Extended enterprise

From CEOpedia | Management online

Concept of extended enterprise is the most advanced form of added value chain concept. Treating supply chain as "extended enterprise" is associated with a specific approach to enterprise collaboration, which involves the elimination of many existing barriers between entities. The primary goals are to enable the management and coordination of movements of products ranging from raw materials to finished goods purchased by consumers and other users.

Implementation of the presented concept is associated with a change in the approach to business management. The functioning of the market can not be seen only as lonely struggle with competitors and the desire to win benefits with suppliers or customers. It is necessary to understand that everyone involved in the production and distribution of the product should work closely in providing the highest possible benefits to end-users and customers.

Application of extended enterprise

The concept of extended enterprise refers to the idea of treating the supply chain as an extension of the main business, rather than as separate entities. This approach involves collaborating and coordinating closely with suppliers, partners, and other stakeholders in order to improve efficiency, reduce costs, and enhance the overall performance of the supply chain.

An extended enterprise approach can be applied to various business models, such as manufacturing, retail, and logistics. It can also be used in a variety of industries, including automotive, aerospace, and healthcare.

One of the main benefits of the extended enterprise concept is the ability to share information and resources across the supply chain, which can lead to better decision-making and problem-solving. Additionally, it can lead to increased innovation, improved customer service, and greater flexibility in responding to market changes.

To implement extended enterprise, companies must have a strong IT infrastructure, which includes a robust enterprise resource planning (ERP) system, a customer relationship management (CRM) system, and other tools that enable the sharing of data and communication across the supply chain. Some of the common ways of implementing the concept are by using digital tools such as cloud computing, shared platforms, and analytics.

It's important to note that, implementing extended enterprise approach also requires a change in culture, mindset, and processes of the organizations. The process of implementing the concept can be difficult and time-consuming, but it can bring significant benefits to the organization in the long run.

Examples of Extended enterprise

  • Business to Business (B2B): Business to Business (B2B) extended enterprise relationships involve a company working with other firms to create a supply chain with the aim of providing better quality products and services to customers. For example, a manufacturer may partner with a logistics company to improve its delivery times and reduce its costs.
  • Business to Consumer (B2C): Business to Consumer (B2C) extended enterprise relationships involve a company working with consumers to provide better customer service and create loyalty. For example, a retailer may partner with a customer service provider to provide 24/7 customer service and also provide a loyalty program to reward customers for their purchases.
  • Third Party Logistics (3PL): Third Party Logistics (3PL) extended enterprise relationships involve a company working with a third-party logistics provider to manage and coordinate the movement of products from raw materials to finished goods. For example, a manufacturer may partner with a 3PL provider to manage its supply chain and ensure timely delivery of products to customers.
  • Business to Government (B2G): Business to Government (B2G) extended enterprise relationships involve a company working with the government to provide better services and access to resources. For example, a company may partner with the government to receive preferential tax treatment or access to resources such as funding or technology.

Advantages of Extended enterprise

An extended enterprise is a network of companies and organizations that work together to create value for customers and stakeholders. The advantages of extended enterprise include:

  • Lower Costs: By leveraging the resources of a larger network, extended enterprises can reduce costs and improve efficiency. For example, companies can share resources such as personnel and technology, giving them access to a larger pool of expertise at a lower cost.
  • Improved Customer Service: By having a larger network of organizations, extended enterprises can provide more comprehensive customer service. This includes faster response times, improved product availability, and more personalized services.
  • Enhanced Collaboration: Extended enterprises create a platform for organizations to collaborate more efficiently and effectively. This can help streamline processes and foster a more productive working environment.
  • Increased Innovation: By creating a more connected supply chain, extended enterprises can bring new ideas and products to the market more quickly. They can also better identify and address customer needs, leading to higher levels of innovation.

Limitations of Extended enterprise

  • The extended enterprise concept is not easy to implement as it requires companies to establish strong partnerships and trust with other companies.
  • The concept involves a great deal of coordination and communication between the different organizations, which can be difficult and time consuming.
  • There may be issues of data security and integrity which can be difficult to manage across multiple organizations.
  • It may be difficult to enforce compliance with the rules and regulations of different organizations.
  • It may be difficult to track and measure the performance of the extended enterprise.
  • It can be difficult to integrate the different systems and technologies used by different organizations.

Other approaches related to Extended enterprise

The main approaches related to extended enterprise are:

  • Business Process Reengineering (BPR): BPR is a strategy that focuses on the analysis and design of workflows and processes within an organization. It is used to help companies become more efficient and competitive by improving their processes and systems.
  • Collaborative Planning, Forecasting and Replenishment (CPFR): CPFR is a process that allows companies to collaborate in order to plan, forecast and replenish inventory in a timely and cost-effective manner.
  • Supply Chain Management (SCM): SCM is a strategy used to optimize the flow of merchandise from one point in the supply chain to another. It involves managing the flow of materials, information and finances to optimize the delivery of products and services.
  • Real-Time Visibility and Event Management (RTEM): RTEM is a process that allows companies to gain real-time visibility into their supply chain. It enables companies to monitor and respond to events in the supply chain, such as product availability and pricing.

In summary, the main approaches related to extended enterprise are Business Process Reengineering, Collaborative Planning, Forecasting and Replenishment, Supply Chain Management and Real-Time Visibility and Event Management. These approaches enable companies to collaborate more effectively and efficiently in order to optimize their supply chain processes.


Extended enterprise — recommended articles
Centralized purchasing — SCM system — Efficient Consumer Response — Principles of Supply Chain Management — Supply chain integration — Strategic information system — Supply chain collaboration — Service delivery architecture — Tactical outsourcing

References

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