An extranet in an intranet that has been extended to give selected external partners (such as suppliers) authorized access to particular areas or levels of the organizations website or information network, for exchanging data applications, and sharing information. E.g. the registered-user-only pages of corporate websites and the member only pages of professional bodies.
Supplier access to a buyer’s extranet system is generally protected, requiring defined verification of identity (e.g. via user ID), supplier codes and passwords. Extranets are particularly useful tools for relationship management, inter organizational partnerships and direct e-procurement transactions (which might have previously been carried out by EDI protocols).
An extranet may be used to:
Publish news updates and technical briefings which may be of use to supply chain partners Publish requirements and/or conduct e-tenders or e-auctions ( via a market exchange portal) Exchange transaction data for electronic P2P processes (orders, payments, and
delivery tracking) Share training and development resources (e.g. as part of a collaborative quality or sustainability management).
Procurement –focused extranets usually provide suppliers with
• Real time access to inventory and demand information, enabling them to proactively manage the buyer’s needs rather than merely reacting to spot orders.
• Authorized report information e.g. their vendor rating analysis-enabling them to be proactive in managing and improving their
performance and competitiveness.
Extranet systems provide potential for removing process costs and increasing supply chain communication, real-time information sharing, co-ordination and responsiveness (e.g. for improved demand management and just in time supply). They support the automation of procurement tasks, and therefore support the increasing focus of procurement professionals on strategic-value adding roles rather than transactional and communication tasks. Suppliers can similarly become more focused on developing innovative, competitive and continuously improving supply solutions.
Business Link lists the following potential benefits that can be gained from using extranet systems.
• Assists in improved supply chain integration via the use of online ordering, order tracking and inventory management.
• Reduces operational costs, for example by making manuals and technical documentation available online. This reduces cost and increases the speed of inter-business communication
• Improved collaboration and relationship potential by enabling involved parties to work online using common documentation; again this accelerates the business process as well
as saving cost by reducing the need to hold expensive meetings.
• Suppliers can directly access authorized business information which often enables them resolve their own queries.
• Provides a single user interface between business partners.
• Improved security of communications since exchanges take place under a controlled secure environment
Integrating supply chain processes via extranets still poses challenges and risks. Common reasons for failure include:
- Inadequate planning and preparation
- Unrealistic expectations
- Lack of clear business case for how the extranet will support organizational objectives
Extranet security is another critical design consideration. Hackers increasingly probe connected computers for weaknesses in their security, and data corruption, loss or theft – e.g. though the use of malware.