Increasingly in relation to business models we are seeing the use of terms such as ecosystem, keystone, and networks. This is not in itself new, as we have been used to the concept of supply chains more many years and they have been used throughout history.
What we are seeing increasingly, is many organisations adopting a different balance in their supply chains with a move towards acknowledging that they are supply networks rather than supply chains.
With traditional supply chains the approach has been to create them and then hold them in a relatively static equilibrium for as long as possible. With supply networks, however, whilst they are also held in equilibrium it is done so by regularly adjusting the tension between the various players in the network creating a solution that is robust yet able to flex to accommodate changes and shocks.
The levels of effort required to create, grow, and maintain a supply network are subtly different from those required for a traditional supply chain. With a supply chain, once it is put in place, changes are often minimised as much as possible, and it is expected to be self managing with players only expecting to communicate with the players who are directly connected to themselves. It is a relatively ‘lumpy’ style of activity and relationship, with bursts of effort when issues require it.
If we look at supply networks, the level of effort is often far smoother in profile, with a ‘little and often’ approach to interaction. Additionally, there is a need for a much greater awareness of the overall ecosystem, for example, to understand the impact of change in one area on the overall balance. It requires a portfolio management approach which in turn requires people who can think and communicate at a systems level.
The role and skills of supply chain professionals in the world of supply networks is therefore different to that of a traditional supply chains. Skills such as communications, modelling, relationship management, environmental awareness, and systems thinking to name but a few become more important.
Whilst many professionals would say that these skills were equally important in relation to supply chains, I would suggest that whilst this may be true to a certain extent, the importance, and their relative balance, in relation to supply network management is different. In order to create a forward-looking supply network management team we need to address this skills balance and equip professionals with the right blend and depth of skills.
In addition, we need to ensure that we surround them with an organisational mindset that accepts the need to balance the ecosystem in terms of value flows. An acceptance that it must remain in dynamic equilibrium both on a short and long-term basis, and that value doesn’t pool inappropriately, nor does it get sucked to the largest or highest players.
As Vittorio Colao, CEO of Vodafone, so eloquently put it during his results presentation “the lemon cannot be squeezed too much“. He was speaking about the upcoming spectrum auctions and the fact that hopefully this time the approaches being put in place had taken on an understanding that there needed to be balance that particular ecosystem in order to maintain the overall economic benefit that his industry brings.
- Supply Chain Shocks – A Risk or an Opportunity? (kommercialize.wordpress.com)