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ASCM Insights

Open Business Networks Are Coming — and Will Deliver Key Supply Chain Collaboration and Responsiveness

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The hundreds of ships once parked at ports around the world may be sailing, but the challenges facing global supply chains remain. Better transport solutions are needed — ones that enable superior collaboration throughout the supply chain. Of course, collaboration isn’t new to the transportation industry. Railways have pooled and shared equipment rather than incurring the extra expenses associated with owning surplus assets to buffer shipment peaks and valleys. But the asset to be shared now is data — with open business networks as the vehicle.

What is an open business network?

An open business network is a cloud-based tool that enables essential collaboration with trading partners in order to respond rapidly and confidently to changing demands and market disruption. It offers a data-driven platform for cooperation and comprehensive supply chain management, strengthening relationships via a unified portal. This, in turn, increases the value of the entire system, as a whole is greater than the sum of the parts.

Open business networks enable shippers and consignees to collaborate transparently with each other and with their logistics service providers, carriers and all the players involved in moving goods. They facilitate data exchange at a global level, providing instant, common understanding of shipping status and optimizing processes for lower costs; elimination of unproductive, empty miles; and improved capacity use. Moreover, they enable track and trace for on-time delivery exception management and improved decision support for order fulfillment and goods in transit. Additionally, material traceability helps create a trust chain for upstream and downstream product genealogy, which supports intercompany product recalls.

The big players must lead

The key to establishing open transportation business networks will be getting the trucking industry on board. There are about 1.8 million trucking companies in the United States alone, many of which are independent contractors with a single rig. In contrast, there are just seven major U.S. freight railroads. The myriad trucking companies, plus the 22 regional and 584 short-line railroads, must be integrated into open business networks. This demands the big players to develop the data-sharing infrastructure. These systems should be based on open standards that reduce costs and encourage adoption.

Building open business networks takes substantial time and money investments. The payoff, though, will be holistic solutions offering efficient connectivity to business partners and external systems, enabling streamlined communication across the value chain. Another benefit will be the fine-grained tracking of sustainability metrics that regulators increasingly demand in meeting climate goals.

Open business networks will pay off in efficiency gains and improved customer service, and early adopters will enjoy competitive differentiation. Ultimately, they will be indispensable to staying competitive in the first place. 

 

About the Author

Kevin Schock Global Vice President of Travel and Transportation Industries , SAP

Kevin Schock is S vice president of travel and transportation industries at SAP. He may be contacted through sap.com.

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