Since 2020 the global economy has experienced unprecedented supply chain pressure. In this article, entrepreneur Vinod Ramchandra Jadhav shares essential insights about how companies can protect themselves against supply chain pressures in the future. Vinod helps to clarify some of the critical issues, including digital ecosystems, that entrepreneurs must consider.
What is your supply chain?
Your company’s supply chain is the network of relationships between your company and its suppliers, vendors, and partners. These relationships are carefully crafted and nurtured to produce and distribute your company’s product to the final buyer.
There are dozens, if not hundreds, of steps involved in the development, production, and delivery of the products we consume—whether physical items, software, apps, transportation, or services.
Classic examples of supply chain partners include providers of raw materials used in manufacturing, electronic components needed to build computers and other devices, and shipping companies required to deliver finished products. But other supply chain relationships include less physical materials and parts, such as open and closed source software code.
In the past, conventional wisdom underscored the importance of keeping vendors at arm’s length while creating an atmosphere of ongoing competition for your company’s business. But, as this article shows, without close, even interdependent, relationships with your supply chain partners, your company will be the first to experience shortages in the future.
What causes supply chain pressure?
Supply chain pressure is caused by any disruption to the availability or access to what you need to stay in business. This pressure often manifests itself in the form of higher prices as companies compete for scarce resources. Supply chain disruption can also appear as long lead times as providers fall behind delivery schedules.
The Coronavirus pandemic of the last few years has caused enormous supply chain problems across all sectors of the global economy. But COVID-19 is not the only contributor to our current challenges in keeping goods and services flowing to consumers.
Political unrest worldwide, including the war in Ukraine and the economic instability of many emerging countries, also contributes to supply chain pressure.
Digital transformation is the gradual but inevitable migration of all businesses to the modern, streamlined processes enabled by technology. Nearly every company is at some stage of digital transformation. You may run a fully cloud-based company born in the digital age, or your business may still be in the transformation process.
Why you need a resilient digital ecosystem.
A digital ecosystem is a group of supply chain partners that support your company’s digital transformation. Your digital ecosystem includes business partners with whom you are interconnected through your information technology systems. Suppliers, vendors, trading partners, and data providers can all be a part of your company’s digital ecosystem.
A healthy digital ecosystem can alleviate supply chain pressure. In addition, the interconnectedness of each branch of the ecosystem incentivizes each partner to look out for the best interests of the entire ecosystem.
It’s important to note that the interdependencies of companies within your ecosystem create additional risks that you should not overlook. As partners connect their IT infrastructures and systems, cybersecurity vulnerabilities for any group member are now shared by the entire group. Therefore, precautions must be in place to ensure each member of the interdependent digital ecosystem meets all routine security precautions.
To protect your business from future supply chain pressures, you must begin today to build a resilient digital ecosystem with best-in-breed partners. You’ll be better protected from future shortages if you build trust relationships supported by verifiable minimum standards of behavior.