That way, when the firm needs material, it's already there. When material is used in the final production, the firm sends electronic payment. For business to be conducted like this, a highly trusting relationship must exist. If you're willing to share your sales forecast, I can do the math and put X number of my components in your facility. As trust builds, we share more critical information, which enables me to respond as a vendor to you more efficiently.
Computers can support that, but fundamentally, that relationship has to be driven by people.
Companies farthest along in supply chain optimization are those in industries with a tradition of cooperation. The automotive industry leads the way with the most advanced set of established protocols for synchronizing communication between players in the supply chain. As an automobile goes down the assembly line, signals are sent electronically to component manufacturers to ensure the appropriate parts are delivered to the right part of the assembly line at the right time. This has enabled auto manufacturers to ramp supply to meet demand as well as provide a broader range of options to customers while maximizing assembly line efficiency. High technology is also cooperative, as illustrated by Microsoft, Intel, and Compaq Corporations.