The Future of the Supply Chain Lies in Ecosystems

Here is what we know: At most companies, products reach customers through a very standardized process that looks like this:

If no disruption occurs, the gap between supply and demand is minimal and everything goes well.

It works in theory, but if you’ve worked in the supply chain long enough, you already know it often doesn’t translate to real life.

Today’s supply chain is still a wide array of siloed steps, designed to take a product from marketing and product development, to manufacturing, distribution, and ultimately into the hands of the end customer. The business goal of the digital supply chain is to deliver products into the customer’s hands faster, while increasing efficiency, cutting costs through automation, and enabling smarter decision-making using internal and external data.

Mature digital technologies (cloud computing, complex data processing, etc.) and emerging ones (blockchain, IoT etc.) allow companies to bring down some of those walls and turn their supply chain into integrated ecosystems that are fully transparent to all the players involved. In return, this new level of transparency enables more responsive organizations, and a complete integration of every link in a company’s value chain (see below)

However, fully implementing a coherent supply chain ecosystem requires important investments and internal changes. Most of all, it demands that business leaders understand that this new wave of change doesn’t contradict what has been done in the past. The technology simply wasn’t there when they invested in backbone enterprise resource management (ERP) systems a decade ago.

Building a supply network that is transparent, interconnected, responsive and resilient is a necessary but daunting mission for senior executives. There won’t be an off-the-shelf solution; different problems require different solutions. Engineering, sourcing and sales do not particularly want to live in the same tool, but all these tools need to share data with each other.

The “One Big Solution” model has failed. The implementation of monolithic systems to manage mission-critical aspects of a business was already hard. Using the same tools to develop new models and iterate at scale is next to impossible.

Building new supply chain models requires the capacity to iterate quickly, in addition to openness and distribution. This is where software-as-a-service (SaaS) products become the building blocks of supply chain ecosystems. Relying on solutions that don’t require complex installations while integrating with existing workflows and/or other tools seems like the safest bet.

Now, the race is on. Organizations across industry verticals are heavily investing and testing solutions to develop their own version of the digital supply chain. The latest PwC study on the rise of the Industry 4.0 reported that 72% of the 2000 companies surveyed expect to have fully digitized their supply chain in the next five years.

This investment rush is easy to understand. The same report forecasts that “companies with highly digitized supply chains and operations can expect efficiency gains of 4.1% annually, while boosting revenue by 2.9% a year.”

Which tools is your company using to digitize its supply chain? Let us know in the comments section below. Even better, tell us why you like them and how to improve them!

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