Near Field Communication Serves Up Supply Chain Link

I have been seeing a close link for the past three years between supply chain management in the electronics industry and online advertising, especially the ad networks serving up content.

Last week, Google (Nasdaq: GOOG), along with partners Sprint, CitiGroup, MasterCard, and FirstData, unveiled a platform that would enable consumers to ditch the plastic credit cards and paper and coin currency and pay for goods and services with a smartphone running Android. Google Wallet is set to roll out in beta this summer in Manhattan, Portland, and San Francisco.

Samsung, NXP Semiconductors, and Google have worked together to create the Google Nexus S 4G mobile phone available on Sprint. Google Wallet will establish application programming interface (API) to enable the transfer of offers, loyalty programs, receipts, and more at the point of sale (PoS).

Today, hardware and software partners must work directly with Google to build products and services that connect to Google Wallet, but in the future that will change. VeriFone, Hypercom, Ingenico, and VIVOTech have been working with Google to develop PoS systems to be tested by retailers, including American Eagle Outfitters, Bloomingdale's, The Container Store, Foot Locker, Guess, Jamba Juice, Macy's, Noah's Bagels, Peet's Coffee & Tea, RadioShack, Subway, Toys "R" Us, and Walgreens.

The platform relies on Near Field Communication (NFC) technology to drive mobile commerce transactions. And while Google and partners point to mobile commerce as the driving factor behind the announcement, the application also can support personalized marketing and advertising campaigns, as well as a network of hardware and software developers that will no doubt build on top of the Google Wallet NFC standards. Debbie Arnold, NFC Forum director, says there are 15 standards engineers need to take into consideration.

With Google integrating mobile commerce and PoS connections with smartphone, could its next stop be supporting backend enterprise systems? Would Google partner with SAP and Oracle to develop auto-replenishment inventory platforms for manufacturing facilities?

Arnold says SAP, Oracle, and other enterprise platform makers have features in manufacturing enterprise software that trigger auto replenishment of goods from suppliers, but not so many connect with mobile commerce applications to replenish components or pull down online advertisements from ad networks as inventory of finished goods gets depleted.

Kelly Pennock, Visible Technologies CEO and former president of analytics at First Data, says just-in-time manufacturing will turn into just-in-time supply chain for mobile. "At Amazon.com, where I also worked, we tied the supply chain to the online website and purchasing, working hard to keep inventory low," he says.

NFC integrated into Google Wallet could also provide inventory forecasting, predictability around time of week, time of day, and season of year, according Pennock. He says the higher the volume, the truer those predictions.

Platforms are available today to replenish inventory from data gathered through mobile purchases. Pennock says companies simply need to build middleware to connect hardware inventory replenishment with mobile commerce sales, ad campaigns, and online ad networks.

Similar to IBM Corp. (NYSE: IBM), Google's push into NFC and mobile commerce could indirectly prompt SAP and Oracle to link more closely with online advertising. The online advertising network OpenX, for example, said it secured $20 million in venture capital funding. SAP Ventures, the VC arm for enterprise software maker SAP, led the round and will take a seat on the company's board of directors.