Business management software specialist Roman Bukary examines the changing dynamics of web-based supply chain communications technology and its ability to increase levels of flexibility and transparency
Business management software specialist Roman Bukary examines the changing dynamics of web-based supply chain communications technology and its ability to increase levels of flexibility and transparency
Roman Bukary, who runs manufacturing industries marketing for cloud-based enterprise resource planning (ERP) vendor NetSuite, is highlighting how the weakest link in a chain determines its reliability and performance.
Until recently, supply chain technologies have focused on strengthening point-to-point connections, viewing the world as a straight line between raw material and final consumer. Bukary said this linear view ignores the new reality of the supply web – a much more complex three-dimensional network of partners, customers, and suppliers that requires the same point-to-point excellence of execution as the supply chain, but has the added advantage of flexibility and transparency.
Exploiting web interconnectedness
“Nothing embodies today's interconnected 24/7 world as well as the modern supply web,” he said. “Multiple tiers of raw supplies, intermediate parts and assembled products are sent halfway around the world and back again, all in pursuit of the oldest capitalist objective-getting goods from Point A to Point B faster, better, and cheaper in order to better serve the needs of the customers, investors, and employees. The 24/7 world is only possible because of the free and clear flow of information. By sharing metrics and timelines, as well as demand and capacity data, the supply web can forge a common set of objectives, insulating the web against commodity pressures as well as the failure of any one node.”
He stressed that manufacturing giants grappled with information flow for decades. “But finally the advent of the internet has democratised the flow of information throughout the supply web,” he continued. “Instead of being directed by proprietary exchanges or mandated by a single dominant player, the internet has made it possible for supply webs to operate in the cloud, using widely accepted protocols and methods and delivering data in formats and languages easily customised to almost any situation. Operating with the free, multi-directional flow of information gives each player in the supply web control, command and communication with the other key participants. What was once hammered out at great expense with rickety client/server architectures and armies of IT technologists can be deployed anywhere, anytime in the modern business cloud.
“Clearly, the supply web together knows more and can accomplish more than any one of its parts. Consider a construction project, where the customer as represented by the project manager is the nominal authority, setting the schedule and determining how and when the process will play out. But if the cement truck doesn't arrive on time, the entire project slips.”
Embrace collaboration for success
But some supply chain strategists fear transparency for this very reason. Bukary explained: “They worry that one bad actor with clear insight into their importance will be able to consistently extort the rest of the web. For instance, the cement contractor from the construction example might deliberately ransom an on-time delivery for more money if they were certain no competitor could fill the order in time.”
Certainly, he contended that this kind of aggressive opportunism can happen in the real world. “Better awareness means that the entire supply web will know which links are weak and which are actively hostile to the success of their partners, and insist that they be punished, constrained, or excluded from future deals,” he argued. “Modern supply chain marketplaces introduce market efficiencies and are being used to rate and compare suppliers on their record for reliability and fair play.”
Bukary concluded: “Starving supply chain partners of information as a defensive measure is a huge mistake, because it ultimately starves the web of value-adding opportunities. Kept in the dark, supply chain participants can only hope to differentiate and excel on one dimension – price. There is no sense of a shared destiny, and no ability to collaborate to minimise the price shock through process improvements. They lack the tools and the will to carry out that kind of collaborative analysis, so they suffered both individually and collectively.
“Adopting a cloud-based supply web could provide each participant with clear, concise, and real-time insight into the requirements and capabilities of the others, and the resulting improvement in engineering and manufacturing processes would act as a significant contributor to growth. That's the kind of power no 21st century manufacturer can afford to be without.”
