By all indications we are truly living in the Information Age.
So why do we continue to have supply chain bottlenecks—disruptions in the flow of goods and information at a global level?
Why are many of the technology "solutions" unable to meet the challenges facing those engaged in global trade and transportation? What is required in order to unleash the promise of the digital economy?
In search of answers to these questions, ChainLink Research initiated a fact finding mission. The report on this study will be published in January. The replay of the webinar is available now.
What did the research tell us?
Discussions with over 250 executives identified many different challenges, depending on vertical and regional sectors. However, there was a resounding theme:
The business model that current information systems are designed to support has changed!
The enterprise of the present is no longer a single, vertically integrated organization. Globalization, outsourcing, and off-shoring have created an environment where end-to-end supply chains include many players, with a shared need for accurate and timely information.
Past dependencies on direct supply chain partnerships, and working in silos—your little sliver—versus a multi-tier view, are a core problem in today's supply chain.
Leveraging the digital environment of the new age, this should be accessible to all through a neutral interface, ensuring equality through a "single version of the truth" (SVoT).
What Is a SVoT and Why Is It So Important Now?
As more and more activities are performed at an level, it is critical to ensure that both physical operations and information systems operate optimally. This requires a fine tuned level of control, ensuring that activities and functions that have been outsourced across an extended network are monitored and managed. Each of the players, irrespective of role, adds some element of lifecycle data to the movement of product throughout the chain. And this information is becoming increasingly important.
In order to synchronize the flow of goods, cash, and information across the supply chain, each link in the chain of custody should be monitored, recorded, and measured to ensure that constraints and failure points are identified, and that remedial action is taken.
In addition, reliance on channel partners to provide market intelligence won't cut it. They have little to no motivation to provide this data. And many don't have it. Progressive retailers do provide point of sale (POS) information, but this is sales—not market demand—in the true sense of the word.
And then, what will we operate from?
This requires a common view, even a single system of record, where key data is captured and stored concurrently versus sequentially. (See figure 1 below.)
(click here for larger verison)
Information Nirvana—Linking the Chain through the SVoT
A key enabler for a virtual digital enterprise is an open environment for real time information sharing. This should ensure that all participants have access to product, customer, supplier, and other data that forms the fabric of the supply network. Ideally this information technology (IT) environment should enable each participant to access and share rich and real time information related to their specific as well as related activities.
Technology enablers abound; digital networks create a ubiquitous environment in which to share information. Wired and wireless devices ensure the flow of data at a global level. Radio frequency identification (RFID), the hottest technology in small smart auto-identification, is being embraced at a global level. Theoretically, the global economy could be seamlessly connected through the diffusion of data at digital speed.
 See detailed list of functional entities, information needs, and data points in Addendum A
of this coming research report.
So What Is a SVoT?
At the broadest level, an SVoT is conceptually a virtual data repository (although the actual implementation may be highly distributed). This environment should facilitate a digital workspace through which data related to product, customer, supplier, and trading partners is available to all participants in a timely manner. Achieving time synchronization today means that this work space probably exists outside the firewall of the traditional enterprise.
How Can We Achieve this Vision?
An environment that facilitates an SVoT should support the key processes in the supply chain, ensuring a consistent view across the supply network for all participants, ensuring benefits for all players. For example:
Achieving a true SVoT requires very specific definition—agreed upon standards (global transportation network [GTN], electronic product code [EPC], etc.), and user and functional requirements will vary, depending on the level of process integration within the supply network. The SVoT could also support the growing need to have item and serialized data related to product components, and link to finished goods at the item, package, and pallet level—whatever information might be needed to see the business events and complete an inter-enterprise transaction.
Critical Elements of a SVoT Environment
The right data for this is situation dependent, but our research (get ChainLink Research report for this research) shows that most executives really crave a full set of supply chain operational data—but with critical priorities.
A warning: as RFID and sensors become widely deployed, this will add much more data and algorithms to the portfolio. So keeping from falling behind on today's operations views is critical.
- Peer-to-peer data synchronization—machine to machine interaction
- Community or trade partner networks—beyond the intimate tango!
- People to people—instant messaging paradigm
- Semantically align—consistency in meaning and interpretation
- Publish/subscribe/event architecture—a way to get at business events as they happen
- Convergence of existing technologies—to include wired, wireless, distributed applications and databases, browsers, and personal digital assistant (PDA) technologies
SVoT—From the Vision to Virtuality
So what did our respondents say about their adoption of RFID and network based applications—and just getting on a collaborative playing field?
There are a series of "hurdles" to widespread adoption that need to be taken into account. (See chart 2 below.)
The following are potential catalysts that will drive more universal adoption of an SVoT model.
- Mandates beyond the mass merchandisers—food and drug administration (FDA) compliance, counterfeit issues—what's in it for me!
- Market forces—consumer acceptance and requirement for product level validation in terms of counterfeit and other threats—real implementations with proven return on investment (ROI)
- Education—an understanding of what is possible and what is available
- Maturity of solutions, more commercial offerings
- Simplicity of adoption—inclusion of existing components
- Global supply chains—community compliance initiatives—a cascading issue. You may not be the direct supplier dealing with the mandate, but the supplier to, or trading partner of will also be impacted!
- Maturity of technology—real or perceived.
- More commercial offerings—new players in the field
- Simplicity and impact of adoption
- Relevant, business use case studies
- Inclusion of existing components—electronic data interchange (EDI, barcode, Web-based tools— RFID additive or replacing EDI and other legacy approaches.
- Mobility of solution—linkage with PDA, cell phones, instant messaging, etc.
