According to IBM's Sam Palmisano, supply chain inefficiencies cost the consumer products and retail industries an estimated US$40 billion annually, or 3.5% of sales.

Enterprises face the dual challenge of driving greater efficiency into their organizations, while operating in a market that demands increasing levels of flexibility.

Today every consumer wants to buy at bargain prices, nobody wants to queue at checkouts and everybody wants better returns on their 401k.

This reality has driven most markets to commoditization at speeds not previously encountered in the marketplace, and as competition becomes more intense and over capacity builds within the network costs are no longer the driver of pricing within the demand chain network.

Many suppliers do not have the ability to raise prices to compensate for rising input costs; seeking greater efficiency they become locked into monolithic systems and processes, driving their organizations down to subsistence levels in the marketplace

Monolithic systems work but they tend to be rigid; based on fixed roles, rules, relationships, responsibilities and workflows. They also come with higher overheads, cost of communications, rework, activity repetition and long lead times.

Many network partners have adopted this enterprise systems approach; increasingly standardizing the process dynamics that differentiate them in the marketplace.

The current IT approach to these issues is to provide data interpretation software and equipment between an enterprise’s immediate suppliers and customers. Transactional data messages are sent via "go between technologies" (middleware) which translate, transform and transmit the sender’s messages (sequentially and iteratively) so that each discrete message arrives in context to each receivers system.

This is equivalent to conducting complex "face to face" business meetings with several different partners in several different languages with the help of a multi-lingual phrase translation book. The creation of multiple point-to-point messaging interfaces across a heterogeneous end-to-end network of organizations does not work and can’t scale.

Organizations using these methods subsequently find it almost impossible to coordinate, grow and contract their products and services according to uncertain consumer demand without sacrificing some of their core capabilities.

In this environment it becomes extremely difficult to translate internal corporate strategy, network process execution and automation into quantifiable business value in a timely manner.