The journey to fully embracing Supply Chain Operating Networks is ongoing. As the industry evolves, the role of network effects in supply chain management will become increasingly important, and companies will need to adapt to stay competitive.
The Missing Link in Supply Chain RFPs
In over two decades of analyzing the supply chain and logistics software market, a noticeable absence is the Request for Proposals (RFP) for Supply Chain Operating Networks (SCONs). These networks, also known as business or multienterprise collaboration networks, are crucial for modern supply chain management but are often overlooked due to the lack of a dedicated executive role, such as a Chief Network Effects Officer (CNEO), to champion their value.
The Need for a CNEO
A CNEO would view supply chain management through the lens of network effects, understanding the importance of collective intelligence from various stakeholders. This role would be responsible for crafting RFPs for SCONs, but most companies still operate with an inside-out approach and in process silos, which extends to their procurement of software solutions.
Breaking the Silo Mentality
The traditional procurement process is fragmented, with separate RFPs for Transportation Management Systems, Warehouse Management Systems, and other solutions. This siloed approach fails to recognize the integrated nature of supply chains and the potential of network effects to enhance resilience and collaboration.
Educating and Evolving
To shift this paradigm, there’s a need for education on the value of business networks and network effects. Executives must be willing to challenge the status quo and adopt new ways of thinking. Some suggest rebranding “Supply Chain Management” to “Network Effects Management” to reflect this change in perspective.
Software Vendors Recognizing Network Value
The trend towards network-based solutions is evident in the recent acquisitions by traditional supply chain and logistics software vendors, such as SAP’s acquisition of Ariba and others. These acquisitions highlight the growing recognition of the value of network-based platforms, although realizing the promised synergies often takes time and requires a cultural shift.
The Slow Shift in Understanding
It has taken years for companies like SAP to integrate their business networks across various solutions and trading partners. This slow progress suggests that it takes time for the C-suite to fully grasp the value of business networks.
The Path Forward
The industry is moving towards a future where RFPs for SCONs will become standard practice. To prepare for this shift, supply chain professionals should educate themselves on network effects, initiate discussions with their teams and partners, and take concrete steps towards integrating network effects into their supply chain strategies.
The journey to fully embracing Supply Chain Operating Networks is ongoing. As the industry evolves, the role of network effects in supply chain management will become increasingly important, and companies will need to adapt to stay competitive.
