As we transition into a global economy, regulations concerning supply chains and public awareness of supply chain risks have grown rapidly. As a result, the way we manage the data within supply chains has also had to change substantially in recent years. Technological advancements have provided the ability to link companies with suppliers around the world and efficiently exchange data related to thousands of parts and products. This digital transformation of supply chain data management has a meaningful impact for industries, companies and the world as a whole.
Why Is Supply Chain Data Management Important?
Products are composed of individual parts, each with their own unique corresponding data such as sources of origin, substance composition or supplier information. Collecting and analyzing this data is essential to understanding risk and informing critical business decisions. From capitalizing on favorable trade practices to brand protection, supply chain data management is a valuable practice in every area of a business.
Effective supply chain data management provides transparency at every stage of a product’s lifecycle, from beginning to end-of-life. Collection of this type of dynamic data is made possible through sustained supplier engagement, exchanging data from upstream parties down the supply chain. This is often a burdensome task requiring time, effort and resources.
What Digital Transformation Means for Supply Chain Data Management
The digital transformation seen in industries around the world has replaced the previously manual processes required for supply chain data management, resulting in more comprehensive, effective and affordable systems. Out of these changes, three core values of digital transformation have been identified, and they harmonize well with the value provided by supply chain data management.
Embrace Innovation Technology
Data collected from supply chains plays a role in innovation from the boardroom through to the lab. Substance composition information, for example, may identify a need to replace substances as they become restricted through regulation. Supply chain data also informs the testing process, narrowing the scope of product tests to key areas of interest.
Additionally, as innovations add to the complexity of products, more parts and suppliers enter the supply chain. Data management enables companies to scale their assessment, procurement and design processes as the scope and complexity of their supply chain grows.
Seek Partnerships
Supply chain data management provides teams across a company the ability to access important information and identify areas of growth or concern. Cloud-based data management platforms will even allow connection and communication with suppliers working with less sophisticated systems. With a more transparent view of the supply chain, companies will be more prepared when entering service agreements and responding to risks presented by those it does business with.
Drive Value With Forward-Looking Tech
Advancement in the digital world can lead to significant change in the physical world. Supply chain data management is providing companies with the tools to reduce harmful substances, promote fair labor practices and increase transparency into the environmental impact of products. These meaningful actions align businesses with consumer values as the world begins to prioritize a shift toward sustainability and corporate social responsibility.
The Industrial Internet of Things
The industrial internet of things (IIoT) connects all aspects of a company — machinery, employees, facilities, etc. — and shares data to provide value to a company. This information can be assessed to inform business decisions concerning day-to-day activities or more substantial changes. Supply chain data is a part of the IoT and can be leveraged to:
- Assess and mitigate risks.
- Demonstrate compliance with global regulations.
- Claim preferential trade status for certain parts or products.
- Provide auditable information on suppliers in the supply chain.
- Scale internal programs alongside company growth.
Digital Supply Chain Data Management for Rapid Risk Response
For all industries, the old adage is true: to be forewarned is to be forearmed. The enhanced transparency afforded by digital supply chain data management is a critical component of early risk detection across multiple areas of business, allowing companies to respond proactively.
Product Composition
Numerous substances are prohibited or restricted through regulations such as the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation or the Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65). Companies in scope of these regulations must monitor product composition and be prepared to find alternatives as new substances are added to restricted lists. Collection and analysis of this data is part of sound supply chain data management and is critical to avoiding penalties for non-compliance and ensuring continued market access.
Part & Product Sourcing
The source of origin for parts and products has large implications for corporate social responsibility (CSR) programs, regulatory requirements and trade statuses. It is a central component of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires publicly-traded companies in the U.S. to report their due diligence activities when sourcing tin, tantalum, tungsten or gold (3TGs) from the Democratic Republic of the Congo (DRC). It also presents a risk to companies sourcing from countries with imposed sanctions. In 2019, E.l.f. Cosmetics settled with the U.S. government, agreeing to pay nearly 1 million USD after the company discovered parts of their products originated from North Korea, a heavily sanctioned country.
Relationships
Companies are impacted by the businesses they associate with, linking, for better or worse, all parties in a supply chain. The digitization of supply chain data enables a seamless flow of data between these parties in a reportable and auditable format. This digital history allows companies to ensure their codes of conduct are being upheld by the parties they work with.
Final Thoughts
Supply chain data exists whether or not a company fully utilizes it. Bringing data management programs up to the digital standard set for many other business processes allows companies to leverage supply chain data in a variety of ways. Many companies have chosen to adopt platforms solutions for supply chain data management, such as the Assent Compliance Platform, to save internal resources and benefit from the latest data management technology. As this technology continues to develop, the benefits of supply chain transparency will continue to grow, and companies will be able to leverage supply chain data to reach greater heights.
