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How to Survive in Supply Chain Ecosystems

Aug. 8, 2014
A UT professor contends that supply ecosystems are replacing your father’s supply chains

Interactions and interdependencies within today’s supply chains parallel those of biological ecosystems where organisms compete for scarce resources such as water, according to University of Tennessee, Knoxville, professor Russell Crook. In fact, he writes in a forthcoming Journal of Business Logistics article that collaborative relationships among supply chain members are being overshadowed by competition for scarce resources and the profits that takes place within those relationships.

Crook suggests that 3-D printing and other changes have pushed modern-day supply chains to the threshold of a revolution: the rise of supply ecosystems. Crook, a management professor in the College of Business Administration, co-authored the article with David Ketchen of Auburn University and Christopher Craighead of Pennsylvania State University.

There are three implications for companies as they transition from a traditional supply chain environment to surviving and thriving within an ecosystem:

  1. "Coopetition" takes place within the ecosystem.

Organizations within the ecosystem are independent, but they also are interdependent as they need to both cooperate with one another and compete for limited resources such as profits. The intersection of cooperation and competition is referred to as "coopetition."

  1. Ecosystem organizations pursue dual goals of creating value for themselves as well as other ecosystem members.

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.

  1. Each organization's knowledge and skills must be leveraged across the entire ecosystem.

Because each ecosystem competes with other ecosystems, members must pool their knowledge and skills to create unique ecosystem-wide competencies that benefit all members. Therefore, each ecosystem must develop processes and platforms that allow for the thoughtful pooling of these resources.

As a result, many of the complex global supply chain networks that currently exist are likely to be replaced by regionally based ecosystems whose members work closely together. In this scenario, an important challenge will be to remain cost-competitive while scaling back on global sourcing.

Executives will also need to consider disruptive technologies, such as 3-D printing and big data, that affect the ecosystem by making economies of scale less relevant and changing the nature of sourcing and other forms of resource support.


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