The New Era of Global Supply Chain Ecosystems
18th May 2015 | Mark Millar
In this article Mark Millar discusses the evolution of Supply Chain Ecosystems.
Supply Chains are the arteries of today’s globalised economy – they enable the international trade flows that empower global commerce. Today’s Supply Chains are evolving to reflect the increased complexity of world trade – a highly competitive, super connected, fast changing and increasingly volatile global environment, which is progressively more difficult to predict. Supply Chain Management has now become an essential topic across all spheres of management and a strategic agenda item in every boardroom.
Twenty-first-century supply chains have evolved into world-wide inter-connected supply-and-demand networks with profound interdependencies - comprising vastly more complex operations and with greater exposure to the vulnerabilities of our uncertain world. This is leading to greater use of collaborative partnerships, frequently involving outsourcing and off-shoring, creating elongated networks of organisations comprising multiple stakeholders, which require more sophisticated management, control and communication than ever before. Consequently, modern supply chains have become complex, multi-layered and inter-connected distribution systems that enable companies and countries to trade more effectively and efficiently.
Developed by innovative, competitive and ambitious practitioners and business managers, these ecosystems have become the essential enablers of international cargo flows around the world, bringing economic and social benefits, and leading to a steady improvement in the standard of living for millions.
Confirming how these networks enable business in an increasingly connected world, the Financial Times’ (FT) lexicon describes how “businesses operate in a broader network of related businesses offering particular products or services - this is known as a business ecosystem”. They further define this business ecosystem as “a network of interlinked companies, such as suppliers and distributors, who interact with each other, primarily complementing or supplying key components of the value propositions within their products or services”.
From the supply chain perspective, Cranfield’s Dr Martin Christopher adopts an end-to-end perspective of the flows of product and accompanying information from the source of raw materials to delivery to the end customer - and sometimes beyond - to develop a definition of supply chain as: “the network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer”.
This notion of networks is particularly important, with Christopher reinforcing the key message that modern supply chains are no longer simply linear chains or processes, “they are complex networks - the products and information flows travel within and between nodes in a variety of networks that link organisations, industries and economies”.
Supporting the concept that your supply chain drives competitive advantage for your business, the FT lexicon explains how “Ecosystems also create strong barriers to entry for new competition, as potential entrants not only have to duplicate or better the core product, but they also have to compete against the entire system of independent complementors and suppliers that form the network”.
The linear concept of a chain is therefore no longer adequate to describe today’s complex international networks of suppliers, partners, regulators and customers – together collaborating to ensure the efficient, effective and competitive movement of products, services, information and funds around the world.
These extended multi stakeholder networks have continued to evolve as supply chains have become increasingly strategic, complex and global - we are firmly in the era of Global Supply Chain Ecosystems.
Mark Millar is the author of Global Supply Chain Ecosystems, in which he presents detailed and practical insights that help companies capitalise on market opportunities, overcome supply chain challenges and make better informed business decisions. Acknowledged as an engaging presenter who delivers a memorable impact, Mark Millar has completed over 350 speaking engagements at corporate events, client functions and industry conferences across 23 countries. A Visiting Lecturer at Hong Kong Polytechnic University, Mark is recognised in the 'China Supply Chain Top 20', as one of ‘Asia’s Top 50 Influencers in Supply Chain and Logistics’ and in the 2014 USA listing of 'Top Pros-to-Know in Supply Chain'.