IT leaders can be excused for feeling like their supply chains are one link away from disintegration these days. The news over the past few months has been alarming, from outcries over horsemeat in Europe and mislabeled fish in New York to the longer-term impacts on supply chains from environmental events like the tsunami in Japan, monsoons in Thailand, and the volcano in Iceland.
And those are just the highly publicized issues. Increasingly, CIOs are challenged to protect their supply chain from physical and cybertheft, counterfeiting, potential scarcity of materials and regulatory mandates such as removing lead from materials. Welcome to Whack-a-Mole, supply chain-style, where you attack one problem, only to have another pop up elsewhere.
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Experts say the problem is only going to get worse. "Globalization lengthens supply chains and increases complexity," says Emma Scott, spokesperson for the Chartered Institute of Procurement and Supply (CIPS) in London, the professional organization of procurement professionals. "When supply chains are leaner, any disruption affects you more" -- and, thanks to a decade or more of globalization and cost-cutting, supply chains these days are very lean.
This makes the issue of visibility into the supply chain -- or the lack of same -- that much more critical, says Matt Smith, founder and chief strategy officer of Icix, a cloud-based exchange for supply chain partners based in South San Francisco, Calif. "Companies have visibility into purchasing and logistics, but not into where materials or ingredients or components are actually grown or manufactured. When you lose visibility, you get horsemeat in meatballs, e coli in spinach, lead in toys and worse."
Then there's velocity to consider. "You have to move information faster to enable the supply chain to react to changes. Velocity allows us to plan more aggressively. That's what wakes me up in the morning," says Nathan Johnson, CIO of Ports America, which manages 42 ports around the United States. One of his big concerns: spikes in transport costs because of fuel prices. "The only way to get around that is more productivity and more efficiency."
The good news: Technology can address the issues of productivity, efficiency, visibility and risk. The challenge: When supply chain experts say "technology," they're talking about more than RFID tags, GPS and temperature sensors.