Supercharge Your Supply Chain – The Network Effect

“It’s said that something as small as the flutter of a butterfly’s wing can ultimately cause a typhoon halfway around the world.” – Chaos Theory

In complex, global supply chain ecosystems, disruptions for a partner on one side of the world can adversely impact their manufacturing partners across the globe. The pandemic brought this dependency to the forefront during 2020. Inventory stuck at closed borders and sales crippled by the closure of retail outlets brought entire value chains to a grinding halt¹.

The pandemic was a clarion call to break down operating silos. The Supply Chain industry needed to reinvent its model, and the path forward was to build resilience. The ability to switch supply lines at the touch of a button would ensure the value chain preserved its integrity while taking corrective actions to resurrect downed partner operations.

How would an enterprise go about building and operating such an ecosystem, especially one that has relied on trust and performed like clockwork for decades?

The network effect

Demand signals, and the ability to accurately forecast and deliver, thrive on data constantly exchanged amongst the various tiers of a value chain. With the number of partners running into the thousands, such data interchange relies on links established between direct points of interaction. But what if these links extended to the entire ecosystem? Ambitious? Yes. But certainly doable.

What are the drivers to enable such a network, and what goes into building one that stands the test of adverse circumstances?

Knowing is half the battle

Amongst the wonderful things to come out of the 1980s, GI-JOE’s war cry flies high. Staying informed is the first crucial step in building or sustaining a thriving business.

Organizations can no longer claim disparate systems of records at partner sites as a black box. With interoperable systems and APIs at the forefront, even partners with low technological maturity can inform stakeholders of their supply and stock levels.

Forecasting needs accurate demand signals. Getting demand signals through to all stakeholders, direct and indirect, is key to ensure everyone has an equal stake at the table. A network is all about the interchange of such information. Data feeds from Bangladesh are transmitted to Birmingham-based factories, letting them know of the raw materials shipped. Simultaneously, the sales headquarters at Boston knows that the next marketing campaign is on track based on production queue status at the factory. Disruption in shipping channels at the Suez? The network fulfills an alternate supply – Bolivia steps in to cover the hold-up.

Insights are as good as the underlying data. And so, establishing a fail-safe mechanism for data interchange is a non-negotiable step 0 of the process.

Fixing gaps requires identifying them

Widespread partners can now be connected via the network, where there is seamless exchange of data, and prediction algorithms churn out insight after insight. With so many moving pieces, a chain is as strong as its weakest link. Suppliers’ inability to fulfill their orders from a geography puts stress on all other parts of the ecosystem—a domino effect.

Resilience is built on trust, and in a network, data drives this trust. Supplier scores are a mechanism to ensure the best of partners (or the closest alternate) is always available to protect the network’s sanctity. The scoring algorithms take into account multiple factors, primarily a partner’s track record, their tier-2 and 3 suppliers’ efficiencies, as well as macro-economic factors.

A common question that stakeholders pose when it comes to a network is: What’s in it for me?

Apart from the transparency and benefits from leveraging economies of scale, the notion of new markets opening up to a partner purely by virtue of a multi-enterprise network is unparalleled. Imagine breaking beyond the barrier of the 6 degrees of separation. With dynamic scoring algorithms, intelligent order routing engines, and predictive insights running atop the network, it levels the field for even small-scale partners while boosting top-line options for the larger ones.

Breaking the fourth wall

While several enterprise networks end at last-mile delivery, it is time to remember that ‘consumers’ are your partners too. Direct-to-consumer (DTC) models have taken off and, for several organizations, serve as the leading source of revenue. How, then, can these partners be unaccounted for?

What started as a means to directly reach consumers for their daily personal needs has evolved to even EV auto-makers going direct, shaking up the traditional fossil-fueled personal vehicle landscape. Consumers have leveled up to brand ambassadors even as online ad/promo spending budgets have shot through the roof.

Connecting with the end consumer has often remained the holy grail for principal brands. The network simply gives the right set of tools to enable the connection. By understanding consumer spends and market share projections, business applications built atop the network allow brands to fine-tune their strategy on the fly—all at the touch of a button. Bringing customer loyalty and membership as a use case to the network has resulted in better adoption and value realization.

Conclusion

Multi-enterprise Supply Chain Networks are not new. They’ve existed for quite a while now. However, most networks do not have much to offer, purely putting together building blocks – riddled with aging tech and still operating under silos, all under the guise of an interconnected system. The evolution of such networks is underway, and it brings with it a need to not only modernize the underlying infrastructure but to have point solutions built atop the network, which leverage the powerful data generated from near and far.

Pay-as-you-go and subscription models offering insights not only help the primary brands but even the smallest of partners by opening up new avenues of revenue and growth.

The future of the Supply Chain revolution has already begun. Come on aboard!

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