Modern supply chains have so many moving parts that it’s almost impossible for a shipper to gain a direct view of every touchpoint. That’s why it’s time to stop thinking of your supply chain as a linear chain that runs in a straight line and start thinking of it as a digital nervous system that branches off into countless directions simultaneously. But how do you build the partnerships you need to maintain visibility across a complex supply chain nervous system?
This article is packed with the information you need to start building a digital nervous system for your supply chain, including:
- Why you need to create a system map that encompasses all your partners and their down-tier suppliers and vendors
- How establishing visibility outside the internal workings of your organization can make you aware of risks and benefits you may not have noticed
- How to identify your key service providers as strategic partners and implement them into your supply chain nervous system
Modern shippers must optimize process management, cargo movement and other logistics and supply chain functions to maintain an agile and resilient supply chain operation. Many organizations have developed an increased focus on breaking down data silos and turning data and analytics into a core business function that enables them to overcome disruptive elements through real-time information.
It is impossible for most shippers to gain a direct view of every supply chain touchpoint. Complete visibility requires shippers to see into suppliers, first- and last-mile trucking providers, air and ocean carriers, drayage carriers, warehouses and much more. With so many moving parts, businesses lost the ability to maintain sole control over the supply chain long ago. Instead, companies rely on a network of service providers, vendors and strategic partners to provide critical data about daily supply chain operations.
Given the complexity of modern supply chain networks, the term “supply chain” now fails to encompass reality. The simplified concept of a linear chain no longer applies when discussing 21st-century procurement and logistics. A modern supply chain is more like the human nervous system than an actual chain. While a chain runs in a straight line, a system of nerves branches off into countless directions simultaneously.
Shippers now rely on strategic partnerships to obtain and process the data required to maintain visibility across this digital supply chain nervous system. Partnerships enable shippers to focus on their own core competencies while technology and logistics partners handle specific, complex supply chain operations. In turn, partners deliver all necessary data for shippers to optimize revenue-generating processes.
Understanding the supply chain nervous system
The chief information officer (CIO) at every company uses a diagram that lays out the organization’s technology portfolio and capabilities. But that system map rarely extends beyond the four walls of the organization.
“More than 135 companies can be involved in moving an international shipment from carriers, through customs brokers, and through freight payment platforms. The mapping exercise is about taking a holistic view of data,” said Brian Glick, CEO of Chain.io, a provider of supply chain technology integration solutions. “Corporate boundaries mean nothing in the supply chain, so a comprehensive data strategy must be both interdepartmental and inter-company.”
An accurate system map must consider second-, third-, fourthtier technology and how the data it provides feeds into first-tier systems. Every service provider and technology provider collects data sourced from dozens of other suppliers and vendors, who all source their data from other stakeholders, and so on.
“In the old days, you could build your own set of tools or your own homegrown transportation management system and rely on that for everything,” said Morgan Jones, customer solutions engineer for Chain.io. “That’s not what it takes anymore to really compete in the 21st-century logistics and freight forwarding sphere. These additional tools, software and applications you get from vendors are becoming increasingly business-critical. Those other companies rely on these different external tools from vendors to be efficient and competitive in the market. If you don’t pay attention to those, then you end up introducing a lot more risk into your overall business process.”
More than 135 companies can be involved in moving an international shipment from carriers, through customs brokers, and through freight payment platforms. – BRIAN GLICK, CEO of Chain.io
Supply chain leaders need to understand how those pieces work together as a collaborative nervous system to take ownership of good data. By following each provider’s branching data sources as far as possible, supply chain leaders can map the entire extended nervous system.
“Building connectivity three or four tiers into the company supply chain is surprisingly still a relatively obscure thing to be doing,” said Tim Vadney, senior principal of operations excellence at West Monroe, a business and technology consulting firm that specializes in supply chain. “A lot of companies just don’t do it or don’t care. But this is what major companies like Apple and all their competitors do in procurement. They source down to levels two, three, and four in their bill of materials and have those materials delivered to the contract manufacturer for assembly. They have the data and capability to actually control the entire sourcing sequence and they gain better visibility and a better understanding of lead times as a result.”
The initial legwork involved with mapping various partners and their down-tier suppliers and vendors may prove time-consuming and challenging. However, the rewards gained by enhancing visibility outside the primary organization make the effort well worth it.
