Instrumented Interconnecteds Intelligent
February, 18th 2009

The groundwork for a Smarter Planet — a world of intelligent infrastructure for energy, healthcaretransportation and more — is arguably in place:  just consider the global web of supply chains that interlink the global economy.

These networks already weave together businesses, partners and customers into intricate, dynamic relationships. And they are functioning not just as the physical plumbing of economic activity, the literal means of production, distribution and consumption of goods and services, but also operate as complex information networks.

Smarter Planet is about enabling the world’s physical and digital networks to converge. That interaction can be advanced by embedding societal systems like supply chains with new kinds of sensors, software, and self-awareness. 

IBM's inaugural Global Chief Supply Chain Officer Study, which launches on Feb. 24th, focuses on just such an innovation: the supply chain of the future. The report is based on in-depth interviews with 400 executives responsible for the logistical networks that have become essential to the financial health of most companies that interconnect through them.


In fact, if a smarter planet can be broadly defined as one that is instrumented, interconnected and intelligent, those same characteristics apply to the smarter supply networks that serve as the world's arteries of commerce. 

The study’s five key findings focus on the challenges of cost containment, visibility (the ability to “see” and act on the right information), risk management, customer intimacy, and globalization as a growth opportunity.

Strategically, the study notes that:

“Building this kind of [smarter] supply chain is a strategic undertaking; it implies a different role and set of responsibilities for supply chain executives. These executives must become strategic thinkers, collaborators and orchestrators.”

What will make these webs of production and distribution smarter? Different kinds of sensors and information technologies will make supply networks more instrumented and interconnected. But what’s ultimately required are the analytical resources to extract new, actionable intelligence from such complex systems. What kind of new intelligence do we mean, and what actually is new about it?

“New intelligence” will flow from advanced computing techniques and expertise that can reveal insight from rivers of real-time information. Innovations in data visualization, predictive modeling and simulation software will make new kinds of knowledge possible, and lead to more evidence-based decision making.  (For examples, see these posts on our companion site on Tumblr tagged "new Intelligence.")

As the study reports, managers need to peer through the "data fog" of supply chain information not just to better perceive their own operations, but to gain visibility into what’s happening across the network that extends to partners and customers. 

As strategic and practical as data sharing across this extended supply chain might seem, one unexpected finding on data visibility was that “many executives reported that their organizations are too busy to share information or simply do not believe collaborative decision making is that important.”

That sensibility may change as new intelligence tools help supply network professionals make better decisions and spot strategic patterns and trends.

The study revealed another pressing issue for supply chain managers: their need for better tools to manage risk and deal with disruptions. Consider current problems with contaminations in our complex supply chains for food, toys and other products that need to be recalled. Smarter supply chains embedded with sensors and software can help trace such quality control issues back to their source, as well as to more rapidly identify where suspect inventory has been distributed.

If advanced supply chains will be like the nervous system of a smarter planet's body — its eyes, ears and sense of touch — then this new intelligence will be the brains to help us gain new understanding and greater mastery over these  complex economic ecosystems. And the new links in smarter supply chains, factories, office buildings and highways will include such elements as wireless sensor networks, GPS, actuators, radio frequency identity (RFID) tags, and other kinds of monitoring equipment. 

RFID tags already widely used in shipping and inventory control, but can enable products to be embedded with even more precise and dynamic data. For example, fish caught off the coast of South America could be tagged to authenticate exactly when and where they were taken, and their temperature en route to market tracked to prove freshness and legal provenance. Or the diverse products that a hotel chain or government agency buys could be measured for how "green" they are in terms of manufacturing processes and overall carbon footprint.

(In fact, IBM has just announced a Supply-chain Network Optimization service (SNOW) that is  a harbinger of such new intelligence resources. Another is Carbon Management Analysis tool 
that debuted last year.)

So what about this "new intelligence" distinguishes it from the kind of data-mining and information-crunching commonly done today? Of course, the volumes of data involved in supply chain management are already huge, but will grow exponentially. What's really different is the variety of kinds of data  — geospatial or location-based information, digital multimedia and environmental conditions to name just a few — and the unique insights that we may glean from finding correlations across such diverse sources.

Another major new characteristic is the velocity with which supply chain data flows, and the concomitant speed needed to capture and process it to be useful. Complex traffic patterns, millions of financial transactions per second, video from tens of thousands of security cameras, are examples of where we need to be able to sift not just static mountains of data, but dynamic, changing information torrents. 

Indeed, for information from smart systems to be most valuable, it often needs to be processed in seconds, minutes or hours rather than days. We need to be able to find and analyze digital needles in haystacks that are not stationary, but rolling past on fast-moving trucks.

The need for speed is also about getting rapid return on this new intelligence so that it can be applied right now to help the world's economy — and all the businesses in the complex economic webs that make up supply chains  — get back on our collective feet.

Finally, if you're in need for some inspiration about the power of deep data and statistics to tell us important things about the world, and to give us new insights into the changes happening around us, this presentation by Hans Rosling, a professor of global health at Sweden's  Karolinska Institute,
 is a treat and a mind-opener.

Jack Mason
Strategic Programs, IBM Global Business Services

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It’s nice to see IBM giving so much thought to what constitutes a “Smarter Supply Chain” but I’m wondering where sustainability factors in to IBM’s efforts in their supply chain? The Global Chief Supply Chain Officer Study doesn’t mention this growing area of importance as any of the key focus areas for many IT (and other) industries. It seems like the true “smarter supply chain of the future” would make sustainability a top priority. As a member of the EICC, does IBM have plans to apply the EICC principles across its own supply chain?

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Will be glad to send along the study when it launches on the 24th.
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February 19, 2009
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Once again, thanks for posting this information — it’s fantastic. Over the course of the next month, I will be addressing both F4SS (The Foundation for Strategic Sourcing) and the National Association of Chain Drug Stores on “The Future of Supply Chain Management.” This information will be quite useful. If possible, please forward a copy of your new study ASAP.
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