Leonardo Bonanni, chief executive of Massachusetts-based tech company Sourcemap, talks to Risk & Compliance Journal about how his company is employing social media to help companies map out their supply chains and better prepare for possible disruptions to their networks.
Leonardo Bonnani, CEO, Sourcemap.
What is Sourcemap?
Mr. Bonanni: Sourcemap is a platform for supply chain visibility and sharing information about where things come from with consumers and, increasingly, between businesses. I started Sourcemap as a kind of public consumer information website so conscious consumers could find out where products come from and what the social and environmental impacts are. When I showed some of by sponsors at the media lab where I was building Sourcemap for my Ph.D they saw something different. They saw maps of where products come from and asked, “Can you make a map for us so we know where our products come from?” That was when I realized companies don’t have an easy way to account for their global supply chain using today’s enterprise software.
What sparked this review among companies to learn about their supply chains?
Mr. Bonanni: A lot of this came to light after Fukushima (nuclear meltdown) and companies realized they were outsourcing for so long that they don’t have a database of where the raw materials they buy come from. After decades of outsourcing, most enterprise databases don’t even have address information for where the factories are in their supply chain. Today, there can be hundreds of thousands of suppliers in a chain, and there are very lean supply chain departments and they can’t account for all the different players in their network.
How do companies figure their supply chains out then?
Mr. Bonanni: We built our site as a social networking website. For so many products out there the only way to map them all is to crowdsource and let as many people as possible work on them. Companies upload a list of their direct suppliers, invite them to our social network and ask them to map out their supply chains. This gets them visibility into the second tier of their supply chain, the third tier, and so on and so forth until they can map their entire chain to the sources of all their raw materials.
How many companies are you working with so far?
Mr. Bonanni: We work with a dozen major clients, and in their networks are several thousand suppliers.
Have any found the end of their chains yet?
Mr. Bonanni: Our most ambitious project is with Mars chocolate. We have a social network that connects cocoa farmers in Cote d’Ivoire with the management at Mars’ global headquarters.
What are the advantages of crowdsourcing a supply chain?
Mr. Bonanni: One of the advantages of using social media is we can quickly get people in very remote places to share data on their mobile phones. Even though we couldn’t set up an enterprise server in the middle of the jungle, we can send out a few hundred phones with survey software so farmers can directly share their data with the global operations team.
How do you verify the information coming in?
Mr. Bonanni: Great question. Verifying information is the whole point behind Sourcemap. Before Sourcemap it was impossible to even find out where the source material was coming in from. Now, the names and location information of the people recording the data from the crowdsourcing are being put into the audit supply chain for the first time. Auditors send out multiple requests for information, and they can see what data comes back looking good and what data comes back with contradictions, and this helps our clients prioritize. One thing we can do is first sweep through the data as part of a risk exposure index that automatically assigns a risk score to every site, every shipment in the extended supply chain.
How does that help?
Mr. Bonanni: So when you finally see all the red lights in a chain, those are the places where a company needs to have a mitigation strategy plan in place for bolstering inventory, so that anything that is happening, they can have enough buffers in their network to avoid supply interruptions. After Fukushima companies started realizing they weren’t receiving critical parts–the auto industry suffered especially, they were all relying on a few suppliers of critical parts. Among the major car parts suppliers, no one had a way to trace back the parts to that plant. If they were relying on a single source they need to identify that upfront to make sure they have enough inventory in their network to weather the storm.
How does regulation factor into this system?
Mr. Bonanni: There are a number of regulations requiring companies to go upstream—an example is conflict minerals, companies have to make sure they are not using conflict minerals from the Congo and have to trace back to the smelter, and that is very far upstream in the supply chain. In California there is a forced labor law to ensure there is no forced labor being employed in the supply chain, and companies really have to travel upstream to suppliers and their suppliers’ suppliers and effectively ensure none of them are doing anything risky. Any environmental regulation or organic certification requires companies to travel upstream and get their suppliers to provide them with timely information. The trend is for more reporting and reporting farther upstream.
Where does social media and technology fit into this plan?
Mr. Bonanni: The social networking approach is the only way to reach that far up the supply chain.
Where is all this headed?
Mr. Bonanni: We see supplier collaboration powered by social media as the new standard. There is no excuse with today’s technology for a company not to know all its suppliers and not to be in contact with them on a regular basis. Back in the day it was impossible to keep in touch with 250,000 suppliers in a global network. Now we all are used to communicating in real time with people halfway around the world and we are beginning a new collaboration with companies that are gaining new efficiencies to see how information gets to them. There is pressure from the top from the people concerned with risk management. Every company needs to map its supply chain, and needs to be dynamic and change in real time.