An investigation of the value of becoming an extended enterprise

Abstract

This research explores the value of a new form of enterprise, namely the extended enterprise in the new economy. To become an extended enterprise, an enterprise with a traditional Enterprise Resource Planning (ERP) system will need to upgrade or modify the existing system, and/or introduce Extended Enterprise Applications (EEA) into the system. This leads to the investigation on the potential benefits of using EEA. Interviews with EEA and ERP vendors and users are carried out to ascertain the concepts of an extended enterprise. The key results include the following: (1) manual operational tasks will be automatically managed by the EEA, and the system will even warn the enterprise if certain events did not occur or need to occur; (2) as supply chains become more integrated, and business processes are automated, the supply chain will require less day-to-day management; (3) the supply chain will be driven to manage exceptions, and the system will handle much of the ‘traditional operations’. This will mean more time to focus on improving the way the supply chain fits together, develop strategic alliances, reduce inventories, and improve productivity. The overall conclusion is that the use of EEA is expected to increase the supply-chain information velocity, greater product customization, and lower cost of doing business. However, some concerns have been identified in addition to those included in the questionnaire for the interviews, but the findings suggest that the avenue of becoming an extended enterprise is worth pursuing after considering the potential value obtained from using EEA.