What Makes a Good Supply Chain Solution? How to drive a valid start up idea and conceptualize the product?

Supply Chain is, arguably, one of those things that you can’t live without. The sheer complexity of Supply Chain, the multiple pockets of risk, lurking around in its various corners and the endemic lack of overall visibility of its multiple channels is what makes it so hard to deal with. And yet, as our recent collective experience of COVID painfully highlighted, Supply Chain is a central ingredient of modern society and instrumental to our very survival.

In fact, Supply Chain has become such an important part of day-to-day life that from an economic vantage point that, it is considered a true source of Competitive Advantage for any corporation when under control. Gone are the days when serious companies considered Supply Chain a wild sub-department or a collection of disparate groups barely communicating to each other. Quite the opposite, now the name of the game in major companies is defining Supply Chain’s diverse functionalities into a coherent unit, hiring the best talents money can buy and providing its senior management with more influence in running the affairs of the respective organizations.

In such a landscape, what makes for a good Supply Chain solution? In other words, what type of product, be it developed internally or acquired from a 3^rd party, can add enough value to an organization’s Supply Chain to ensure it gives the said company an edge over its closest competitors? This question is equally (if not more) critical also for any start-up that wishes to produce the next big thing to shake the existing foundations of Supply Chain, or as the old heads like to say it “disrupt the status quo”?

Before we go any farther and list a few deciding factors that make a new Supply Chain solution successful, a number of disclaimers are to be made:

First, short articles can never capture the depth and breadth of concepts and their rich and associated interconnections to pain a full picture of what is truly at stake. Complex solutions need time investment for verification.

Secondly, such lists are rarely exhaustive and can always be expanded as we delve more into the specific requirements or the challenges that we wish to take on.

Connectivity: Arguably, the most fundamental characteristic of a good Supply Chain solution is its impact on Supply Chain connectivity. Simply put, a Supply Chain that offers the best end-to-end connectivity wins the day. COnnectivity applies to seamless movement of goods and services as well as the respective finances and, perhaps more importantly, relevant information.

In fact, while end to end movement of goods, services and even finances are better understood it is the frictionless flow of data within various Supply Chain channels that provides the biggest challenges and greatest opportunities to explore when building new solutions.

As the world we live in becomes increasingly more complex and the nature of interactions between various players within Supply Chain gets more convoluted, existing systems (think the likes of SAP) struggle to provide the same clarity for how data flows within layers of Supply Chain, leading to many pockets of manual and erroneous activities that add more friction to exchange of useful data. The ability of a new solution to replace or eradicate such manual activities remains essential to its success of adoption within the ecosystem.

Technology: While it is apt that the 21^st century is dubbed the century of data, it is the technology, as data’s biggest enabler, that is fundamental to any Supply Chain company’s future success.

The biggest challenge with technology, however, is its annoying insistence to move forward at the speed of light! In fact, it is hard to find technologists these days who can truly keep up with all technological advancements happening around us. The best technologists are quite familiar with a good few tools and solutions and quite savvy with fundamental concepts underlying technological advancements (a useful hint for those readers who are responsible for hiring talents).

Having said that, similar to the case of connectivity, technology is also an overloaded word. To some, a company that makes critical material planning decisions using loaded Excel files with tens of tabs, each with never-ending number of columns, is a technology driven company.

To others, unless you are employing the hottest kid on the technology block (say, Blockchain) in every aspect of your work then you have failed to leave the 20^th century behind. This obsession with the latest technology as a driver of new solutions is best observed in the offering of many start-ups cropping up all over the Supply Chain landscape.

“The fact remains that Supply Chain needs more fundamental technological shaking that may not necessarily involve the fanciest concepts.”

The truth is Supply Chain is not always as backwards as some expect it to be but nowhere near advanced (read connected) enough to simply absorb the very latest technologies. The recent failure of companies such as TradeLens goes some way to highlight this very point. The fact remains that Supply Chain is in dire need of more fundamental technological shaking that may not necessarily involve the fanciest concepts. Often times, it is the most obvious and established concepts that can add immediate value, rather than the most advanced. For example, most companies will extract more value employing a coherent data model or a unified virtual data access layer (both well-established technological ideas) than implementing how to work with cryptocurrencies. In short, you would do well to concentrate on employing smarter solutions using more established technologies than falling for the hottest buzzword you came across on a blog!

Independence: Independence is about the simple question of who is behind a new solution? This is especially relevant in the context of data-intensive solutions as data is clearly an Intellectual Property of a company that cannot simply be shared with others without extreme measures of control and oversight.

TradeLens, which we briefly touched on earlier, does provide a good example in this case too. As a for-profit company, owned by two giants of the business world, IBM and Maersk (more accurately owned by IBM and GTD Solution, a division of Maersk) it was always a tall order to expect willful participation from other companies simply because they were promoting a set of standards for everyone to follow.

As a general rule, for any new standard to become established in a given ecosystem requires true independence (say, a not-for-profit entity) or mass contribution of many committed equals. Otherwise, you should expect failure sooner, rather than later. Bear this in mind before trying to push for an internal solution to become a de facto industry standard or relying too heavily on one established company to help promote your product.

Cost: This is the cost of Opting In as well as Opting Out and includes the actual monetary value as well as how it is structured, including the length of any related contract.

The Opting In cost is the total cost a prospective user of a new solution has to bear and in the greater scheme of things, there may be nothing special about it as it is an obvious sticking point that every company that considers acquiring a new solution has to consider and there is normally enough industry knowledge to make a sound assessment here. The most complex aspect of this type of cost is considering the cost of continuous participation (especially on solutions encompassing shared platforms) and regular upgrades.

For a new solution, especially one that is intensely data-driven, calculating and elaborating on the cost of Opting Out of a solution is much more difficult to achieve and requires a solid understanding of the respective ecosystem and, in particular, how it is expected to develop over time. Again, this is especially important if a solution relates to platforms that include managing and sharing data among various participants and even more challenging if it involves advanced analytics, which is notoriously difficult to sell as a value-add.

What is the best way to elaborate on a new solution’s true values and paint a clear picture that suggests why a potential client simply cannot afford to miss out on it? Make the solution a collection of stories that the client can relate to. In other words, your solution should be centered around narratives that offer an operational path to how it can/should be used to minimize cost or to increase revenue.

No matter how promising a new solution and its underlying technologies look like, the worst approach is to build something in the hope that the users will eventually see the value. On the contrary, the value of a new solution, even the promise of future values, must have a clear story or narrative, including the personas expected to engage with the offered functionalities, to make it easy for prospective buyers to identify when they can expect a change in operational behavior, which processes are expected to change and how and where new values are manifested.

Building a new solution in any industry is hard and the inherent complexity of Supply Chain is likely to make this even harder to achieve but a more structured approach in identifying the challenges, categorizing them and taking a more holistic view (rather than obsessing over one factor alone, like technology or cost) can go a long way to help with the next true disruption of the ecosystem.