Professor: Supply Ecosystems are the Next Generation of Supply Chains

 

The technology of 3D printing seems like science fiction, but its implications for business are anything but imaginary. A new article by UT professor Russell Crook suggests that 3D 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.

In a forthcoming Journal of Business Logistics article titled “From Supply Chains to Supply Ecosystems: Implications for Strategic Sourcing Research and Practice,” Crook and his co-authors describe how the interactions and interdependencies within supply chains parallel biological ecosystems where organisms, such as plants, compete for scarce resources, such as water. Current supply chain thought generally emphasizes the collaborative relationships among supply chain members but underemphasizes the level of competition for scarce resources and profits that takes place within those relationships.

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.”

 2. 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.

3. 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 3D 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.

The full article is available online.

CONTACTS:

Tanya Brown (865-974-1570, tgbrown@utk.edu)

Russell Crook (865-974-8764, trc@utk.edu)

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