There is a multibillion-dollar supply chain software market that grew at double digit rates during the pandemic, and will continue to grow fast, that very few supply chain executives have heard of. How can this be?
What is this Market?
The solution is called a supply chain collaboration network (SCCN). Gartner calls this solution a Multi-enterprise Supply Chain Business Network. ARC’s definition is that a supply chain collaboration network is a “collaborative solution for supply chain processes built on a public cloud – many-to-many architecture – which supports a community of trading partners and third-party data feeds. SCCN solutions provide supply chain visibility and analytics across an extended supply chain.”
Gartner defines a multi-enterprise supply chain business network as a “community of trading partners that need to work and communicate/collaborate on business processes that extend across multiple enterprises, with an end-to-end/shared focus.”
Whether it is SCCN or MESCBN, both solution sets are based on a network (public cloud) architecture.
While the definitions are similar, in practice, Gartner views a MESCBN as being one form a supply chain execution solution can take. ARC puts more emphasis on SCCN as a network; from our perspective the solution can involve collaborative messaging or it can also be a particular type of application.
How Can the SCCN Market Be Largely Unknown?
ARC’s research shows the SCCN market is over $3 billion in size and is projected to grow at double digit rates for the next five years. How can such a large market, growing so fast, be largely unknown? Because it is not a new market at all, it involves a rebranding of markets that already exist.
The SCCN market is composed of EDI Value Added Networks, solutions that originally arose to support industry specific procurement in a marketplace environment, transportation management or other forms of collaborative supply chain applications based upon a public cloud architecture, real-time transportation visibility solutions, and interesting new solutions that can identify supply chain risks in near real-time.
Why the Rebranding?
Why did ARC feel the need to combine these different solutions into a new market labeled “supply chain collaboration networks?”
What is common to these different solution sets is that they are all network solutions. Networks have distinctive advantages:
- Onboarding and Communication management – it can be time consuming and costly to integrate to trading partner systems. However, if a trading partner with products/services to sell is on a network, and a buyer of those products/services joins the network, the IT effort involved in facilitating collaboration between those two companies is greatly diminished.
- Partner management – before doing business with a new trading partner, there are all sorts of things a buyer of products or services wants to know. Sellers on the network can enter this information and then give permission for other potential buyers of their products to see this information. This saves a seller time and can accelerate the speed with which two companies can do business.
- Third-party data – One example of the advantage of this category concerns third-party forecast data. Industry and government data can be used to increase forecast accuracy. If this data lives on a network, accessing the data can be much easier and less expensive. Similarly, third party information on the financial health of suppliers or information on supplier environmental, social and governance practices can be very helpful.
- Network analytics – A good example of this occurs with public cloud transportation management systems (TMS). In a TMS, a shipper tenders to a carrier for a lane. The carrier responds that they can take the load, or not, and the price of the move. A network built with the right permissions allows the lane information to be anonymized and aggregated. Shippers can know that the average price for a move on a lane is $X, and that the price they are getting puts them in the bottom 25%.
- Collaborative system of record – Some SCCN solutions can serve as the source of truth about a transaction that has occurred on the network. This eliminates “he said, she said” type arguments.
A SCCN Promotes Supply Chain Agility
Supply chain management became a topic of conversation at the board room level during the pandemic. While the pandemic taught companies many things, undoubtedly one of the key things was the need for agility.
A SCCN can help facilitate onboarding new partners more quickly, getting visibility to disruptive events or new risks that could (or will) disrupt a company’s supply chain before they occur, and quicker and easier access to information that can improve supply chain planning. In short, there is no doubt that a supply chain collaboration network contributes to agility. It is not surprising that this market continued to grow briskly during the pandemic.
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