This week, we had an amazing, interactive discussion with our community of COOs and global chief supply chain officers on the increasingly important role of ecosystems in driving progress toward broad business and environmental goals. As part of a two-hour roundtable discussion, we explored the following topics with these leaders:
- How can brand owners best partner across their value chains to maximize innovation, profitability and sustainability?
- Where does the supply chain community need greater precompetitive collaboration on larger environmental and social challenges and what are the barriers to progress?
- What additional leadership, resources and governance can be brought to bear to accelerate broad-scale ecosystem collaboration?
During the conversation on the second question, I shared results from a short survey conducted with our Global CSCO community, which spans both B2B and B2C industries.
Interest in and Barriers to Precompetitive Cooperation
What came through loud and clear from global COOs and CSCOs is that they are open to collaborating across industries, as well as within their home industries — more specifically with companies traditionally considered to be competitors. In fact, when it comes to setting standards for areas such as product-based carbon accounting or traceability standards for agricultural and mineral product inputs, the assumption is they won’t effectively meet governmental regulations and their ambitious sustainability targets without standard and scalable solutions.
This type of collaboration is, of course, more challenging for a variety of reasons. Our discussion revealed that concerns over the legality and commercial impacts of cooperating with traditional competitors are significant for many in the community. Digging a layer deeper, some leaders said they had engaged their legal departments and operating committees in discussions that enabled them to carve out more opportunities for precompetitive cooperation (e.g., sharing of logistics resources, aligning on standards for “greener” raw inputs to their products, etc.)
What Did We Learn?
Here are some key takeaways from the group sharing and discussion at this roundtable event:
On Value Chain Collaboration …
- A consumer product company convened a cohort of Tier 1-3 suppliers to share common resources (e.g., one supplier shared surplus RFID tags in a region where other suppliers needed them) and enable the broader value chain to run more smoothly.
- A retailer is focused on how it can enable more circular models, including a scaled and efficient reverse logistics capability to bring reusable/resaleable products back into its distribution system.
- Prior to the event, Dirk Backhaus, head of product supply for Bayer Crop Science, shared a powerful example of value chain collaboration in a video interview (Gartner subscription required). Bayer is working with farmers to improve yields, use less water and chemicals, and reduce carbon emissions through precision agriculture technologies that enable more granular cropland management.
On Ecosystem Barriers and Opportunities …
- Many supply chains see a gap in how they will meet ambitious carbon emission “net zero” goals without buying carbon offsets. An underlying issue for some suppliers is access to renewable energy to drive down their carbon emissions, which in turn impacts their customers’ Scope 3 emissions.
- A high-tech company is collaborating with other traditional competitors to define a standard carbon content “label” for products, preempting government regulatory standards for which industry compliance would be less efficient and effective.
- There is an opportunity to leverage “adjacent resources” when an entire industry or geography is experiencing constraints. One leader described a key breakthrough in the recent UK petrol shortage as coordinated sharing of drivers across different sectors that typically operate in silos (aviation freight, heavy road freight, etc.)
On Solutions and Actions to Accelerate Progress Through Ecosystems …
- The Open Compute Project was shared as an example of traditional competitors coming together to define common standards — in this case for data center hardware solutions — to drive greater operational efficiencies and reuse opportunities, as well as reduced power consumption in hyperscale environments.
- One company uses a venture capital arm to identify common industry frictions (field equipment safety issues, a need for alternatives to plastic packaging, etc.) that are not core enough to warrant internal R&D focus. The company funds entrepreneurs/startups to tackle these frictions and then provides them with first customers to underpin and scale the new technologies for their industry.
- Members of the apparel industry are participating in platform groups that use a portion of their membership fees to invest in defining common ESG standards and fund open-source technologies.
It was inspiring to hear the level of conversation and passion for these topics across the supply chain community. We’re very much looking forward to the next gathering of this esteemed group, next February, to explore emerging requirements and best practices for ensuring a secure supply chain.
VP Distinguished Advisor
Gartner Supply Chain