Supply Chain Should Bank on Business Networks

In a world where agility and first-to-market status are king, electronics OEMs remain under intense pressure to stay ahead while keeping costs in check. Good partnerships in the supply chain are becoming a critical strategy to that goal.

“Over the last ten years, the procurement function has evolved — a shift that has been well-documented,” said Rachel Spasser, senior vice president and chief marketing officer of Ariba, in an interview with EBN. “Purchasing used to be functional and didn't have a seat at the table in terms of driving the direction or strategy of the company. Now, procurement is more strategic. Risk mitigation and support of overall corporate functions and values have become a procurement function.”

In order to drive innovation, procurement organizations must create better collaboration with the supply chain. One key enabler will be business networks, also called procurement networks. “What most of the networks above share is a many-to-many ability to connect participants and a value proposition that promotes a shared infrastructure and common standards,” said Andrew Bartolini, chief research officer at research firm Ardent Partners, in an interview with EBN.

He added:

Ardent Partners believes that an investment in a network has become a very strategic decision and one that will have a significant impact on operations and results for many years. It is a decision that warrants a detailed analysis that incorporates the value derived from the network (i.e., expected benefits, incremental benefits and cost savings) as well as the initial and ongoing costs of accessing and using the network.

These networks provide a shared platform that allows close collaboration between the various players in the supply chain. “This year, we'll see more and more companies embrace business networks,” said Spasser. “Networks are a great way of connecting all the players in the supply chain. These networks bring increment value in terms of data and insights captured by the network.”

In addition to increasing the speed of business, these networks contain transactional data that can be leveraged to make better decisions and predict future trends proactively, which reduces risk, said Spasser.

Currently, many organizations are engaged in identifying and choosing the right business network, which can be a complex task. First, organizations must match the network to their business needs. “We recommend that enterprises take a total cost of ownership (TCO) approach to network selection,” said Bartolini. “Groups also need to understand the total value that can be gained from a business network.” Organizations should also consider upsides in terms of efficiency gains, internal stakeholder value, trading partner value, and the distinct characteristics of the network, he added.

Other important considerations Bartolini identified:

  • The features and capabilities that support transactions, collaboration, communication, and information sharing.
  • Any value-added services available within the network.
  • Integration capabilities.
  • A network's ability to scale and advance, as well as its road map for the future, “because the industry is still in its early years and we expect innovation and significant changes ahead.”

Let's talk about how leading procurement organizations are maximizing supply chain efficiency through the use of business networks. Andrew Bartolini and Rachel Spasser will be our guests as we explore this topic. We'll be gathering for a live chat on Thursday, April 3, at 3:00 p.m. ET (12:00 p.m. PT) in EBN’s chat room. Hope to see you there!

— Hailey Lynne McKeefry, Circle me on Google+ Follow me on Twitter Visit my LinkedIn page Friend me on Facebook , Editor in Chief, UBM’s EBN

2 comments on “Supply Chain Should Bank on Business Networks

  1. Daniel
    April 3, 2014

    “What most of the networks above share is a many-to-many ability to connect participants and a value proposition that promotes a shared infrastructure and common standards,””

    Hailey, networking is the way of interacting with a consortium or group of peoples or companies. They are all of having similar goals, it can be about marketing, business, technology, procurement etc. So any debate happening between these groups can help to improve the process and technology.

  2. ITempire
    April 3, 2014

    People with distinct mindsets having the same goal to achieve can share their views through many-to-many networking. Solution of different problems like how to mollify risk or to expand business with available resources and many more related discussions can be held.

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