As with all disruptive technologies, the true values will be attained once critical mass is achieved.
Creating a Digital Democracy— Analyst's Perspective
Unlike most information systems challenges, the answer does not lie in technology. The key to the solution is a change of corporate mindset—moving from an exclusive to an inclusive model—understanding the interdependence of each of the constituents—a true economic democracy! And like all changes from autocratic to democratic models, there needs to be a clearly defined and shared constitution—changes in policy governed by clearly defined and understood principles.
Tune Up the Band and Do the SVoT—Getting those Players Dancing to the Beat!
The following are some guiding principles to light the way along the electronic highway for the new followers of SVoT:
Changes in policy impact information requirements. These need to be reviewed, updated, and maintained up to date.
- Local, regional, and global compliance
- Piracy, counterfeit, and diversion control
- Safety and health regulations
- Environment and sustainability issues
- Corporate governance—fiscal responsibility
- Social responsibility
- Corporate philosophy—inclusive versus exclusive
Changes in policy need to be supported by changes in corporate mindset. The policy should define and drive the critical processes in support of the desired outcome.
Once the corporate mindset has embraced some of the concepts of inter-enterprise collaboration, it is useful to review all inter-related processes.
- What is our true value proposition—outcome versus actions?
- What activities need to be retained?
- What activities can be outsourced to third parties?
- What information needs to be shared? What mechanisms exist in order to create the desired SVoT?
A SVoT across the enterprise provides players with an accurate view of all activities—past and present. This level playing field requires a new set of metrics. Consider:
- Corporate financial performance criteria?
- Areas of constraint?
- Consistency across all processes?
- Identification of variations from plan?
- Measure and management of individual and single enterprise performance across the extended value chain?
- Adjustments that should be made when there are variances to plan?
The output is a "play sheet" that highlights areas of constraint and critical issues. This guideline for the SVoT ensures that all players:
- Understand the constraints across the network and focus on managing them
- Understand the competitive issues of competing supply networks versus regional players
The SVoT, in all practicality, cannot be a single "database in the sky". A composite data repository, the SVoT should be accessible through current technologies, include internet and other media, and should incorporate the data technology networks of each of the participants. More importantly, this critical system of record needs to be guarded and controlled through a set of protocols, access codes, and industrial strength digital security.
The potential of a truly global and digital enterprise all sharing an SVoT has benefits for all players—manufacturers, distributors, retailers, and consumers. In addition, there are many opportunities for service providers to leverage the current environment and create new value propositions for their customers—and their stakeholders.
Are You Ready to Do the SVoT?
The following chart illustrates the type of information that could be shared, as well as potential data contributors and users. (Note: this is not an inclusive list but highlights the complexity of data that needs to be shared across the supply chain.)
|Supply Chain Process
||Type of Information Shared
||Information Contributors and Information Users |
|Product design and request for information (RFI) exchange
- Product designs and computer-aided design (CAD) files
- Project plans (e.g. for construction projects with many players)
Design and marketing personnel
- Planning data (forecasts and demand)
- Product specifications
- International trade information—current, up-to-date regulations, duties, tariffs, harmonization codes, denied party lists, etc.
Third-party logistics (3PL) partners
|Procurement from supplier
- Transactions (purchase orders [PO], PO acknowledgement, advance ship notice [ASN], receipt, invoices)
- Compliance guidelines for retailers—making sure that when the retailer changes their compliance guidelines, all their suppliers know about it precisely and in a timely manner
- Status of manufacturing lines, individual orders
Supplier Carrier or 3PL
|Transportation from supplier
- Product movement data (where is stuff in the supply chain)
- Condition monitoring—e.g., temperature, pressure, etc. for sensitive goods in transportation and storage
- Condition monitoring
- Shipment dimensions - size and weight
- Packaging requirements
|Shipment with secondary carrier
- Condition monitoring
- Special handling and stowage data
|Customs classification and entry
- International Trade information—current, up-to-date regulations, duties, tariffs, harmonization codes, denied party lists, etc.
- Financial information—total cost of goods and transportation
- Letter of credit details
|Transportation to distribution center at receipt location
- Condition monitoring
- Estimated arrival
- Receiving and storage requirements
|Order fulfillment for retail channels
- Condition monitoring
- Compliance guidelines for retailers—making sure that when the retailer changes their compliances guidelines, all their suppliers know about it precisely and in a timely manner
|Sales personnel |
|Receipt at store level
||Retailer store personnel |
|Sale to ultimate consumer
- Customer information—in particular for the end customer
- POS data (exactly what the end customer bought and when)
|Returns, service, and repair
- Service events and records (from many angles— how often does part X fail, what is the service history for this customer, how much inventory is in the repair depot, etc.)
|Design department |
This article is from Parallax View, ChainLink Research's on-line magazine, read by over 150,000 supply chain and IT professionals each month. Thought-provoking and actionable articles from ChainLink's analysts, top industry executives, researchers, and fellow practitioners. To view the entire magazine, click here
About the Author
Carla Reed heads ChainLink's Global Logistics and Distribution practice. Ms. Reed brings deep hands-on experience, having design and managed numerous global distribution networks and warehouse facilities around the world. Before joining ChainLink, Ms. Reed founded New Creed, a business process and enabling technology consulting group which focuses on the global supply chain, linking evolving technologies and concepts to global business issues in existing and emerging markets. Ms. Reed was previously Director, Logistics Solutions for Sterling Commerce, General Manager, Sales and Marketing for Premier Freight, Johannesburg, South Africa; and has held various other positions in the international freight management area.
ChainLink Research is a bold new supply chain research organization dedicated to helping executives improve business performance and competitiveness.