We’re at the dawn of a new age in supply chains. As cloud-based technology moves into the mainstream, extended partner networks that make up the global supply chain are harnessing it to share information in new ways and collaborate online. The real benefit of the cloud isn’t so much about its features and functions, but its business networks and related communities.
The revolution parallels what’s happened in the consumer world with social networks like Facebook, LinkedIn, and Twitter. How useful is the software for Facebook or LinkedIn by itself? Those platforms are only as strong as their embedded communities. Without them, there is no solution. It’s just a piece of software.
A New Age in Network Technology
Modern commerce networks behave and grow like social networks. A vibrant, connected community makes them valuable. When the community grows, the network, in turn, grows in value. Platforms with community traction and depth – across a broad scope of industries – become extremely lucrative. They deliver more than functionality and the promise of improvement. They make business transformation a reality. They make the path to supply chain automation and agility finally possible.
Supply chains are beginning to benefit from cloud-based networks. Innovative companies are using these active, connected trading communities to address a number of supply chain challenges that have vexed the industry for years, like achieving industry-wide information standards and performance benchmarks.
If only every company on the planet would just embrace a common IT standard for their supply chains. Efforts around data messaging have been implemented (EDI), but they still fall short. We have seen examples in other industries. The SABRE computer system for bookings standardized and automated the way airline reservations work. In the financial world, the SWIFT (ISO 9362) banking standard and system created a way for financial institutions to make it easier to transfer money between banks worldwide. Unfortunately, the supply chain is a very different animal that EDI alone has not been able to solve.
The problem lies with the structure, size and complexity of traditional trading communities. Network technology can instill standards because it redefines the structure of communities. For cloud-based network technology to transform this very specific B2B world, it needs to be able to rapidly and easily connect different partners (companies) together into the same information hub.
Cloud platforms automate and make transactions between parties easier. But they also create communities that tie into real business processes. Supply chain communities are forming, based on core areas common to everyone – ocean and air freight, finance, logistics. Early in the dot-com days, for instance, ocean carriers got together and formed ecommerce utilities that did what SABRE does for airline reservations.
In this way, the technology platform itself becomes the standard, or master translator, and sits in the center of the community. All the business transactions in the supply chain—between physical and financial partners—occur through the common tongue of the network platform.
For platform users, this naturally creates a tightly-knit supply chain community. Common ways of engaging in commerce start to take shape, organically, without a body trying to enforce their standards on others (which hasn’t worked).
Through platforms, there’s suddenly a unified way of interaction, and a new, active, productive type of community can develop.
The Power of Community
Best practices and benchmarking have always been tricky in traditional communities. When dealing with competitive industry peers and vertical-focused trade associations, it’s challenging to work together with any kind of real fact base. But thanks to cloud platforms, it’s now possible to create community benchmarks that highlight—with full privacy and protection—how industries are really performing in their supply chains, based on actual data being captured on the underlying transactional platform. Importantly, these benchmarks are cross-industry. After all, retailers and manufacturers all use the same pool of ocean carriers, banks, ports, and 3PLs. Pooling shipper-community-wide performance data allows a business to see how it performs against a community average.
And this is really where the power of a network-technology-defined community comes in. It’s able to compare apples-to-apples, since all parties are using the same system. The benchmarking is also instant, in real-time, and always up-to-date based on actual transactional information.
Traditional approaches to benchmarking studies by outside research firms takes weeks or months. The benefit of a shared community platform is that benchmarking occurs instantaneously. If a company is performing worse than the community average, it knows, and can identify where it needs to get better and has the time to still make a difference.
It’s this sort of reinventing of ‘community’ that makes network technology so compelling. And because network technology is cloud-based and, therefore, iterative, community engagement with the platform is year-round, instead of just occurring at a conference once a year and then dissolving into day-to-day operations. Everyone is constantly participating and feeding back into the technology platform, and the resulting updates benefit everyone who’s on board. So in the same ways that LinkedIn and Facebook have evolved the different ways we can connect to each other, cloud platforms are poised to redefine the ways business partners interact, share information, benchmark, and grow.
Greg Kefer is Vice President of Corporate Marketing at GT Nexus.