Platt Perspective on Business and Technology

Interoperability, third party provider support and first mover advantage – 6

Posted in business and convergent technologies, outsourcing and globalization by Timothy Platt on March 17, 2012

This is my sixth installment in a series on unique value propositions and sources of unique value in individual businesses, with a focus on businesses as they function in supply chains and larger value chains, and in complex business and economic ecosystems (see Outsourcing and Globalization, postings 15-19 for parts 1-5.)

I discussed the issues of business competitiveness at the level of the supply chain in Part 5 as a part of a general discussion as to how competitive value can arise at both the level of the individual participating business, and at the level of the supply chain itself. I turn in this installment to consider some of the process issues that would go into making supply chains competitive and marketplace-effective as core prerequisites to their supply chain level best practices. And with this posting I finally start addressing some of the specific terminology cited in the title of this series: interoperability and operational connectivity, third party provider support and support between member businesses within the supply chain, and first mover advantage and at both the business and supply chain levels.

Interoperability and operational connectivity: Supply chains have to be closely connected and participating member businesses have to be able to function together smoothly and without delays or disconnects if they are to meet and even beat schedule deadlines and if they are to do so with cost-effective completion of their steps in the overall supply chain work flow. Stated as such, in the abstract, this almost sounds trite, but when you look at individual businesses and their practices and at the issues involved, this becomes a rich source of opportunity for best practices differentiation from the competition, and at both individual business and supply chain levels. And I start this discussion by making a basic distinction.

• Issues of interoperability and connectivity can be divided into two distinct areas: adherence to open standards, and ability to connect in-house and even proprietary processes and protocols to them.

One obvious source of open standards interoperability and connectivity arises in use of standard internet-based communications and information formatting protocols and that is the basic level of connectivity that any business or supply chain can be expected to follow as it communicates through online channels in conducting its business. But on top of that, rides a series of other connectivity issues starting with capacity to connect across perhaps disparate database systems. And standardized labeling and categorization systems for managing data flows and connectivity only comprise one part to this. As examples of standardized labeling systems of the type cited here, consider standardized Stock Keeping Unit (SKU) systems where for example Fuji apples, or specific versions of some software program as developed for a specific operating system would have separate and unique SKU labels. Any business would recognize and correctly identify specific SKU labeling data shared with it through a supply chain if it uses this labeling system and works with those products (or with such components as they would go into further production processing and/or aggregation and assembly.)

Addressing this level of interoperability and connectivity is, however, not as simple as just following a single SKU labeling standard. Yes, a great many businesses and business types use SKU systems but they do not always match up precisely. There are inconsistencies and of a variety of types. But perhaps more to the point for this discussion, SKU is not the only type of system in use and even in general use. Businesses also use Universal Product Code (UPC) tagging and Global Trade Item Number (GTIN) and more regional labeling standards such as European Article Numbers (EAN) – now called the International Article Number. This multiplicity of systems becomes important as businesses become more fully connected and interconnected in globally-reaching markets and with potential need for forming supply chain partnerships with other businesses that could be located anywhere. And I have just been discussing goods as shipped – finished products and raw materials and parts up to now.

This becomes more challenging – meaning this creates more opportunity for developing new sources of competitive advantage, where businesses have to interconnect at the level of the processes and practices they use in effectively ordering, shipping, using and passing on the items that would be covered in those labeling and tagging systems, and in their general operations that they work together smoothly and seamlessly. Interoperability and operational connectivity offers a rich source of potential for creating competitive advantage at the supply chain level, and even unique sources of such advantage. And where in-house practices and processes residing in specific business partners in these systems, facilitates these supply chain level sources of advantage, they can be difficult for other supply chain level competitors to emulate.

I am going to continue this discussion in my next series installment in which I will turn to consider third party provider support and support between member businesses within the supply chain. After that I will delve into some of the issues that arise regarding first mover advantage and at both the business and supply chain levels.

You can find this posting and series at Ubiquitous Computing and Communications – everywhere all the time and at Outsourcing and Globalization as the supply chain and value chain business ecosystems that are discussed here are increasingly global in reach and participation. You can also find related postings at Business Strategy and Operations and its continuation page, Business Strategy and Operations – 2.

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