The Internet and the knowledge economy fundamentally alter the concept of the traditional supply chain. Organizations should realize that interactions with their various trading and business partners are not linear chains but interconnecting webs. These webs provide opportunities for new and different trading relationships that were not even considered a few years ago. Successful organizations will be those that take advantage of the opportunities that this e-business model creates.Smaller companies seem like bigger companies, and more companies make more points of interaction in supply webs. The Internet gives almost any company a chance to be noticed on a global scale. In addition, outsourcing allows smaller companies to concentrate on their core competencies and still have top-quality technical operations and infrastructures.
Networked Supply Models
Clearly, the Internet has displaced the traditional supply chain model. In its place, we have two types of supply models at work in the new economy: the discrete B2B model and the marketplace model.
The discrete B2B model
This supply model is a holdover from the traditional B2B supply chain model. The new, "postmodern" approach merely aspires to augment the old model with more automation and online communications. This is the promise of e-commerce in general, and we've seen plenty of e-commerce success in the business-to-consumer (B2C) sector. But B2B e-commerce is just beginning to take off.
When looking at the discrete B2B supply chain model, it becomes clear that although e-commerce may enable more parties to participate more easily, the model is essentially unchanged from the traditional supply chain. Even with the rush into e-commerce, many organizations continue to view their trading-partner relationships as before.
Marketplace supply webs
The B2B marketplace supply model is more innovative. In this model, intermediaries provide the mechanism to bring buyers and sellers together to trade. Typically, such marketplaces bring together manufacturers, materials suppliers, wholesalers and retailers in a particular industry or market segment.
Despite the theory that intermediaries cause market inefficiencies, Internet-based B2B marketplaces actually accelerate the distribution process. This is especially true in highly fragmented industries such as apparel, electronic components or furniture, in which there are few dominant companies or service providers around which the market revolves.
In the marketplace model, the intermediary itself incurs the lion's share of the cost of running the marketplace, with responsibilities such as site development, implementation and maintenance. Trading partners pay a fee that may include access charges, transaction charges or a percentage of sales. In any case, the expenditures are often negligible compared to going it alone with a pure B2B play.
The next generation
Both the postmodern and marketplace supply models can be seen in practice today. However, the nature of the Internet belies the orderliness of these models. In reality, every trading partner is like an individual atom and can be connected to any number of other atoms in different ways, which in turn can be connected to many other atoms and so on.
Thus, the Internet has given rise to an atomistic supply web that appears chaotic on the surface but actually provides an environment for limitless opportunity.
The atomistic model represents the way the world really works. Its evolution would make the Internet's founding fathers proud. It is a limitless model without boundaries on relationships among companies, individuals, information or transactions. In the Internet economy, success depends on quickly taking advantage of new business opportunities. That means knowing when to cast aside old models--such as traditional supply chains--that may become obsolete for your business.