I was recently reading Adrian Gonzalez’s 2018 supply chain predictions on his Talking Logistics blog and I found myself nodding at many of his points. We live in a chaotic world where change is the only constant to our lives and we’re seeing that with the massive changes in business and the economy. Changes that will require a different approach to how we measure, connect and execute our supply chains.
In his article, there are a few key trends that hit upon the value that supply chain orchestration can bring to organizations and key to this discussion is network connectivity and the value of technology with helping to drive optimization across our internal and external parties.
Let's take a look at supply chain networks and how we can begin to build these networks for greater supply chain performance.
Companies Will Focus on Integrating the Long Tail of Supply Chains
Simply put, in a business environment where making smarter decisions faster is becoming more important than ever, and where the margin for error is getting smaller and smaller, the 80/20 rule, connect only with the 20 percent of trading partners that account for 80 percent of transactions, to trading partner connectivity, communication, and collaboration is quickly becoming obsolete — and a risk to future success and competitiveness. - Talking Logistics
There is a rising importance in networks and your ability to tap into ALL of the parties within your network including suppliers, 3PLs, transportation partners, customs, freight forwarders, manufacturing and warehouses. However, as Adrian points out our approach to connectivity with these partners typically have rightly been to connect where it has the most impact and cost efficient. And with technological innovation we are seeing that we are able to have better connections with these partners in your supply chain networks.
The question is how do we evaluate the best practices with building out and partnering to connect our supply chain networks? What are the considerations to take into account?
Network Size vs. Network Diversity
One of the key debates around supply chain networks is around size and diversity. In a perfect world technology providers would be able to connect EVERY third party across ALL supply chain functions (transportation, global trade, manufacturing, repairs, customs, freight forwarding, etc.)
While the dream, we see a lot of different vendors specialize in particular areas with their networks such as specializing in air or ocean transportation or supplier integrations. They go for breadth within their specialized market to make it easier to connect when you have these distinct needs for better visibility in that specialized area. While certainly valuable we see that these networks only provide additional value for their core function and when it comes to optimizing orders across the end-to-end supply chain, they fail to provide the broad and detailed visibility across all steps needed.
We see Control Tower solutions taking a broader approach to connecting your internal and external systems and parties. These solutions focus on providing the ability to connect to all of the parties above in order to gain more granular supply chain visibility across all order steps and improved collaboration between these systems and parties. Most of these solutions also provide a network of connected parties but the focus is not just on building out this network but ensuring the diversity of this network and ability to add any party to this network based on customer need. This means building configurability and flexibility into the systems to connect with any type of party.
This is a core focus of supply chain orchestration, ensuring the connected parties don’t just provide visibility into the partner actions but also enabling collaboration and optimization to ensure lean and timely order flows across all parties.
Optimization through Automation
The other key element mentioned in Adrian’s article is the focus on optimization in the supply chain and the need to connect parties in your network to ensure optimization occurs for all orders in the supply chain.
This is what supply chain orchestration is all about. By connecting and getting better visibility across all parties that affect your order flows across all functions including inbound, outbound and reverse, we see that organizations are able to get true collaboration and full executional control over all parties. This leads to optimization.
By digitizing all constraints (time, cost, capacity, inventory, order requirements and SLAs of partners), supply chain orchestration can help you evaluate the constraints to build the best micro-supply chain in terms of OTIF and cost for every customer order based on the internal and external parties in your network and their capabilities and costs.
Just as important, it will take into account new orders along with your current orders, re-planning each micro supply chain for current orders should it make sense based on timing, capacity and other factors.
However, this doesn’t happen without moving beyond supply chain visibility with the internal and external parties in your supply chain network. You need to connect with them first but then use those connections and data to drive true collaboration and over time, optimization in your supply chain operations.
Focus On What You Can Do With Your Network
A supply chain network is only as good as what you can do with it. Growing the size of the network is great but if you get limited visibility and collaboration with the parties included in the network, the value will be limited as well. And if you can’t connect with certain parties who aren’t part of the network quickly and easily, then you lose value.
The future of supply chain is using our networks better and truly optimizing the investments we have made internally and externally with partners to drive better customer, order and cost outcomes. This only comes with flexibility across multiple and unique parties with intelligent and configurable automation to drive lean and timely order flows in our supply chains.