The current health crisis has demonstrated the importance of resilient and flexible supply chains.
It has been calculated that the world’s largest 1,000 companies or their trading partners own more than 12,000 facilities in COVID-19 quarantined areas. Companies are challenged with many disruptions in their established supply chains: the uncertain supply of critical materials, demand volatility for goods and services, and constrained capacity in manufacturing and logistics.
In good times and in challenging times, all businesses want to run at their best. They want to offer the best employee experience, the best products and services, and the best customer experience. They want to manage spend intelligently, run efficiently, adapt to challenges, make confident decisions, and innovate.
But they cannot do it alone. More and more, companies are leveraging and, in many cases, depending on their network of partners to meet growing customer demands for innovative and sustainable products, delivered when, where, and how they want them.
Networking Isn’t Easy
The global economy has evolved into a networked economy. Companies today rely heavily on their connections to their extended ecosystem to operate effectively. They need to understand their supply network beyond just tier-one suppliers. They need to collaborate with manufacturing partners and asset service providers in a manufacturing or asset network and outsource transportation to third-party providers in a logistics network. They also need to serve their customers through distributors, resellers, wholesalers, or retailers in a demand network.
Behind the scenes of today’s global economy, many companies still rely on point-to-point methods for connections to their customers, suppliers, manufacturers, distributors, and service providers. These supply chains are hindered by the largely linear, one-to-one integration connecting siloed systems, which limits visibility, the ability to interact with data, or to collaborate in the process. To compensate and mitigate risks, they carry excess inventory and build redundancies into the supply chain that lower the velocity and agility of operations. These risks are multiplied in the face of disruptions, such as COVID-19, Brexit, trade wars, or natural disasters.
Additionally, consumers are demanding ethically sourced products that are designed, manufactured, and delivered sustainably to minimize carbon impact during their entire life cycle. Sustainability cannot be an afterthought and requires visibility and collaboration across a network of designers, suppliers, manufacturers, logistics service providers, and other partners.
To overcome these challenges, companies need an intelligent and open network that delivers the enhanced visibility, greater efficiency, continuity, and improved collaboration to help supply chains thrive in the face of disruption.
Creating a Unified Network of Intelligent Enterprises
SAP’s intelligent enterprise strategy delivers on the promise of working with customers to ensure the tools, systems, and processes delivered by the company work in a collaborative and integrated fashion. With the business network, we will take that same philosophy of end-to-end connected processes and extend it beyond the “four walls” of the business, facilitating the seamless exchange of data and insights across businesses and geographies to drive greater levels of collaboration and agility.
We will start by connecting business partners across the supply chain — in research and development, engineering, planning, sourcing, procurement, manufacturing, logistics, and asset operations, including the design-to-operate and source-to-pay life cycles — to help maximize the value of an organization‘s extended enterprise and ecosystem.
Intelligent enterprises collect insights about their customers, employees, products, and brands at every touch point. They use powerful technologies to manage data, automate and integrate processes, sense opportunities, risks, and trends as well as gauge sentiment. And they turn this collective intelligence into action across every part of their business.
By turning insight into synchronous action, a unified business network of intelligent enterprises can deliver the best possible results, unlock new sources of growth, and anticipate risks and opportunities. Imagine the exponential value of a network of intelligent enterprises.
Chris Haydon is president of SAP Procurement Solutions.
Paige Cox is senior vice president and head of Digital Supply Chain Business Networks at SAP.