THE MUTUAL SEARCH IS FOR HIGHER LEVEL IMPROVEMENTS

The basic question to be answered, as a firm is poised to move with the help
of willing and trusted business allies into what can only be described as virgin
territory, is: Why should we make the trip? For most firms, reaching level 4
and gaining the results we have cited is progress enough, and further ventures
will seem impossible, too risky, or as involving too much alteration to the
existing business culture to pursue. Since an extremely high level of trust is the
necessary ante for participation, most firms will rule themselves out of the
game. The idea that a major retailer, for example, would be willing to work
closely with a few key suppliers to determine how they can find higher level
savings, share the benefits, and work closely to draw more revenues to both
parties is simply an alien concept in many business circles.
Here we see that the
various business applications reach the highest state in the maturity model.
Design, development, and product/service introduction reach the point where
the linked constituents in the value network come together and co-develop new
introductions. Combining the expertise across several capable business allies,
the focus is on joint design and development using a full business functional
view, which provides any party that can contribute useful information to the
effort a format from which to do so. Boeing typified this type of effort when
that firm decided it could cut the normal production time on its new 7E7 aircraft
from over a year to four months, by allowing key suppliers to take responsibility
for major components of the plane. These suppliers not only provide key subassemblies,
but were very active in the design of the aircraft and its development
process.
Purchasing, procurement, and sourcing reach the point where network sourcing
is done through the best constituent, which means that raw materials and
services are secured from the best possible source (regardless of global location)
through the member of the network most able to secure the best arrangement.
Often, members use each other to manage specific categories of the buy, so the
task is spread across more participants, and the best arrangements bubble to the
top of the effort. In this advanced level, the normal emphasis on price negotiation
is set aside so that the most strategic suppliers can contribute to the
sourcing methodology in a way that benefits both buyer and seller.
As two writers describe the condition, �Supply chain managers need a
sourcing methodology that will not only satisfy the near-term cost concerns but
also position the organization for long-term operational success and profitability.�
Their idea is �to extend operational efficiency while not losing sight of the
core competencies that sustain profitable growth.� We contend that such a
situation is achieved when collaboration between buyers and their best sources
establishes a plan that has mutual advantage. Such an approach can be termed
�predictive sourcing,� under conditions where �the company�s sourcing strategy
is linked with its overall business strategy� (Bernhard and Vittori, 2004, p. 58).
We would add that the linkage should be across network strategies, requiring
the network participants to share information on the best sourcing strategy,
resulting in a joint business plan with industry-best objectives as the end result.
Kyocera Wireless, the Japanese manufacturer of telecommunications products,
offers a good example at its San Diego operations facility. This firm
decided to source manufacturing in the United States based on an assessment
�of where the company adds value for its customers.� For Kyocera, predictive
sourcing meant �looking at manufacturing, logistics, and demand planning needs
collectively � instead of basing sourcing decisions only on manufacturing
costs� (Bernhard and Vittori, 2004, p. 61).
Marketing, sales, and customer service also reach a higher plateau, where
an electronic consumer response system is in effect across the full value chain.
Now the targeted best consumer groups are contacted directly and provided
customized services through a variety of channels: store, catalogue, telephone,
Internet, or personalized delivery. The movement results in what is being called
the �demand-driven supply network� (DDSN). According to AMR Research,
such a condition results in a �system of coordinated technologies and processes
that senses and reacts to real-time demand signals across a network of custom