Seizing value from supply network management

From the May-Jun 2024 edition of Supply Chain Management Review.

May-Jun 2024

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If hindsight is 2020, then Bob and I have 2010 vision. When we started our careers in physical distribution, technology was measured by PCRPM—punched cards read per minute. Today we’re talking about the internet of things and Industry 4.0 technologies that connect everything and everyone in a global ecosystem that is brokering change in the analog physical world with the digital virtual world. Businesses grapple with complexity, rapid technological advances, and an uncertain geopolitical reality. Ecosystem supply “network” management stands at the forefront of transformation. We increasingly see “supply ‘chain network’ management” in the literature. It’s time to break the chain.

A new shared leadership vision

One of the common characteristics among market leaders is a clear and shared vision that defines the business model and structure for the operating business leaders to envision their future functional process operating models. Among the remaining companies, the most frequently cited barrier to achieving operating metrics and innovative performance is the lack of an integrated vision across functional silos for the enterprise. The supply network of the future will use artificial intelligence, virtual reality, and cognitive digital technologies to automate process execution.

A nuanced framework (Figure 1) is needed to guide businesses through this challenging landscape, incorporating elements of visioneering, digital and robotic process automation, digital twins, ecosystem commerce platforms (cloud), composite applications, and Industry 4.0 technologies. This comprehensive, yet practical approach focuses on the inevitable transition from traditional supply chains to networked ecosystems, exploiting digital technologies, and embracing a new era of collaborative ecosystem commerce.

Visioneering is more than a planning tool; it’s a transformative process framework that enables leaders to conceptualize the current and future states based on shared outcomes, an operating metrics hierarchy, and process definitions/maps. Future technologies and best practices as well as market scans inspire shared process metrics, collaboration, root cause analysis, and process requirements to be considered in a prioritized planned timeline moving forward. In the context of current supply chain management, it means envisioning a future state ecosystem supply network that’s agile, connected, collaborative, transparent, and autonomous. This shared vision sets the stage for the transformation from “chain” to “network” management within an integrated enterprise operating within a market ecosystem—the network of networks.

From chain to network: Transforming and adapting to the future

Traditional linear supply chains are giving way to interconnected ecosystem supply networks. This shift represents a profound transformation; where siloed, sequential processes evolve into a collaborative, dynamic, responsive, resilient ecosystem increasingly goaled and operated based on simulation, analytics, and automation. Moreover, the supply networks will contend more than ever with system thinking-based decision-making that not only considers intended consequences, but must also the unintended consequences from structurally created network decision cause and effect, e.g. “The Bullwhip Effect.” The transformation leverages multi-enterprise ecosystem commerce platforms, allowing real-time collaboration and enhanced efficiency from total network optimization and ecosystem-shared economic value and risk. We compete at the point of demand, not on the transportation lane.

Introducing the multi-enterprise ecosystem commerce platforms

Cloud-deployed and composite application-based platform technology acts as the backbone to meet the master data harmonization and resource optimization management requirements of the modern supply network. Multi-enterprise ecosystem commerce platforms (ECP) connect all of the various ecosystem stakeholders in seamless digital environments to facilitate the adoption of ecosystem commerce. They include the following.

1. Unification of stakeholders. These platforms unite various stakeholders, including suppliers, customers, distributors, contract manufacturers, and logistics service providers. Additionally, the platform connects to the commercial support ecosystem including financial institutions, brokers/forwarders, insurance companies, government agencies/customs, regulatory bodies, industry standards organizations, legal firms, etc. It allows seamless data sharing, cross-boundary licensing, customs transaction flow, and collaboration to reduce redundancy and enhance decision-making.
2. Customization and flexibility. ECPs offer customization features and composite applications that allow businesses to tailor the platform to suit their unique needs. It creates a flexible environment where different players can co-create value.
3. Scalability and reach. With the help of these platforms, businesses can expand their reach and easily adapt/scale their operations up or down. They can tap into new markets, connect with new partners, introduce new products, and leverage global opportunities with unprecedented resilience.

