As industry evolves, companies need to make their supply chains more competitive by reexamining just what they can accomplish.
An emerging way to accomplish this goal is not to look at the procurement ecosystem as a series of supply chains, but as a ‘value web’. When set up properly by a company, a value web can be active in multiple dimensions – simultaneously mitigating issues while maintaining service, providing feedback in real time and driving innovation.
Forces driving the transition to value webs
Of course, the biggest factor driving this shift toward to concept of value webs is rapidly evolving technology. Technology has smoothed out the costs of interacting with multiple third parties, and in the process has provided many more options for supply chain managers. Technology also allows for the more efficient exchange of ideas, expanding innovation possibilities.
In addition to better access to outside resources and capacities, international trade is now being liberalized as you read this. Deals like the Trans-Pacific Partnership (TPP) have given large companies the ability to globalize their operations and the knock-on effect of that is the ability to source from smaller supply firms. Now, a construction company in Europe can quickly and easily source raw materials from a factory in Detroit.
While both of these factors are making material acquisition more efficient than ever, they are also putting pressure on supply chain professionals to keep pace with the changes. Instead of just honing and refining existing processes, supply chain professionals should be exploring all-new sourcing methods and tactics.
State-of-the-art value webs
Change has altered the entire ecosystem around supply chains so much, many professionals are starting to talk about businesses connected by supply chains as hubs on a value web.
Although the basic goals of the supply chain ecosystem have not changed, supply chain leader must also focus energy on expanding individual transactions into long-term relationships, exploring the possibility of material co-creation, reexamining company standards with an eye toward learning and developing “next practices.”
In short, supply chain professionals have started looking more at hybrid production and multi-lateral relationships. For example, a manufacturer could parse out the design of a product, designate suppliers for various parts of the design and allow them the latitude to participate in bi-lateral innovation. This allows a business to leverage assets it doesn’t own or control.
An example of the impact of value webs
The result of all this change and shifting of focus means the flow of knowledge, ability to learn and capacity for collaboration are just as valuable as product flow, inventory management and logistics.
One way to take advantage of the new supply chain ecosystem is for large companies to be engaged with small, highly specialized companies.
These companies specialize in innovation and can be so small, working with them feels more like talent acquisition than procurement. By fostering bi-lateral collaboration with small innovative firms, a large company can tap into this source of innovation, while the smaller company can access a larger resource pool than it would otherwise be able to.
Of course, there are many more benefits to value webs, but it takes engagement to make them work for your organization.
At ZDA, we understand supply chains run on talent, and that’s why we strive to provide our partner companies with the talent that best fits their particular needs. If your organization is looking to improve its supply chain personnel, contact us today!