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Extended Enterprise

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Extended Enterprise The enterprise Large number of activities Boundaries customer needs Capabilities Positioning in the value chain Handoff Interaction between ... – PowerPoint PPT presentation

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Title: Extended Enterprise


1
Extended Enterprise
2
The enterprise
  • Large number of activities
  • Boundaries
  • customer needs
  • Capabilities
  • Positioning in the value chain

3
Slicing the value chain
4
Extended enterprise
  • Set of companies with shared interest
  • Industry fragmentation
  • Developing complementary capabilities with
    partners for customer solutions
  • Aligning business processes
  • Sharing knowledge
  • Setting rules for managing the enterprise
  • Collaboration or collusion

5
Traditional enterprise
Industry Fragmentation
Low
High
Process Alignment
Traditional Enterprise Architecture
6
Extended enterprise
Industry Fragmentation
Low
High
Process Alignment
Extended Enterprise Architecture
7
Ownership size
  • ROI
  • Agility
  • Creativity
  • Handoff inefficiency
  • Information transparency
  • Dynamic partnership

8
Handoff
  • Interaction between internal functions and
    external partners
  • internal assembly rate
  • customer orders (quantities)
  • component delivery (time)
  • Handoffs represent potential mismatches
  • waste
  • information deterioration in the chain
  • customer-service degradation
  • cost increase
  • Causes
  • communication breakdowns
  • breaks in authority
  • inventory and material buildups
  • process inefficiencies

9
Coordination
  • Transparency of operations
  • knowledge of levels and rates
  • inventory levels, unused capacity, forecasts
  • production rate, delivery efficiency, order
    execution
  • new product introduction
  • proactive partners
  • Alignment of processes
  • information format
  • common standards
  • linking databases and applications
  • partners at different levels of technology
  • Merge-in-transit
  • Dell computers
  • Compensatory actions if targets are not met

10
Funds flow
  • Multi-party transactions
  • Bullwhip like effects in funds flow
  • impact of downstream delays in cash transfers on
    upstream cash transactions
  • floats in payment terms
  • downstream impact of uncertainties in production
    due date slippage
  • value added downstream
  • Security uncertainty with electronic fund
    transfer
  • Accountability in the chain
  • sharing responsibility equitably

11
Product architecture
  • Integral
  • components are closely coupled
  • not easy to outsource component manufacturing to
    several suppliers
  • Modular
  • Customers mix and match receivers, speakers,
    compact-disks players, and other components for a
    home stereo system
  • components can be individually upgraded and they
    may not share functions

12
Partner network
  • Integral
  • close geographic, organizational, cultural, and
    electronic proximity
  • high degree of dependency among partners
  • not easy to substitute one supplier with another
  • processes of individual partners aligned with the
    total system
  • Modular/flexible
  • a large number of diverse partners
  • stand-alone business processes
  • suppliers can be substituted easily without
    adversely impacting the overall performance of
    the partnership

13
Capabilities in the EE
  • How should it align its capabilities with the
    capabilities of its partners
  • In-house production capabilities
  • outsourcing
  • How should it realign its capabilities with the
    needs of its customers
  • develop customer-specific capabilities dedicated
    to a few customers
  • develop general purpose (versatile) capabilities
    that can be used to supply a large number of
    customers

14
Cisco Model
CM
A
S
C
flow of material
flow of information
15
Cisco
16
Dimensions of capability
  • Knowledge
  • know-how
  • Capacity
  • time and money
  • Capability scenarios
  • possess knowledge and capacity
  • possess only knowledge
  • possess only capacity
  • possess neither knowledge nor capacity

17
Toyotas capabilities
Transmission
Electronics
Engine
Inadequate
Possesses
Possesses
Inadequate
Knowledge
Knowledge
Capacity
Capacity
18
Toyotas outsourcing strategy
  • Engine
  • RD in-house
  • Production in-house
  • Transmission
  • RD in-house
  • Production outsource
  • Electronics
  • RD outsource
  • Production outsource

19
Outsourcing vs. inhouse
Engine 7, 8 Transmission 4, 5, 6 Electronics
1, 2, 3
20
Knowledge/capacity interactions
21
Clock speed
  • Rate of industrial evolution
  • rate of new product introduction (product)
  • rate of capital equipment obsolescence (process)
  • rate of change in connectivity (partner network)
  • Varies by industry and in value chain
  • upstream manufacturers (slow) cable
    manufacturers
  • downstream customers (fast) music lovers
  • service providers (intermediate level) Intuit,
    E-trade, FedEx, UPS
  • slower rate of innovation upstream may act as a
    bottleneck downstream
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