The term Ecosystem is now ubiquitous in US business, and becoming so in the UK. (It’s especially embedded in software development circles but leaking everywhere). It’s replacing words like “Supply Chain”, and compared to “Supply Chain” serves as a good illustration of the difference between a business without social technologies and a business with.
Social technologies allow people in business to share and collaborate quickly. With such a pace now, that “who you know online” is proving palpably more valuable in companies than the “knowledge we store online”. Companies are recognising that anecdotal knowledge, social knowledge, context-sensitive knowledge, chance meetings, happenstance and serendipity, when occurring on a large scale can yield more corporate benefits than vaults of siloed, stored, organised and structured knowledge.
The concept of a Supply Chain, in this environment, needs revision. A company no longer needs to manage each supplier in a silo. Ecosystem is a better word. Don’t manage suppliers individually, manage them as if they are a community. Share information with them as a community. Suppliers, providers and partners can talk to each other (and often do anyway), they operate in more open markets than ever before, and it’s easier now than ever to share information and it drives down costs and improves delivery to do so.
Here’s a suggested summary “Ecosystem Approach” to managing suppliers:
- Permit suppliers to collaborate (this is a big step for many firms).
- Encourage them to collaborate, let them know it is a good thing.
- Help them collaborate with group meetings and shared project and job management tools.
- Give them common purpose – costs to be reduced, delivery times to be improved, corporate goals to be achieved etc.
- Give them common data – share core data with them which helps them self-check progress.
- incentivise them on improvements, create a competitive merit-based environment (see post on “Marketers Could Benefit from VC School“).
- Ensure contracts are explicit, not blanket and meaningless, on how information and data is shared and protected – spend time on this, don’t gloss over it.
- Appoint a “Community Manager” on your payroll with the explicit job objective of “helping suppliers” and “Supplier Satisfaction” as the key metric of performance.
- Have arduous and tough terms and conditions, by always pay on the agreed time – it’s the most telling mark of respect.
- Recognise that your suppliers can be as competitive as a bag of foxes, use it to improve performance, introduce a peer review process but terminate any who overstep by.
- Define and share your competencies and where you have elected not to develop competencies so suppliers know your gaps, their space to operate, and can invest with confidence.
