Synergistic supply chains are the true goal. All trading partners in the chain, including service providers, are creating or diminishing total value. It’s important to understand that most if not all of these factors are determined by the E2E supply chain - from source to delivery, or suppliers’ suppliers to customers’ customers. Many factors impacted by supply chain performance contribute to these market measures, including COGS, optimized working capital, free cash flow, gross operating margins, cash-to-cash cycle time, total supply chain lead times, product and service quality, and total delivered cost. Commonly accepted measures include stock price and earnings per share (EPS). One is the inability to determine the value to be distributed among trading partners. Corporate finance hasn’t been well understood by supply chain leaders thus, initiatives to deal with E2E chains and trading partners have failed to pass hurdle rates for return on investment and other resource-allocation decisions. Let’s examine two major causes for this blockage. The need for collaboration among trading partners is hardly a new idea, but it hasn’t caught on as it should. And they enable the power to deal with complexity, uncertainty, volatility and ambiguity, all of which characterize the supply chains of today and tomorrow. These criteria determine the synergies of the modern-day supply chain. They must operate on the same information, provided by the “conductor” in as real-time a fashion as possible. They must work together toward common objectives. They must work for the best interest of the entire network. The hubs and links of the complete supply chain must achieve synergy from E2E operations. This rethinking calls for address four keys to a synergistic supply chain: The synchronization of supply and demand has been disrupted, and the need today is for networks to be efficient, effective, respected and resilient. Yet the pandemic has opened our eyes to the need for more. The evolution of supply chains has progressed over three decades from one of efficiency to effectiveness. Thus, as we rethink the supply chain, it’s essential that we capture the collective value created when all companies in the chain work together in a harmonious and congruent manner. Synergy happens when the combined value of multiple companies is greater than the sum of those companies. But one key modification is needed: That the output from the whole exceeds the output of the parts. The famous quote from Aristotle - “The whole is greater than the sum of its parts” - has everything to do with how we need to rethink the supply chain. Paradigm shifts highlighted by the disruptions of COVID-19 have caused supply chain leaders to closely examine their end-to end (E2E) and domestic networks, practices, and supply-demand problems. That requires working with all trading partners to collaborate and harmonize on what will distribute value to all parties. Next on the agenda is finding solutions that mitigate risk and reduce COGS. As a result, more companies are moving to map their global supply chains and enable visibility of the flow of goods from source to customer. While the pandemic has accelerated the evolution of unified commerce, it has also surfaced troubling issues with non-resilient supply chains, widespread disruptions and rising cost of goods sold (COGS).
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