Q: What's the major change that's occurring today with supply chains?

Slowly but surely we're seeing many different information technologies come together, making it possible to integrate from the consumer back to the manufacturer of the product and even to the raw materials supplier or grower. The key technologies here include automatic data capture, planning and execution software, wireless, and the Internet, of course. I fully expect that 5 years from now we will see certain supply chains integrated from the point of consumption back to the point of origin.

Q: Now that's really backwards of the way most people would have expressed it. Typically, people would expect the supply chain to be integrated from the suppliers to the consumers.

I know. But companies need to build the supply chain from the bottom up not the top down as they have done in the past. It's primarily a reflection of the shift in the balance of power of what gets bought and by whom. Suppliers have to extend their capabilities to supply what their customers want and when.

Q: Just how are suppliers going to make this happen?

Take the example of a grocery chain in the Northeast known as Stop & Shop. In a pilot program, consumers download their grocery list to the chain's computer. They not only identify what they want to buy but the location where they will buy it. When the consumer gets to the store, he or she will pick up a wireless terminal that will guide them to the shelf location for each of the products on the downloaded list. Essentially, the system treats the grocery store as if it's a warehouse and customers are orderpickers, which is exactly what all of us have always been. But now there's help at the store. The data of what was actually bought will then go through the Stop & Shop system, eventually aggregating into orders to suppliers for replenishment of stock. The end result is the convergence of the information infrastructure with the physical infrastructure in the grocery supply chain.

Q: What industries are taking the lead on this right now?

Similar efforts are underway in automotive where Tier I, II, and III suppliers tap into assembly plant schedules based on customer orders to find out what they need to supply and when. Trading exchanges will also help suppliers acquire the raw materials, parts, and components needed to build the assemblies for the automakers. In the electronics industry, Dell and Cisco are at the forefront when it comes to requiring suppliers to maximize collaboration at all stages of the supply chain.

Q: What's the major change required at companies to advance these and other efforts?

Companies have to start using information technologies to extend beyond the four walls. They have to be integrated with and able to accommodate decisions made elsewhere in the supply chain. Otherwise, they won't be part of the supply network of the future.

For more information, Rich Sherman's e-mail address is guruofscm@aol.com.