How are outsourcing and supply chain tasks such as purchasing and inventory management tied to "network-centric operations?" What is a network-centric operation? Read this article to find out.
Organizations, finding it necessary for competitive advantage to reduce costs, improve the quality of information of direct and indirect spend, and improve efficiencies and effectiveness, are increasingly seeking business process outsourcing (BPO) and other procurement and inventory strategies. This search settles atop the management team's already full workload of maximizing the company's enterprise resource planning (ERP) system and/or upgrading and improving it; managing existing agreements and operations; and concerns regarding the capital- resource- and training-intensive nature of enterprise and asset management systems.
With all these variables and considerations, how does a company attain superiority in information, decision making and cost savings? The good news is that most organizations have already been reaching toward those goals for years. The bad news is that most of the initiatives they have directed toward those goals are short-term cost saving measures that stand alone and are rarely integrated into long-range plans.
Although each incremental step in strategic sourcing, KANBAN, point-of-service (POS), and other inventory and procurement strategies have allowed organizations to wrap their arms around the information and material requirements that are necessary to drive their operations, they all ultimately fail to take an organization to the next level. Nevertheless, in almost every respect with the measures just mentioned companies are already practicing limited "network-centric" operations to some small degree.
So what exactly is "network-centric?" When one hears the word "network-centric" one might automatically think in terms of technology-networked systems. In essence, that is only partially correct. Business and the military have borrowed heavily from each other in many areas in the past, and in this case the supply chain has already been incorporating the military's collaborative and holistic concept of "network-centric," unwittingly, for years.
A military definition of network-centric might look like this: A network-centric force is effectively linked or networked by an information infrastructure, or "infostructure." This force has the capability to share and exchange information among its geographically distributed elements: sensors, regardless of platform; shooters, regardless of service; and decision-makers and supporting organizations, regardless of location. In short, it is an interoperable force that has global access to assured information whenever and wherever it is needed.
It is easy to see how this definition can apply to any number of current global organizations by simply substituting a few words, such as "business development" for "sensors," or "staff" for "shooters."
Thus, the ability to operate as a network-centric force provides warfighters, or business professionals, with a new type of information advantage that is broadly characterized by improved capabilities for sharing and accessing information. Network-centric "warfare" enables business professionals to leverage the information advantage to increase competitive advantage through self-synchronization and other network-centric operations.
Across a broad spectrum of mission areas, evidence for the power of network-centric "warfare" is emerging from experiments and exercises. Evidence collected to date supports a strong correlation between information sharing, improved situational awareness and increased combat power. A common theme in the evidence is the critical role of modified (in some cases new) tactics, techniques and procedures. Sound familiar? It should. This is the same reason companies implement an ERP system or, if resources are limited, seek a center of excellence around some kind of procurement, inventory and supplier strategy to achieve the same things that are scalable across the divisions. Additionally, network-centric operations, even when starting small with, say, a strategic sourcing initiative, rely on the fact that the technology and processes are tools that are enabled to a higher level of long-term effectiveness through the development and practice of a few key principles.