The global economy is a networked economy

According to IDC, 87% of companies outsource at least part of their operations. [1] In addition, cost savings efforts are driving outsourcing in the areas of logistics, supply chain planning, and procurement, says IDC, while a need for greater innovation is driving outsourcing for R&D, packaging services, and marketing. [2]

In response to ongoing supply chain issues, “just in time” has become “just in case” inventory, which has implications for managing warehousing and inventory costs and increasing the need for greater visibility into maximum and minimum levels for supplier-managed inventory.

Material traceability is becoming increasingly important as companies ensure they are sourcing raw materials and components from reputable suppliers and maintaining vigilance regarding sanctioned regions and companies to protect brand reputation. Ensuring that quality products are delivered on time means greater collaboration across multiple members of the supply chain.

All of these strategies and challenges need to be addressed for enhanced customer satisfaction. But doing this isn’t easy. Companies must manage many partners and processes when orchestrating a complex global ecosystem to deliver the product to the consumer. And this complexity creates real challenges:

• Lack of real-time visibility into what is happening with critical suppliers and basing supply chain planning heavily on internal data alone, which limits the ability to dynamically respond to disruptions
• Day-to-day interruptions,  such as delayed shipments, out-of-stock materials, low capacity of production, or supply shortages
• Exposure to major disruptions,  such as weather delays, critical equipment failures, or a trade war, which can all have a catastrophic impact on the company’s ability to serve customers and reach its revenue goals

Siloed, legacy technology solutions don’t provide the ability to detect and respond rapidly to disruptions, exposing companies to financial, operational, and regulatory risks. To mitigate these risks, organizations are forced to carry excess inventory, hire additional staff, and build redundancies into their supply chains that inhibit speed and limit operational flexibility. Combined, these tactics create a major barrier to efficiency and agility.

How a business network can help

SAP Business Network modernizes how procurement and supply chain processes are connected across companies. It closes the break points between buyers and suppliers by enabling transaction exchange, information sharing, and trading partner discovery, leveraging AI and configurable business rules. This helps companies gain greater visibility into their supply chain, increase operational efficiency, and ensure compliance.

By participating in a multi-enterprise business network, such as SAP Business Network, you can adapt to and future-proof your business, all while driving sustainability, in the following ways.

1.  Provide multiple ways to participate

In a truly global network, an individual organization must have the flexibility to play multiple roles. Company A may be a buyer in one scenario and a seller in another. Company B may be a shipper in one scenario and a carrier in another. Providing flexibility is a must.With our more singular approach, we aim to help you:

• Connect with a global community of trading partners to drive desired business outcomes
• Strengthen  collaborative capabilities to take advantage of the reach and power of a global network
• Use the  intelligence of the network to learn from the past, act in the present, and predict the future

This can change how you work with your trading partners for the better. It can improve everything from how you source suppliers and manage supply chain risk to how you work together with partners to design, manufacture, deliver, and support the goods and services the global economy needs

2.  Encourage a community of diverse participants

To be successful, a business network must welcome and connect trading partners and other networks in all their forms:

• Suppliers  providing direct materials and indirect goods and services to buying organizations
• Manufacturers  of components, packaging, and materials that comprise what a company builds
• Carriers, shippers, and other logistics providers  that deliver raw materials and components to manufacturers and deliver the end products to distributors or customers
• Distributors  that get products into the hands of customers
• OEM and asset operators that develop and maintain plant machinery or other equipment, offering proactive services and data that can improve equipment utilization and performance
• Financial institutions  that deliver working capital, financing, or payment options to network participants
• Other existing networks,  such as logistics networks, that provide consolidated access to multiple providers (such as Uber Freight, InstaFreight, and so on) or shipment tracking data (such as project44 and others) or existing industry, asset, or other networks

3.  Stand on an open architecture

To be effective, a network must be able to easily connect to any system, data source, or application from any partner that is connected to it. It must be built with a common data model and APIs for secure and seamless integration.

When built this way, the network can encompass a broader ecosystem, providing capabilities and value such as data or content experts that offer additional intelligence into business processes:

• Suppliers  that contribute ready-made catalogs of goods available for purchase
• Applications  that add depth and functionality to end-to-end processes – such as digital signatures in the contract process
• Financial institutions  that provide payment, financing, and working capital solutions at different points in the process
• Asset services  that offer a central, global repository for asset data, and solutions for effective equipment data and maintenance management

SAP Business Network offers these capabilities, as the world’s largest B2B trading partner platform, with more than $6 trillion in annual transactions. By increasing visibility across the supply chain, improving efficiency through automation of procurement and invoicing transactions, and ensuring compliance with policies and regulations via configurable business rules, SAP Business Network is the answer to operating in today’s networked economy.