No More Supply Chains? Another Procurement Term Bites the Dust

With the advent of the supply ecosystem, the concept of the linear chains is outdated and misleading. Perhaps it’s time to let this term disappear.

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The thing about chains is that they’re linear.

No matter how complex they might be, supply chains are sequential by definition. They stretch from one geographical point to another, each link representing one of many upstream or downstream businesses that make up the whole.

But in a hyper-connected, interdependent world, the concept of the chain no longer does justice to the complexity of a supply manager’s role. Any attempt to map out a modern international supplier network will end up looking more like a cluster diagram, or a series of cogs and gears.

Or, to take an analogy from the natural world, a “supply ecosystem”.

Supply Ecosystems versus Supply Chains

To unpack some of the key differences (and similarities) between ecosystems and chains, let’s examine some key terms.

• Interdependency

While a single link in a supply chain is only directly connected with its two immediate neighbours, each part of an ecosystem relies upon every other. This has been referred to as “super-connectivity” or “hyper-cooperation”. This comes with enormous benefits in terms of visibility, data collection and knowledge transfer.

• Cooperation

Rather than having a single purchasing organisation sitting at the top of a supply chain, a supply ecosystem may involve a network of competing business with shared challenges. Collectively, they create and nurture a sourcing base that will benefit their individual businesses and the ecosystem as a whole.

• Fragility and resilience

When a link in your linear supply chain snaps, the whole structure is at risk of collapse. A supply ecosystem is similarly fragile, as each component has its own important part to play. However, the difference is that the entire extended stakeholder network can work together to rapidly replace any missing part.

• Knowledge

While organisations are eager to unlock potential innovation among their suppliers, they are often frustrated by a lack of visibility beyond the first-tier, or the neighbouring link in the chain.

Within the super-connected ecosystem, there is an increased flow of data, and better exchange of skills and knowledge. This means shared challenges are more likely to be solved through crowdsourcing among the entire network’s talent pool.

Again, problems will be tackled and solved with the conviction that what is good for the overall ecosystem will also benefit every member therein.

IBM Watson Gets It

IBM Watson helps supply professionals illuminate risks and opportunities to make better decisions through a proactive, predictive and innovation supply network.

The cognitive procurement technology leverages the entire ecosystem rather than the usual first-tier suppliers. This enables collaboration across every supplier organisation in your network to identify gaps, share capability and mitigate risks before they become obstructions.

The Supply Management Lexicon is Changing

The procurement and supply management profession is changing rapidly, and the language we use is changing with it. In 2016 alone we’ve gone so far as to declare obsolete three frequently used terms in procurement:

• the Pareto Principle (or the 80-20 rule),
• “soft” skills, and now,
• “supply chains”.

Do you agree that these terms have passed their use-by date? What other frequently-used supply management terms are also likely to disappear within the next decade? Leave a comment below!

Procurement exists in an ever-changing environment. Keeping up to date, even with terminology and concepts, can be a struggle. However, technology, like Watson Supply Chain, can help by making information available wherever we are. Find out more here.