A network and an ecosystem are not the same thing. An enterprise might think of its network of relationships as its ecosystem, but the enterprise’s networks do not represent the full resources of the ecosystem that contains the enterprise, much less the ecosystems that intersect it.
Almost by definition, an enterprise can’t explore the resources within a larger ecosystem by looking solely at its own network. Nobody understands an ecosystem entirely without looking beyond their own networks. To stay competitive and lead their market, companies therefore need to open new channels with new products and services, potentially for new customers. That’s a new business model — new customers, new value proposition, new capabilities, likely a new financial model too. In order to explore those capabilities, enterprises need to build the foundation first, connecting and collaborating with business partners in a multienterprise supply chain business network.
The most critical challenge for chief supply chain officers is to gather, analyze and use data to drive effective supply chain decisions. Organizations can no longer act solely within the individual supply chain. Instead, they must act within a business ecosystem. The goal is to achieve visibility for multiple supply chain functions across the organization. This elevates its supply chain maturity, building on insights for intelligent response.
A business network is about building the foundation. This allows organizations to establish real-time end-to-end supply chain visibility (see it), understand and leverage signals from the digital ecosystem (process it), work along exception management for an intelligent response (act on it) and continuously learn and automate (learn from it).
Multienterprise supply chain business networks support a community of trading partners — of any tier and type within a network — that need to coordinate and execute supply chain processes across multiple enterprises. It consists of two major elements — the network and information hub (connectivity, interoperability and visibility) —and value-add capabilities represented by application functions (universal apps, supply chain apps, collaboration functions and embedded intelligence).
Any company with a supply chain across virtually all industries. The players on the network:
- The brand owner/tenant itself with its subsidiaries, plant, distribution centers …
- Upstream, the suppliers, contract manufacturers, co-packers …
- Downstream, the distributors, shops, consumers …
- In between, the service providers, carriers …
Remember, a company’s business network represents only its active business partners connected on the solution. However, the broader view includes the ecosystems of the suppliers, customers and service providers, those outside but not yet active for the brand owner.
Business networks go way beyond control towers for visualization and the question, “Where is my stuff?” They connect end-to-end signals to understand the impact at the operational, tactical and strategic levels. Companies could start exploring them at any stage of supply chain maturity, from getting off spreadsheets to complete digital transformation. However the impact to the organization, the received value will differ:
- At lower stages of maturity (Stage 1 and 2, with an internal focus on functional alignment), it provides limited benefits.
- At Stage 3 maturity (companies establishing cross-functional integration), it turns to be beneficial.
- At higher stages of maturity (Stage 4 and 5 with stakeholder value delivery), it is essential.
Organizations can — and should — start at any point of maturity along the following three dimensions to enhance supply chain efficiency:
Capabilities — The five stages of capabilities (activities and technology usage) describe a pathway of the maturity journey utilizing supply chain business networks. From just understanding what is happening toward an autonomous self-directing supply chain:
- Descriptive and historic: I can sense what is happening and recall what has transpired.
- Predictive and diagnostic: I can understand what has happened and anticipate what is coming.
- Prescriptive and corrective: I can determine the best course of action for the given conditions.
- Algorithmic and autonomic: I can respond instantly through human-less decision and task automation.
- Learning and adaptive: I can evolve through AI, self-learning and adaptation.
Reach — The five stages of business scope (reach) describe the journey from an inside-out mindset (enterprise and extended enterprise) to an outside-in mindset (multienterprise and ecosystem):
- Ad hoc: Point solutions short of enabling complete processes
- Functional: Siloed capabilities, cross-process within the function
- Cross-functional: Cross-functional capabilities within the enterprise
- Multienterprise: Capabilities extending to trading partners
- Ecosystem: Platform-level capabilities that enable ecosystems
Breadth — The five supply chain functional domains describe the breadth of application functions covered within a supply chain business network — ultimately all domains for integrated insights and response: plan/source/make/deliver/service.
Supply chain leaders looking into supply chain business networks should:
- Build expertise in business network and ecosystems and in the use of technology platforms to provide the connectivity and intelligence that ensures the supply chain delivers the anticipated outcome.
- Become familiar with the building blocks and anticipated benefits of technology platforms in order to properly communicate the value to the C-Suite.
- Make the business case for visibility and collaboration initiatives to improve end-to-end supply chain across the organizations and further the business ecosystem by quantifying improvements in key supply chain performance indicators.
- Embed technology platforms in a company’s business and technology context by fostering internal and external collaboration with business change managers and digital transformation leaders to innovate, redesign and optimize supply chain business processes.
- Employ technology platforms to effectively participate in dynamic supply chain business ecosystems by working with stakeholders to identify business moments that benefit from early warnings to anticipate threats and exploit opportunities.
Research Vice President
Gartner Supply Chain