Companies that "get it" realize that in the future, competing will be about turning a company, and its entire value chain, over to the command and control of the customer. 

For example, when a customer goes to Dell for a build-to-order computer, Dell's suppliers and the suppliers' suppliers are linked into the transaction in real time to trigger fulfillment and inventory replenishment. The customer is in the driver's seat initiating activities that ripple throughout the value chain. 

Customers, who can compare prices and search for suppliers without leaving their browsers, hold absolute power in the new economy. 

Instead of owning the product and pushing it to market segments, successful Internet age companies are turning control over to empowered customers, making it easier for them to pull products and services from a multitude of suppliers. 

General Electric's Trading Process Network pioneered this concept in the business-to-business market, bringing together multiple buyers and suppliers with aggregated catalogs and sophisticated trading. 

In the business-to-consumer market, customers hold the purchasing power when they buy through Mercata.com, an online collaborative that brings together buyers seeking the same products. They are then connected with suppliers, which offer them lower prices, since there's only one large transaction to handle. 

Such instant buyer cooperatives weren't possible before e-commerce, but now suppliers that don't embrace these new business models won't appear on the consumer's radar.

E-commerce calls to us to re-engineer not just our companies, but also complete industries. We must extend our internal business processes to the outside world: customers, suppliers and trading partners. As a result, competition among companies like Sears and J. C. Penney will be less about brand and more about the strength and efficiency of each firm's value chain. 

How does a company protect its position? The struggle is to own the primary relationship with the ultimate customer served by the value chain. 

For instance, last June, Home Depot notified 1,000 suppliers, including Black & Decker and GE, that it will hesitate to do business with suppliers that also market their products online. Home Depot said it would be happy to partner with them on selling via the Internet, but maintaining the primary relationship with the ultimate customer is Home Depot's obvious rule of engagement.

But putting the concepts into practice is the hard part. So what are IT managers to do? 

Foremost, they must recognize that the challenge of continuous value-chain optimization goes beyond their companies' walls to their trading partners. Companies can't go it alone.

Peter Fingar, Senior Vice President, the Noor Group, llc in Washington D.C. and Cairo, Egypt, is the author of Enterprise E-Commerce: The Software Component Breakthrough for B2B Commerce.
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