«Extended enterprise» concept. Part 2.

SCORE program has become a ground for bigger concept named Extended Enterprise. 

For better description of this method let’s have a detailed look at what SCORE program is. (Data is based on the results of meetings held in person between Chrysler Company and general managers of their suppliers). The main points of the program are described below.

 What SCORE is supposed to work on:

* Execution;

* Modernization of production process;

* Materials;

* Technological innovation;

* Sales growth of produced output;

* Quality of packaging;

* Reduction of the car weight.

 What SCORE is supposed to work on (2)

* Share fraction;

* Terms of payment;

* Warranty;

* Terms of inventory survey;

* Growth of throughput;

* Quality of packaging;

* Reduction of the car weight.

 What SCORE is supposed to work on (3)

* Terms of transportation;

* Grade;

* Reduction of legalization costs;

* Conserving on equipment and tools;

* Repair parts;

* Information exchange;

* Business relations between Chrysler and its suppliers.

 What SCORE program implies.

Extended enterprise supposes reviewing each participant of the team as fully functional member f a chain in a context of profit distribution. According to this system, each supplier is a mature member of a supply chain regardless of his compay size and status.

Extended enterprise is a philosophy of structuring the mutual relations with suppliers. It was successful due to willingness to let the suppliers show their expert skills. Extended Enterprise concept has enlarged the suppliers’ right of property. In return, Chrysler team expected more profound research projects and technology adoption.

Considering suppliers as well-informed experts and implementing a co-project with them is helpful for creating an atmosphere of partnership instead of isolation from each other.

Principles of Extended Enterprise concept , which are: close communication with suppliers, exchange of the future plans, cost-volume-profit relationship, participation in leadership implementation and long-term reciprocal liabilities during long-term strategic projects, might be applied for the management of any company.

Extended Enterprise concept is an innovation approach to work, implying co-operation with suppliers, creation of trust-based atmosphere and development of common ideas as well as resources for their achievement. A serious and detailed planning and strategic vision are necessary for these purposes.

Complex use of Extended Enterprise ideas by Chrysler showed that cost reduction and gaining profit from close and stable relations with the companies is a merit of co-operation and partnership with the suppliers..

Chrysler example shows that cost reduction for RTD and technological developments as well as sustainable resource use are the most essential achievements of this concept.