Winners and losers in a digitally ideal world

Despite all the hype about e-business, many remain unclear about the degree to which it can transform a business. What they do see are a lot of new acronyms – so this column will be an initial-free zone.

Understandably, there has been a focus on the technology and its ability to give firms access to crucial data from every corner of the enterprise.

But the technology is not the whole story. Imagine direct competitors who draw on the same raw materials and component suppliers and take their products to market in an arena defined by industry standards.

Assume that each has chosen the same best-of-breed technologies in a further attempt to level the playing field.

Now take a big mental leap, and imagine they are operating in an ideal world in which all players in the supply chain are digitally connected. In such a world, and with the same raw materials, suppliers and technology, where are the competitive advantages? Who are the winners and who are the losers?

Ultimately, the end-user market will decide. And the speed at which physical products move through the supply chain from raw material to their final destination will inevitably play a major role.

The capability to network internally and with external partners allows the entire supply chain to maintain momentum, minimise delays and wastage and monitor real-time business processes.

E-business also provides a wealth of management information and metrics. This has the potential to create information overload, and also brings a set of new questions about where the critical success factors really lie.

There are new choices about which products to keep, and how to measure the value added from concept through design, planning, purchasing, production, distribution and customer satisfaction.

Traditionally, the margin added at each stage of the process has been the deciding factor in streamlining the supply chain.

But in the digital world, time becomes a particularly precious commodity, and the best e-businesses will use it well.

Providing the data and detailed information is only part of the answer. The challenge is to understand what it all means to the key stages of the business, and focus investment on the areas that have most impact on the end result.

Intellectual capital – the ability to interpret the consequences of a series of linked processes and act accordingly – will increasingly be perceived as the distinguishing factor between direct competitors.

The logic that links the inputs, outputs and those in between is the basis for smart e-business.

The design and evolution of networks need to be based on identifying and connecting intellectual capital and ensuring that it flows to where it is needed.

Barry Yard is regional president of EDS UK