Forrester: Noah’s Ark partnering doesn’t solve supply chain problems

TORONTO — Collaboration based on eXtended Relationship Management affords more productive and profitable e-business than CRM or ERP, according to James Sharp, an analyst with Cambridge, Mass.-based Forrester Research Inc.

Speaking in Toronto as part of Forrester’s Canadian eBusiness Leadership Forum Thursday, Sharp said established collaboration approaches limit businesses’ ability to take advantage of the Internet by fostering an inside-out view of e-commerce, where a business can only monitor their own efficiency.

He said “Noah’s Ark partnering,” where companies team up in pairs, means only problems within one step on the supply chain can be addressed. eMarkteplace platforms often result in the squeezing of suppliers, Sharp added.

Sharp said the answer to these problems is XRM — a term Forrester coined — as it allows for collaborative management of supply and demand between multiple interdependent firms.

“Are you content to collaborate with internal business units?” Sharp asked. “(Or) are you prepared to collaborate with partners? Your partner’s partners?”

XRM applications from companies like Atlas Commerce and diCarta began appearing about a year ago. They are complimentary to CRM and ERP applications, as they put that data beyond the four walls businesses and into the hands of different partners participating in a network. A large company like Dell might maintain a collaborative network of its suppliers. Alternatively, the suppliers might run the network in order to ensure their competitive spirit is not exploited.

To illustrate the potential of XRM, Sharp related a supply-chain problem that faced DaimlerChrysler, wherein the automobile manufacturer was unable to fill Mercedes orders because of delays in shipments of leather needed for the vehicles’ interior doors. The bottleneck was eventually traced back to a South African cow farmer.

“Are you going to stand idly by and let that farmer in South Africa disrupt your supply chain?” Sharp asked rhetorically.

With XRM applications, Sharp said, DaimlerChrysler would ideally be able to monitor, manage and optimize inventory of its partners and its partners’ partners. The most common XRM apps allow for monitoring and notification of supply chain changes. Managed apps let business to syndicate information across a network of partners. Optimized apps enable adaptive planning and automatic allocation of resources.

Most applications currently reside in the monitoring realm, though Forrester claims a recent partnership by SAP and BiosGroup to develop adaptive intelligent agents for supply networks is a step towards making the advanced managed and optimized apps more common.

“The supply chain should be so visible and transparent that the next time GM sells a car, the cow in the field should wince,” Sharp said.

However, that kind of transparency raises concerns about privacy and security. Sharp said XRM collaboration is worth the risk.

“There’s a lot of skepticism today about putting data outside the firewall,” he said. “But I think those fears will be subsumed by the benefits of collaboration.”

Sharp outlined three imperatives for maximizing XRM-style “dynamic collaboration.” Businesses, he said, should seek mutual gain when setting up a network of allies. They should also create bridges between traditional business boundaries. “Don’t just automate a single business function — create linkages between those functions,” he said.

Finally, Sharp said businesses should tailor collaboration to context. “Think of dynamic collaboration as a dial you can turn up or down depending on the business problem and partner you are working with.”

Sharp said the industries that will gravitate fastest to XRM will be those characterized by high velocity and complexity, such as high-tech and consumer packaged goods. He predicated agriculture and heavy industry will be the latest adopters.

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Jim Love, Chief Content Officer, IT World Canada

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