For many years, the biggest challenge identified by supply-chain leaders has been achieving visibility. With the adoption of digital and “Business 4.0” technologies, one can only hope that supply-chain visibility will “cross the chasm” from early adoption to early majority in 2021. With disruption caused by the pandemic heightening awareness of the strategic importance of the supply chain, there is a pressing need for track-and-trace visibility of products as they move and become transformed throughout the supply chain.
Simply put, the notion of a supply “chain” is dead. Long live supply “network” management. As companies embark on the journey for visibility into supply chains, and technology advances to support and enable the quest, the shift becomes more than a dream. The supply-network modeling and management application segment has been active for more than two decades in search of supply-chain visibility. Yet it has been constrained by limits on computing power, data collection, and the difficultly of developing algorithms that can solve for the complexity of millions of variables in even the simplest supply networks.
In the past five years, the network-optimization industry has experienced access via the cloud to slices of supercomputing power, the maturing of artificial intelligence and machine learning, advances in cognitive analytics, and the emergence of visualization and simulation tools that provide visibility and rapid scenario modeling. Along with these developments comes the realization that applying “chain” thinking to solving network problems is the major hurdle to achieving optimal performance. The time for supply network and ecosystem thinking is now. Break the “chain.”
As supply-chain leaders embrace digital technologies and connectivity to partners throughout the network ecosystem, they acquire a new level of visibility. Yet not everyone is on board with this effort. Companies that are competing for supply-network resources such as transportation and warehousing are facing serious capacity issues, preventing them from enabling the efficient and cost-effective allocation of such resources.
To address this ecosystem supply-network issue, traditional interchanges and marketplaces are evolving to support multi-enterprise commerce transactions. They are becoming ecosystem commerce platforms (ECP), which provide transaction management across industry markets. They are also the source of supply-network visibility, and the ability to federate ecosystem data. Many ECPs are developing network-management and optimization solutions to model and optimize ecosystem resources holistically, to include all enterprise supply networks. The goal is to lower costs and improve capacity utilization for the entire supply-network ecosystem.
Application of powerful new logic and simulation technologies to federated ecosystem data will lead to the creation of shared value creation. In the process, supply-chain partners can significantly reduce the cost and inefficiencies of systems that operate in discrete pieces. As supply-chain visibility crosses the chasm between early adoption and early majority, innovators with vision are looking for ECP providers to develop ecosystem resource planning (ERP 4.0) solutions to realize the benefits of visibility.
Twenty twenty-one marks the year that supply-chain visibility crosses the chasm. Lack of visibility reveals the vulnerabilities of supply “chain” thinking when attempting to solve supply network problems. To realize the benefits of visibility from enabling connectivity across industry ecosystems, leaders are piloting ERP 4.0 applications from ECP providers. The strategy allows them to federate ecosystem data and democratize supply-network resource management for the benefit and shared value of all. We don’t compete in the container; we compete in the market.
Rich Sherman is a Senior Fellow with Tata Consultancy Services.
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