned or leased lines to which that company has exclusive access.
