This article is the first part of a two part series about in the importance of Collaboration & Mobility in the Supply Chain.
In modern-day supply chains, borders, time-zones, and languages are no longer conventional obstacles to supply chain cooperation. Social media and advanced communications, trade-agreements, and multinational companies have flattened the world. Now the players in a collaborative process are not in the same geography or even in the same enterprise. Distributors collaborate with contract manufacturers and 3rd party logistics providers to solve a single problem.
Collaboration – Always connected
Supply chains, like most other facets of our everyday lives, have become increasingly connected and global. The Internet-of-Things has delivered real-time connectivity to billions of devices around the world. This has led to coupled supply chains capable of visualizing the real-time flows of demand and supply across countries, companies, industries, and languages. But are we now data rich and insight poor?
This revolution of connected supply chains has not necessarily led to more cooperative supply chains. Connectivity has brought volumes of additional data points which must be interpreted to be meaningful. The increase in data volume and update frequency results in more data available more often. This can lead to more informed decision making, but invariably more data requires more effort and technology to digest.
Having connected data is only part of the equation. The data certainly enables the determination of optimal decisions, however, what happens next? To leverage from connected data one must execute connected decisions. This means decisions that impact stakeholders across entities, geographies, and even supply chains. It is not enough for the data analysis to suggest the usage of opportunistic low-cost freight carrier if the carrier is making daily route planning and you are executing orders hourly. The decision-making time-fences need to be connected. This is very evident when performing end-to-end what-if analysis across the supply chain. The collaboration must occur within a decision-making time fence.
Inside-out to Outside-In
Business schools have long taught about the shift from Inside-Out (capability centric) business strategies and outside-In (customer-value centric) business strategies. But it equally applies to supply chains as well.
Traditional supply chain collaboration occurred within the four walls of a single enterprise and often within a single location. The supply chain plan was based upon data generated within the enterprise and was not normally shared externally. The actors in a collaborative process were usually colleagues of a common commercial entity. The techniques used for collaboration were whiteboards and email. Communication was prescriptive and structured with periodic meetings. A typical item of business may be to validate production capacity with the maintenance team, or reviewing short term demand opportunities, or identify expedite or defer options in light of new potential demand. This model remains popular in smaller manufacturers or those have not yet engaged a digitization strategy. Because the data, the processes, and the people exist purely within the enterprise looking out, this is often referred to as the Inside-Out model.
Outside-In Supply Chains are not chains at all but a network of relationships. Each network node is a point of known or speculative demand, supply, or capacity. The nodes are not linear. Modern supply chain models recognise that demand does not originate within the 4 walls of an enterprise but with a market, customers and consumers. Likewise the capability to supply, manufacture, or distribute originates with suppliers, 3PLs and contract manufacturers. Outside-In supply chain modelling looks at the complete supply chain holistically, of which a manufacturer is one node. The actors in this model are not colleagues nor do they live in the same country nor necessarily speak the same language.
“40 different countries contributed to the manufacture of the Airbus A320.”
Communication is unstructured in real-time with no periodic meetings. The techniques used for collaboration are often subscriptive. Communication may occur between a person and a machine or an internet device or a bot. A typical item of business may be to explore the feasibility and profitability of using contract manufacturing capacity in China to satisfy un-forecasted European demand requiring third party shipping and storage.
However, the shift from Inside-Out to Outside-In is disrupting the manner in which supply chains collaborate.