Powerful Synergies the Supply Chain Sharing Economy

Learn How to navigate the Powerful Synergies the Supply Chain Sharing Economy

PurchTips Edition #410

The 21st Century Supply Chain is dynamic, challenging, unpredictable and loaded with immense opportunities. We are currently amid the rise of a powerful phenomenon, the Sharing Economy. This concept is underpinned by collaborating, co-operating and negotiating the core inputs, methods and processes required to realize specific outcomes, products, or services. In many cases we see the rise of many companies working together to design and manufacture products, where each company focuses on parts of the final product which leverages their expertise and core competencies. There are many challenges that stem from co-ordination of these activities, but the product and service excellence that can be realized is enormous.

The Sharing Economy can enhance Supply Chain Synergies at:

1.) The Component Level

  • Technology
  • People
  • Process
  • Inputs and Raw Materials
  • Metrics
  • Physical Plant

2.) The Functional Level

  • The Procurement Function
  • Manufacturing and Conversion Function
  • Logistics Functions.

3.) The Systemic Level –

The integration and interaction of Sales, Marketing, Human Resources, Finance, Facilities Maintenance, Information Technology with the Supply Chain Functions

Savvy Executives would leverage Sharing Economy Dynamics by defining, measuring, and examining their organizations at the Component, Functional and Systemic levels. The key is to identify areas that they are weak and struggling in. There must be an understanding of the Degree of Risk that the poor performing areas of their organizations pose, relative to customer requirements and corporate mandates.

The understanding of Degree of Risk that the poor performing areas of their organizations pose, is a vital pre-requisite for decisions around outsourcing and partnering of high-risk elements. The goal for executives would be to assure that their businesses focus on core competencies and either dramatically improve high-risk areas, outsource or partner with other organizations to close performance gaps. Special care must be taken to assure that all decisions pose a strong ROI.

The modern customer pushes the triple constraints of Time, Quality and Cost to the limit, this adds a level of complexity on ROI decisions.

Imagine a corporation realizes that its procurement and logistics functions are very weak. The company has strong manufacturing and supporting functions and partners its suppliers to strengthen its procurement function. Another decision was made to outsource the logistics function and to help a critical supplier with its manufacturing function. Now imagine the synergy across this supply chain.

Other synergies can be derived from sharing information, technology, combining buying power, amongst partners. Imagine the partners “loaning” their top talent to other partners to assist in process improvement and research and development initiatives. The Sharing Economy provides extraordinary benefits and may become the new way of doing business.

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Copyright 2018. This article is the property of the Next Level Purchasing Association and may not be copied or republished in any form without the express written consent of the Next Level Purchasing Association. Click here to request republishing permission.

By David Millington, SPSM, SPSM2, SPSM3 - Director of Education (Next Level Purchasing Association)

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