Ready or not, the death of the linear supply chain is upon us. Today, networks, platforms, people and digital technology are essentially blurring the lines between physical and digital spheres, causing a tremendous societal change in the last decade. The sharing and collaboration practices of the internet is present in our everyday lives and has disrupted the way that businesses do business.
What exactly is the difference in a linear business and a platform business? Let's break it down:
- Traditional linear businesses take in raw materials, produce a product or service, and then sell that to consumers. Inventory is owned by the business and it shows up on their balance sheets. Legacy businesses like General Motors Co. and HBO were linear businesses.
- Platform businesses use technology as an enabler of their business. A platform business facilitates the exchange of value between two or more groups, such as an end customer and a producer. Supply chain partners within the platform can connect, collaborate and communicate over the network and automate business processes.
To clarify, while technology enables a platform business, a platform is a business model, not a piece of software. A platform business focuses on the network, bringing more value to each business that is connected.
Services that we use every day (Spotify, YouTube, Netflix) have taken advantage of this opportunity; none of these companies actually own any physical assets. Instead, they create the means of connection; deeming them a “network-based platform.”
A network-based platform is a piece of technology or software that fosters connections between all platform community members to create mutually beneficial business opportunities. These types of platforms have been around for a while, but this approach is now being embraced in SaaS and other cloud-based solutions to drive value for users.
Collaborative networks through cloud-based solutions are making an impact in construction’s heavy work space by allowing companies to leverage network-based intelligence and analytics to optimize processes and gain efficiencies. Trading partners can connect and exchange information from one single source, providing a deeper understanding of what is happening within the supply chain. When more members are added to the network, the value of the network increases. This is a phenomenon known as a “network effect.”
A product displays positive network effects when more usage of the product by any user increases the product's value for other users (and sometimes all users).
When more people connect to the platform, the more valuable the platform network becomes. However, adding more warm bodies to the network isn’t enough when interaction is stagnant or non-existing. Engaging is essential to keep participants coming back to the platform; without engagement, the system is not sufficient to achieve network effects.
The most important product of the network is the person using the network.
In the construction world, the speed at which materials can be delivered is a major component to completing a job. Platform-based businesses can gain power through the network effect of bringing more trading partners together.
Collaborative tools possess the ability to help supply chains quickly react to demand and provide visibility from end-to-end across the supply chain, helping managers to deter risks from missed deliveries and speeding fulfillment. Scalable, on-demand services that can be accessed anywhere allow participants to be plugged in at all times, and have the ability to mine and share data for deeper insights and personalization.
Almost all industry sectors have experienced digital disruption from the digital age. This new and modern world we live in can be scary to many business owners who fear taking the plunge into the age of digital disruption. Major enterprise industries are seeing their profits plummet because they are not adapting fast enough to new technologies. Although construction is an incredibly stable industry, large enterprise companies are understanding that their dominance will be short-lived if they do not adapt to this change.
Maintaining a Competitive Advantage
One fully integrated collaboration platform provides information to each constituent, regardless of role—from production all the way through consumption. Cloud connectivity enables the collection and standardization of information across the entire supply chain in real time, allowing trading partners to interact and work together to rapidly adjust to change.
Connecting to a collaboration platform allows businesses within the heavy construction industry to harness problem-solving energies and gain insights into every aspect of their supply chain. Companies can simplify data and analytics across their trading partners, and streamline operations for greater efficiency and productivity.
Data can be gathered from internet of things devices, telematics and more, running analytics to inform about a business’ performance in dimensions never thought possible.
The ability to connect, collaborate, plan and execute across the entire supply chain will allow enterprises to optimize decision-making and dramatically increase their effectiveness.