Top Resolutions for Building a Better B2B Supply Chain Operating Network for the Process Industries
|A sound business network is key to a solid supply chain.
Some goals haven’t changed. Businesses in 2015 still have the common pursuit of growing revenues, profits, and market space, and leading companies are relying on building collaborative relationships in their extended supply chains to meet these goals in a responsible and sustainable way. Building powerful and more intimate relationships, extending across a critical mass of trading partners, leads to continuous improvements in company performance, agility, and differentiation.
According to Lora Cecere, Founder and CEO of Supply Chain Insights, companies use business networks because the performance of their organization hinges more than ever on the effectiveness of flows between, and amongst, trading partners. Examining Lora’s definition of a business network - “an electronic information exchange to improve business processes between companies. It is an inter-enterprise network that is established around a specific community’s goals and purposes” – makes it clear that a business network’s strength sits in the quality of the dynamic interactions happening across the supply chain that ultimately determine prosperity and economic growth for all participating parties.
As supply chain business processes and supporting technologies evolve, the concept of a business network can also be more broadly thought of as a business ecosystem. As Victor Hwang, author of “The Next Big Business Buzzword: Ecosystem?” published on Forbes.com, an ecosystem “…is about the dynamic interactions between things. It’s about how people meet, talk, trust, share, collaborate, team, experiment, and grow together. When an ecosystem thrives, it means that the people have developed patterns of behavior – or culture – that streamline the flow of ideas, talent, and capital throughout a system.” Victor concludes that a business ecosystem is a profound shift in how society thinks of economic value, where individuals matter and their actions can transform industries. It’s really a way of viewing the world.
Discussing the concept of a business ecosystem with Kevin O'Marah of SCM World proved insightful. I wanted to validate whether there really is a tangible connection between a Supply Chain Operating Network ecosystem and the realities supply chain executives face in the process industries. Here is what he had to say; “The concept of a supply chain ecosystem is like the control tower, but much bigger. There is such interconnectedness of the chemical companies and their customers. For example, feedstock to conversion plant, to multi-plant stop, to the factory that someone downstream will take the materials to convert – it’s huge. In the chemical sector, it’s an expansive footprint, and there’s a co-dependency.”
The inter-connectedness, expansive footprints, and co-dependency within the process industries, and the dynamic supply chain interactions in an inter-enterprise network, form the basis for these “10 Top Resolutions” to building a better Supply Chain Operating Network in 2015 and beyond.
Realize Unprecedented Visibility – While the definition of supply chain visibility differs among companies, it is still important to define what visibility means to you and your company, and then align your processes to gain the specific kind of visibility you need and desire. A significant area of business pain is supply chain visibility according to many surveys.
Gain Indisputable Understanding – Synchronize transactional data gathered across your business network to drive insights into information and align it with your business needs. A supply chain that senses and properly responds to market demand or supply disruption allows you to make both better and faster decisions.
Respond to an Infinite Variety – When you’re talking about tens of thousands of companies and individuals communicating with each other, all the differences in the way they each operate and think about their business processes creates massive complexity in the center. A business ecosystem isolates you from this complexity and removes friction in commerce.
Impact People’s Lives – A business network has a huge impact on people’s lives. When a critical mass of partners are actively participating, you reduce the amount of time trucks need to spend on the road, the amount of product sitting in a warehouse, the obstacles and stress people need to overcome in order to do their jobs well, and more.
Laugh-Out-Loud More – B2B Social is expanding rapidly, even in supply chain management, improving communication and collaboration among supply chain trading partners. It is an invaluable tool to help identify new innovations, understand market trends, learn evolving practices, and more. Even sharing LOL moments with each other will strengthen your immune system, boost your energy, protect you from stress, and
it’s free ;-).
Exceed Contributions to Sustainability – When you eliminate paper-based processes with order and invoice automation you lower energy usage, save trees and water, and lessen greenhouse gas emissions. Collaborating with carriers in a business network allows you to leverage unused capacity, maximize loads, optimize modes, and lower transportation resource allocation.
Deliver Differentiated Customer Service – Supply Chain Operating Network ecosystems enable companies to speak the language of their individual customers, greatly improving customer service and satisfaction while also providing the agility needed to keenly respond to ever increasing customer demand fluctuations or supply risk.
Make the Impossible Possible – It’s not uncommon for very smart people to spend months figuring out how to make complex business processes work that are best for them, and in the end compromise often trumps the ideal. A business ecosystem makes what was the impossible now possible – with you and your individual partners securing respective tailored processes and it all fluently working together.
Eliminate Waste and Unnecessary Costs – Partners running blind to each other’s operations are unable to “sense and respond” to potential disruptions throughout the supply chain which can adversely affect inventory levels and working capital. Integrating partners across a business network eliminates these issues.
Adopt an Outside-In Skillset – Adopting an outside-in supply chain is strategic, focuses on what matters to the customer and creates collaborative partnerships that derive real value over time. Be flexible to work with and meet your trading partners on their terms while still operating with your own ideal processes in place.
According to Lora Cecere’s research study titled “Building Effective Business Networks in Process Industries - Improving Supply Chain Value Networks” the average respondent in the survey uses four types of B2B solutions. The most common, in order, are; 1) phone/email/fax/mail, 2) EDI/XML, 3) spreadsheets, and 4) business networks or industry hubs. In a separate all industry study, Lora found that only 7-9% of industry flows move through specialized B2B Networks.
Reliance upon phone/email/fax/mail – obviously still prevalent across supply chains with its #1 ranking – clearly does not enable the types of business transformation outlined in my “10 Top Supply Chain Resolutions” list. Nor will spreadsheets. That leaves EDI/XML and business networks. How does EDI stack up?
Electronic data interchange (EDI) systems are more than 30 years old. The point-to- point nature of EDI does not scale, is difficult to maintain, and does not have the flexibility to meet the typically rigid requirements of a company’s enterprise resource planning (ERP) system. It’s no wonder heavily reliant EDI companies have become stuck. Business networks, and the technology innovations enabling them, are singularly presenting the plethora of opportunities outlined in these “10 Top Resolutions” - unlocking the next level of revenue realization.
Evolving your supply chains away from antiquated EDI systems to next-generation business networks, which combine value-rich technologies for business process applications and predictive analytics, are real game-changers. This will allow you to reconcile the tension between the specific requirements of your ERP instance, and the wide variety of processes and technologies across your trading partners.
A Supply Chain Operating Network ecosystem enables you to conduct more efficient commerce, develop deeper trading partner relationships, achieve forward-looking flexibility, communicate more effectively with social, gain predictive insights into market opportunities or disruptions, and more. Customer expectations today dictate that companies deliver Amazon-like, customer-centric experiences.
What Business Network is Right for Me?
It is important to select a B2B Network provider that is not only very active in your industry, but one that also has a demonstrable track record of delivering results for your industry. The effectiveness of any business network or ecosystem depends on the amount and quality of trading partners participating on the network. The more trading partners in your industry on the network, the better collaboration, communication, and cost savings you will experience. In addition, it’s also important to consider the breadth of business processes supported, and the capabilities within the network to build and leverage the benefits of the ecosystem quickly and effectively with a critical mass of your trading partners.
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Ed Rusch is VP of Global Marketing at Elemica, the leading supply chain operating network for the process industry.Capturing transaction data, across all trading partners, and translating it into actionable information is key to driving value out of the supply chain. By combining powerful SmartLink business process applications with a robust QuickLink Network, Elemica solutions improve operational efficiency, lower costs, and decrease working capital. Founded in 2000, Elemica today processes approximately $350B in annual transactions across more than 7,500 process industry trading partners. www.elemica.com.