Information overload

August 24, 2010
by Dave Luton

It’s been said that companies in the supply chain can use three things to break down the silos that traditionally separated their differing functions: transparency, time and trust.

The first of the three, transparency, is a tricky thing to foster. And it’s getting trickier. Over the past few decades, many companies have worked to create systems and processes that allow them to share information on basic business activities—such as the status of shipments—without tipping their hands too much about sensitive business objectives.

Historically, the flow of information between parties in a supply chain was limited to whatever was crucial for carrying out an effective and efficient transition of shipments from supplier to customer. That included things like purchase orders and basic in-transit information.

That is changing. Now 3PLs and other supply chain service providers are asking shippers to divulge deeper strategic data in an effort to optimize service.

There are several reasons behind the drive for more data. Much of it has to do with mitigating risk. Offshore sourcing, smaller supplier bases, inventory reductions and volatile demand have greatly increased the risks involved in supply chains. This ups the possibility of disruptions. By increasing the transparency of information within the supply chain, potential issues can be collectively managed on a collaborative basis or avoided altogether. This results in better performance.

So shipments today carry far more information than those of the past. If the multiple parties involved are to conduct operations in an efficient way, transparency of information and smooth data flows are crucial.

Technology supports

One reason companies are able to share data more securely is that the technology used to exhange information has improved immeasurably.

Once upon a time, before internet use became widespread, companies relied on electronic data interchange (EDI) transmissions to share data with their trading partners. They often did this using a modem with a value-added network (VAN) hosted service as an intermediary.

The rise of the web resulted in the development of internet-friendly data-sharing tools, which made EDI much faster and easier to do.

Today, many companies are pushing things further by using cloud computing. This pay-as-you-go model removes the obligation for companies to invest in built-in software, making it easier for them to update capabilities as required. It also allows all parties to access a centralized hub of information with little more than an internet connection and a password.