We hear talk about them all the time. We are told we need one. But what exactly is a supply chain network?
Just as social networks have existed for centuries (long before social media platforms!), so too have supply chain networks. Digital social media platforms when first introduced made it much easier for us to communicate and collaborate with our social networks. They acted as a turbocharger on what we were already able to do through other means. They unlocked previously impractical capabilities of what we can do today.
Do you remember how you shared a photo of the view from your breakfast table on the first day of your vacation with everyone you knew before Facebook was a staple?
Exactly, you didn’t!
Before the big digital social media platforms, we either didn’t do some of what we today take for granted, or we relied on point solutions. Some solutions allowed us to ask our contacts to log in to a platform of our choice to see our latest photo album. Other solutions allowed our connections to update their own contact details in our address book but not share the details with each other.
These one-to-many solutions ultimately faded away in favor of digital social media platforms, since they were inherently hub-and-spoke solutions that provided some value for the initiating party, but questionable benefits to everyone else.
Supply chain networks
At the most fundamental level, organizations must communicate with everyone from manufacturing and warehousing to transportation partners, freight forwarders, distributors, retailers, and others. We send orders, confirm those orders, notify when the shipment is scheduled and send invoices before the actual movement of goods takes place.
Each party typically leverages its own preferred point solutions, some rather sophisticated solutions, and others very basic. Efforts have been made to integrate between some of the largest solution suites typically leveraged by large organizations, but as you move down the line, we typically end up relying on spreadsheets, emails, phone calls and various file-sharing solutions.
Quite quickly you realize there’s a need to collaborate on the details of many orders. Then you want to provide an order forecast, a promise or confirmation on the order, to schedule pick-up and delivery of the shipment, etc. Ultimately you want to manage and optimize across all your buyers.
The industry analyst firm Gartner® coined the term “Multienterprise Supply Chain Business Networks” (MESCBN)” and defined it as “a community of trading partners — of any tier and type within a network — that needs to coordinate and execute supply chain processes across multiple enterprises.”
The key is that the community of companies carry out business processes that extend across multiple parties or enterprises, which includes most supply chain business processes.
According to the report, “Multienterprise supply chain business networks (MESCBNs) are an essential technology component to a successful high-maturity, digital transformation. Executives must understand that their company needs to operate within such networks to stay competitive — in other words, minimize risk, increase efficiency, reduce cost, and capitalize on opportunities.”
While all of that is true, it doesn’t address what you truly need to be successful in achieving the ultimate supply chain goal of delivering the highest customer value at the lowest possible cost.
