The Relay Race is Over: This Year We Network Our Supply Chains
Maybe the “chain” is the problem. For decades we’ve looked at trading relationships like a relay race – suppliers pass the baton to manufacturers who pass it to logistics companies who pass it to retailers. The truth is that the supply “chain” is more complex than that. It actually looks more like a network than a chain. Each party has its tentacles in multiple business areas, and its participation isn’t sequential—it’s involved in multiple stages of a process, and there’s often a lot of back and forth between stages.
Perhaps the reason we haven’t appreciated the network structure of trade is that, until recently, information didn’t flow that way. Due to technology limitations, information between parties was passed off like a baton. Having trading relationships resemble one thing and information flows resemble another is not good. It creates bottlenecks, inefficiencies, and blind spots.
But here, today, in the year 2016, there’s a better way. This is the year we network our supply chains.
There’s a great report by American Shipper that talks about why we can’t wait any longer to correct our vision of supply networks.
Some highlights from the report:
- Big things are happening in 2016 that require companies to share information better. From the Internet of Things to predictive analytics, the amount of data that companies have access to will be immense. Unless they share that information with their trading partners, they won’t be able to take advantage of it.
- Global trade will continue to be dicey. From sweeping trade agreements like the TPP to stagnant ocean freight demand and trucker shortages, there are lots of market forces at play. Navigating these choppy waters requires having a good information architecture to be responsive.
- Inward-facing supply chains will have trouble in an increasingly globalized world. Separating transportation functions from sourcing functions creates silos, which make a company particularly vulnerable when it needs to strategically orchestrate its end-to-end supply network.
The report offers many great examples of traditional supply chain functions, and how they need to be reevaluated from a networked multi-enterprise perspective. Perhaps the emergence of these kinds of reports is an indication of where things are heading: the traditional paradigms of walled business functions won’t take you very far. Today, global trade is all about the network.