HOW SUPPLY CHAIN 3.0 CAN LEAD TO TANGIBLE BUSINESS BENEFITS (Part 4 of 6)

I hope by now you have grasped the business model in which Supply Chain 3.0 resides. Before we examine all the concrete benefits of Supply Chain 3.0, let us briefly differentiate it from its predecessors. Table 1 sets out to do that:

 

 

Table 1 – Supply Chain Metaphors

  Supply Chain 0.0 Supply Chain 1.0 Supply Chain 2.0 Supply Chain 3.0
Value Addition Uncertain Accretion Synergy Synchronicity
Mathematical Principle 2+2 ??? 2+2=4 2 & 2 = 5 2  & 2 is 22
Physical Metaphor Folk lore Mechanical (Newton) Quantum (Max Planck) Relativity (Einstein)
Cognitive Principle None Impulse Conscious Sub-conscious
Organisational Metaphor Brownian motion (Chaos) Chronometer Orchestra (feel the well-arranged and rehearsed music) Schools of fish (see the spontaneous music in action, changing every second)
Visual Metaphor Candle Torch Laser Sunlight
Key Co-operation Mechanism None Control (Forced) Co-ordinate (Labored) Co-create (Spontaneous)
Economic Metaphor Barter – primitive economy Free Markets – Invisible hand Managed Markets – Firm hand Networks – joined hands
Economic Principle Foragers Scarcity Prosperity Abundance
Key Actors Gangs (Tribes) Individuals Organisations Networks
EconomicGuru None Adam Smith J. M. Keynes Barry Nalebuff
Management Guru None Peter Drucker Alfred Chandler C.K. Prahalad

I must add here that this is yet a preliminary table; many of the concepts being presented here are still being explored. To the best of my knowledge they are articulated for the first time in The 5-STAR Business Network. I am leaving the full discussion of this table to future blogs because it will take a lot of time to explore the fundamental differences between each generation of supply chain and the triggers that launched the next generation.

Whether you are a small, mid-market or large corporation, whether the economic volatility is high or low, whether the economic growth environment is high or low – in almost all situations for every company, supply chain 3.0 provides outstanding benefits over and above its predecessors.

Why?

Because it helps leverage the power of business networks with external partners. Let me explain further.

Who says Elephants cannot dance – all you need is good music

Large businesses are notorious for moving too slowly and being less nimble than their smaller counterparts. Layers of management, volumes of policy and procedures, risk management protocols are all designed with good intent. However, over a period of time as the intention becomes blurred and the link between the purpose and edict becomes more and more tenuous. In other words, old companies just get old and sclerotic, and lose their suppleness.

Dozens of large companies are discovering that the best way of retaining nimbleness in face of above situation is to formulate tight-lose supply chain relationships with other, more nimble companies. This is not restricted to business process outsourcing arrangements, or Japanese style Kieretsu structures. Almost all companies try and keep their labour force numbers flexible by using some form of sub-contracting, for example. At a higher level of value added, collaboration between entities for research, new product development and customer solutions creation increases the nimbleness and responsiveness of old age corporations.

Small companies can have a much larger impact with supply chain 3.0

If the impression so far is that supply chain 3.0 is only for larger, more established companies, it could not be more wrong. In fact, supply chain 3.0 is even more useful for smaller companies who can project their strengths and best attributes on a far wider scale using their 5-STAR Business Networks.

Now Red Bull is a large company, but cast your mind back a few decades when it was a small start-up competing in the global beverages industry against much larger giants. Gaining traction in more than 100 markets in a matter of 2 decades against the formidable competition who took nearly 7 decades to do that was no small feat. It would have been next to impossible without due regard to a close network of business partners and service providers.

But Red Bull is not the only example of a smaller player running rings around their much larger competition by configuring their 5-STAR Business Network.

We have helped a number of our client corporations achieve similar results in industries as diverse as solar energy, retail, chemicals, heavy engineering, machine tools and FMCG. More pertinently, we have used the same concepts in our own business to help our clients create results far superior than our top-tier strategy consulting competitors could. Most clients are surprised when they come to our office when they see how small our core operations is – because based on our results and global reach, they expect our company to have a much larger regular payroll.

Find out the concrete benefits of Supply Chain 3.0 in the next blog entry of this series.

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  • Elizabeth SCM researcher says:

    I’m doing research on SCM all versions 0,1,2,3. I found this blog is very descriptive and remarkable for Supply chain. I’m defining this line “Proactive Supply Chain Performance Management with Predictive Analytics”. Could you do comment on this line? Thanks in Advance.

  • Ethan says:

    SCM 3.0 is based on leverage the power of business networks and It may be good but now trend is the “SCM 4.0 digital supply chain” “the application of the Internet of Things, the use of advanced robotics, and the application of advanced analytics of big data in supply chain management: place sensors in everything, create networks everywhere, automate anything, and analyze everything to significantly improve performance and customer satisfaction”

    Over the last thirty years, logistics has undergone a tremendous change: from a purely operational function that reported to sales or manufacturing and focused on ensuring the supply of production lines and the delivery to customers, to an independent supply chain management function that in some companies is already being led by a CSO – the Chief Supply Chain Officer. The focus of the supply chain management function has shifted to advanced planning processes, such as analytical demand planning or integrated S& OP, which has become established business processes in many companies, while operational logistics has often been outsourced to third-party LSPs. The supply chain function ensures integrated operations from customers to suppliers.

    Trends in supply chain management

    Industry 4.0 creates a disruption and requires companies to rethink the way they design their supply chain. Several technologies have emerged that are altering traditional ways of working. On top of this, megatrends and customer expectations change the game. Besides the need to adapt, supply chains also have the opportunity to reach the next horizon of operational effectiveness, to leverage emerging digital supply chain business models, and to transform the company into a digital supply chain. (https://mck.co/2QZPXuC)

  • […] hope by now you have grasped the business model in which Supply Chain 3.0 resides. Before we examine all the concrete benefits of Supply Chain 3.0, […]

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