We can all agree that the world of e-commerce has transformed the way we live our lives. When you want to order a product, you search for it online, click a button and wait for it to land at your doorstep in a few short days. However, should you really be content with the status quo? For all the fuss about the “Amazon effect,” most companies are far from achieving it.
Consumers regularly deal with exorbitant premiums on overseas shipping and find themselves in irrational predicaments. Suppose, for instance, you were taking a ski trip abroad and needed a snowboard. You’d probably have it delivered to your home, then schlep it to your destination. Why? Wouldn’t it be easier to ship the item directly to the resort? What if you wanted to send a family member in Thailand a book for their birthday? Shipping overseas is too expensive -- though, ironically, the book is probably sitting on a local shelf, collecting dust.
The good news is the fulfillment of these orders and other similar scenarios will not remain a fantasy. A supply chain revolution is on its way, and there is a noteworthy parallel to be made between what drives the internet and what propels the future of supply chains. E-commerce, much like the advent of the internet, holds the potential to bridge manufacturers, distributors, retailers and service providers globally. It has the power to source and distribute products as quickly and seamlessly as the internet disseminates information. But to realize its full potential, it must adopt the same cutting-edge model that once transformed the Internet.
In 1969, the Advanced Research Projects Agency Network (ARPANET) needed a better way to share information, so it devised a single network on which multiple computers could communicate. From there, the TCP/IP communication protocol advanced the innovation by expanding connectivity and information sharing between multiple networks. During the 90s, the World Wide Web opened to the public, launching a global network of networks, which then stimulated exponential growth.
The internet would not be what it is today if every university had created its own version -- if it existed in hundreds of silos and discrete networks. Its revolutionary capacity to make information available to anyone, anywhere and at any time -- at the speed of light and at virtually no cost -- is owed to the fact that its global network knows no bounds. I believe the supply chain is evolving toward a similar end with product distribution.
A few decades ago, supply chain management was narrowly focused on streamlining internal processes. Over the last decade, companies have broadly expanded their efforts to include inbound and outbound channels. Today, the most progressive organizations have realized that even networks can be somewhat ineffectual if they are closed and yield limited options. It takes a dynamic network of suppliers, contract manufacturers, production sites, logistics service providers, warehouses, carriers and sales channels -- otherwise known as multi-enterprise business networks -- to create operational excellence while also boosting the customer experience.
Pioneering companies are trading in legacy systems for a new generation of cloud technology to enable supply chain orchestration. These advanced multi-enterprise platforms reside across all systems (customer relationship management systems, enterprise resource planning systems, warehouse management systems, transportation management systems) and are capable of planning and executing dynamic product flows and handling collaborative partnerships worldwide. They also offer smart features like financial control and optimization analytics. Following the trajectory of the internet, these new multi-enterprise platforms will also, in a few decades, enable a World Wide Web of supply chains -- a new phenomenon I’ll define as the “Ordernet.”
The imminent Ordernet will be a network of networks, both physical and informational in nature. It will constitute an unlimited physical network of suppliers, factories, warehouses, carriers, terminals, ports and stores that collaborate worldwide, as well as a network of information systems, including existing ERP, WMS and TMS systems. Unified under new, smart cloud platforms for supply chain orchestration, companies will inherit virtually endless capabilities and capacities for processing customer orders in the global supply chain, yielding the highest service levels at the lowest costs.
In essence, the Ordernet will facilitate a world wherein any order can be fulfilled and any product becomes available. Just as the internet delivers multimedia content fast and reliably at low costs, so too will the global supply chain network of networks optimize all order and product flows for reliability, speed and cost using similar techniques to packet switching and peer-to-peer sharing.
The internet revolution disrupted a range of industries, especially those in media and publishing. However, those who embraced innovation are reaping its rewards. We are on the cusp of a similar supply chain revolution, and any company involved in trading products -- from manufacturers to wholesalers to retailers -- are standing on its fault lines.
Last year, Gartner took notice of this evolution when it released (registration required) the Magic Quadrant for Multienterprise Supply Chain Business Networks. Now it is time to take action. As part of our series on the Ordernet, we'll offer advice and actionable insights in future articles for those looking to leverage the supply chain revolution to their advantage.
As the future of the Ordernet draws near, businesses must quickly choose what side of progress they want to be on and either disrupt or be disrupted.
