Today, we announced our strategic partnership with Catalent. Over the last six months we have learned significantly from each other and developed a clear understanding of the functionality and information that needs to be shared between a global contract manufacturer and packager with their thousand customers. Instead of getting distracted by the complexity of each relationship, we focused on functional simplicity and broad utility.

Companies have complex business processes and inter-company process integration is often a tug of war between two companies trying to force-fit one company’s process with another company. The semantics surrounding these conversations is also confusing, since business process names and information fields are interpreted differently by both parties. Expand the conversation to all your supply partners and you soon have a massive challenge in basic communication. The standards approach with EDI and proprietary portals only makes matters worse, because it requires too much process and information integration to get even the basic level of visibility.

In reality, we just need to use a single business application for processes that cut across all the supply chain companies. By using the same application that has a common definition of data, business rules and collaboration tools, we can eliminate the many-to-many, multi-enterprise issues. The purpose of a common application is not to supplant current business applications at each company but instead to put into a common application framework the processes we already conduct via our informal activities using fax, phone and email.

In any large-scale network application, the value is based on commonality of capabilities. Inter-operability and uniformity, enabling collaboration with all partners, is far more important than special features for specific members. Large-scale network applications focus on core features that enable valuable capabilities across all users. At the core, Facebook and LinkedIn are very simple applications that enable its users to connect and share information across a set of relationships.

Our approach at TraceLink was to focus on the core functionality needed to facilitate communication, coordination and collaboration for well understood business processes. In order to keep it simple and valuable for our customers we established three guiding principles for designing functionality in our service:

1. We are the communication vehicle between contract suppliers and their customers for their shared business processes.
2. We facilitate the shared execution of those business processes by enabling each party to push and pull information in a format and manner best for themselves.
3. We link and instrument the related business processes to show mutual dependencies and overall analytics.

These principles enable us to fill the capability gaps between companies without imposing one partner’s IT requirements on another. We believe our approach and solution will deliver the true benefits the industry seeks from a Cloud Supply Chain. Our partnership with Catalent will enable us to lead the adoption of a solution that will create a more predictable supply chain.

No BullWhip!

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At the heart of solving the fundamental challenges of managing a supply chain requires building a network for communicating and coordinating people, processes and information about product flow. All our visions of demand-driven virtues hit the friction-full realities of connecting people, processes and information flows. The time and cost to establish meaningful connections prevent widespread adoption, and the lack of predictability creates inherent loss of revenue, constraints on cash and greater expenses.

Today the industry is engaged in building connections using b2b links, trading hubs and portals. These approaches create many local proprietary solutions and don’t fundamentally address the many-to-many network problem. Each connection between partners becomes a major expense to establish and maintain. These costs limit deployments to some processes and some partners.

On a recent visit to a major BioPharma, they shared the time and costs involved in developing a portal for their contract partners. In the last two years, they spent greater than $3M dollars to develop a portal for one business process. To date, only one contract partner has agreed to use it. The following week, we had a meeting with a major contract service provider who indicated that they receive multiple requests for greater information and integration on a weekly basis. The contract service provider cannot jump from portal to portal for each customer nor can they service information requests in proprietary formats for each customer. What we need is an instant and common mechanism to establish collaborative processes with any partner at any time.

Our decades of experience in supply chain and technology combined with our very close relationship with companies and individuals provided us with a solid understanding of real world issues of production tracking, inventory visibility, partner management, distribution control and demand planning. To revolutionize the supply chain we needed to enable partners to establish secure collaborative workspaces, conduct shared business processes across companies, provide a common view of information within and across partnerships and empower people to manage the processes and teams independently.

At TraceLink we decided to look around and evaluate how large global networks are built on the World Wide Web. Google revolutionized advertising by building a massive network of advertisers and connecting them to content. Anyone can join that network with a credit card through a website. The value of Google is not just in the search engine but also in the advertising platform for the smallest to the largest businesses. In a New York Times article, the following growth of Google’s base was shared:

In a regulatory filing with the Securities and Exchange Commission, Google said it had 1 million advertisers as of 2007. If history is any guide, we can expect the number to be much higher now. The number of advertisers on Google has grown at a steady clip, from 89,000 in 2003, to 201,000 in 2004, 360,000 in 2005 and 600,000 in 2006.

The most impressive statistic was:

Interestingly, each advertiser, on average, spent a little more than $16,000 a year on Google. That figure changed little between 2003 and 2007.

In social networking, LinkedIn, Facebook and Twitter each established their own networks to enable information sharing and relationship building at unprecedented levels. These services established collaborative frameworks with information sharing, social process execution and sophisticated levels of permission management. The core concepts from these social networking giants establish a bold new path for inter-company business process execution and collaboration.

This analysis gave us new insight and ideas for how we can solve our supply chain challenges more effectively. Based on our lessons and understanding we established the:

Top Ten Tenets for Building a Predictable Supply Network:

1. People Network: put people not companies at the center
2. Functional Simplicity: provide only the most valuable capabilities
3. Shared Process: integrate processes across corporate boundaries
4. Connection Value: actively solicit connections to drive network effects
5. Long Tail: integrate and collaborate with all niches of partners
6. Be Discoverable: let people find you since it uncovers opportunity
7. Cloud Economics: share the cost and pay for only what you use
8. Self Managing Groups: let teams organize themselves based on their rules
9. Network Knowledge: leverage the information from all to make your decisions
10. Agile Adoption: start small, learn fast and grow quickly

These tenets establish a foundation for a supply chain leader to form a strategic direction and operational processes, which can rapidly grow the communication, coordination and collaboration with their partners. Our service intrinsically supports these tenets and enables rapid adoption. For instance, a user of our service can engage in collaborative production tracking with their contract partners in minutes after registering with our service.

In the coming weeks and months, we will discuss each of these tenets. Along the way we will identify the benefits and challenges in incorporating the Top Ten Tenets into your solutions and operations. Please share your ideas, issues and experiences so that we can learn from each other.

Together we will transform the supply chain. No BullWhip!

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The commonly known BullWhip Effect in a forecast driven supply chain is caused by variations in demand driving greater buffer stock as we move up the supply chain. The amplification of supply is also referred to as a “butterfly effect”. The root causes stem from behavioral and operational miscues due to a lack of collaboration and information about products and processes across the supply chain. In order to eliminate the BullWhip Effect, we need to create a Predictable Supply Network which will enable rapid communication and coordination across the supply chain.

This is an opportunity for us to share and learn within the industry as we create a Predictable Supply Network. Working with you we will transform the supply chain into a network of highly-integrated partners executing shared business processes and collaborating continuously to achieve greater levels of business performance. We can build the network ten times faster and at one-tenth the cost of current solutions.

In order to meet these objectives we need to not only apply our knowledge of supply chain processes and information, but we also need to learn from other solution providers that transformed their industries. Here we will discuss and apply lessons from Google, Facebook, Twitter and LinkedIn combined with in-depth analysis of challenges in distribution, manufacturing and outsourcing. Individual contributors, executive managers and business leaders will be able to understand, challenge and propose ideas that change the way we think about solving supply chain problems of excess inventory, long cycle-times, limited capacity, consumer safety, product security, forecast accuracy and overall lack of visibility.

Together we will transform the supply chain. No BullWhip!

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