Demystifying Business Networks: Building a Resilient Supply Chain
The evolution of business networks and the way forward.
They’ve been around for longer than you think. And today, they’re better than ever, driving business collaboration, supply chain transparency and resilience, and business value. Tony Harris, senior vice president and head of marketing and solutions for SAP Business, examines the evolution of business networks and how they are the key to supply chain resilience and success.
Business networks. How can two simple words be so misunderstood?
But they are. Some consider business networks to be just another clever invention of marketers rather than a powerful tool to drive real business value. That is until the “Aha!” moment when they ask themselves, “How on earth did we get by without one of these?”
The Evolution of B2B Business Networks
Most organizations have always used business networks – even if they didn’t know it. In its simplest form, a business network is a series of point-to-point lines of communication between business partners. One could even argue that this type of communication started thousands of years ago with the carrier pigeon.
As technology has evolved, business networking has moved on from the venerable carrier pigeon. The telephone made it possible to speak directly with business partners. Fax machines, e-mails, and later electronic data interchange (EDI) and supplier portals made it increasingly easy to share the documents required to place and process orders.
However, these “old school” channels are no match for today’s complex supply chains:
You have to work with each partner individually: That’s a lot of phone calls, e-mails, or carrier pigeons.
You only know the suppliers you know: What if the supplier for a specific fastener is out of stock? How do you find a new, qualified supplier quickly? And how do you avoid surprises like this in the first place?
Suppliers need to work harder to be discovered by new buyers: While buyers have challenges finding suppliers, those same suppliers need a centralized place to hang their sign and tell their story. Advertising, web searches, word of mouth, and so on can only take them so far.
As shown in the picture below, modern business networks enable buyers to “connect once with many.” By joining a modern business network, an organization’s buyers are connected with hundreds, even thousands of suppliers instantly. This goes a long way toward solving the challenges of one-off, point-to-point vendor communications. Buyers will find more suppliers, and they’ll be able to work with them more efficiently. Likewise, suppliers have an instant channel to advertise and sell their products and solutions to a vast pool of buyers worldwide.
The Challenges of Sharing Data
When we talk about resilient supply chains, we often refer to increased visibility among buyers and suppliers. This requires sharing of data – sometimes a lot of it.
That’s not easy to do with traditional business networks. Let’s look at a common example: A company e-mails it’s six-month forecast to a component supplier and then changes it the next day. Most businesses manage forecasts in spreadsheets, some with upwards of 500 rows of data. If they change a row, will the supplier make the same update on their copy of the spreadsheet? How will the supplier communicate that they can address the new requirements? And how do these updates make it into the planning system? Does someone re-key the data, potentially introducing errors?
There has to be a better way. There is – think “digital transformation.” Today, organizations are digitizing their businesses with enterprise resource planning (ERP) solutions, which enable them to integrate business processes and share data within their enterprise.
But you can’t achieve the full potential of digital transformation without business networks. They extend key processes beyond the four walls of the company, orchestrating transaction flows across end-to-end business processes, exchanging data securely, and connecting trading partners to enable full visibility and transparency.
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