Part 2 of the “The Network And Your Supply Chain” series
Networks have had a very positive effect in today’s world – just think about how Airbnb, Uber, Facebook, and Alibaba have impacted your life. These networks have created a digital platform for all their participants, and the fundamental objective of the network is value creation for participants. The so-called “network effect” comes into play when increased numbers of participants improve the value of the service or the product offering.
From the lens of supply chain leaders, it is very important to recognize that a network can determine the efficiency and effectiveness of your supply chain. Networks are critical for value creation; they become the system of record in a multi-enterprise collaboration world.
What to look for in a network that serves your enterprise
- Financial opportunities, such as cost reduction, working capital optimization, on-time deliveries, and quality improvements
- Mutual value drivers for trading partners such as costs and efficiency improvements
- Process automation that results in saving time and administrative costs
- Preventive risk tracking against late shipments and logistical errors
- An integration framework to operationalize your business processes and drive business value
- Visibility and insights across the network for a better understanding of the state of processes
All of the above will enable full supply chain alignment within and outside the four walls of your enterprise and can offer the business very positive outcomes.
To achieve these objectives for your enterprise, the challenge is to ensure your trading partners are onboarded and managed. This is where the network plays a crucial role. Think of some of your current business challenges: maintaining pricing contracts, confirming goods with your warehouse clerk, working with your planner to ensure your supplier has the capacity to meet the forecast, or collaborating with your quality assurance team about a quality incident they created on an incoming batch from a supplier.
This is a normal day in a life of “what can go wrong in your supply chain.” Navigating the challenges and developing a winning strategy not only requires the right structure within your organization but also working with your trading partners – your suppliers, logistics providers, and partners – to ensure you have the right communication mechanisms and tools to support the free flow of commerce in your organization.
Some industries have been very successful in embracing the network. Electronics manufacturers, for example, have a great deal of experience and knowledge from building and managing their digital supply chains by creating a network with outsourced manufacturers. Consumer products organizations and retailers may be far behind, but they have started to work on transforming their supply chains and leveraging the network.
In reality, what you really need is a high level of transparency that provides mutual benefits for your enterprise without burdening your trading partners. Business-to-consumer (B2C) markets are enabling companies to deliver this level of insight, providing information about shipment updates with real-time visibility. Here are some key aspects that need to be considered to make the network work to your advantage:
- Data from internal and external sources needs to be brought into a simple platform – data consolidation and enrichment.
- The consolidated data needs to be augmented and cross-referenced with information that is relevant for your organization – analytics and network optimization.
- Information from external sources like weather, traffic, and social networks that could impact your business operations needs to be included – social listening and monitoring tools.
- The enriched information needs to be linked into your data models and advanced analytics systems then optimized to feed into the control center for further review – proactive response management.
- Easy data visualization and governance need to be provided and privacy and security compliance standards need to be adhered to in the cloud – data security and compliance.
All of the above means your network has two main critical components: the trading partners who play a key role in enabling your supply chain, and a digital platform that can help your enterprise create agile and flexible business processes, providing improved supply chain collaboration and frictionless integration to enable the next-generation intelligent supply chain.
Get to know the SAP C/4HANA and Qualtrics portfolio by joining our webinar on November 26th.