"This is Not Your Father’s Supply Chain Ecosystem"
If a company does not change and mature their supply chain fast enough, they might go the same way as Oldsmobile.
If you are near my age, you may remember that your parents or maybe even you once owned an Oldsmobile. While growing up, my parents owned several Oldsmobiles. These were positioned by General Motors between their Chevrolet and Buick brands and considered reasonably priced family cars with some luxury features. In the mid to late 80s, Oldsmobile started to see their market share drop as younger buyers wanted something different: to stand out from their parents. Seeing the handwriting on the wall, Oldsmobile hired an advertising agency to create a memorable but disastrous campaign based on the slogan, “This is not your father’s Oldsmobile.”
Unfortunately, the new slogan not only didn’t attract younger buyers—who weren’t fooled by a campaign slogan while seeing very little difference in new Oldsmobile models—it also managed to alienate older buyers who still wanted the traditional Oldsmobile. That was 1988. Oldsmobile saw accelerated market share decline over the next 12 years and closed its doors in 2000. Although the marketing slogan didn’t help, Oldsmobile’s downfall was mainly from not changing fast enough to meet buyer expectations.
Having been a supply chain practitioner since the mid-90s, I can say with some confidence that today’s supply ecosystem is NOT your father’s supply ecosystem. If a company does not change and mature their supply chain fast enough, they might go the same way as Oldsmobile. Compared to even 10 years ago, today’s supply chain is much more complex with many more parts that have to move and adapt much faster to keep up with customer requirements.
The average Fast Moving Consumer Goods (FMCG) company is now outsourcing 25% of their manufacturing and packaging. According to the Contract Packaging Association, FMCG brands’ reliance on contract suppliers is expected to grow at 10.2% compounded annual growth rate for at least the next five years. To be successful, companies can no longer just compete against other companies: they must also compete as part of a supply ecosystem. Supply ecosystems compete against each other based on agility, speed, quality and yes, total landed costs.
It should come as no surprise that the system capabilities to manage our drastically changing supply chains have also changed. Solutions like Enterprise Resource Planning (ERP) and Advanced Scheduling & Planning (APS) solutions first introduced decades ago were not designed to facilitate today’s multi-enterprise supply ecosystems. What’s needed today is a solution purpose-built to facilitate dynamic collaboration and real-time data visibility—in other words a Multi-Enterprise Supply Chain Business Network (MESCBN) Platform.
Gartner defines MESCBN platforms as “cohesive technology platforms that support a community of trading partners that need to coordinate and execute on business processes that extend across multiple enterprises”. MESCBN capabilities support a shift from an organization’s enterprise-centric mindset to a multi-enterprise, outside-in approach to ecosystem collaboration. Furthermore, Gartner considers MESCBNs to be foundational technology for more mature organizations—implemented to coordinate, automate and transform an organization’s extended supply chain within the overall business ecosystem in which it operates.
Most experts believe that within the next five years, brand manufacturing companies will need to improve their ability to dynamically collaborate with their supply ecosystem partners if they want to survive long term. As supply ecosystems become increasingly connected, partners face a variety of increasing challenges for operating efficiently. These include:
The companies that don’t enable dynamic collaboration will suffer:
Leading organizations have shown that dynamic collaboration and real-time data visibility enabled by an MESCBN platform drives powerful financial benefits and improves the ability to meet ever-increasing customer demands. An MESCBN platform drives better supply ecosystem decision-making and enables partners to continually improve through shared performance metrics.
To avoid the fate of Oldsmobile, it is imperative that companies embrace dynamic collaboration with their supply partners and enable efficient and effective management of their supply ecosystem through a purpose-built MESCBN platform.
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