Investments in Supply Chain Operating Networks Continue

Four years ago tomorrow, I wrote about how investments in Supply Chain Operating Networks (SCON) were rising. The post was triggered by Thoma Bravo’s acquisition of Elemica at the time (which it later sold to Eurazeo in 2019), as well as previous deals like Infor’s acquisition of GT Nexus, Insight Venture Partners’ acquisition of E2open, and Kewill acquiring LeanLogistics (with the combined entity later rebranded as BluJay Solutions). 

Last week, Thoma Bravo announced that it is acquiring another SCON: Exostar, LLC, “a leader in trusted, secure business collaboration for the highly-regulated aerospace and defense, life sciences and healthcare industries.” Here are some details from the press release:

Exostar’s unique platform creates trusted communities where companies can manage the complexity and mitigate the risks associated with collaborating with external partners. Thoma Bravo plans to leverage its expertise in enterprise software solutions for complex industries to partner with Exostar’s existing management to further develop and expand the company’s current capabilities, particularly in cybersecurity, to position the company for further growth.

Exostar was developed as a joint venture between some of the world’s leading businesses, including BAE Systems, Boeing, Lockheed Martin, Raytheon, Rolls-Royce, and, more recently, Merck. Initially formed as a B2B aerospace and defense industry exchange, the company’s secure platform now serves over 150,000 organizations worldwide in not only aerospace and defense, but the life sciences and healthcare markets as well. Exostar’s former shareholders plan to remain actively involved as customers and advisors offering guidance on the product roadmap and strategic platform investments.

This follows Thoma Bravo’s acquisition of Command Alkon earlier this year. As communicated in the press release, “the acquisition by Thoma Bravo is expected to speed the execution of Command Alkon’s strategy to integrate inter-company supply chain operations in heavy construction via CONNEX, the company’s many-to-many technology platform.” 

Also this year, Trimble acquired Kuebix, a network-based transportation management system provider (and a Talking Logistics sponsor). And according to PE Hub, Insight Venture Partners is reportedly bringing E2open back to the market (after acquiring network-based providers Amber Road, INTTRA, and Cloud Logistics over the past few years).

Why the ongoing interest and investments in Supply Chain Operating Networks / network-based solutions? For the same reasons I have written about for years (see links below). Simply put, many organizations now recognize that for business processes involving many external trading partners, network-based solutions are the best platform. 

“I believe the time has come for supply chain executives to step into the role of Chief Network Effects Officer,” I wrote back in 2016. Unfortunately, I still haven’t come across any Chief Network Effects Officers (not surprising, I guess, since many companies don’t even have a Chief Supply Chain Officer). But if the current COVID-19 crisis is truly serving as a catalyst for change and innovation, perhaps we’ll see more companies taking a fresh look at their supply chain strategies, processes, technology, and people from a network effects perspective.

How do you get started? First, you have to educate yourself about “network effects” and how they currently exist in supply chain management, and what opportunities lie ahead. Then you have to get the conversation started with your teams about network effects, as well as your carriers, brokers, suppliers, customers, logistics service providers, technology providers, and other external partners (see this post for questions that can serve as a catalyst for conversation). And finally, you have to 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.

For related commentary, please check out these posts: