Supply Ecosystems: Creating Value For Shareholders and Members

The notion of collaborative “supply ecosystems” is one that puts the notion of traditional competitive supply chains on its head. For those who are curious, this paradigm is being posited by Penn State’s Christopher Craighead, Auburn University’s David Ketchum and the University of Tennessee’s Russell Crook in a forthcoming journal article (for further reading on the topic see: Supply Ecosystems: The Next Big Thing? and Supply Ecosystems: Co-opetition – where cooperation and competition meet and Supply Ecosystems: Leveraging Skills and Knowledge Across an Ecosystem.

The authors suggest that one of the elements that members of supply ecosystems will have to follow are balancing the “dual goals of creating value for themselves as well as other ecosystem members.” In this world, “Each ecosystem competes with other ecosystems to survive (for example, Airbus and its ecosystem members versus Boeing and its ecosystem members); therefore, each ecosystem member must create value for itself, but not at the expense of the ecosystem overall. Sometimes an organization’s goals must be sacrificed for the greater good of the ecosystem.”

This argument is perhaps the most challenging for traditional procurement, supply chain and commercial managers to latch onto. But it actually makes perfect sense, and is in fact in play today in certain industries. Consider, for example, the need to create standardized parts and part families, which makes the management of not just product supply chains more effective and efficient but also service parts as well. A given supplier innovation that impacts design specifications must be weighed against the needs of the ecosystem – or must be shared with the ecosystem to drive adoption.

In a world such as this, we will see more and more companies share competitive intellectual property to create standards. Consider, for example, Tesla sharing its battery patent portfolio with competitive automotive manufacturers. In this case, the ecosystem of electric car manufacturers (and Tesla, at its center) has realized that collaboration provides greater benefits to overcome the existing combustion or alternative fuel cell engine paradigm.

As we conclude this series of posts exploring the concept of supply ecosystems, I’d like to share my personal thanks with Professors Craighead, Ketchum and Crook for exploring and fleshing out the concept. Those interested in the concept will be able to find the full text of the article in the Journal of Business Logistics online site. I’ll be looking for it.

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  1. CrisisMaven:

    Well, a lot of innovative cooperation concepts in the supply area are under constant threat of a monopoly commission wielding its Damocles sword of “market domination” or some other wordy monster that has (mathematically speaking) no bounds.

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