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Article
Two to Tango; But it Takes More than Two to do the Single Version of the Truth

Today's enterprise 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.


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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?[1]

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 of direct supply chain partnerships, and working in silos—your little sliver-- vs. a multi-tier view, is 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 out-sourced 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 of 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 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)

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 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. 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.

So what is a SVoT? 

At the broadest level, a Single Version of the Truth 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.  Achieve time synchronization today means that this work space probably exits outside the firewall of the traditional enterprise.

How can we achieve this vision?

An environment that facilitates a 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 (GTN, EPC, etc.) 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 situational dependant, 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.

Considerations include:

  • 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, browser and 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)

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Chart 2

The following are potential catalysts that will drive more universal adoption of a SVoT model.

  • Mandates beyond the Mass Merchandisers—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 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/impact of adoption
  • Relevant, business use case studies
  • Inclusion of existing components—EDI. Barcode, web based tools- id 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— Analysts 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:

Policy

Changes in policy impact information requirements. These need to be reviewed, updated and maintained up to date.

Drivers include: 

  • 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.

Process

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?
Performance

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

Enablers

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, to 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 a 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?

Chart 3  - 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/Information Users

Product Design – RFI Exchange

  • Product designs and CAD files
  • Project plans (e.g. for construction projects with many players)

Brand Owner
Retailer
Suppliers
Installers
Design and Marketing personnel

Sourcing Stage

  • Planning data (forecasts/demand)
  • Product Specifications
  • International Trade information – current up-to-date regulations, duties, tariffs, harmonization codes, denied party lists, etc.

Brand owners
Buyers
Compliance Department
Suppliers
3PL partners
Carriers
Customs Brokers

Procurement from Supplier

  • Transactions (purchase orders, PO acknowledgement, 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

Purchasing Department
Finance Department
Banks
Suppliers
Transportation providers
Consolidators
Brokers

Manufacturing

  • Status of manufacturing lines, individual orders

Procurement
Supplier
Carrier/3PL
Broker
Consolidator

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

Supplier
Carrier
Consolidator
Logistics Department
Compliance Department
Brokers
Banks

Consolidation Stage

  • Condition monitoring
  • Shipment dimensions - size and weight
  • Packaging requirements

Carrier
Supplier
Consolidator
Storage location
Brokers

Shipment with Secondary Carrier

  • Condition monitoring
  • Special handling and stowage data

Consolidator
Secondary carrier
Broker
3PL
Supplier
Retailer/Brand owner

Customs Classification and Entry

  • International Trade information – current up-to-date regulations, duties, tariffs, harmonization codes, denied party lists, etc.

Supplier
Retailer
Brand owner
Broker
Compliance personnel
Banks

Financial Settlement

  • Financial information – total cost of goods and transportation
  • Letter of Credit details

Procurement
Banks
Brokers

Transportation to Distribution Center at Receipt Location

  • Condition monitoring
  • Estimated arrival
  • Receiving and Storage requirements

Carrier
Warehouse personnel
Purchasing Dept.
Sales Department
Product management

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
Finance
Warehouse personnel
Carriers
Retailers

Receipt at Store Level

  • Condition monitoring

Retailer – store personnel
Carrier
Finance
Sales

Sale to Ultimate Consumer

  • Customer information – in particular for the end customer
  • POS data (exactly what the end customer bought and when)

Retailer
Supplier
Brand owner
Sales/marketing
Forecasting
Procurement

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
Suppliers
Service personnel
Warehouse
Carriers
Customers


[1] see detailed list of functional entities, information needs and data points in Addendum A of this coming research report

 




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