A leading Tier 1 aerospace contractor, speaking at the recent PNAA Advanced Aerospace Conference, stated: “…suppliers need to digitize their supply chains.” Many attendees wondered: “What EXACTLY does this mean?”
This is a very legitimate, and deeply probing, question. I say this because, at one time “digitizing” one’s business was often misconstrued as: deploying email, turning up a website, and activating unified communications. We now know that digitizing the business involved a lot more than “brand.com” going live and digital transformation requires a rethink of how we do things; how we do everything.
One of the most poignant observations Marshall McLuhan ever made (and I paraphrase here) is that: Human beings march into the future backwards. He observed this in the context of how we embrace new media. Think of it this way: each new technology gets deployed as a new version of the old.
The first automobile was a horseless carriage; the first television show was a radio program with a camera; the first website was a physical brochure in digital form; the first hand-held computers are known as smartphones; etc., etc., etc.
And we’re watching it again in the supposed digitization of the supply chain. Many players we’ve encountered are using Blockchain (or distributed ledgers) simply to replicate the point-to-point data collection they have been attempting with Electronic Data Interchange (EDI) data traversing Enterprise Resource Planning (ERP) platforms across their suppliers and customers. Early efforts required suppliers to contribute data in asymmetric exchange, attaching to someone else’s data model, which is/was different than every other data model in the supply chain. And, there’s also the question of “data property ownership”: whose data is it and who gets to use or view the data? Two of earliest efforts are flailing and/or shutting down for two reasons: 1) inappropriate governance model – ruled by one player and 2) fundamental logic flaw – digitizing only the product, instead of the people, places, and exchanges in the chain that create and move the product.
This is not reason to despair; first-movers in any industry often end up losing the game. Fast followers learn from what didn’t work and create something better.
In his book Connectography, Parag Khanna argues:
“And yet as universal as they are, supply chains are not things in themselves. They are a system of transactions. We do not see supply chains; rather we see their participants and infrastructures—the things that connect supply to demand. What we can see by tracing supply chains link by link is how these micro-interactions add up to large global shifts….If “the market” is the world’s most powerful force, supply chains bring markets to life.”
We subscribe to this premise. To be successful, there must be trust among those in the systems of transactions. Technology and governance can and do deliver trust. Think of our online bank account. There are a set of rules between parties operating with Government oversight. This is the premise behind the design of the Commercial Transaction™ Framework and the Commercial Trust™ Protocol. Collectively they:
· provide an inclusive, collaborative, industry-specific governance model
· digitize the people, places, and products of the supply chains
· capture the dual-sided nature of supply chain transactions
· incent the contribution of evidence to support company and product claims
· support 3rd-party evaluation of the evidence
This level of transparency builds trust.
As one thinks about “digitizing” the supply chain, one must define the desired “end-state”, identify the participants, and understand the transactions that make up the supply chain. If this is on your “to-do” list, give us a call. We have the roadmap.