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320 Chapter 11 • Supply Chain Management

Adopting e-Business approaches to supply chain integration promises more than just
incremental improvements in efficiency. Many companies are discovering whole new approaches
to conducting business, and even new business opportunities not previously possible. E-Business
allows partners to redefine logistics flows so that the roles and responsibilities of members may
change to improve overall supply chain efficiency. A supply chain network may jointly create
new products, pursue mass customization, and penetrate new markets and customer segments.
New rules of the supply chain game can emerge as a result of integration fueled by the Internet.

Integrating ERP and SCM Systems
ERP systems offer tremendous benefits by integrating functions across the organization. They help
in automating the business processes and enabling reliable information capture and retrieval. SCM
systems offer capabilities to integrate various entities that make up the supply chain and facilitate the
seamless flow of information between all the supply chain partners. Given the intraorganizational
and interorganizational advantages offered by ERP and SCM, respectively, integration of both
systems can help in deriving substantial leverage and the potential of such integration is quite huge.
Integration of ERP and SCM is a very tough task because each member in the supply chain
may have different hardware and software, and it is very difficult to insist that your company’s
supply chain partners maintain same systems. It would be ideal, however, if all the parties
involved could agree up front to abide by open standards. This would help ease integration. Here
are some of the approaches to integration. If the two companies want to integrate on the
infrastructure level, and they happen to have the ERP system installed, then the process would
be to have the ERP systems of the supply chain partners interlinked to each other directly to
enable a seamless flow of real-time information. This might be possible when the ERP systems
are sophisticated enough to include the necessary functionality to support SCM (interenterprise
integration). If all systems use the same operating platform (or the same vendor’s product), then
the integration of the systems would be easy. If they are different, however, the necessary
middleware software would have to be developed that could enable connectivity and integration
of the disparate systems so that there would be a consistent and seamless information flow. If the
integration of the supply chain is achieved by linking the ERP and SCM systems, then this
integration could be viewed as a way to capitalize on the strengths of the two systems (i.e., ERP
and SCM). For this purpose, sophisticated middleware interface software, which enables sharing
of data and processes, are used to help in building up the linkage between ERP and SCM
systems, specifically at the point where they have overlapping features. For example, i2 technol-
ogy uses SAP’s ALE TM (Application Link Enabling) to exchange data between SAP R3 and its
TM
SCM product, Rhythm . There are also some specialized software called specialized integration
software, which allow ERP and other systems to share processes and data. This software allows
integration by simply choosing the sending application (e.g., SAP, Baan) and a receiving appli-
cation (like Rhythm, Manugistics) and the process to be linked.

Enterprise Application Integration
Enterprise application integration (EAI) facilitates the flow of information and straps transactions
among disparate and complex applications and business processes within and among the organiza-
tions. With the move toward market globalization, there have been mergers and acquisitions at a
phenomenal pace. EAI has become an essential component for an organization to share data and
business logic with its business partners within the supply chain. As IT aims to provide companies
with a competitive edge, several factors can slow down its effectiveness. The move from the