Jabit

Today, I read an interesting article in the Irish Sunday Independent by Roisin Burke entitled ‘Adapting and surviving: Reports of the demise of Irish manufacturing have been exaggerated, but the nature of the sector is changing here as it is everywhere.’. Roisin correctly identifies a shift in the manufacturing sector and states that the “manufacturing is no longer a function in isolation and is becoming integrated with other areas such as customer and technical support, supply chain management and research and development to produce complete product lines…Companies will become extended enterprises, which are flexible and responsive to customer needs.“. So what are extended enterprises?

Extended enterprises have, according to the researchers Browne and Zhang (1999), have three main characterisitics:

1. Manufacturing organisations concentrate on their core business and technical activities and outsource all other non-core activities.
2. Manufacturing organisations establish long tern relationships with key customers and treats them as key business partners.
3. Methods, business processes and technology are available to support business activities that cross traditional enterprise boundaries. These methods particularly support supplier-customer integration through the interchange of commercial and technical information, seamlessly and effectively.

The extended enterprise is a collection of organisations working together, all concentrating on their own core competences, in the sale of a product. What brings them together is an increased focus on customer service and a knowledge that modern day customers demand more than just high quality customisable products but clear advantages from the intangible services and accessories that come with the product (such as customer support, finance, recycling, etc). For example, car dealers, car manufacturing, finance companies all coming together on the car lot, through the embodiement of the sales person, to offer you everything you need to purchase a car.

Why extended enterprises are of interest to me is because extended enterprises achieve competitive adavantage through the integration, using technology, of information and the efficient flow of products, goods and services between the organisations involved in the enterprierse and ultimately to the customer who purchases the “extended product” (the product is extended with such services as customer support, finance options, etc). It is the use of technology in such a way that is of real interest to me. Organisations can start to become extended only if they enable external access, to collaborating partners in the extended enterprise, to their key information systems. This allows everyone in the enterprise, i.e. other organisations, to use everyone elses systems so as to improve the sale of the product. Web services offer great potential in assisting organisations to become more integrated and mobile and wireless technologies (such as RFID) promise to improve the efficiency of information flow.

1. Browne, J. & Zhang, J. (1999) Extended and virtual enterprises - similarities and differences. International Journal of Agile Management Systems, 1, 30-36.

Addition 8/1/07:
Irving Wladawsky-Berger has just posted an interesting blog on this subject