I had an opportunity to speak to a group of executives at Ohio State University ‘s Center for Operational Excellence, at the Fisher College of Management, on the subject of transparency and the cultural changes implicit in moving to a digital ecosystem.
In addressing some of the questions, one that came up is the fat that many companies are hesitant to act, because of their inability to construct an effective business case for transparency. “What is the ROI?” is a common complaint. The key to establishing the business case is not on market share, but through the velocity of material and decision-making, taking action in the face of uncertainty, using the most up-to-date information.
For legal arguments, the issue of privacy and security are generally of paramount concern.. There is no arguing against this point of view, as it is an extension of risk management that every legal counsel is going to push for. To address this issue, care must be taken to establish the right governance structure. This structure should be guided by the Law of Transparency: “People need access to information that ensures they can react and improve supply chain outcomes.”, but also be guided by the right “firewalls” between individuals, that ensures legal connectivity policies are not violated.
Another concern has to do with releasing “validated” data. For example, in the pharmaceutical sector, there was a discussion in a meeting I had with Pharma executives earlier in the week whether GMP data (data from manufacturing and material handling that is validated using ‘Good Manufacturing Practices’) can be shared with partners, if has not been fully vetted. There are several responses to consider to this argument. First, the FDA and other agencies only require GMP data for specific reporting applications. Second, demand forecasts and production/inventory data are not GMP regulated, and thus are not subject to this validation argument. This is typically one of the most important type of data we require.
CIO’s are also concerned about data security. But as we start down the road of transparency and start to think about it, much of the information is going to be new data, data that is not currently within the four walls of our organizations. That can make the argument a lot easier, since we do not have to “violate the CIO’s security stack”. Pulling internal data and hosting it onto a cloud server where it can be shared, is not going to expose the organization to cyber-security risks, since hackers will not have structural access to the data used by the organization. In this sense, creating a LIVING supply chain involves hosting only that data that is required to operate the supply chain, and that is required to be shared with key supply chain partners. It is also combined with external data, which is not considered secure. These considerations render the LIVING supply chain easier to execute and can overcome concerns regarding data sharing leading to cyber security risks. As noted by one executive I spoke with, “You can’t let IT and the CIO control your destiny.” Supply chain executives have to take control of this factor. CIO’s will throw Oracle, SAP an other systems jargon at you. Acting to control your destiny means finding a way around these arguments to drive real-time visibility of information required to operate your supply chain more efficiently.