(Editors’ note: This is the fifth of a five-part series of articles about the journey to creating an end-to-end business network that enables demand-driven supply capabilities.)

All stakeholders in market-based ecosystems stand to realize breakthrough opportunities with the adoption of digitally enabled network platforms.

Benefits won’t come only from a sharp reduction in the complexity of technology and data integration, but also from the economic power of scale, collaboration, responsiveness, visibility and transparency across all networked partners.

The transformation is already happening in multiple sectors, led by innovators such as Amazon, Google, and Apple. For others, it’s still a new and evolving concept.

Central to the effort is adoption of a five-stage maturity model. Stages 1 through 3 yield value from a traditional point-to-point, supply-driven perspective. They remain an important foundation for internal functions such as logistics, operations, and procurement, as well as for managing external relationships with contract manufacturers, suppliers, retail pharmacies and hospitals (in healthcare supply chains), distributors, and suppliers.

In early stages of the journey, these will still be largely transactional in nature. However, non-linear, exponential economic value kicks in at Stages 4 and 5, where the power of the network becomes the ecosystem differentiator. In other words: the stronger the partner network, the higher the economic value.

The economic value of a market-based network originates from the power of all market elements and partners collaborating within a unified ecosystem, drawing on a digital network platform. The interconnection among partners enables real-time transparency and unprecedented levels of collaboration. It’s as simple as going from a one-to-one connection to the participation of multiple partners in the network, collaborating and exchanging data with one another.

Companies experience reduced complexity and improved sense-and-response capabilities because they’re no longer constrained by delays arising from the need to integrate disparate I.T systems, businesses and databases. Codified connectivity embedded in the digital network platform — such as cloud-based applications provided by Amazon Web Services — is the heart and soul of the networked ecosystem.

The five-stage model provides a capability reference and diagnostic tool for assessing a company’s current capabilities, as well as a framework for future improvements and creation of an execution roadmap for the journey. It serves as the common foundation for all stakeholders to address maturity levels, gaps, and opportunities. In the process, they can benchmark and share lessons and best practices.

In short, the model allows leaders and practitioners to determine current capabilities within their own businesses, as well as those across the market-based network ecosystem.

Best practices codified under the five-stage framework provide a north star to guide stakeholders toward the achievement of Stage 5+ capabilities, whereby responsiveness, effectiveness, and customer safety are embedded into the DNA of a networked market ecosystem.

A few final notes:

It’s important to stress that achieving Stage 5 capabilities isn’t a competition — it’s about communicating a capabilities-based roadmap for a led and managed transformation journey.

Second, it’s important to note that different business units (for example, diagnostics, vaccines and biotech in healthcare) might be at varying stages of capability. The model is ideal in the sense that it allows for assessment, diagnosis, analysis and differentiation across the entire ecosystem, or inside of a business.

Third — and I always get asked this question — why can’t I just skip straight to Stage 5 capabilities?

The answer is that core capabilities such as improvement projects and functional excellence in Stages 1-3 are important foundations for end-to-end, customer-driven capabilities in Stage 4. The platformed network can’t operate if partners are unable to execute basic performance improvements and deliver reliably to plan. By focusing on the rapid buildup of Stage 2-3 capabilities, coupled with visionary leadership principles defined in Stages 4 and 5, businesses are less likely to get stuck in a particular stage because they’ve grown too comfortable there.

Progress toward the ultimate goal of Stage 5+ varies according to type of business. In general, industrial companies are highly engineering and project-centric, placing them in Stage 2, while consumer packaged goods operations tend to be low Stage 3. Distribution, warehousing and logistics operations are typically at Stage 2 and 3. When it comes to compliance, Stage 2 and 3 serialization and track-and-trace capabilities are the ideal starting point for journey to a digital partner network platform.

Retail and hospital operations have the ideal opportunity for building Stage 5 aspirations because they’re directly impacted by the availability and use of product at point of sale and consumption. They exist at the ultimate moment of truth for any system: winning at every customer, buyer, patient, and user.

Roddy Martin is chief digital strategist with TraceLink.