Abstract
The chapter discusses the specific changes in supply chains, conducted by the establishment of “smart” local communities as the result of comprehensive implementation of digital technologies. The author distinguishes the main drivers of these changes, derived from the activization of knowledge spillover used for commodification of locally supplied goods and services. The emphasis has been done on the institutional framework, enabling to expand the scope of beneficiaries of supply chains, associated with the provision of services, basic for local communities, based on networked consumption. The sophistication of supply chains in “smart” local communities the author explains by the expansion of business-local communities' partnership, integrating “smart” solutions into local governance and supplementing digital technologies with reformatting of managerial practices and everyday behavior patterns.
TopBackground
The issue of supply chains’ modification is widely discussed in the studies of technological and economic progress. Nagurney (2006) stresses on the tight interconnection between supply and value chains. In fact, supply chains link value chains, thus, their design truly depends on the technological shifts, changing value creation process – namely, new sets of tools, productive equipment, appropriate technologically determined production factors, data and methods of data processing and usage in management etc. Indeed, supply chains as an external “interface” of the company, reflect the changes in the market environment and should be much more reactive and flexible compared to production itself.
The researchers of a community of sustainable business experts BSR (2017), based on the studies of practical experience of leading companies’ procurement offices, identified the key priorities that shape the procurement processes and should influence supply chain management till 2025, namely:
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The comprehensive adoption of modern technologies at all the length of a value chain;
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Global climate changes and shortage of resources;
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Massive migration processes;
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Shifting consumer demand towards personalization and on-demand economy, exploring new markets and new customer groups;
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Fundamental changes, influencing supply chains – both international, such as reshoring, changes in supply and delivery geography, changes in main economic partner countries, and domestic - uncertain prospects of changes in regulations.
New drivers enable to engage more resources and modify the structure of demand, consumers’ pools, location, needs and purchase behavior. This expands the supply chains, provides new chances for their sophistication, building their proper design. Janjevic, Winkenbach, and Rice Jr. (2016) derive the modern methods of supply chains’ building, reflecting the changes in supply chain design:
Key Terms in this Chapter
Networked Consumption: The consumption of systems of some goods and services, the value of which reveals in full extent due to the network communication of their consumers, while the consumption itself serves at the identifier of affiliation with this network.
“Smart” City: The model of systemic management of urban community, based on the inclusive integrated implementation of intellectual digital technologies, managing the basic processes of community’s life.
Knowledge Spillover: Dissemination of knowledge, created by some entity (individual or organization), to the availability of all the members of the community, complemented with their capacity to utilize this knowledge in their activities.
Sustainability: The capacity to maintain in long run the main functional features in spite of changing external environment.
“Smart” Network: Intellectual technology, which manages a process, using the digital control and monitoring instruments to optimize its supply chain.
Spatial: Reflecting the features of the subject, associated with its internal topology and external positioning with respect to other subjects.
Sophistication: The evolution of a subject, improving its complexity, self-regulation, adaptivity, manageability and sustainability.
Synergy: Dynamic interrelation between the elements of a system and a system and its environment, bringing to system the new features, exceeding the sum of features of its elements.
Commodification: A process of involvement of a product, previously excluded from commerce, to the market turnover.