Supply Chain Frontiers issue #33. Read all articles in this issue.
An unwillingness to share sensitive commercial information often prevents companies from entering into high-level collaborative relationships with trading partners. Now a consortium of academic institutions — including the Zaragoza Logistics Center (ZLC) in Zaragoza, Spain — is developing a technology that not only eliminates this obstacle, but also could unlock the huge potential of strategic supply chain collaboration.
While companies typically collaborate to improve supply chain efficiency, the communications that underpin these relationships tend to be relatively shallow. “There have been many initiatives as well as information sharing, but different companies are not really synchronizing their planning activities in the supply chain,” says Dr. Richard Pibernik, professor of supply chain management at the European Business School and ZLC adjunct professor.
The SecureSCM project aims to change this behavior by supporting collaborative communications and the confidentiality of the information exchanged. Backed by the European Union, the project involves a number of universities in Europe and is headed by the software solutions company, SAP. The work was the subject of an international workshop on secure supply chain collaboration organized by ZLC on June 2, 2009, in Barcelona, Spain.
In addition to unease over releasing sensitive facts and figures to the outside world, companies fear the loss of leverage that could result from divulging strategic information to customers and suppliers.
“What if you could provide software tools that do all the computations and synchronization across supply chains in a secure manner?” asks Pibernik. “That means no data would be leaked.”
The key is a technology called Secure Multi-party Computation, which offers a way to jointly compute results without revealing knowledge that the parties want to keep to themselves. “It is a fairly established technology. But for large-scale problems that we would like to solve, it is not well known—and that’s one of the key challenges,” he adds.
A good way to explain the technology is through a simple example. Suppose that three people, A, B, and C, want to compute their joint salary without revealing their individual salaries to each other. First, Person A adds a random number to his salary and sends the figure securely to Person B. The second person adds her salary to the figure and transmits the new number to Person C. The third person adds his salary and sends the final figure securely back to Person A, who deducts the random number he added initially to arrive at a figure for the joint salary. The data has been exchanged, but without divulging the salaries of the individuals involved.
The same basic approach could be used to communicate important supply chain information, such as the total production capacity of a manufacturer and two contract manufacturers. Of course, the technology would handle much more complex configurations in order to facilitate strategic collaboration between trading partners.
“It’s not some monolithic black box that computes something; it happens in a decentralized fashion by exchanging private messages, and at the end there is a final result,” explains Pibernik. In addition, the technology is capable of coordinating higher-level communications, such as master planning across time zones, to synchronize the production planning among multiple enterprises in multiple locations.
The technology could bolt on to existing solutions such as supply chain planning software. But perhaps a more ambitious variation is a third-party service that uses the technology to “orchestrate between different systems and manage the computations,” he says.
Another intriguing possibility is that the technology could fundamentally change our approach to supply chain planning. “Today, we often locate planning systems where the processes happen,” notes Pibernik. It would be possible to outsource planning tasks to appropriate contractors offshore using the technology to connect the trading partners—in effect, decoupling planning computations from the physical locations of the associated processes.
The consortium is about one year into the three-year project, and prototype systems could be available for demonstration purposes by 2011. “These would not be for large-scale commercial use,” he stresses. “But within two years, we should have workable, feasible prototypes.”
ZLC is planning a second international workshop on secure supply chain collaboration. For more information on the event and the research, contact Fernando Liesa, External Funding & Knowledge Transfer Office Manager, ZLC, at fliesa@zlc.edu.es .