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Supply Chain Communities are Being Reinvented by Cloud Networks

By John Urban, EVP & GM, GT Nexus

John Urban, EVP & GM, GT Nexus

Cloud platforms not only automate transactions, but become a common infrastructure to tie together business processes and execution Something unexpected has happened in the world of supply chain technology. As cloud networks have become widespread, trading partners who’ve used them have grown tighter, and more collaborative. This might have started out as a side consequence of the fact that cloud networks make day-to-day transactions more convenient and automatic. But it just might be that the real value isn’t their specific functions, but their ability to foster highly productive business communities.

To be fair, this effect isn’t completely unexpected. It’s similar to what's happened in the consumer world with social networks like Facebook, LinkedIn, and Twitter. How valuable is the actual software for Facebook, LinkedIn, or Twitter by itself? Each of those platforms is only as strong as its user base. For supply chains, cloud networks could finally bridge the long-standing distances that exist between trading partners, both physically and virtually.

Connecting the Community

In the business world, communities have typically existed as trade associations or tech user groups. One of their important functions has been to develop and implement common standards (protocols, information technology, etc.) that benefit the community at large. Unfortunately, most ideas sprouted through trade conferences or user forums rarely get executed, because members return to their day-to-day responsibilities and solving these larger industry-wide issues takes a backseat.

In supply chains, this is an even more serious concern because trading partners have to do business with each other, so the need for standards is all the more pressing. And yet, in many industries, it’s difficult to get different businesses, organizations, parties, and people to agree to adopt something—like a technology standard—universally.

But now, the propagation of network technology— particularly the cloud—is finally bringing change to supply chain communities.

The Power of Networks

 In other industries, there are already prominent examples of business standards developing from network technology. In the airline sector, the SABRE computer system for online bookings standardized airline reservations. In the financial world, the SWIFT banking system created an easy way for financial institutions to transfer money worldwide.

The realm of supply chains is huge, and arguably the most complex “community” there is. For cloud-based network technology to transform this B2B world, it needs to be able to connect different partners (companies) together into the same information hub. That’s already happening.

The initial purpose of supply chain cloud platforms was to automate transactions. There are lots of documents that pass back and forth between organizations – purchase orders, shipment notices, ocean contracts, etc. Prior to cloud platforms, these exchanges all happened through an uncanny combination of EDI, spreadsheets, faxes, and phone calls. Cloud platforms unified this experience, setting up automation rules, instant notifications, built-in compliance, real-time visibility, and other features that eliminated manual intervention and human error.

As a result, more companies have wanted to adopt cloud platforms, and get their suppliers onboard. But like consumer social networks, there’s a “stickiness” to cloud platforms–if, say, a few ocean carriers are using one platform, it makes sense for the others to be on it as well. This turns into a self-fulfilling prophecy, and creates a large user base. Consequently, cloud platforms not only automate transactions, but become a common infrastructure to tie together business processes and execution. Network technology itself becomes the standard or master translator, for a community.

Setting Standards

For users, network platforms are a means of closer community collaboration. Common ways of engaging in commerce start to take shape, organically, without a standards body trying to enforce the compliance on others–which often doesn’t work.

Instead, supply chain communities have formed around technology, focusing on some core areas that are common to all - ocean and air freight, supply chain finance, 3PLs. For example, early in the dot-com days, ocean carriers (arch rivals) got together and formed e-commerce utilities that did what SABRE does for airline reservations.

Through platforms, there’s suddenly a unified way of interaction, and a community can develop around this. The GT Nexus Shipper Council is an example. This is a new type of community– one that is constantly engaged with the network via the technology platform, and in turn, can drive changes in areas like data quality, partner communication, awarding performance through PR, and importantly, establishing community benchmarks through data.

Rethinking Benchmarks

Best practices and benchmarking have always been tricky when dealing with competitive industry peers and vertical-focused trade associations.

But thanks to cloud platforms, it’s now possible to create community benchmarks that highlight—with full privacy and protection—how entire industries are doing. But more than that, network technology is able to create benchmarks that are cross-industry. Retailers and manufacturers all use the same pool of ocean carriers, banks, ports, and 3PLs. It can be a huge benefit when dissimilar industries learn from each other. Retailers, for instance, can learn from logistics innovations in pharma, and vice versa. This sort of benchmarking across industries through anonymized community data can produce a lot of valuable insights.

Pooling community-wide performance data allows a business to see how it performs against a community average. The comparison is apples-to-apples, since all parties are using the same system. The benchmarking is instant, real-time, and always up-to-date. If a company is performing worse than the community average, it can work to get better. If it’s doing better, it can save the effort of thinking there’s a major problem that needs to be fixed. Normal benchmarking studies by external research firms takes weeks or months. The benefit of a shared community is that benchmarking occurs instantaneously.

The Redefinition of Community

Cloud technology brings many B2B benefits, and as it continues to expand there will be much focus on features, functions, and automation. That’s all very valid, but what’s equally important for businesses to realize is that it’s the reinventing of ‘community’ that makes cloud technology so compelling. The cloud provides an avenue for meaningful collaboration within an across industries, to accomplish larger goals that benefit everyone involved.

And because cloud networks are inherently iterative, community engagement is year-round, instead of just occurring at a conference once a year and then dissolving into day-to-day operations. Everyone is constantly participating and feeding back into the technology platform, and the resulting updates benefit everyone who’s on board. So in the same ways that LinkedIn and Facebook have evolved the different ways we can connect to each other. Cloud platforms are poised to redefine the ways business partners interact, share information, benchmark, and grow.