Supply Chain Leaders Must Create Ecosystems to Strengthen Networks

Logistics and Supply Chain News Uncategorized

Single connections between customer and supplier are often not resilient enough in crisis situations, so supply chain leaders must address that challenge by adding more partners and building an ecosystem, according to Gartner, Inc.

Gartner analysts presented the findings today during the Gartner Supply Chain Symposium, EMEA, taking place virtually through Thursday.

Sustainable Procurement Beyond Covid

“Major disruption, such as the COVID-19 pandemic, are the ultimate test for the resiliency of a supply chain network,” said Simon Bailey, senior director analyst with the Gartner Supply Chain Practice. “However, not all disruptions are unplanned. Many CEOs are planning to offer new value proposition of their products and services, and they expect that their organizations require new capabilities to support these new products and services.”

Supply chain leaders can gain the new capabilities their CEOs demand and improve their network’s resilience by designing an ecosystem with a variety of partners. “Every ecosystem looks different. Some organizations turn to academia and start-ups to fill capability gaps, others look to involve end users and consumers in new forms of value exchange, such as re-commerce and rental,” Mr. Bailey added.

Ecosystems Enable Circular Economy

The circular economy model looks to maintain asset value through strategies ranging from recycling to maintenance. Adopting a circular economy mode can also increase raw material security as the organization reduces its dependence on virgin material supply and increases the use of recycled materials.

Recovery of materials and products relies on an integrated ecosystem of partner organizations. According to Gartner’s Opportunity After Crisis Survey (a May and June 2020 survey of 528 respondents responsible for supply chain and related functions), more than half of respondents (57%) recover material from waste collection or recycling agencies. Thirty-six percent work with reverse logistics providers.

“Consumers can also be a good addition to an ecosystem,” Mr. Bailey said. “Some companies incentivize end users to return their used products, for example by switching to ‘as a service’ business models which increase material reclamation rates substantially.”

Ecosystems Require Trust

As supply chains begin their journey towards taking full advantage of their ecosystem, they will face challenges. For example, there must be certain standards around data and data quality. Those challenges can only be solved if there is mutual trust between the partners.

“It’s crucial that supply chain leaders create a collaborative and trusting culture where ecosystem partners are willing to work together and share information across the network. This will only be the case when all members agree on mutual quantitative and qualitative standards,” Mr. Bailey concluded.

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