Driving Better Supply Chain Execution Through Digital Networks

Context

The twentieth century saw the expansion of supply chains beyond national boundaries. The feverish pace of globalization that started in the eighties created new manufacturing economies primarily powered by low labor costs feeding insatiable consumption in the developed markets. Just-in-time philosophy which up until then used to drive manufacturing production lines (without interruption), expanded beyond factory walls into the broader supply chains. Standards and methods for identification of products, pallets, information exchange, etc., along with significant automation of warehouses helped move goods with less friction and made Quick Response a reality. The coming of age of the internet and smartphones in the 21^st century further fueled unprecedented growth with direct access to consumers leading to the longest bull market in history. Efficiency was the only measure that mattered when it came to separating supply chain winners from the rest.

Move over, efficiency

All of that came to a standstill in 2020 when the COVID-19 pandemic hit the world. It was a perfect storm that saw a concurrent disruption of supply, demand, and logistics on a global scale. The rest is history. For most manufacturers, supply chain resilience has become the new mantra worth the additional cost that it entails. So, what does resilience mean? Simply put, resilience is the sum total of visibility (which is required for better planning), agility (in creating supply diversification and, perhaps, redundancy), and intelligence (to anticipate and respond in near real-time) to events across the broader ecosystem.

Much work has already happened in driving better visibility to demand. Knowing yesterday’s sales today at a store-item level is a reality that has delivered significantly improved short-term forecast accuracies. Nonetheless, with both new product introductions and e-commerce sales growing at a faster clip than ever before, demand signal fragmentation too has increased, thereby paring back gains made with better visibility. With inventory deployment decisions going in lockstep with demand forecasts, concurrent stockouts, and excess inventory situations have continued to hobble planners. How do we then address this dichotomy?

Role of the ERPs

Enterprises have long had multifarious supply chain partnerships typically organized in their respective resource planning systems (ERP). These systems, while integrating functions within the enterprise, have little to offer when it comes to driving external collaboration. While transactions are inherently dual-party, ERPs have, by design, perpetuated sell-side and buy-side functional silos, thereby preventing true end-to-end visibility even within an enterprise. Insomuch, that they represent islands of data on which enterprises live and operate both within and outside. The need of the hour is a fabric that digitally connects ERPs across a relevant ecosystem to bring simultaneous visibility and operability for the benefit of all participants. This is what a digital network is all about.

What is a Digital Network?

A digital network is an over-the-top (OTT) architecture that enables many-to-many connectivity among its participants. It is founded on a common data model that harmonizes participant information so much so to enable interoperability of respective underlying ERPs. Of course, a digital network must ensure that any visibility is self-regulated at the discretion of the parties concerned. With this, parties can potentially start focusing on bridging planning gaps (read forecast errors) with responsive execution.

Execution in a Networked World

For parties connected with each other on a digital network, the ways they can collaborate is only limited by their imagination. Let us look at a few examples of what a digital network like TradeEdge Network can mean to you:

Conclusion

Digitization of value networks is happening faster than we know. Enterprises recognize that the benefits from creating or participating in such networks far outweigh any risks to information or data security. Digital networks like TradeEdge are inherently architected and designed for privacy, integrity, and performance. As these networks continue to evolve, so do the use cases that participants discover. The above is but a small sampling to demonstrate #Possibilities Unlimited!

Connect with our AVP & Global Platform Head, TradeEdge, Suresh P Bharadwaj, for further discussion.