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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.”

11 comments on “Using Data to Power the Supply Chain

  1. DataCrunch
    April 24, 2012

    Hi Barbara, supply chain visibility has generated a lot of buzz lately.  In the past many organizations operated in separate silos with their own specialized systems, such as capacity and demand planning, manufacturing, distribution, transportation, etc .  Now with global supply chain executives having control of all these functions, visibility and data sharing has become extremely important if not mandatory.  Case in point GT Nexus and companies like them have experienced significant growth over the past few years, which stresses the importance of proper data visibility and exchanges.   Machine-to-machine (M2M) technology, a field in which I am heavily involved in is emerging as a key ingredient in tracking assets, shipments, vehicles, cargo, etc. within the global supply chain and providing the necessary visibility.  I think we will start to hear more about M2M technology and its importance in the supply chain, especially where visibility is concerned.

  2. Barbara Jorgensen
    April 25, 2012

    @Dave: I am constantly amazed at how difficult it is to actually achieve visibility! The ERP and MRP systems currently available are great systems, but were not meant for the kind of collaboration GT Nexus envisions. It is true that the supply chain is something that evolves, and technology has to keep up.

    I can also see a reluctance to simply scrap a legacy system, so a soltuion you can use in conjuction with a legacy makes sense.

  3. bolaji ojo
    April 25, 2012

    Dave, The reason “visibility” into demand, supply and pricing is so difficult is because for many companies having a cloud cover on these issues is part of their competitive differentiation. They want to keep competitors, even suppliers and business partners, guessing. This, of course, may be bad for the entire industry, but if you can hide information long enough to gain market share, increase sales and boost profitability, then you'll do it. This is the way many businesses operate.

  4. Himanshugupta
    April 25, 2012

    the idea in itself is pretty niche. Customer may want to know at every point of time about the status of their shipment. The greater advantage though could be the visibility of companies that usually do not have enough visibility in the supply chain. Customers will know who and why is someone involved. So, good and fast work will be appreciated and with increased business.

  5. Barbara Jorgensen
    April 26, 2012

    @Himan: The idea is similar to the tracking systems that UPS, FedEx and other carriers provide for their customers. The problem with these systems is that they are “closed:” they only track within the UPS or FedEx system itself. Now, let's say Foxconn uses a system to let people know a PC order is done; the ship out of China alerts partners the PCs have been loaded; the Port of Oakland lets partners know the ship has arrived; Customs says the shipment got the green light to unload; and Bob's trucking company says the PCs are en route to Best Buy Chicago. This is an “open” system that provides a lot more insight into the flow of prducts.

  6. Himanshugupta
    April 26, 2012

    correct Barbara, more visibility will also mean a better customer service. A customer need not to call to the company's toll free number to know about the current status. Also, if the shipment is delayed then it will be easier to track. The only problem with the facebook like system is that once you are invited to share the data then anyone and everyone can check the status. I am sure that something must have been done to avoid it.

  7. R.J.Matthews
    April 27, 2012

     

    Very interesting article Barbara I can already see a use for this product.

    http://www.ebnonline.com/author.asp?section_id=1434&doc_id=242789

    Manufacturer supply chain issues. Companies want the SEC to take into account the realities of today's global supply chains. The intent is to have manufacturers trace the metal in their products to the mines from which it was sourced. The problem is that most companies currently only have direct contact with a first tier supplier or a company immediately upstream from themselves. Components are typically sourced from multiple countries and manufacturers.

    Companies want the SEC to take into account the lack of transparency in the electronics supply chain and the challenges faced by manufacturers in tracing conflict minerals.

    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.

    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.”

    Could be rolled out in lots of other areas as well where companies want to demonstrate their ethical sourcing. Think GT Nexus could be onto a real winner if there is not a similar competing product.

     

  8. Barbara Jorgensen
    April 27, 2012

    @RJ: excellent point! Part of the story I didn't get to, but will write about in a follow-up, is the other parts of the supply chain this system can open up. For example, the financial side. If a company stops shipment for non-payment, the GT Nexus system can provide that information, assuming someone knows to go looking for it. There are so many things going on behind the scenes of any supply chain that can muck up the works, it's pretty mind-boggling.

  9. Ariella
    April 27, 2012

    @Barbara, that really is a good thing — to show the whole story behind what presented out of context can look like a negative mark.

  10. R.J.Matthews
    April 27, 2012

    Thanks Barbara i look forward to the follow up.

     

  11. Houngbo_Hospice
    April 27, 2012

    @Ariella,

    That is why comments and discussions on the board are useful to better understand what was not fully developed in the original post. 

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