Introduction
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.
[1] See detailed list of functional entities, information needs, and data points in
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:
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.
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.
As with all disruptive technologies, the true values will be attained once critical mass is achieved.
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.
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.
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.
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:
The output is a "play sheet" that highlights areas of constraint and critical issues. This guideline for the SVoT ensures that all 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.
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.)
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,
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