The challenge of supply chain transparency
Author: Tim Cummins
The Covid-19 pandemic has powerfully indicated why supply chain visibility is an essential feature of today's business environment. Research shows that it is also acting as a catalyst for new thinking and approaches to sourcing strategy and customer delivery models.
The latest report in the IACCM Research Forum series, titled 'Leveraging Extended Supply Ecosystems – the role of transparency', is therefore timely as a potential support for that new thinking. The in-depth study has been undertaken over a period of eight months and was able in its final stages to gather experience and intelligence from the pandemic, ensuring that the findings and recommendations remain pertinent to unfolding events.
The report draws an important distinction between supply chains, supply networks and supply ecosystems. All three have an important role to play within a sourcing strategy. All three require greater levels of transparency than typically exists today. Yet the drivers behind that transparency – and the selection of which supply models to use – vary considerably. They range from market-controlling to market-making in their nature and we see a number of forces promoting the ecosystem approach. These include:
- A need to deal with heightened levels of market uncertainty calling for more rapidly adaptive structures
- A need for increased collaboration to deal with shifting risk profiles and supply economics
- A need to confront a reduction in competition as suppliers consolidate or go out of business
- A need for creative approaches to develop new ecosystems as a route to innovation and to hasten business recovery
At such an unpredictable time, we see this report as very much a 'work in progress' – the world continues to learn and many existing relationships and supply networks are inherently unstable. A key benefit of the research is that it helps organizations distinguish their relationships based on five distinct categories of purpose and guides them in the way such relationships should then be structured, motivated and managed. It also dispels the illusion that today's 'supply relationships' are exclusively the preserve of Procurement or Supply Management functions and hence the need for thought on how best to organize and integrate activities in this area.