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What's In Your Supply Chain?

Recent reports suggest companies could face significant lawsuits because of an inability to know what their suppliers are doing.
By Mark Roberti
Mar 10, 2008Capital One, a financial services company, has been running ads for the past few years in which consumers suffer a wide variety of bad experiences—in one, for instance, a family skis in the summer when there is no snow—because they don't have a Capital One credit card, so they don't earn reward points or they suffer black periods when they can't use their points.

The ad asks, "What's in your wallet?" Lately, however, the question running through my mind has been, "What's in your supply chain?"

In just the past few months, toy companies have had to recall products made overseas because their suppliers used lead paint, which can be very harmful to children. Pet food manufacturers have had to recall products after dogs died, because an overseas supplier used a harmful chemical in the food. Then, last week came reports that people in the United States and Germany were getting ill from heparin, possibly because of tainted supplies coming from China. And General Mills, Nestlé and ConAgra Foods had to ask supermarkets to remove some of their products affected by the recall of meat from the Westland/Hallmark Meat Packing Co. in Chino, Calif.

These unfortunate incidents underscore the challenges companies face in an increasingly integrated global supply chain. Wal-Mart and other retailers are being sued over the dog food poisonings, even though they were not the parties at fault—rather, an importer had reportedly changed the labels to hide the fact that potentially harmful ingredients had been used.

Companies are going to increasingly demand more information from their suppliers to protect themselves from lawsuits, their brands from negative publicity, and the public from harm. And if they don't, governments will demand more information from them. The U.S. Senate passed a tough measure last week that will require a higher number of inspections of toys by the Consumer Products Safety Commission. (The House passed a similar bill last year.)

We are moving inexorably toward a world where everything in the supply chain is being more closely tracked. Radio frequency identification is going to be a greater part of that over time, but 2-D bar codes can also be employed to capture serialized information about parts and materials that are going into products.

Clearly, we're going to see a rapid rise in the adoption of automatic identification technologies over the next decade. These technologies could provide information on what suppliers are doing and what's going into their supplies, as well as reduce counterfeiting (see Counterfeiting is Everyone's Problem). But auto-ID technologies can only help if the data collected can be turned into actionable information and shared with business partners.

That's why I'm such a strong believer in standards—and not just within the RFID industry. I believe we need to develop standards that will enable any data collected automatically—whether by a passive RFID, active real-time location, 2-D bar code, ZigBee or Wi-Fi system—to be employed across supply chains, across borders and among trading partners.

That shouldn't be that difficult to achieve. If data can be output from these systems in a format compliant with EPCglobal's EPC Information Services standard, companies can use the data and software can create new applications, or modify existing applications to take advantage of all the data captured. That's what we should be working toward, because it's the only way you'll ever know what's in your supply chain.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog or click here.
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Reader 2008-03-10 12:32:25 PM
Supply Chain: China Toy Recalls This is an insightful article. The opportunity is actually not so much in the supply chain, but in how senior executives view the quality of what is manufactured for babies and children. If their organization is run with care and regard for human life, you get NO lead paint. If you play the risk management game, like so many large manufacturers, you get sickness and death from lead based toys. Try this site http://www.toysutrust.net/ as an example of how to eliminate lead based toys by ONLY marketing toys that have a higher standard.
Stephan Mueller 2008-03-14 03:26:18 AM
Standards The standardization of nuts and bolts accelerate the global mechanical engineering, the standardization of measures accelerate the global trade - so the standardization of logistic information will accelerate and elaborate the global value streams. I truly agree to a global logistical information exchange standard like EPC. And RFID is the data mining tool of choice. We need diverse and adapted data sensors according to the mechanical and environmental stress throughout the supply chain and a standard like HTML to share the information.

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