Analyst insight: As “Business 4.0” technologies continue to mature, companies are facing new competition, customer expectations and market models that disrupt existing operations and financial strategies. Aligning business strategies and new models is no longer optional. 

In 2020, we have enough experience with digital transformation to identify strategic trajectory and stages of maturity as companies develop “digital twin” operating infrastructures to transform from supply-chain management to ecosystem commerce. 

Most companies today remain challenged with phase one: the digital twin. They have not defined, digitized and harmonized their master data and infrastructure. They want to move forward with a digital business strategy, but they have yet to engage in transformation and align the enterprise to digital markets. 

Having transformed to digital, the companies progressing to phase two — connected commerce — have the capability to extend their marketing and operations to include customers and suppliers in connected communities. They actively implement “data lakes” for advanced analytics. 

As companies experience the benefits of digital collaboration, they realize they’re not a “supply chain” at all. They’re a “supply network.” 
 
At phase three — enterprise supply network (ESN) — companies leverage ESN cognitive analytics to develop “network control towers” for visibility over inbound and outbound material flow paths. These allow for optimization and orchestration of order and fulfillment processes. Because these companies can see flow impact from other ESNs, they become part of an even larger “network of networks,” or “market ecosystem.”

The noise from ecosystem ESNs, which emcompasses both partners and competitors and all of their operations, leads companies to phase four: ecosystem commerce. Multi-enterprise, supply-chain business platforms are already moving toward ecosystem commerce platforms (ECP). These ECPs collect ecosystem data as companies engage in commerce.

In phase five, ecosystem resource planning — or “ERP 4.0” — companies leverage this data to reduce total operational cost and environmental impact.

ECPs deploy planning, execution and optimization applications that use artificial intelligence to consolidate shipments, improve capacity, cut cost and reduce environmental footprint throughout the ecosystem — benefitting all participants in the network. 

Outlook

In 2020, the competitive mandate is transforming to a digital-twin infrastructure. Leading companies have implemented ESN strategies, and are engaging ECP providers to leverage more capabilities. This kind of ecosystem management will benefit all participants far beyond what any single company could achieve.

Rich Sherman is senior fellow at Tata Consultancy Services.