Supply Chain & the Information Bottleneck

With increasing regulations and more consumer attention on the materials used in electronics parts and the environmental impacts of manufacturing, OEMs are trying to figure out how to make their supply chains more transparent. But gathering and organizing detailed information at every stage of the supply chain is a tough nut to crack. Not only are the logistics of collecting the information difficult, but concerns about business confidentiality make it seemingly impossible in some cases.

But a recent report from the Wharton School, "Greening the Supply Chain: Best Practices and Future Trends," contains interesting information about a startup that is trying to solve the problem of transparency in supply chains. The report is based on presentations at the April 2012 annual meeting of Wharton's Initiative for Global Environment Leadership.

Most companies do a poor job at tracking such information in their supply chains, according to Gil Friend, CEO of Natural Logic, a sustainability consultancy. In fact, even the world's largest corporations simply use Excel spreadsheets to compile the data. At one company, Friend found a senior vice president actually collating those spreadsheets. It's "spreadsheet mayhem," he said. "If you think about a global enterprise, with perhaps hundreds or thousands of locations, with spreadsheets at every location being sent into corporate where someone is collating those spreadsheets manually to produce a report, the economic cost of that is huge, but the opportunity cost is even bigger."

ERP systems still have a long way to go before they can integrate environmental data into their packages, says the report. In a survey by IFS North America and Affinity Research Solutions, more than half of the manufacturers polled rated their ERP solutions unfavorably in terms of the ability to assist with green supply chain requirements. It's something that ERP suppliers are trying to fix, but it will take time. "We used to live in a world where energy was cheap and information was expensive," noted Peter Graf, chief sustainability officer and executive vice president of sustainability solutions at SAP. "Now, information is a resource that is becoming limitless, and energy and other environmental resources are becoming constrained."

Perhaps the most difficult problem with the transparency of supply chains is that corporations don't like sharing what they consider confidential information. Even if a supplier will share some data with another link in the chain, it may not want it passed along to any other companies. Plus, that data probably is not in a format that can be easily integrated with other companies' IT systems anyway.

Friend's startup, the Open Data Registry, tries to solve these problems. The company is building a Web-based platform that purports to gather all the information about a product and its components in one place while protecting business confidentiality. There's not much information on the company's Website, and its service is not yet available, so exactly how it may work is not really clear.

The Wharton report quotes Friend describing it this way: The ODR will "give every product, every component, every batch that's being moved through the system, its own URL." It will be like a long bar code that will point to "an addressable information fragment on the web that can be found from anywhere, addressed from anywhere, and have its confidentiality masked." It sounds like a sort of dictionary of data on the materials and environmental impact information of components. The plan is to create an open platform for this online data dictionary, and then let companies build their own tools to access whatever data they need in whatever ways and format makes sense for them, similar to how developers build apps for Apple's apps store.

Although details are sketchy, it's a fascinating idea that uses "big-data," a topic that is popping up all over the tech industry this year. Entrepreneurs are launching companies in all sorts of markets based on the idea of creating huge common data stores hosted by third parties, and then allowing companies access to perform their own analytics on that data. This may be the first to target the supply chain, but I suspect it won't be the only one.

Check out ODR and tell us what you think. Does the idea have merit?