Global 2000 organizations must prepare more aggressively for commerce chain competition by assigning chain ownership and expanding e-business planning and architectural effort scope to include key business partners.

The optimal competitive unit in the e-economy will be the commerce chain (integrated supply and service), not the individual organization. Com-merce chains are manifested through multiple organizations collaborating to deliver customized and targeted complementary goods and services bundles via integrated online and offline channels (e.g., click and mortar). Although in some cases single organizations (i.e., Citigroup, General Electric, AOL/Time Warner) could possess all components in a single commerce chain, in most situations commerce chains will consist of multiple, separate organizations (i.e., 21st century keiretsus, cabals, zaibatsus).

Commerce chains can represent single industry processes ­ for example, mortgages in the banking industry, new product information in pharmaceuticals or entire industries themselves (Dell and Compaq as competing chains in the computer hardware industry). Although the commerce chain is the key competitive unit, many individual organizations that represent chain components (e.g., links) will participate in multiple chains (i.e., Intel feeding both Dell and Compaq's chains). A firm's success, however, is intimately tied to the chains that it participates in; and, conversely, the chain is only as strong as its weakest link. This extensive "co-opetition" between chains and individual links will create a dynamic, flexible and (usually) competitive marketplace. It will also prove difficult to manage from planning and organizational perspectives and will place great demands on an organization's technical architecture and infrastructure.

Organizations must begin to more proactively prepare for ­ and address opportunities related to ­ commerce chain development. These efforts must be part of e-business strategic initiatives, which themselves must become a component in the overall corporate planning vehicle as e-business and business strategies become one during the next two to three years. In addition to developing integrated planning processes, organizations must also evolve strategic planning from a periodic event to an ongoing, adaptive process. Organi-zations should deploy cross-functional teams that report to the e-business chief to both assess and define commerce chain options as well as begin to forge tighter links with other commerce chain participants and develop collaborative planning and management processes. While most organizations have experience with partnerships, joint ventures, etc., efficiently (i.e., rapidly, flexibly) identifying/assessing and simultaneously participating in multiple relationships (commerce chains) will become a prerequisite for competitiveness during 2003-2005.

There are some specific and practical first steps organizations must take to prepare for increased commerce chain competition. The first is to assign ownership for commerce chain planning. Al-though executives and business development staff have long worked to develop and grow partnerships, organizations must elevate, formalize and extend these efforts. More importantly, organizations must integrate the efforts with e-business initiatives. As business and e-business become synonymous, organizations cannot support separate groups managing e-business strategy and strategic partnerships/alliances. This is not to imply that executives no longer lead efforts, but that just as with mergers and acquisitions, management needs better support and more IT group input. The e-business (or EC) chief, the EC steering committee and, in the long term, a dedicated commerce chain group should own commerce chain planning and development, working in conjunction with existing business development groups and with executive management's high-level direction.

There are specific tasks to be included on the commerce chain management's group agenda (e.g., map/define components, define optimal channel mix and government/ownership process, identify component owners, design collaborative environments). Organizations would initially take a first cut at these efforts independently. However, deployment clearly involves coordination with other commerce chain participants. The nature of this coordination will vary depending on the industry and its representative players' strengths and weaknesses as well as its current e-business maturity (i.e., Have multiple dot- coms already disrupted the industry?). It will also depend on the developmental state and strength of the commerce chain's trusted intermediaries (TIs). Commerce chain participants must clearly define their roles relative to the TI and recognize that the TI often will attempt to chart an aggressive path to dominate the commerce chain. It is advised that organizations devote skilled resources to this negotiation process and approach it with an aggressive agenda (e.g., defining its role) or risk being subjugated to more nimble and proactive chain participants or TIs. Commerce chain partners should also focus on process optimization (Remember business process reengineering?) in conjunction with deployment efforts.

Yet the biggest challenge for individual organizations will be redefining their role in the industry and becoming more focused. Winning commerce chains cannot tolerate extensive redundancy among participants. Organizations will need to become "best of breed" in key areas (e.g., customer support, marketing/branding, R&D), develop specialized technical architectures and infrastructures to support these areas and then minimize activity in other processes that are better handled by other chain participants. Organizations must also determine whether to drive new commerce chain development, potentially playing the TI role, or participate in other established chains. This is not only a daunting process to work through, but also one that is rife with political baggage (legacy people and processes) and exacerbated by rapid industry changes brought about by e-business, deregulation and globalization. Although dot-com spinoffs will have appeal as a means to circumvent these problems, this approach is by no means a panacea. Long term, commerce chains will become cross-functional or horizontal across industries. Best practices in leading industries will migrate to other industries and their respective commerce chains. Organ-izations with representative skills will have the opportunity to offer services across multiple industries by participating in multiple chains. For existing G2000 organizations, however, this will often first imply identifying and growing commerce chain best practices.

Dedicated focus on commerce chain planning and strategy is critical to accelerate e-business efforts. Driven by the e-business chief, organizations must dedicate resources to assess, map and define commerce chain opportunities and then initiate steps to coordinate efforts across business partners/chain participants.

Register or login for access to this item and much more

All Information Management content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access