Value is created when the whole is greater than the sum of the parts

Posted by Barloworld Logisitics on 21 Feb 2019 9:00:00 AM

Value is created when the whole is greater than the sum of the parts

In the era of innovation and connectivity the idea of an economy built from autonomous industries attending to their own clients with their own suppliers is fast becoming outdated. More and more, savvy organisations understand that operating in isolation is no longer viable, and that by partnering across, or indeed within industries, higher efficiencies, cost reductions and improved customer service can be achieved. A good example of such collaboration is the symbiotic relationship  between two competing technology giants Samsung and Apple Inc, where the electronics manufacturer is a key supplier of IPhone micro chips and the like. Such symbiosis is a true case of how the seemingly direct competitors in fact can benefit from collaboration in order to function at their full potential.

Mark Geoghegan, General Manager Solution Development and Advisory, at supply chain specialist Barloworld Logistics, points out that the concept of standalone industries is still prevalent in the South African market place with companies still looking at their own markets, customers and suppliers in order to gain value and market share. While this type of strategy has worked well in the past, when considering the concept of an open business ecosystem, such traditional business models are likely to dramatically change.

“Cross industry collaboration is about drawing companies together through multiple industries and collectively seeking opportunities for differentiated value propositions in order to target customer segments that could not be reached before, “explains Geoghegan.  “Connectivity and the internet of things will position companies well in the future to leverage cross industry collaboration, however, only a few organisations are currently taking this leap”.

Cross industry collaborations can meet numerous organisational objectives across multiple industries with three main areas set to drive increased collaboration in the future.  As cost focus continues to remain a business imperative, the advantages derived from sharing risk and cost will become a necessity in both the private and public sectors alike. Secondly, the leveraging of large pools of data and information which organisations have at their disposal across seemingly disparate industries will give rise to organisations identifying and creating new revenue stream opportunities.

Lastly, the increase in small businesses which will continue to be a trend into the future as more and more entrepreneurs gain access to the market. Economic pressure will however continue to constrain start-ups unless companies collaborate so as to find the capital that they need to remain in business.

“Organisations across all sectors need to create stronger value propositions and begin thinking about cross industry collaboration in order to remain relevant or risk becoming disinter mediated,” states Geoghegan.

Supply chain partners play a vital role in identifying areas of shared value throughout the value chain, allowing for innovative partnerships across companies and industries leading to collaboration in the overall supply network. The supply chain is arguably the starting point for collaboration offering shared networks, shared facilities and shared access to technology and expertise, to name but a few.

Feasibility to capture growth across industries has increased among a large number of organisations, however, there is a limited timeframe to reel in favourable partners in order build sustainable collaborative ecosystems. Leaving industry comfort zone is a difficult decision, but changing market dynamics and increased pressure on growth can make it a necessary one.


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Topics: News, PR