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A study of extranets in a supply chain / by Randall T. Raikes

by Raikes, Randall T.

Electronic commerce

Extranets (Computer networks)

Business logistics

vii, 120 leaves : ill. ; 28 cm.

Advisor: David Tietyen.

Committee members: Gene Wright, Dr. Bruce Thompson.

Introduction -- A brief description of the supply chain -- The supply chain -- Recent changes -- Possible effects of e-Commerce and extranets in the supply chain -- Extranets -- The extranet -- Current uses of the extranet -- Extranets and the supply chain -- E-Commerce and extranets -- Future uses for an extranet -- Risks and disadvantages -- Organizational management and the extranet -- Organizational structure -- Redistribution of roles -- Partnerships -- Technology adversity -- Management changes -- Empowering the customer -- Security of an extranet -- Security issues -- Alternatives to using the Internet -- Risks -- Benefits and competitive advantages of using an extranet -- Realizing the benefits and competitive advantages -- Benefits -- Competitive advantages -- Costs, savings, earnings, and ROI of an extranet -- Cost -- savings -- Earings -- Calculating ROI -- A study of an extranet in the supply chain -- Structure of the study -- Analysis of the study -- Conclusion of the study -- Conclusion -- Recommendations.

The Internet has the potential to change the fundamental basis of business and create a new order of consumerism. The future will include those that embrace the technology and leave behind those that wait and see. Utilizing one such technology that has been born from Internet technology is the Extranet. The Extranet is a business-to-business Intranet that allows access from remote locations. The potential benefits and competitive advantages an Extranet brings to an organization depends on how it is used and its position within the organization's supply chain.

Companies can effectively manage their supply chains with the correct business knowledge and the correct tools. A new technological tool, like an Extranet, can become a major competitive advantage for any company. In fact, the use of Extranets in business today is becoming more popular as technology progresses, management adapts, and others realize its potential advantages. The classical chain of events - sourcing, buying, making, transporting, and selling - are becoming blurred with the introduction of the Internet. The suppliers, manufacturers, distributors, retailers, and services for supply chain management are changing by linking their source of information with their partner's information. This allows transactions to flow naturally instead of using old ways of trading information with the intention of always maintaing the upper hand.

Companies can have three different types of Extranets. One is solely a content type, which provides web content to partners and customers for their use. Another is a customer service type that is used to provide customers with information related to products and service while empowering the customer to access and check order statuses. And finally, an Extranet can be designed as a revenue-generating type. Companies that perform transactions on-line use a revenue-generating Extranet. The customers are linked to the provider through on-line ordering of products like books or payting for services such as news. From recent reports in the media, it appears that companies detached from consumers invest the majority of their efforts in content type Extranets. This is supported by the author in categorizing articles and reports of companies with Extranets. It was found that the manufacturers tend to have more content type Extranets. In contrast, the companies closer to the consumer, or end user, had a larger percentage of revenue-generating Extranets.

The Extranet has the same issues surrounding the Internet in regards to security. Since the Extranet typically depends on the Internet for outside communication with the internal Intranet, the possibility of security risks exists. There are ways to limit a company's exposure like using Virtual Private Networks, or VPNs, separating and segregating important files on separate servers, or just following the basic security measures every network should have as a minimum. The risk exists, as it does with all new technologies, but the rewards can be staggering according to many reports.

A company must weigh the investment, needs, and benefits of implementing an Extranet. Although, the investment can be small if an Intranet is already in place. The emphasis then should be on preparing the organization to share information for the good of its partners and ultimately its customers. The return on investment from an Extranet has been in some cases 200%, but the suggested expected return is typicaly above 50%. It does not matter where in the supply chain a company is, the benefits gained from an Extranet are ultimately spread among all areas. Suppliers to manufacturers can perform transactions on-line and manage each other's inventory while distributors can pinpoint exact shipping requirements without being notified by the manufacturer. Retailers can provide customers with 24-hour service and customize the information for their specific needs.

However, the type of Extranet a company uses affects the type of benefits it provides. In the author's study of reports, the content and customer service type Extranets provided internal savings, low-cost customer service, and improved lead times with products and services. These benefits related to the efficient use of an Extranet as a communication and transaction tool The revenue-generating type Extranets provided companies with new product ideas, additional sales, and more output with less working capital. Many of the benefits that come with the use of an Extranet are shared among all areas of the supply chain.

It was the same for competitive advantages companies gained from using an Extranet. The development of alliances, reducing barriers between partners and customers, and extending boundaries were all results from using Extranets in all the areas of the supply chain. An Extranet gives companies the advantage of real-time communication through a network of computers operating and making calculations faster than any human. But, it is not about speed. It is how businesses are using the tool to change the old ways of handling new problems.

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