There are multiple ways to describe the external corporate ecosystem. Often, the term extended enterprise is used to describe it. There are many misconceptions surrounding the term ‘extended enterprise’. As a result, this article aims to define the term and clear those misconceptions.
The modern business scenario resembles a spider’s web. Strands of silk crisscrossing from one end to another. Never touching each other directly, but still a part of the same web. Just like that, businesses are often supported and connected to other businesses. Sometimes directly, other times indirectly.
Through the proper functioning of one business, other businesses flourish. As a result, a chain of unrelated businesses working together is formed, this is called the extended enterprise model. Here, an organization is more than just a single entity. External bodies or other businesses act as major contributors to the organization’s success. Hence, considered as extensions of the organization, i.e. extended enterprise.
For e.g.: A tire manufacturer purchases rubber from farmers which is delivered to the factory by a logistics company. They manufacture the tire and sell it to tire dealerships and car manufacturers. In this case, the rubber farmers, logistics company, and even customers form the tire company’s extended enterprise.
As already discussed, in some cases, an extended enterprise is the same as a supply chain. In other cases, it includes the customers as well. In this article, we take a look at the parties making up an extended enterprise ecosystem in an organization. Moreover, we also discuss their functions.
Who Forms the Extended Enterprise Network?
Vendors (Supply Side)
In the extended enterprise model, a vendor is probably the most important partner an organization has. They essentially are the organization’s supply chain. Manufacturing, automobile, and other businesses the production of tangible products is where such relations are the most evident. The reason for this is simple.
Vendors sell raw/semi-finished products to complete the manufacturing of a finished product. As a result, the quality of the finished product depends on the quality of the supplied raw/semi-finished product. Hence, the vendor is as important as any internal employee to the organization’s success.
Manufacturers or buyers hold training programs for extended enterprise partners like vendors. These training programs revolve around good practices, compliance, or training on manufacturing the semi-finished product—in-line with the standards prescribed by an organization. It almost resembles the training provided to an auxiliary branch of an organization. However, in reality, the vendor is still a third-party body and merely a supply chain facilitator to the organization.
The service and technology sector also rely on vendors to support key aspects of their business. Not everything is done in-house.
Distributors (Customer Side)
Many organizations do not sell their products directly. They rely on a set of distribution channels consisting of wholesalers, retailers, and resellers who assess the demand for a product and distribute it accordingly.
Moreover, these distributors are responsible for marketing products at the micro-level. They are responsible for assessing customer needs and sharing the information with the manufacturer, who eventually attempts to address the need. Without the participation of these distributors, an organization most certainly cannot ensure the sales and penetration of their products across the globe. This is why it is important to categorize them as an extended enterprise body.
Distributors are trained in product marketing. while also ensuring the product is not misrepresented or sold wrongly. Distributors are also given the benefits of easy financing, marketing support at a micro-level, and buyback of surplus stocks. Organizations spend considerable time and energy in maintaining their ties with distributors, and this is why they are considered as an extended enterprise member.
Resellers, Technicians, Partners (Service and Product Delivery Support Side)
The most common type of extended partners for industries such as pharma, automobile manufacturing, software, electronics, F&B, and lifestyle products are resellers, partners, and technicians. Many times, managing the services and public relations on behalf of the organization. They also act as external agents when dealing with customers. Car dealers are a great example. They sell cars of various kinds and offer services like repairs and maintenance as well. Dealership technicians often travel to the manufacturer’s plant during new car launches. They learn about the new car and return to provide customer support.
Pharmaceutical dispensaries are also resellers. They stock up on drugs of various brands, but they also provide guidance on how to use these drugs safely and effectively. On the other hand, if the laundry machine at a customer’s home breaks down, an independent technician trained by the manufacturer or the reseller’s technician visits the customer to diagnose their problems. All these examples are of extended enterprise members who play an important role in the success of an organization when dealing with customers.
All organizations supported by third-party members are form an extended enterprise. Training them on compliance, engaging with them, and aligning their goals with those of your organization is very important.
Most organizations seldom realize it, but their customers are an extension of their organization. Especially, the loyal ones.
It is the repeat business, word-of-mouth publicity, and unpaid brand promotions that classifies customers as extended enterprise. Organizations spend sizable amounts of resources nurturing their customers. These include loyalty programs, discounts for existing customers, upgrade options, and more. Engaging with customers is as important as engaging with any other external member. They are your brand ambassadors and are often your organization’s biggest allies.
In cases such as technology products, automobiles, appliances etc., providing training to customers is a big task by itself. This is true for the B2C (Business to Consumer), more so for B2B (Business to Business) organizations, and especially for IT and technology products. Customer training on product usage is a non-negotiable. Often, included in the contract itself.
Training customers may sometimes be a for-profit initiative as well.
Certifying customers and administrative users on the usage of products is a huge part of how organizations look at extended enterprise. Training delivery may be part of the rollout plan, especially for enterprise software companies. Customers rarely exist within the supply chain. However, they are important. Perhaps, equally important, hence included as an extended enterprise member.
At Abara LMS, we have designed a learning platform capable of helping you effectively train all your extended enterprise partners located around the globe. This capability has won us a spot in the top 20 extended enterprise learning management systems by eLearningIndustry.com, one of the leading authorities on eLearning and learning technologies worldwide.
To learn how you could use Abara LMS to train your vendors, partners, distributors and customers, please reach out to us at firstname.lastname@example.org or click here m and one of our sales representatives will get back to you shortly with a training solution for your extended enterprise needs.