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THE BUSINESS ENVIRONMENT HAS CHANGED

Gaining competitive advantage in the marketplace has never been easy, but with all the business and technol­ogy advancements of recent years, it has become far more complex and tends to have a much shorter life span once achieved. Business process reengineering (BPR) used to be a one-time event, but with continuously changing e-business trends and techniques, it is now seen as an ongoing process. Decisions that would have been con­sidered strategic a few years ago are now categorized as tactical, and those responsible for strategic planning must recognize this. Constant innovation in both technology and processes is becoming a necessity.

 

One major evolutionary change that has been greatly accelerated by the burgeoning e-business phenomenon is the shifting of strategic priorities from internal en­terprise considerations to external value chain issues. Merely "building a better mouse trap" is no longer enough to achieve success. Competitive advantage has
 

become more dependent on how a company goes to market rather than on just the products and services it takes to the market. The technologies and processes a company uses to interact with both customers and sup­pliers must be regularly reevaluated and reinvented to sustain ongoing success. One very important aspect of this evolution is the increase in business done with pre­viously unknown entities—both customers and suppli­ers. The Internet (especially marketplace portals, auction sites, etc.) has opened the enterprise doors to an extent that few imagined. From a strategic planning stand­point, mechanisms for dealing effectively with estab­lished trading partners must be augmented with capabilities providing the agility to transact business with a flood of new customers, suppliers, and service providers through e-business.

Another evolutionary change to be dealt with at both strategic and tactical levels is the emergence of e-channels for product distribution that will either replace or coexist with physical channels, depending on the mar­ket segment. Many physical channel intermediaries (such as wholesale distributors) will face serious chal­lenges as many brick-and-mortar facilities are sup­planted by e-marketplaces. The new breed of e-commerce market-makers has an impressive arsenal of tools with which to battle traditional retailers, distributors, bro­kers, and manufacturer's representatives. Margins will become tighter, prompting an increased emphasis on cost reduction. Delivery mechanisms will need to be more fluid as product movement velocity expectations increase. The cost of entering and exiting a market is shrinking —this greatly increases the importance of cre­ating innovative business models not easily replicated by competitors. Increased channel conflict also greatly affects compensation and turf issues for both internal sales forces and external intermediaries.

Information-intensive businesses (for example, finan­cial services, publishing, education, travel, and music) will face tougher reengineering challenges than other businesses due to the fact that the Internet provides a whole new delivery channel. Distributing products and providing services electronically, although more efficient and economical, lead to much retooling when it comes to authorization and other security issues.

In the new world of e-business, aligning the business strategy with the IT strategy has become far more criti­cal than in the past. Enterprises that jump prematurely into e-commerce activities without the proper IT infra­structure in place risk dismal failure. Selling product quickly over die Internet but then dealing with a slug­gish legacy fulfillment mechanism is a sure way to lose customers. Customers who are able to purchase goods in self-service electronic fashion but then must deal with previous-generation customer service, product return, and warranty facilities are likely to take their business elsewhere.

To Be Continued

For balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 12


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