As more companies move to online e-commerce, they are embracing omnichannel fulfillment strategies. Piece pick, parcel ship, and home delivery, combined with pick-in-store and multiple order options, are increasing the volume of small orders. And that’s putting pressure on space, load building, and transportation costs, due to the inability to consolidate inventories into efficient pallet units, full truckloads, and direct-from-plant shipments.
Supply chains are transforming into “supply networks,” and omnichannel fulfillment is increasing the complexity. In response, companies are implementing “control towers” to equip their enterprise supply networks (ESNs) with connectivity to trading partners, providing visibility and optimizing goods flow.
However, as control towers are implemented, visibility to the flowpaths reveal that the ESN is simply a node in a larger ecosystem supply network community. Participants include competitors, suppliers, and customers’ ESNs.
Just as each airport has a control tower to manage traffic in its airspace, ESNs have one to manage goods traffic. The emerging issue is that while these control towers provide visibility and control over loads, they don’t have visibility to all traffic in the market ecosystem in which they operate. ESN complexity results not just from enterprise flowpaths and goods, but also the competing “invisible” flow of goods from competitors’, suppliers’, and customers’ ESNs. All must adapt to changing demand, resource constraints, and capacity utilization and availability.
Individual airport control towers take their orders from the Air Traffic Control (ATC) system — itself not a control tower, but rather a network of towers with visibility to all traffic in the ecosystem. What we call ecosystem commerce platforms (ECPs; Gartner calls them multi-enterprise supply-chain business platforms) have been connecting communities of commerce within market ecosystems for years. Most have emerged from EDI transaction management, marketplaces, and collaborative industry initiatives. They are drawing on Business 4.0 digital technologies such as cloud computing, mobility, the internet of things, artificial intelligence and business intelligence to optimize processes across the market ecosystem.
ECP providers are building what we call Ecosystem Resource Planning or ERP4.0, a new wave of operations-planning technology in the Business 4.0 digital environment. Leading ECP providers are developing or acquiring operations applications. ERP4.0 suites will enable ESNs to connect to an ECP that enables the optimization and synchronization of ecosystem flowpaths, lowering the cost and complexity of integrating the flow of multi-enterprise goods within an ecosystem.
ERP4.0 requires neutrality in the collection, consolidation and federation of data, information, and commerce transactions. It implies deployment by multi-enterprise ECPs. ECPs are dependent upon scaled subscriptions by communities of commerce with common interests. Business 4.0, in general, is dependent on connectivity. We expect to see ECPs being adopted and deployed over time, in a manner similar to the evolution and consolidation of the current enterprise resource planning (ERP) market.
In 2020, if you’re not starting to feel the cost disruption resulting from smaller and more frequent shipments, accompanied by last-mile delivery challenges, you will. New applications such as ERP4.0, using existing data sources and digitization to optimize ecosystem resources and flow of goods, are required. It’s time to start looking beyond the “chain links” of the enterprise, and into the promise that ecosystem technology such as ERP4.0 and ECPs offer.
Rich Sherman is senior fellow at Tata Consultancy Services.
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