Supply Chain Operating Networks are Finally Beginning to Emerge

The concept of a network of networks – a network that rides on top of other networks and leverages those other network’s data – has been in existence for a while. ARC prefers the term “supply chain operating network,” which we have been writing about since 2003. While the terms are in use, what has not been present is an actual working example of a supply chain operating network. That may be about to change.

Supply chain visibility & collaboration solutions take different forms. Some visibility solutions are built on top of BI and event management technologies, collaborative planning solutions can be fast optimization solutions, and other solutions have evolved out of B2B networks.

In the early 2000’s, a large amount of venture capital was invested in the creation of B2B marketplaces. 90 percent of those marketplaces disappeared. However, the B2B networks that remain, and whose visibility extends beyond procurement processes, are among the leaders in the supply chain visibility & collaboration market. These suppliers include GT Nexus, E2open, Neogrid and Elemica. This is a different set of suppliers than dominate other supply chain management (SCM) software markets. The very fast growth this market has experienced has come, and will continue to come, largely from the B2B public cloud providers.

Further, contributing to the strategic position of B2B network providers is the concept of a supply chain operating network. This vision is being pursued by JDA, Oracle, and SAP. All three of these companies recognize that supply chain synchronization capabilities are key for success in this market.

All three of these big SCM suppliers offer a variety of planning and execution solutions. All have developed robust supply chain cockpits built on BI technologies that allow for the real-time analysis of supply chain data with drill down capabilities. All have very fast in-process memory technologies that allow for simulation and predictive analytics. All have cockpits that allow the sales & operations planning process to be effectively managed.  And all are seeking to go beyond inward looking S&OP to more collaborative planning environments built upon better visibility.

Trad SCM Platform

Traditional View of a Supply Chain Platform

To accomplish this, these suppliers have partnered or procured providers of B2B networks. Yet these SCM suppliers recognize that no one B2B network provides all the visibility necessary. Descartes, for example, is very good for Air cargo visibility, while Transporean excels at visibility into European road transportation. So to take supply chain orchestration to the next level, they will need to collaborate with a variety of B2B network providers.

SCM Platform with SC Operating Network

Supply Chain Platform with a Supply Chain Operating Network Layer

All three of these SCM solution providers recognize that effective integration to those networks will depend upon semantic integration; in other words, a transport order as defined in SAP will need to be mapped to the same concept in a solution like GT Nexus to insure that apples are not being confounded with oranges.

Oracle, JDA, and SAP recognize that semantic integration is difficult and admit they are early in their journey. And in all three cases the vision is that they will be a supply chain operating network, the visibility layer that rides on top of all other networks. The execution of this vision is apt to be rather slow, but steady. In a few years, our view of what a supply chain platform looks like could be completely different.

This concept of a network of networks is one of the key factors that will drive growth in the supply chain visibility and collaboration market. Yet this is already the fastest growing of all supply chain software markets.  For more information on this study, click HERE or contact Conrad Hanf at chanf@arcweb.com.