For companies that have already deployed enterprise resource planning (ERP) systems to integrate a wide variety of functions within their operation, the next game is to start integrating supply chain partners into the base computer system.

Obviously, the more companies can standardize electronic communication and provide 24/7 access to pertinent data and information-usually through a Web portal-the more they should gain control of the long supply chains necessary to handle offshore sourcing and manufacturing. Manufacturers and vendors on the cutting edge of these practices report that extending ERP beyond the core enterprise definitely pays off in improved performance and reduced costs.

Take the example of NSK Steering Systems in Burlington, Vermont, a 600-employee, wholly owned subsidiary of NSK Japan that produces steering columns for auto industry giants. By creating a Web portal for suppliers to access a wide variety of operational data, and also integrating advanced shipments notes through a combination of XML and EDI messaging formats, NSK was able to standardize all data that comes into the docks. Today, 100 suppliers can communicate uniformly utilizing Infor's ERP solutions designed specifically for the auto industry, according to Chuck Still, who until August 2004 was NSK manager of information systems and CIO, and oversaw these deployments.

"This saved tremendous time because when you get to the dock and unload from 100 suppliers, and then dock workers, and are dealing with 100 different types of paperwork, the new system provides everyone the same type of paperwork. There's a huge performance improvement just from lost time, missed receipts, inventory-just by having the same paperwork every single time," says Still, currently a technology consultant based in Hoosick, N.Y. who maintains contact with NSK.

At ArvinMeritor, a Troy, Michigan-based manufacturer of automotive systems, including commercial vehicle drivetrain and braking systems, there's always the need to balance the needs of customers and suppliers. In this case, the customers are global automakers equipped with the latest EDI systems, while ArvinMeritor's suppliers tend to be smaller and less likely to have advanced order-processing technology.

ArvinMeritor decided to integrate smaller suppliers into the company's ERP system, according to Steve Tracy, until recently director of the company's Enterprise Resource Planning Program. The company also wanted to work on financials and turned to ERP vendor Oracle's iSupplier Portal to make this happen at the end of 2003.

According to Tracy, extending the base ERP system now allows suppliers to track orders and shipments online, improving visibility for both sides. For example, suppliers can check electronic receipts for goods as soon as they arrive at ArvinMeritor's plants, "even before we send them an invoice," Tracy says.

And, he adds that "real time tracking, combined with better insight into upcoming orders, helps shorten order-cycle times, reduce material shortages, and improve long-term planning. Improved collaboration also improves the receiving process and our first-pass yield for payables." All has added up to improved collaboration with suppliers and "enhanced flexibility and control."

Integrating entire supply chains has been a long-time goal of ERP vendors like SAP, Oracle and PeopleSoft, which was recently bought by Oracle. Although these are still pioneering days in the world of extending ERP systems and no one claims to be able to fully communicate with an entire supply chain and manage all business and operational functions in a uniform fashion-as if one organism-integrating individual functions is becoming more common as NSK and ArvinMeritor illustrate.

"If you look at the whole ERP notion of 10 years ago or so, it was all about providing the backbone of your company-how you managed the enterprise form a transactional, doing-business perspective in terms of supply chain, including inventory," said Bob Ferrari, director of SCM Business Development for SAP in Boston, Massachusetts. "At the same time, ERP hasn't remained static, in that many companies have developed ERP systems and use them. The aim becomes extending ERP systems to other supply chain partners-to extend their processes beyond their home base platform."

Ferrari is witnessing "tremendous need and demand to move ERP systems beyond the enterprise" due to outsourcing, global technology deployments and supply chain consolidations during the recent recession.

Making a network function outside one organization and providing data visibility are key concerns for many SAP customers, he says. Palm Pilot, for example, approached SAP in recent years to provide "visibility of demand" to meet the requirements of manufacturing in an ever-changing industry where the ability to react quickly to changes "becomes paramount," Ferrari explains. The electronic data book manufacturer also turned to SAP to integrate planning for contract manufacturers building semi-finished goods for final assembly, creating what Ferrari calls an electronic planning book.

Oracle also provides ERP tools to help customers and suppliers collaborate on functions such as advanced planning, explains Nadeem Syed, vice president for Advanced Planning Applications at Oracle's Redwood Shores, California office.

He says these capabilities aim to "allow trading partners to synchronize inventory and supply/demand schedules, increase forecast accuracy and delivery performance, reduce supply chain planning cycle time to hours, automate inventory replenishment, proactively identify and resolve exceptions, and drive continuous improvement with integrated intelligence."

In the early days of ERP, deployments were notoriously costly, cumbersome and bore mixed results. Ferrari says SAP is well aware of customer concerns and has become "more educated and sophisticated with providing customers a series of best practices on implementations that went well. We provide preconfigured templates so the customer doesn't have the full burden of having to start from scratch. And, you can always bring in experienced integrators or customers who have done it on their own, built up key learning, and can do it quite well."

Until recently, NSK found deploying Infor products "pretty difficult," though worth it in the long run. "As soon as you start integrating dissimilar systems you run into costs and issues. Most suppliers to the auto industry aren't EDI capable beyond Tier I. The small ones often buy one EDI computer, take information from their ERP system and then type it into the EDI computer so there's no real integration. Only 10 of our suppliers actually went the EDI route. Most worked the Web system," he explains.

Even so, he feels that extending ERP-whether through direct integration onto a computer platform or by simply posting pertinent information on the Web, effectively opens up visibility and collaborative opportunities between a company and its suppliers. "You can get tremendous benefits form the Web approach. You don't need the nth degree level of integration to be effective," he believes.

Chuck Still is all for providing transparency throughout a supply chain. In the days when NSK used to "push data to the suppliers, they could deny they ever received information. Now, because the information is posted on a Web site and you can tell when they've logged in and get the data, they have no excuses. There are no more arguments about expedited freight shipments."

And, at ArvinMeritor, where Tracy views collaborating with suppliers as a natural extension of its internal supply chain, early results from the iSupplier Portal program, launched mid-2003, have been encouraging. "We want to expand it," Tracy said. "Our goal is to have all non-EDI suppliers move to iSupplier."