Partner Perspectives is our ongoing series of conversations with business leaders from Tradeshift’s strategic partners around the world. They’ll provide you with unique insights into the latest trends in business and offer tips and advice on how to become more efficient, agile, and successful.
I had the pleasure of sitting down with Richard Sherman, Senior Fellow, Supply Chain Center of Excellence, Tata Consultancy Services, to get his take on how innovative companies are transforming their supply chain into an enterprise supply network (ESN).
Richard has forty-plus years working across the supply chains of global enterprises, and it’s his view that now is the most exciting time to be working in the field. This is as modern technology gives businesses the opportunity to collapse their linear supply chains and replace them with dynamic supply ecosystems. It’s a big shift. And one that’ll be transformational. Not only for those that work across supply chains but also for businesses and even whole industries.
Here’s what he had to say.
What’s the biggest change you're seeing in how companies manage their supply chains?
The biggest shift I’m seeing today is the way leading companies are transitioning away from the concept of supply chain management and towards the discipline of enterprise supply network management and ecosystem commerce. It’s happening as the most innovative companies realize that a supply chain isn't a chain at all. Chains are linear, sequential, and based around silos, and leading businesses today are none of these things—they’re dynamic, adaptive, and collaborative. So leading enterprises are working to transform their supply chains to reflect this and build a competitive advantage.
Why’s this shift happening now?
The theory behind this isn’t new. In fact, we’ve built adaptive supply chain models that react to millions of variables for decades. But the lack of computer power prevented companies from taking full advantage of these. It took a few days to see the outcomes of the models. This is ok, for strategic planning, but there’s little practical, operational use.
But today, thanks to the increase in computing power and the emergence of ecosystem commerce platforms (ECP) like Tradeshift, the theory is becoming a reality. Businesses can now connect with their buyers, sellers, and partners on a collaborative network platform or ECP. They can all exchange data in real-time, and use tools like AI, and machine learning to dynamically respond to changing demands and business conditions.
This is a very different way of thinking about the supply chain. So how close are companies to realizing this goal?
It varies. None are there yet. Some, like Procter & Gamble, are on their way, and have worked to break down the supply chain management business model for nearly a decade. And many are at the early stage of this journey or need to get started.
So how do enterprises get there? What are the steps they must take to remove the chain from the supply chain?
You’re right in assuming it’s a journey. In a recent article I authored, I introduced a five-stage maturity model for Digital Business 4.0. It starts with the foundation: going digital. I call it setting up a digital twin of the enterprises’ physical capabilities and digital supply network. It’s as basic as cleansing, organizing, and digitizing master data that can be used to “digitalize” internal and external business processes.
Once the foundational work is complete, an enterprise can realize the benefits of technology. They can automate processes, such as accounts payable, for instance. They can better collaborate with stakeholders in the supply network from a single source of the truth. And they can leverage the data flowing through the network. That'll give supply network professionals the ability to conduct advanced analyses into their operations to understand the bottlenecks and areas for improvement. I call this setting up a control tower to oversee the supply network.
Most companies are somewhere between these two points right now. But, there are industry leaders moving further ahead. These enterprises are optimizing their network design. To do this, they’re embracing leading-edge IoT technology to get real-time visibility into all the moving parts of their supply network. This is transformational and creates many new opportunities for enterprises to optimize their supply network and deliver value to the business.
Can you provide an example of what value this shift will bring to an enterprise?
Think about the changes an enterprise must make to thrive in an eCommerce centric environment. It’s all about personalization, last-mile delivery, and getting products to customers when they need them. Traditional supply chains based on bulk ordering and fulfillment don’t allow for this. And when enterprises make the shift towards eCommerce they see costs increase as they’re no longer able to benefit from the economies of scale they could before. This also has a knock-on effect on shippers, carriers, and others involved in the network as they must respond to changing demands…for every action, there's a reaction.
But when you have an adaptive enterprise supply network this isn’t a problem. Why? Because the digital connections, data flows, analytics, and systems allow the enterprise and it’s entire ecosystem supply network to be dynamic. Things like freight capacity, inventory, production times, and any other important data points can be shared on the ecosystem commerce platform with the network anonymously and in real-time. The ecosystem network can then run algorithms based on these data points to match supply with demand and capacity to make sure fulfillment happens as quickly and efficiently as possible.
This shift will also have a positive impact on society as it’ll make sure that enterprises maximize resource efficiency and eliminate waste. It’ll bring the concept of a circular economy to life.
When do you expect this vision to become a reality?
We’ve been talking about this for over forty years, but we’ve reached a point now where technology makes it all possible. That being said, there is lots for businesses to figure out so I don’t expect the change to happen overnight.
But one thing is for sure, the direction of travel is set. This is where supply chains are headed. So going digital is not an option and if you’re only just starting you’re already falling behind.
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