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How Digital Ecosystem Creation can, Lead to Supply Chain Transformation

How Virtual Ecosystem Introduction can, Result in Provide Chain Transformation

The world of business is changing. The environment of manufacturing and service industries has become more and more competitive, and an increasing number of SMEs have recognized the importance of designing, planning, and implementing an updated supply chain management tool to tap the synergy of inter and intra organizational integration, gain visibility across the business ecosystem, and improve customer interactions.

A new type of supply chain model, digital ecosystems, is based on a universal digital framework populated by digital entities that form communities capable of evolving and interacting with information exchange throughout the ecosystem. The rewards of embracing a digital ecosystem model are many and companies that fail to adapt to this change not only risk missing out on business opportunities, but also invite a loss in their market share.

Traditional, Supply-Focused Models

Supply focused models essentially are deemed effective in the case where they appeal to distinct market segments with differentiated needs. So, if a business serves a multitude of segments at once, the shortest route to success is to subdivide it into targeted units in lieu of applying one model. For example, Amazon with its multiple shop units Quidsi, online shoe, and Zappos grants its focused acquisitions appreciable autonomy in serving their segments.

However, employing such focused models that entail tightly linked, contractually organized entities have several drawbacks.

People buy bread and butter

First, it ought to rely on a single product, customer segment, or service. Hence, this type of business ecosystem is limited. To add, it fails to adapt to demand swings and market shifts.

People want car in colors other than black

Second, the production of the product rests on the shoulders of the organization’s internal resources, and so innovating and expanding the product’s features is tricky. Hence, both the product as well as service options remain limited and inflexible, and the consumer becomes dependent on the rigid supply chain.

People want more than flyers to stay in touch

Third, legacy operating models lack customer interaction. As the consumer walks out of the store, the company has no access to them. As per recent research from McKinsey & Company, it was revealedthat only 13 per centof customers surveyed said they were loyal to a single brand. Further, the research found that 87 per centof customers surveyed said they shopped around, and 58 per cent had switched to a new brand. Poor customer service and interaction drought were cited as the primary reasons.

Car manufacturers and grocery stores using outdated models are inherently limited in their ability to maintain customer relationships, thereby losing customers.

Digital Ecosystem Models

With digital technologies disrupting companies and industries, corporate functions such as supply chains have been upended and replaced with digital ecosystems models.

Though supply chains remain the life and blood of companies, digital ecosystems have revolutionized the world of business by offering a linear path between supplier and customer that helps to create fresh business opportunities. A survey conducted by EY has corroborated this fact that establishing a new collaborative ecosystem serves as a source of strategic competitive advantage. It helps to restructure supply operations and mitigate risks as well.

Drives Value

Digital ecosystem helps generate value by helping enterprises carve out ways to enhance their service propositions. Creating a digital ecosystem help enterprises gather more information or data from customers for making better business decisions.

Promotes Interaction

Digitizing customer interaction methods have helped manufacturers gain more insights, allowing them to be more responsive to fluctuations in demand.This helps premium stakeholders such as producers and consumers interact with transparency.

Improves Fluidity

Digital ecosystems are coordinated by central platforms. Such platforms constantly ingest data from the interactions of people, processes, and objects across the ecosystem. To add, these models inform and often revamp the entire logic of ecosystem flows. Hence, firm boundaries that have been a crucial aspect of supply chain models lose their importance and coordination, and so communication across the value chain becomes much more fluid.

Drives Revenue

Apart from restructuring the processes, modernized supply chain models allow the shift from being product-centric to service-centric. This helps them pull in more customers which, in turn, does not just create visibility across the supply chain – it translates this visibility into new forms of revenue.

Though it is crystal-clear that creating a digital ecosystem can modernize supply chain systems, converting conventional supply chain models to digital is easier said than done. In fact, reinventing business models is a complicated task especially in the absence of a robust integration solution. Adeptia Connect, a widely used integration platform, helps companies create systematic and open business ecosystems and allows the reinvention process to become continual and inclusive rather than a series of isolated, internally focused events.

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