Using federated “one source of the truth” data harmonization and visibility to all ecosystem transactions and master data enables new sources of data for cognitive analytics (artificial intelligence), shared ecosystem optimization, and value creation versus individual node cost (democratization of freight movement and increased logistics network capacity utilization). Examples include Blue Yonder’s acquisition of ONE Network Enterprises, E2Open, Oracle, SAP, Coupa, and Infor Nexus. They foster collaboration, data sharing, and real-time decision-making, epitomizing and accelerating the shift toward ecosystem commerce and democratizing commodity logistics resources for increased utilization and consolidation value.

Ecosystem resource planning (ERP4): The new era of resource planning

ERP4 represents an advanced stage of resource planning that integrates various elements across the ecosystem supply network. It aligns with the concept of a networked system, leveraging real-time data, composite applications, and cognitive analytics to provide visibility and analysis to optimize inventory, workforce, and supply network execution resources globally.

Enterprise resource planning (ERP) systems have long been the backbone of large organizations, providing an integrated suite of business applications that automate various organizational processes and promote data-driven decision-making. As the world becomes more digitally connected, the fourth-generation ecosystem resource planning, commonly known as ERP4, emerged, focusing on an ecosystem and network approach.

“The future of supply network management demands a comprehensive enterprise framework that integrates various innovative practices to achieve desired results.”

While the ERP4 technology market remains fragmented among “best of breed” and AI startups, the necessary composite applications are beginning to be developed or aggregated by the market leaders to offer broader ecosystem commerce and ERP4 solutions. Managing a networked system requires a comprehensive understanding of its application technology and maturity levels. The path to full maturity involves integration, simulation, automation, collaboration, and innovation, empowered by digital technologies. Innovate and then automate based on a shared vision.

Industry 4.0: A holistic approach to supply network management

Industry 4.0 symbolizes the convergence of all digital technologies with traditional business practices. It represents an integrated approach, harnessing automation, intelligence, and agility to create value and resilience across all aspects of business, including supply network management. Visioneering represents the future state business model/architecture. Industry 4.0 represents the digital technology architecture for the immediate future and beyond. Industry 4.0 and digital transformation enable the creation of shared value from integration, resource utilization, cognitive analytics, and optimized resilience from implementing the base digital functional maturity level capabilities, including the following.

1. Master data management (MDM). We started our digital journey 40 years ago with a simple saying: GIGO—garbage in, garbage out. Clean, well-defined, harmonized, and managed data is critical to success; it is the lifeblood of the organization.
2. Digitization vs. digitalization. Digitization refers to converting physical information into digital media. MDM done well accelerates the journey. Digitalization involves leveraging digital technologies to automate, redefine, or create new business processes and analytics. It is the basis of transforming an innovative vision into a practical reality.
3. Digital twins. Representing a digital replica of a physical entity (enterprise processes), digital twins enable advanced simulations and analytics. They offer real-time insights into collaborative processes, promoting innovation, agility, and responsiveness. Digital twins facilitate the adoption of advanced and cognitive analytics eventually leading to autonomy and democratization of the supply network.

Back to the future

The future of supply network management demands a comprehensive enterprise framework that integrates various innovative practices to achieve desired results. The vision must be driven by improved financial and operating performance. It requires a visionary approach that considers the transition from linear chains to dynamic networks, capitalizes on multi-enterprise ecosystem commerce platforms, and incorporates advanced Industry 4.0 digital technologies and internet of things connectivity.

Visioneering is not a one-size-fits-all framework, but a facilitated outcome-driven practical roadmap tailored to individual business models and needs. Most importantly, it encourages collaboration, shared outcomes, and value creation. It’s the call to action that can be shared throughout the organization as a common institutional vision and aspiration. It’s an exciting journey that promises to unlock new opportunities and redefine the way we think about supply network management in a digitally connected world. Carpe Diem.

About Global Links

Global Links appears in each issue of Supply Chain Management Review. Richard J. Sherman, retired guru of SCM, is the Global Links column editor. If you are interested in participating in the column, he can be reached at [email protected]. 

About the authors

Rich Sherman is a retired guru of SCM technologies and Global Links column editor. He can be reached at [email protected]. Bob Sabath is a retired guru of SC for management consultancies. He can be reached at [email protected].

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