The call for visibility.
A visible supply chain sounds like the ultimate work environment for logisticians. At any time, using desktop or mobile communications, you know the current situation throughout your supply chains.
Commentators since the 1990’s have written about visibility. A recent interesting article on the topic is at http://supplychaininsights.com/supply-chain-visibility-in-business-networks/ which argues strongly that companies and supply chain professionals need to start developing and implementing supply chain visibility applications.
The call for visibility is hard to ignore. For businesses that recognise the strategic role of their supply network, the business driver has moved from cost reduction to continuity of supply and managing risk. The more knowledgeable you are about the supply situation, the lower your safety stocks and investment in inventory; but as your inventory is lowered, the risks to your business increase.
But failure in a supply chain may not be caused by a tier 1 supplier, but at a supplier you may not be aware of at tiers 3 or 4 and they could be located in low cost countries, with low levels of technology.
Incorporating multiple tiers of suppliers and at least your immediate customers into your data collection and analysis requirements will be complex (while remembering that similar demands are being made on your suppliers by other company’s supply chains). Adding to the complexity is getting operational systems (which maybe networked to equipment and instrument sub-systems) to communicate through your supply chains. But efforts to restrict access to the network should decrease your security risk.
So here is the challenge; extend and integrate the network information systems, but restrict access.
Security risk is the big gorilla
We typically insure for those times when things go wrong. But is your business insured against a cyber attack and how much risk can an insurer afford to underwrite? The 2013 attack on Target Stores in America is said to have cost the company about U$150m and the current attack on Sony Pictures is reported at costing more than U$100m. Even small attacks on SMEs can cost a company U$5m – U$10m in recovery costs.
Supply Chains are more complex that individual companies – think multiple suppliers, logistics service providers, port and terminal operators and global trade administration in many countries. To have full visibility, multiple operational systems need to be networked to equipment networks. Recent cyber attacks on a steel furnace in Germany and nuclear power stations in South Korea show that even equipment network security cannot be assured.
You can insure against fire, flood, theft and other risks because the insurer has historical data concerning the likelihood of the event occurring and the consequences. For a cyber attack, sufficient data is not yet available and the technology used by attackers is forever changing; so what are the threats and value of security systems – that may fail at the next attack?
But the immediate need for your company is to improve visibility within your business and out to tier 1 suppliers and customers – your core supply chains. Start with the visibility of the Sales & Operations Planning (S&OP) process. Where do the inputs come from and who and what is involved, what confidence do you have in the outputs and how secure is all the data and information? Getting that right will be a big step.