There’s a growing discussion today about how companies need to look at the various processes that have historically been called supply chain management through a different lens — namely, a global trade network lens. But what does that mean exactly? What’s the difference between the traditional supply chain model and a global trade network model?
“The Global Trade Network model is very different altogether,” said Doug Surrett, Chief Product Strategist at Kewill in a recent episode of Talking Logistics. “Instead of siloed operations, the focus is on interactive collaboration with all partners and participants on the network. Instead of relying just on contract carriers and traditional spot markets, which tend to focus just on a single mode or geography, you have access to an entire global market of logistics service providers, including those you haven’t worked with in the past.”
Surrett also discussed the opportunity to enable/leverage crowdsourcing within the network. For example, he mentioned how a growing number of shippers are looking to enable non-traditional ways to make deliveries, such as incorporating Deliv as a same-day delivery option on their e-commerce websites or even within their transportation management system (TMS) routing guide.
Another important difference is micro-optimization, which is prevalent today in traditional supply chains, versus macro-optimization, which global trade networks can more easily enable, thus opening new doors to cost savings and productivity improvements.
“Micro-optimization is focused on just one company’s network or sub-component of a network,” explained Surrett. “Macro-optimization is looking at opportunities for optimization across a combination of companies. For example, a traditional TMS is focused on optimizing a single customer’s shipments, but in a global trade network model, you can look across multiple customers at the same time to try to find those ‘orphaned’ opportunities that are left out or cannot be optimized by themselves because there’s no way to get that incremental improvement unless you have other shipments [from other companies] to mix into the model with it.”
Of course, the concept of cross-company collaboration and communication is not new, but overcoming the “we’ve always done it this way” mindset, as well as the limitations of yesterday’s technologies, have been a challenge. However, the tide is starting to turn, as Surrett put it:
“The market as a whole has come to the conclusion that we’ve gotten everything that we can get out of the old ways and the old systems and we’re now looking for ways to get to that next level of savings, next level of effectiveness, next level of optimization. The realization has settled in with people that the systems of yesterday just won’t cut it anymore.”
These systems of yesterday, which are predominantly on-premise, are giving way to cloud-based solutions. “The solutions of the future will be cloud-based and they have to be able to flex and adapt to all the participants on the network,” says Surrett. “And they have to enable participants to connect quickly and easily to the network in whatever way they want to connect, whether it’s EDI, portals, APIs, or other means.”
So, what are some of the benefits of a global trade network model? Surrett shares a few of them in the short clip below, including improved access to capacity, improved speed and agility, and the ability to respond to exceptions and challenges more quickly and proactively.:
I encourage you to watch the rest of my conversation with Doug (embedded below) for additional insights and advice on this topic, including how to get buy-in from trading partners and how global trade networks will evolve in the years ahead. Then take Doug’s recommendation: do an honest assessment of your current supply chain systems and processes. Are they conducive to delivering the benefits of a true global trade network model? Unfortunately, for many companies, the answer is still no.