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How to obtain transparency in the complex supply chain

​Article by Thomas Hornbæk Svendsen, Subject Matter Expert, NNIT


With an increasingly complex supply chain, life science companies struggle to provide decision makers with a timely and continuous flow of accurate and updated information about e.g. cycle time, scrap, profitability and stock levels. This challenge is further augmented when subcontractors or affiliates are involved – making the supply chain more fragmented and difficult to manage. Overview is often a scarce resource and disparate IT systems, complex interfaces and dissimilar data formats are major obstacles when trying to establish transparency across the supply chain.  Often data simply cannot be collected, compared and correlated efficiently – which hinders the organisation in reaching the right conclusions and launch continuous improvements.

How can life science companies achieve transparency in the supply chain, to provide the information and overview that is so critical to decision makers? And what measures are available to secure and streamline information flow across processes, both internally and across organisational borders?

Integrate the supply chain using a cloud-based system

As an alternative to in-house data warehouses and  information management systems, life science companies should take a closer look of the options when  using a cloud-based system, based on interface agreements enabling internal and external IT systems to share data in the cloud instead of directly with each other. The cloud should be the rallying ground, processing data and making it available in a reporting tool with dashboard functionality.

Businesses are constantly moving forward – processes are refined, companies merged or acquired, subcontractors substituted and processes outsourced. Such changes pose major challenges to traditional reporting systems that are tightly integrated into the IT systems that provide data. This makes it difficult – if not impossible – to introduce changes without having to embark on costly upgrade- or implementation projects. A loosely coupled cloud-based reporting tool will provide a better platform for implementing changes to the supply chain. As long as data being collected
across the supply chain is organised and shared according to recognised formats, the reporting tool will stay unaffected. If revisions to data formats are necessary, for instance if additional data must be available for  reporting, the interface agreement must be updated accordingly. Compared to what would be necessary if the setup relied on a custom-built and complex data transfer mechanism – a strongly coupled system – the cloud-based setup offers a much simpler and more flexible approach making it more absorbent to change.

So instead of building custom interfaces to the IT systems across the supply chain where data is collected, we suggest a much more flexible and simple solution, where data is submitted in a well-defined format and picked up by the cloud-based reporting tool. The data format can be used by all systems involved, both internally and across organisational boundaries. This helps simplify and consolidate systems and information architecture – and it reduces costs. With a cloudbased interface you don’t have to worry about how various systems are implemented across the supply chain – you just need to enforce the required interface agreements.

Security concerns still prevail – but they can be handled

Ideally cloud computing help minimise – or eliminate – the cumbersome process of gathering and aligning data across the supply chain. The industry acknowledges this, but is still reluctant to embrace cloud computing fully. One of the major concerns is data security. The thought of having sensitive data stored in a cloudbased system is unnerving to many. But as outsourcing is becoming more commonplace within the life science industry, individual companies adopt the cloud concept and realise the benefits of cloud computing.

To meet the needs and the concerns of the industry the provider of the cloud-based services must be able to deliver a secure, centrally managed and automated infrastructure which is constantly monitored, patched and documented according to regulatory requirements and service level agreements. As with any other IT systems architecture, appropriate security measures should be designed and implemented from the start to be successful. And as when selecting any other IT system, the due diligence program should comprise  of careful evaluation of the provider and selected customer references.

Conduct an independent audit

It is advised to conduct an independent audit of the provider’s processes which should offer a high degree of transparency. The provider must also be able to produce documentation for consistency regarding authentication, identity management and compliance with applicable regulations. It is also important to clar
ify whether the provider makes use of subcontractors that have access to your data. If this is the case, then make sure that this is governed by the contract with the vendor.

When conducting the audit, consider using the SAS 70 auditing standard (Statement on Auditing Standards, #70) which provides guidance for assessing the internal controls of a service organisation. Also consider using the ISO 27001 standard which focuses on information and network security. In general, the provider should be able to accommodate your own security policies.

“Garbage in – garbage out”

The trust you can put into a cloud-based reportingtool is derived from the quality and accuracy of the input data. The omnipresent rule – garbage in, garbage out – still prevails, and it applies to both supply chain management and the cloud. In any circumstance collecting data in a recognised format and computing it according to agreed-upon definitions is essential. Neglecting to define and strictly enforce correct use of data-formats will make your system produce information you cannot trust. The only loyalty you will experience from such a system is its willingness to produce erroneous information – consistently.

A cloud-based reporting tool can save decision  makers from drowning in a sea of incompatible data that successively floods the organisation and its IT  systems. A cloud-based reporting tool can help mitigate the risks imposed by the use of disparate IT systems and the dissonance of different data formats. To provide transparency in the supply chain, organisations should adopt an approach where they – and their subcontractors – share data with the cloud instead of  directly with each other. The arrangement should be established and maintained by use of interface agreements that describe the necessary data formats. Only in this way you can establish a loosely coupled infrastructure which is responsive to change yet effective in delivering and maintaining easily changeable management information.

Organisations that do not seek to enhance transparency in the supply chain, by e.g. investigating cloud solutions, risk being casualties of increased stock levels and become highly dependent on specialists in the organisation and are challenged in utilising machine capacity. The race between a steep growth in the complexity of global operations and the ability to provide an accurate overview in real-time is on.

 

 

 

 

 

 

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Transparency in Supply Chain Managementhttps://www.nnit.com/OfferingsAndArticles/Pages/NNIT_SAP-SCM-Logistics-APO_UK_Article.aspxTransparency in Supply Chain Management
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