Is supply chain visibility a product or feature?
I’ve been debating that question for some time, most recently in a Talking Logistics episode (stay tuned for highlights).
Supply Chain Visibility solutions have been around for a long time. Early versions from the late 90s/early 2000s generally failed because they were missing a critical component: a connectivity network to feed the solution with real-time data from suppliers, carriers, customers, and other external trading partners. It was like having a browser with no internet connection. To get any value from these solutions, companies had to invest the time, money, and resources themselves to make these connections — typically using EDI, which because of the cost and effort involved, meant only a small fraction of trading partners would actually get connected.
Fast forward to more recent years, and thanks to APIs, cloud computing, mobile technologies and other developments, we’ve seen the rise of Supply Chain Operating Networks, which are the business equivalent of Facebook and LinkedIn — that is, industry networks that connect shippers, carriers, logistics service providers, and other stakeholders with each other, enabling them to communicate, collaborate, and execute business processes in more efficient, scalable, and innovative ways.
This gave birth to a new generation of supply chain visibility providers. They started by building the connectivity network first. For example, project44’s Twitter handle is @freightpipes, which reflects the company’s original focus on putting in place the plumbing for shippers and carriers to exchange data. But nobody puts out an RFP for plumbing. While plumbing, electrical wiring, and other utility connections are critically important, people enter the market to buy a house, not its underlying infrastructure. The same is true for companies: they shop for software applications, not connectivity networks.
So, now you have supply chain visibility software enabled by large connected networks of trading partners. This is definitely a big improvement over the original solutions from 20+ years ago. But…
Visibility is not enough.
To derive business value from visibility, you have to do something with the data and insights collected. It’s the doing, the actions taken to improve your transportation and logistics operations, for example, that ultimately delivers value. This is where enterprise software applications like transportation management (TMS), warehouse management (WMS), and yard management (YMS) come in.
In other words, the value comes from leveraging real-time visibility data to continuously optimize and automate specific business processes. This is why supply chain visibility providers have established partnerships with a wide range of TMS, WMS, YMS, and other supply chain software providers.
Put differently, does it make sense to implement a supply chain visibility solution if you don’t have a TMS, WMS, and/or YMS?
I believe the answer is no.
And that is why you’re seeing supply chain visibility providers expanding beyond visibility too. Both project44 and FourKites, for example, have recently introduced their own yard management solutions. I believe they will continue to expand their solution footprints further, most likely into TMS, and start to compete more directly with some existing partners.
In the meantime, you have others like E2open, Blume Global, Transporeon, Descartes, and Trimble (all Talking Logistics sponsors) that have network-based supply chain visibility solutions (developed organically or via acquisitions) along with a broad portfolio of other supply chain and logistics software applications.
In short, even for this new generation of supply chain visibility providers, visibility is becoming a feature of a broader supply chain software platform. The end game, if there is one, is to create the largest network of connected trading partners with the broadest set of software applications on top. As I’ve said before, in the world of supply chain and logistics, it will no longer be just software that will be eating the world (to use Marc Andreessen’s famous quote from 2011), but software and networks.
That’s my take. What’s yours?