As supply chain complexities grow, the industry is recognizing the untapped potential of Supply Chain Operating Networks (SCONs) and the need for a strategic pivot towards network effects management.
The Untapped Potential of SCONs
For over two decades, the supply chain industry has relied on traditional Requests for Proposals (RFPs) for software solutions like Transportation Management Systems (TMS) and visibility tools. However, a notable absence in this procurement process has been the RFP for Supply Chain Operating Networks (SCONs), also known as business or multi-enterprise collaboration networks.
The Missing Executive: Chief Network Effects Officer
The core reason for this gap is the lack of a dedicated C-level role focused on network effects within companies. A Chief Network Effects Officer (CNEO) would be instrumental in recognizing the value of SCONs and spearheading their adoption. Currently, companies operate with an inside-out approach, maintaining process silos that extend to software procurement, which hinders the holistic adoption of network-based solutions.
Breaking Silos for Network-Centric Management
To initiate a shift towards network effects management, companies must break free from functional silos and adopt a more integrated approach. This requires a cultural and educational shift within organizations to understand and leverage the value of SCONs. The renaming of ‘Supply Chain Management’ to ‘Network Effects Management’ could symbolize this paradigm shift, although industry professionals may still prefer the traditional term.
Industry Movement Towards Network-Based Solutions
The industry is witnessing a trend where traditional software vendors are acquiring network-based platforms, recognizing their strategic value. Notable acquisitions include SAP’s purchase of Ariba, Infor’s acquisition of GT Nexus, and Blue Yonder’s recent agreement to acquire One Network Enterprises. These moves signal a growing acknowledgment of the importance of SCONs, although realizing the promised synergies often requires overcoming technological and cultural integration challenges.
SAP’s Journey to Embrace Business Networks
SAP’s journey post-Ariba acquisition illustrates the time it takes for companies to fully grasp the concept of business networks. It wasn’t until a decade later that SAP announced the creation of the world’s largest business network, integrating various networks into the SAP Business Network. This move reflects a C-level understanding of the value of business networks and their integration into core business processes and partnerships.
The Road Ahead: Normalizing SCON RFPs
The industry is gradually moving towards a future where RFPs for SCONs become standard practice. To accelerate this transition, supply chain professionals should:
1. Educate themselves on network effects and their role in supply chain management.
2. Initiate discussions on network effects with internal teams and external partners.
3. Take actionable steps, potentially starting with drafting an RFP for a SCON.
Embracing Network Effects for Resilience
The shift towards network effects management is essential for building more resilient and collaborative supply chains. As the industry continues to evolve, the role of a CNEO and the strategic focus on SCONs will become increasingly critical for companies looking to thrive in a complex, interconnected world.
