The News Ė 02/08/01
Buzz Word Alert: PTX
Well, somebodyís put a new
name to a concept Iíve been talking about for a while: Private Exchanges
are now PTXs. This coinage is apparently courtesy of AMR Research, which
is betting, as is AMR Research, that the majority of SAP's enterprise-class
customers will be putting tremendous amounts of energy and investment into
PTXs [private trading exchanges] as a way to cement decades of building
customer and supplier relationships."
A private exchange is a company
extranet on steroids. A company invites vendors and customers into a secure
area to transact business. In this marketplace, a company may hold reverse
auctions, post Requests For Proposals (RFPs), provide design
specifications, and in general collaborate with its business partners. A
PTX is somewhat misnamed, since the concept of an exchange is generally
thought to indicate a many-to-many model, whereas a PTX is a one-to-many
model. But I doubt that companies care. They want the control, and even more
importantly, the privacy, of a secure marketplace.
Read more about PTXs
(before the buzz) in my
presentation at a recent
Delphi Group conference. Iíve also got a supply chain white paper now in
pre-production that Iíll link to when itís available.
Gorillas to Rule; No Room for the Little Guy?
At a recent Patricia
Seybold Group/SPS Commerce discussion, Dr. Larry Smeltzer, professor of
supply chain management at Arizona State University, argued that large
firms which boast of electronically connecting their supply chains had done
so by overlooking SMEs. An SME is a Small- to Medium-sized Enterprise, and
such firms make up the majority, by number, of the companies in the US.
Smeltzer enumerated five
immutable laws of universal supply chain connectivity:
Enduring supply chain
rules based on e-commerce between large companies are already in place in
the form of Electronic Data Interchange (EDI). But these relationships do
not embrace SMEs.
Large firms are
fundamentally different than SMEs (no IT staff, fewer resources of all
kinds), and the daily struggle of keeping an SME afloat receives more focus
than implementing supply-chain connectivity.
Inertia and the status
quo are obstacles to connectivity
Targeted technology, a
proven process, and dedicated resources are required to connect and support
thousands of supply chain members
technological advances would help optimize supply chain connectivity.
Where all this is heading
is a new paradigm of business relationships. Rather than a linear
relationship between a business and its supply chain members, businesses
will eventually find themselves involved in a sea of value partners, with
much lower vendor switching costs. Companies will have to find new ways to
create value in this new networked environment. Supply chain efficiency
will be accessible to all, not just the few who have emphasized operational
excellence. This new value universe is described by Rafael Ramirez and
Richard A. Normann in their 1993 book, From Value Chain to Value
Constellation: Designing Interactive Strategy:
companies do not just add value, they reinvent it...[they] are more than
links on a value chain. They are the centers of constellations of services,
goods, and design.
So where will the SMEs be
in this new constellation? Well, unless the bigger players give them a
hand, many could find themselves out in the cold, unless they quickly
undertake the effort and expense of getting connected. As John Chambers,
president of Cisco Systems said, "The big won't beat the small - the
fast will beat the slow."
And as I always say, ďBe
wired or retired.Ē
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