Chief Operating Officer of Source Intelligence Discusses Supply Chain Hyper-Transparency

This article by Kelly Eisenhardt, Managing Director at BlueCircle Advisors, LLC, originally appeared in CERM Risk Insights.

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Source Intelligence

May 22, 2015, 02:32 ET

SAN DIEGO, May 22, 2015 /PRNewswire/ -- Determining how to collect compliance and sustainability data from suppliers has been an on-going challenge for brands and retailers for many years. With an ever-changing business environment and an expanding list of global regulations, companies face pressure on numerous fronts. Data collection tools that are cost-effective and efficient can help minimize risk and confusion.

Matt Thorn is the Chief Operating Officer and founding partner of Source Intelligence, a leading provider of data collection for Supply Chain Compliance and Sustainability Information. He leads the company's global operations and platform development team and is the driving force behind the Source Intelligence (SI) technology platform, a unique solution associated with providing supply chain transparency services for some of the world's most recognizable brand names.

Many are saying 2015 is the "Year of Hyper-Transparency." How can companies embrace the trend and understand the impact to their business?

Hyper-transparency starts with open dialogue and communication. It involves suppliers, data collection, and risk mitigation.

While brands and Fortune 500 companies develop and implement their compliance and corporate social responsibility initiatives, suppliers beyond tier 1 are scrambling to provide the required data. In order to address the backlog of requests, many suppliers are building their own internal teams. Companies at the early stages of the supply chain need information and tools to meet environmental and social compliance requirements.

We see this imbalance as an opportunity to help companies by providing an easier way to collect data, while recognizing that there needs to be a flexible standard that is free or nearly free for every company to utilize.

What does Hyper Transparency mean to you?

It means that every actor in the supply chain, along with the ultimate consumer of the result of the supply chain has access to all the information they need to make an informed decision. Whether it's to drive out harmful substances, stamp out corruption and other human rights abuses or to prevent adverse effects to the environment, having collective access to this data helps all of us make the right choices about products we use every day.

Many companies have launched responsible sourcing programs with their supply chain partners. What is the biggest challenge faced with regard to supply chain visibility?

The biggest challenge is in finding tools that automate and streamline the process of collecting and analyzing data from the supply chain. This will remain a challenge unless we can scale down to manageable and even free tools. Unfortunately, there are so many tools out there that are specialized, it's tough for a supplier who is just learning about collecting compliance data to know which ones to use or worse, having to use many tools specific to each brand or retailer.

It is true that in order to minimize and manage supply chains risks, it's imperative to have that level of visibility but it's also important to see all the disparate pieces and be able to put them together.

Providing a way for companies to look at every level of their supply chain and make informed decisions with the data they find is critical. Brands need to work together to find low cost or free tools that reach the lower levels of the supply chain in order to facilitate transparency at the regulatory, investor, and consumer levels.

With so many standards and tools available for collecting and analyzing compliance and sustainability data, how does a company know which one will work best with their supply chain?

Early on, we realized trying to collect and analyze this data is no easy task. There isn't one industry standard that companies can follow to collect all of the data needed. All of the standards in existence tend to be industry aligned or a NGO sponsored specific tool. Most companies use a combination of standards and tools, as well as internally developed solutions in order to collect the specific data needed.

Realizing this complexity drove my company to create a platform to simplify data collection and analysis. We did this with the understanding that it had to be simple enough for companies at the beginning of the supply chain to use and meet all regulatory and brand level requirements.

Can you share some examples of standards or tools that you believe have helped with data collection?

A perfect example is the great work the EICC-GeSI team did with the conflict minerals template. It is the de-facto standard working across multiple industries, albeit very specific to conflict minerals – tin, tungsten, tantalum, and gold.

Those of us in software development and training need to work with the various industries to expand our work on tools that are even more flexible and to make sharing this data up and down the supply chain easier.

I've had this thought that there needs to be a platform that operates on sharing data the way Facebook does but focuses specifically on connecting suppliers and brands. The challenge is to make the platform generic enough and available to everyone. It needs to be cost effective and useful. For the vast majority of users, it needs to be free.

Why is it important to put the tools into the hands of every supplier and how important is human interaction in data collection?

The tools by themselves won't train a compliance team or enable a supplier to provide the required information. Awareness, education, and guidance is needed. Our business is a bit different from most compliance solution providers. We leverage the human component as solution providers not just the technology.

The goal is to put the technology into the hands of every layer of the supply chain, down to the smallest supplier and provide a human touch. There needs to be a person on the other end of a phone call to answer the hard questions when suppliers don't understand the steps in data collection. The best way is to provide more than a simple webpage, but also a knowledgebase, training, and customer service wrapped in technology.

With so much information being collected is there value in leveraging the data beyond compliance and sustainability programs?

So much more value!

If you think about the amount of data being created and stored in various systems around the globe, it's an enormous amount of decision making power.

At some point in the near future, that large store of compliance and sustainability data needs to be turned into usable analytics that enables industries across the globe to make better decisions. The ability to predict risk and highlight potential problems from compliance and sustainability data will provide a new paradigm for managing supply chains and sourcing.

These data stores will enable companies to do a comprehensive risk assessment by pulling from multiple sources and combining the data in ways that create multidimensional views of what is happening in real time. Imagine the possibilities locked away in data vaults today.

These data vaults will provide a big opportunity in the Governance Risk and Compliance (GRC) arena to tie together risk management, supply chains visibility, and technology.

What steps would you recommend to companies who are focusing on building transparency throughout their supply chain?

Determine what matters most to your company and how you can begin to track and measure what is material.

Identify where in the supply chain there are potential risks and build a plan that will mitigate them should the risks occur in the future.

Go beyond tier 1 suppliers, they generally aren't where you will find the risks. Go deeper into the supply chain. Look for hands off and subcontractors that might need guidance and become familiar with their sourcing, work force, and suppliers.

Transparency needs to be a repeatable process and structure at every level of the supply chain with access to tools, support, and data.

With so much pressure on companies to meet compliance and to go above and beyond to protect and enhance brand value, companies need to look at the tools they use to collect compliance and sustainability data and simplify the process for the companies in their supply chain. Data is valuable. Finding multiple ways to use the data that is collected helps to minimize its cost in the long run and could provide valuable intelligence to an organization.

To read the full piece, go to http://insights.cermacademy.com/category/csrrisk-kelly-eisenhardt/

by Kelly Eisenhardt, Managing Director at BlueCircle Advisors, LLC

Featuring: Matt Thorn, Chief Operating Officer of Source Intelligence

Lina Ramos, Chief Business Officer
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www.sourceintelligence.com

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SOURCE Source Intelligence