They have the data and capability to actually control the entire sourcing sequence, and they gain better visibility and a better understanding of lead times as a result. – TIM VADNEY, Senior Principal of Operations Excellence, West Monroe
“You’ll usually have a range of maturity in companies you work with,” said Brian Pacula, director of operations excellence for West Monroe. “Some may not have a robust ERP, so they don’t have the ability to integrate well. A good supply chain visibility tool can go up and down that maturity model with portals people can jump into and emails they can respond to, while also providing canned integration for higher-maturity partners. When you work with your partners to make sure there are no dropped transactions, you really widen the breadth of your IT landscape and very quickly get outside your own four walls.”
Establishing visibility outside the internal workings of an organization makes company leaders cognizant of numerous risks and benefits that may have otherwise escaped notice. This enhanced awareness allows shippers to develop actionable integrations and workflows based on informed decision-making and increased supply chain agility at every step.
“Building a digital nervous system is more possible now than it has been previously because you’ve got more data available from more players today than we ever have before,” Jones said. “That’s both the ability to access that data, as well as transparency around what the data means and how to get it. I think we’re seeing a lot more willingness to step back and actually understand the data, and more companies are starting to recognize how important this is.”
Building a digital nervous system is more possible now than it has been previously because you’ve got more data available from more players today than we ever have before. – MORGAN JONES, Customer Solutions Engineer, Chain.io
Turning service providers into strategic partners
Shippers now demand access to reliable data from suppliers and vendors. To this end, 199 out of 200 surveyed procurement leaders have reported taking steps to upgrade supplier data and intelligence.
“In master data governance projects, the key thing here is a lack of structure,” Vadney said. “Dirty data isn’t necessarily a supplier or vendor issue, but an internal company issue. Most companies neglect that and then get surprised when their vendor master and customer master are a mess. You need a governance process in place that sets standards and creates a process for getting data from all those different sources into your system.”
Better access to upstream and downstream data will help a company understand its own capabilities and core competencies—an essential step when developing a genuinely resilient supply chain.
You need a governance process in place that sets standards and creates a process for getting data from all those different sources into your system. – TIM VADNEY, Senior Principal of Operations Excellence, West Monroe
“When you talk to an advanced shipper like a Fortune 100 company that has their own machine learning and artificial intelligence teams, most of what’s happening from an execution or analytics or strategy standpoint has to do with coordinating and orchestrating those external data parties,” Glick said. “When origin agents, you need to know exactly where they are investing in tech. Because their tech is your tech, and your real systems map is one that brings all those tiers together. If you want to own good data at the core, and you want control and visibility, you’ve got to be invested in understanding how all those pieces work together. That’s the nervous system.”
Still, the concept of a supply chain nervous system only works by positioning key service providers as strategic partners. Supply chain practitioners must determine what strengths they require from their partners to complement their own.
“Positioning a vendor or supplier as a strategic partner requires a high level of collaboration,” said Pacula. “You need ongoing and active discussions with some sort of mutual benefits or strategic vision that all parties have agreed to, and a free-flowing exchange of these ideas. Underneath all of this are the requirement that both sides engage in additional incremental efforts and establish additional roles, responsibilities or resources focused specifically on the partnerships. To share a strategic vision, you have to put your money where your mouth is and invest some resources to focus on it.”
Positioning a vendor or supplier as a strategic partner requires a high level of collaboration. You need ongoing and active discussions with some sort of mutual benefits or strategic vision that all parties have agreed to, and a free-flowing exchange of these ideas. – BRIAN PACULA, Director, Operations Excellence, West Monroe
Identifying providers capable of bringing value to a strategic partnership involves asking a lot of direct questions. As the customer and hiring party, the shipper has the power to ask key providers where their competencies and investments lie. A strategic partner offers core competencies that the partnering company lacks, which allows the parties to complement each other and gain broader visibility into their shared supply chain.
“I wish there were a list of five questions to identify when you’re in love with your service provider and that your horoscopes are aligned,” Jones said. “But each organization is unique. You have to see if you align on the business values and goals of each organization and figure out if you’ve got a provider that is willing to engage on multiple levels—both from a product or offering standpoint, but also at an executive level between your companies. You can’t just check the box and say, ‘hey, we’re strategic partners now.’ You need an understanding that your providers are able and willing to invest in building out or improving the product or service you’re using.”
Once an organization has identified its crucial strategic partners and implemented them into the supply chain nervous system, it gains the capabilities and data necessary to make informed decisions, build agile processes and capabilities, and withstand future supply chain disruptions. With that digital nervous system in place, only then can a company gain true end-to-end visibility into its supply chain activities.
You need an understanding that your providers are able and willing to invest in building out or improving the product or service you’re using. – MORGAN JONES, Customer Solutions Engineer, Chain.io