Modern networked technology platforms are quietly revolutionizing the way businesses work with their suppliers. By allowing companies to rapidly find, assess, validate and integrate with suppliers, they have become a critical part of digitizing and sustaining the competitiveness of supply chains.
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Keeping Up With Evolving Business Models
From the 80s through the 2000s, we saw the evolution of vertically integrated corporations into the virtual/federated enterprise,1 integrating many fine-grained tiers of trading partners and service partners to produce products. This shift was enabled by various technologies such as B2B integration/EDI and the internet. Now we are entering the age of extreme outsourcing, in which the pace of partnership formation and execution is being greatly accelerated. This has allowed companies with as few as three to five employees2 to do what formally may have taken a hundred or more employees to accomplish. In fact, in this extreme outsourced model, the vast majority of the work is performed outside of the core enterprise by a complex web of outsourced partners and services often leveraging technology automation. Even larger traditional enterprises are being compelled to outsource anything that someone else can do better, faster, or cheaper. This requires changes to how suppliers and the supply chain are managed … with implications for the platforms used to manage them.
Technology and Business Model Evolving Together
This phenomenon is a co-evolution of business models and technology. Businesses striving for a competitive edge seek out whatever technology they can find to run more nimbly and effectively, with fewer resources. Meanwhile, more innovative solution providers have their finger on the pulse of their leading edge prospects and customers, and thereby are continually pushing forward the horizon of what’s possible. Together technology providers and the businesses they serve are creating the agile network model, where networks of potential trading partners are able to quickly find the best partners, rapidly combine together, and perform complex tasks to create and deliver new products and new innovative services of all imaginable varieties.
2 In cases of the ultra-outsourced startup, they may consist of a handful of closely knit founders with a great idea/vision, deep expertise in that specific domain, but not necessarily with expertise in manufacturing or logistics or HR or engineering or other core functions. Today they are able to quickly and effectively outsource all of those functions. -- Return to article text above
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