A Supply Chain Matters Guest Contribution
by Rich Sherman
In my previous Supply Chain Matters guest contribution, I outlined the concept of Web 3.0 enabling a fundamental transformation in supply chain management from linear, sequential thinking and communication to a demand/supply network, systems thinking, and dynamic communication. As we evolve in the Connected Age, the transformation is emerging as the Smart Supply Network 3.0 (SSN 3.0). It’s an extension of the vision I painted of a Smart Supply Network in my book. Two years later that vision is becoming reality as Web 3.0 is becoming a reality.
Smart Supply Network 3.0
Supply chain problems are caused from the uncertainty, time delays and amplification of variability based on linear communication of demand changes from one function to another and from one organization to another. The parts of the chain don’t work together. They often work against one another. They may be linked physically; but, rarely are they “plugged” into one another.
They don’t have or share data and information about the plans and performance of their operations or their changing demand/supply requirements. They are consistently “out of sync” with one another. As a system of supply responding to demand variation, they generate uncertainty, waste, cost, time delays, over and under stock, increased transportation cost, inefficient capacity utilization, and, well, you name it. In short, supply chain management is managing the complexity of the never ending consequences of unplanned events. The supply chain is a dysfunctional system that increases the cost of all participants in the system.
Web 3.0 will fundamentally transform the supply chain from a dysfunctional chain of unconnected organizations working separately to create inefficiency into a connected system of organizations supported by smart analytics that simultaneously and synchronously respond to variability to increase accuracy, visibility, and velocity.
We have to lose the notion of a “Supply Chain”. It is not a chain. It is not sequential. It is a system. It is omni-directional. Organizations participate in a dynamic network of other organizations to satisfy demand at a consumption point. The organizations in the network are not “links”, they are nodes. They work together in conjunction with other nodes to distribute material and information across the network to satisfy demand at consumption nodes. Connectivity is provided physically by transportation lanes and carriers and information is provided by communications lanes (Web 3.0) and telecommunication carriers. Forget about supply chain, in the 21st century we must operate and manage a Smart Supply Network 3.0.
What does it look like? Simply stated, SSN 3.0 enabled by Web 3.0’s ubiquitous communications network, automatic identification and data collection, location based services, and business intelligence provides end to end predictive and prescriptive analytics, decision support, and transparency that transcend visibility within the system of systems to synchronize the flow of material, services, and information. More accurate timely data, shared simultaneously, enables the organizations comprising the network to work together to optimize resources and physical flow to reduce time, inefficiency and inaccuracy, and cost while increasing service and capacity utilization to serve the demand of the connected consumer and customers across industries. SSN 3.0 is simply the way to operate and lead in the connected age.
Break the chain and jump on the network.
About the Author: Rich Sherman is an internationally recognized researcher and author on trends and issues across supply chain management. He currently serves as a Principal Essentialist at Trissential LLC in their supply chain consulting practice. His book Supply Chain Transformation: Practical Roadmap for Best Practice Results (Wiley, 2012) has received praise by practitioners, academics, and non-supply chain executives as a great read on business transformation.