The increased supply variability and disruption companies are experiencing today, along with higher demand forecast error given an expanded omnichannel world, will be systemic moving forward. Material Handling and Logistics reports that supply chain disruptions are up 67% over the past year — not including the effects of COVID-19. Problems that affect companies today are external to any one enterprise, and thus a network-based solution and technology approach is warranted.
Corporations have moved from being vertically integrated to incorporating a horizontal network of global trading partners. This trading partner ecosystem typically represents more than 80% of the manufacturing, distribution and logistics capacity related to the products being produced for the end consumer. This means that 80% of the data and upstream supply chain improvement potential resides outside the enterprise in the form of contract manufacturers, subsystem suppliers, tier 1, 2 and 3 supplier factories, distribution centers, warehousing and logistics.
Capabilities around supply chain visibility and improvement are limited by current enterprise systems due to their hub-and-spoke style “enterprise centric” design. Major corporations will continue to struggle with visibility and targeted improvements given that, as the demand generator in the network, they only have the ability to report and improve upon 20% or less of the related variables, while 80% or more remains with their trading partners who are running on completely different systems and system architectures.
Improvement moving forward requires a hub-to-hub style digitized supply chain network that includes all trading partners and runs based on a single version of the truth (SVOT). The network itself must be able to provide visibility to all state changes across demand, supply and logistics. Capabilities that are core to the network include:
Outlook: Corporations, customers, governments and investors are all calling for systemic changes in supply chain management to prevent future disruptions. Evolving consumer demands for transparency, along with increased stakeholder attention on performance of a company’s suppliers, will continue to up the pressure on companies to optimize their supply chain capabilities through advanced software systems.
Joe Bellini is executive vice president of product management and marketing at One Network Enterprises.
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