Using Data to Power the Supply Chain

Check out any supply chain survey conducted within the past few years and the term "visibility" will rank at the top of the wish list. Suppliers, distributors, and end-customers all want to track the movement of parts as they work their way toward becoming finished goods. But each of these partners needs different data at different points in the supply chain to fulfill their concept of visibility. As a result, this data resides in silos and isn't shared across the supply network.

This isn't a bad system -- each partner gets enough information to satisfy its needs. But openly sharing data has a lot of advantages. First, the quality of the data improves as more companies provide information. Second, this aggregated information can be used more effectively to spot and interpret trends. And finally, data can be communicated in real-time across the network to give partners a chance to respond to events that can disrupt the supply chain.

This is the vision behind GT Nexus, a provider of cloud-based supply chain services. The company has developed a kind of Facebook for corporations, where companies can invite their partners to join; update the status of an order (for example); and cascade that information across their supply networks.

The key, says Greg Kefer, GT Nexus director of corporate marketing, is an environment where multiple enterprises can collaborate without downloading or uploading data between systems. "The supply chain is basically comprised of a lot of points of data that have a distinct chain of custody," he said in a phone interview. "This data is different for each company, and that information is often stored, or 'locked up' within an ERP system. These systems aren't designed to work across enterprises, so the data isn't flowing."

The only way to do that, GT Nexus believes, is through the cloud. Not only do most ERP systems not talk to one another: They don't even speak the same language. GT Nexus partners provide data from their ERP systems; GT Nexus takes it, translates it, and then makes the data available to select members of the network. Although the information is standardized, linked, and centrally stored in the cloud, it is also partitioned -- it is visible only to stakeholders that have been granted permission. "Being part of a group does not necessarily mean every partner sees the data," explains Kefer.

In addition to the partners in a typical supply network -- suppliers, distributors, and customers -- global commerce also depends on air, land, and sea freight handlers, third-party logistics companies, trade and tariff officials, seaports, and trucking and rail companies. Each of these groups manages information that isn't necessarily shared with an end-customer that's awaiting a shipment.

For example, a customs inspector at a seaport may hold up a cargo container for some reason. That event may be communicated to partners that are directly affected, such as 3PLs or transit companies, but not the contract manufacturer that is waiting for a portion of that shipment so it can begin production.

"That type of data isn't flowing or being rationalized at a central point," says Kefer. "What we are doing is taking that data, normalizing it in a central location, and amortizing it across a community of major players."

Most of these companies already have EDI links and legacy systems that they have spent millions of dollars on. The cloud doesn't replace those systems, but it does provide economies of scale. GT Nexus users pay a subscription fee based on their level of engagement. This means small companies that don't have costly ERP platforms can participate in GT Nexus.

Partners are being driven to the platform by large, global OEMs and brand owners that source from hundreds of suppliers. "Peer pressure is one way of getting participation on the network. A customer will say, 'OK, this is our strategy and we want you to comply.' It doesn't mean companies have to give up their legacy systems, but it does mean certain data has to be shared."

Kefer points out that most freight -- whether shipped via sea, land, or air -- is managed by a finite set of companies. Participation by these companies is half the battle in supply chain visibility. "Let's say 95 percent of container traffic is managed by 30 companies. If we can get these 30 companies on the [GT Nexus] network, hundreds of companies can access the information that's important to them."

Luke Kupersmith, founder and CEO of logistics advisor Source Consulting, says carriers are often mixed and matched to provide the most cost-effective solution for any given scenario, but following the process is complex and tricky. Network visibility is key to any viable tracking solution.

And visibility can be a game-changer. Kefer cites an example of a US retail store that sources most of its merchandise from China. The retailer began opening stores in China and found it had a problem: In order to manage its inventory, merchandise had to be shipped from China to the US, rationalized in the US, and then shipped back to China. Once it was on GT Nexus, the retailer could ship merchandise made in China to its Chinese stores. "Now they can see exactly where their inventory is," says Kefer. "It's a lot more efficient."