Improving Data Sharing through Interoperability in the Supply Chain
Recent supply chain disruptions caused by the COVID-19 pandemic are bringing attention to the importance of improved data sharing among all stakeholders. Here's how interoperability can help.
The recent supply chain crises have highlighted the need for better data sharing among all the players involved. Investing in interoperability—connecting companies’ computerized and automated systems to expedite information exchange – could be key. Nevertheless, interoperability is vital and critical at multiple levels.
The Benefits and Challenges of Interoperability
Fortunately, there has been some progress toward interoperability in recent years: modern cloud technology, blockchain, APIs, and the industrial internet of things (IIoT), in particular, are offering solutions to the technological challenges of data sharing and interoperability across the supply chain.
Improving data sharing through interoperability can provide a variety of benefits. First of all, increasing transparency across a value chain through data sharing and collaboration is a powerful way to make sure supply chains operate efficiently. Moreover, visibility across all tiers of a supplier network minimizes the risk of supply chain disruptions, improves productivity, and gives a holistic perspective on environmental impacts. According to Tarek Kasah, associate partner, McKinsey & Company, “increasing transparency across a value chain through data sharing and collaboration is a powerful way to keep supply chains operating efficiently.”
On the other hand, there are quite some challenges. While data-sharing standards are still being developed, many companies are still reluctant about upgrading their capabilities. The greater challenge is trust between players, which requires a common understanding on what type of data can be shared and agreement on how it will be used, with the main issues being data security.
Organizations need to feel confident that their data is being protected from all competitors and unauthorized entities. The development of remote working has made security issues even more serious, since data is now being processed through remote connectivity and virtual interfaces.
Strong security protocols must thus be incorporated at the beginning of any data sharing/interoperability initiative, to ensure there is monitoring around security issues.
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