January 17, 2023 | Supply Chain Strategy
Modern supply chains comprise of deeply interconnected networks of supply chain elements with complex interdependencies. These modern supply chains are so designed, that despite their exposure to the volatility of the business environment, they continue to enable businesses to pursue trade with each other efficiently.
A supply chain ecosystem comprises all its constituent elements — the business, the vendors, suppliers, partners, people, processes, data, and resources that come together to move a product from its point of manufacture to where the end customer/user is located.
The ecosystem is, therefore, the network of entities from across industries that work together to design, implement, and execute supply chain solutions. Each entity in the ecosystem contributes an essential capability and delivers a portion of the solution.
The ecosystem’s power derives from the fact that the solution is not entirely dependent on any one element of the ecosystem and that the value of the ecosystem is greater than the combined value of its elements.
The global extent of modern supply chains necessitates collaborative partnerships that create extensive networks of people, processes, information, and organizations. These partnerships forged, for example, through outsourcing, offshoring, etc. draw value from each other and complement each other’s strengths and competencies by sourcing products or services — to add value to the end customer.
It is important to recognize the networked nature of supply chains and the resulting interdependencies. Such a global supply chain ecosystem can be a competitive advantage for the business since it can be a strong entry barrier against potential competitors. Any potential competitor will require to first equal or better the core product or service on offer. And then, it will need to also contend with the complete network of suppliers, vendors, etc. that form the ecosystem.
Taking the traditional approach to managing today’s complex and global supply chains will prove to be insufficient. Supply chains are now seen as strategic assets that act as business enablers, value drivers, and points of competitive differentiation. This has led businesses to compete not only based on their product or service but as much on the strength of their supply chain efficiencies.
The supply chain ecosystem involves all elements of the supply chain that come into play in taking the product to the customer. For several businesses, for example, those dealing in consumer electronics, it is critically important to have efficient distribution channels to minimize the time-to-market. In such instances, strong supply chain capabilities are a competitive advantage in handling these challenges.
The best organizations do not view their supply chain strengths merely as tactical tools but recognize that their supply chains drive business. Efficient management of supply chain execution and supply chain risks enables businesses to adapt quickly to business challenges related to sourcing, procurement, capacity utilization, operational efficiencies, inventory management, warehousing, order processing, inventory financing, etc. to stay ahead of the competition.
Businesses want to use efficient supply chains to reach the markets faster with their products and to save costs. The linkages in supply chain ecosystems are no longer linear but have complex interconnections and inter-dependencies; hence, any ecosystem implementation needs to view it like a system.
In the present digitalized world, in which physical objects are embedded with sensors, there is a deep convergence of the physical and the digital. To be competitive in the modern marketplace, businesses must shift from linear supply chains towards autonomous supply chain ecosystems.
Real-time data is critical for the business to make informed decisions. The digital supply chain ecosystem should be designed to provide real-time data to make informed decisions on costs, delivery time, etc.
Customers’ expectations around product and service deliveries are high and they expect the best possible experience in all their interactions with their sellers. The supply chain ecosystem should enable customers to track their orders and receive real-time updates.
Ordinarily, driving quick, efficient, and reliable deliveries requires expending larger resources with significant negative impacts on sustainability. Any supply chain implemented, together with efficient and rapid deliveries, should also not overlook the adoption of sustainable supply chain practices.
Digital supply chain ecosystems should enable real-time data sharing. This enables businesses to streamline their chain of command with effective communication among the various component elements of the ecosystem.
In the current, complex, rapidly evolving, and hyper-competitive business landscape, supply chain efficiencies have come to be acknowledged as a means for gaining a competitive edge. Businesses that take such a strategic view while building their supply chain ecosystems will be able to leverage their supply chains' strengths and achieve superior business outcomes.