How should we (re)organize ourselves to best harvest the value of ‘network effects’ to measurably boost the quality, opportunity, and ‘user experiences’ of our offerings?
That was one of three key questions that Michael Schrage presented in a research paper titled “Rethinking Networks: Exploring Strategies for Making Users More Valuable,” published last year by MIT Sloan School’s Initiative on the Digital Economy.
And I have no doubt that was the question the combined leadership team at Kewill and LeanLogistics asked themselves in the weeks and months following their coming together last May. (Note: Kewill and LeanLogistics are Talking Logistics sponsors).
Today, they revealed their answer: the combined company is now BluJay Solutions, and the foundation of their value proposition is its Global Trade Network (GTN).
Why rebrand? “Our company has been known for different products and solutions in different areas of the world,” states the FAQ issued by BluJay. “Depending upon the region or country, the awareness of Kewill or LeanLogistics may be limited to a single product, category, or previously acquired business. For many years, we have also operated as independent businesses. However, over the past year-plus, leadership has directed significant changes to begin operating as one global company – different, better, and stronger. The rebrand is a culmination of that effort. Honoring our history and the strengths of our past, we look forward as one company, one team, with one vision. We are reintroducing ourselves under a new unified brand to tell the world our story about forging the future with BluJay’s transformative Global Trade Network.”
Or as Aristotle would have put it, the whole of BluJay is greater than the sum of its Kewill and LeanLogistics parts.
As BluJay reported back in December, “the company saw record revenues, up 30% following the acquisition of LeanLogistics with double-digit growth on a like-for-like basis. The company’s solid recurring revenue base grew by over 10 percent as 59 new customers were added to the platform during the period.” Some other stats about the company:
- 7,500 customers worldwide, deployed in 100+ countries
- $17+ billion freight spend on Transportation GTN
- 1.9 billion transportation transactions annually
- 40,000+ members worldwide on its Global Trade Network, including shippers, carriers, forwarders (6,500 in 189 countries), suppliers (more than 10,000), and third-party logistics providers (3PLs)
“We believe that future success in global trade requires transforming to a new strategy that moves companies from a traditional siloed, linear, functionally optimized supply chain logistics model to a modern, global trade network model,” states the company in its FAQ. Doug Surrett, Chief Product Strategist at BluJay Solutions, echoed this point in a recent episode of Talking Logistics: “The Global Trade Network model is very different altogether. Instead of siloed operations, the focus is on interactive collaboration with all partners and participants on the network.”
For more than a decade now, I’ve been encouraging companies to view supply chain management through a ‘network effects’ prism. Why? Because the greatest opportunities for supply chain innovation exist at the intersection of Software, B2B Connectivity, and Social Networking. And as Schrage wrote in his paper:
The more users participate [in a network], the more value — and valuable experiences — can quickly be generated. And the more value created, the more users — and innovative uses — materialize.
That virtuous value cycle simultaneously disrupts and transforms industries worldwide [emphasis mine]. Value can exponentially increase as costs only marginally grow. This makes the economics of ‘network effects’ combinatorially compelling.
Where do you begin? I’ll repeat my advice from last year:
First, educate yourself about “network effects” and how they currently exist in supply chain management, and what opportunities lie ahead. Below are links to some posts we have published related to this topic that provide additional insight. In his paper, Schrage also outlines a research framework — “The Triple S” — that deconstructs network effects into three interrelated components: Segmentation, Socialization, and Skill-ification. According to Schrage, “organizations around the world have successfully employed this framework to usefully experiment with network effects.”
Second, get the conversation started with your teams about network effects, as well as your suppliers, customers, logistics service providers, and other external partners. The three questions Shrage presents — How do we make it easier for our users to participate and create ‘connections’ they see as valuable? How do we make it easier for ourselves to identify value from user participation, contributions, and links? How should we (re)organize ourselves to best harvest the value of ‘network effects’ to measurably boost the quality, opportunity, and ‘user experiences’ of our offerings? — along with the concepts presented in the Triple S framework, are a good catalyst for conversation.
Third, do something — don’t just think and talk about network effects. Determining what steps to take should be one of the outcomes from your team and trading partner conversations.
That said, most companies today don’t send out Request for Proposals (RFP) for “networks effects” solutions; they issue RFPs for transportation management systems, warehouse management systems, trade compliance solutions, commerce solutions, demand planning applications, and other supply chain solutions that address a specific business process or pain point. Therefore, BluJay Solutions and other supply chain operating networks still need to compete as best-of-breed providers of these distinct applications. But once they get their foot in the door, they can then leverage the power of the network and its unique value proposition to tip the scales in their favor.
How big of a competitive weapon and differentiator is a global trade network? The answer ultimately depends on whether (and how quickly) companies are willing to question the status quo and change their perspective and approach to supply chain management, especially with regards to their technology platforms. Investors are certainly betting that “the future belongs to networked companies,” as Infor CEO Charles Phillips said last July at the company’s user conference. BluJay Solutions, along with its investors and customers, are making the same bet.
What about you?
Have you started viewing supply chain management through a ‘network effects’ prism? Do you agree that the future belongs to networked companies? What are the challenges and opportunities ahead? Post a comment and share your perspective!
For related commentary on Supply Chain Operating Networks and network effects, please read the following Talking Logistics posts:
- Here Comes the Chief Network Effects Officer
- Follow the Money: Investments Rise in Supply Chain Operating Networks
- One More Prediction for 2016: Blockchain Technology Will Make Its Debut in Supply Chain Management
- The Network Effect in Supply Chain and Logistics
- The Rise of Supply Chain Operating Networks
- A Pulse on Social Networking for Supply Chain Management
- Where to Find Supply Chain Innovation
- Enabling Labor, Freight, and Cash-to-Cash Savings with Supply Chain Operating Networks
- HP’s New Style of IT: The Social Supply Chain
- Facebook Graph Search, Through a Supply Chain Lens