Open source and the transformation of supply chains

Global media coverage often identifies the source of the current Recession as greed. With the seeming bonfire of bonus driven vanities, public questionning of values could add fresh impetus to alternative, more communal open source projects such as Linux, Wikipedia and beyond. This sharing principle signifies a paradigm shift from the ownership of assets and resources to the business opportunities generated by providing access to them.  

The Firefox browser now has 21.5% of global market share and there is no more potent illustration of this sharing movement than the unprecedented expansion of social networking sites such as Facebook and Friendster. There is huge potential to harness this collaborative spirit; to transform the ways in which market needs are translated into responsive design and, for supply chains of all shapes and sizes to respond.  Let’s look at ways in which the opening up of these global forces can shape the way connectivity and mobility transforms end-to-end workflow and the quality of lives.

Open source was given a major boost recently when the UK Government finally gave its endorsement for public services to use open source rather than proprietary software.  Various sources estimate that £600 million could be saved annually by using open source in public projects. A local primary school in Cottingham (UK), with 200 pupils, moved recently to a new facility and saved £25,000 by using an open source software application.

Elsewhere, in our review of Simply Modal initiatives, we have noted the potential for adapted bikes and light vehicles; we have seen the scope for market ready packaging and passive refridgeration and, we have explored the ability to use natural materials to extend the road network throughout remote rural areas. We have seen how the mobile phone is opening up endless possibilities to share information on pricing and, to accelerate order processing and maximise distribution. Imagine the possibilities for open sourcing.

There are many more examples. Take Vinay Gupta and his low-cost housing for poor parts of the world or disaster zones. His flagship is the Hexayurt shelter system, which costs around $200. It uses common materials which he claims are a third of the cost of a tent. Think of what could be done to apply this thinking to post harvest cooling sheds.   

Open source is on the move. If you want an open source mobile phone try Openmoko. Want to be part of an open source project building a different type of car? Look at theoscarproject.org. Then, there is openfarmtech.org where they are developing open source ecology including the construction of eco-villages and then, akvo.org specialising in sanitation. There are many other companies like Caringfornature who, with their work on rural roads and pollution clean ups are doing their bit, as Steve John makes plain “to clean up the planet”.

Applications like SugarCRM or Compiere move the agenda to ERP and support end-to-end workflow. These applications provide visibility and an architecture that can link with bar coding; serialised tracking and, as an interface with RFID. 

Open source applications are exploring full circle features that will enable partners along the supply chain to track and trace returns. This is reverse logistics and it is estimated that this is worth an annual £5.75 billion. Professor John Cullen of the University of Sheffield Management School and Professor Mike Bernon of Cranfield have led research highlighting how some companies see up to 30% of their products returned by customers.  Managing these returns incurs substantial costs through logistics, inventory and disposal, yet many companies still employ inadequate processes for dealing with returns. With factors such as the growth of eTailing, shortening product life cycles and, with the frontiers of global outsourcing pushing into various tiers of supply open source can help to make the transparency required affordable. It is worth a closer look.

As we look at end-to-end supply chains and how collaborative behaviours can help the thought occurs that this may be the opportunity to explore management accounting and work with the Majority World. After all, if we focus ERP and the formal parts of the supply chain we will miss huge chunks of data that provides the full picture. Is this an area to explore further?

From Facebook to Friendster, social networking and the open sharing of information has burst on into our lives on an unprecedented scale and this is transforming insights into all sorts of demand. For example, Cadbury bowed to public pressure after 93 Facebook groups called for the return of Wispa and, as news of the recent Mumbai shootings illustrated, twitter is providing frontline news from informal sources rather than through conventional news reports. As we consider ways in which to access new markets in the Majority World, we should explore how such emerging technologies can help to shape forecasting techniques for all sorts of products and services in the developing and emerging world.

The sheer affordability of open sourcing can transform logistics and open up multiple options for supply chains throughout the developing and emerging world. Elsewhere we have noted the major role of SMEs throughout the developed and emerging world and, the need to explore what Barry Nalebuff terms as coopetition amongst them could be a major engine for growth out of the current crisis. Coopetition is where companies cooperate rather than compete challenging the baseline rules and operating assumptions. The ideas have been shaped by game theory and could have an even greater impact in the current crisis.   

There is something else that is only just taking hold. Such connectivity and sharing behaviour can liberate creative energies amongst the bored underemployed as well as the unemployed to design products that people actually need to improve their lives. Add this collective insight into the minds of the market to production capacity worldwide. We would see far less superfluous packaging and fewer me-too products. And this would make a revolutionary contribution to efforts to create green supply chains as the collective will could be put to the task. It may even be the source of transparency needed to scale up the data to measure impact.

As Victor Keegan of the Guardian [05.03.09] puts it: “If governments of the world are worried about where new products and jobs will come from when the recession eventually ends, then they could do a lot worse than to encourage the building of products by the people for the people.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter
This entry was posted in Supply Chain, T L thinking and tagged . Bookmark the permalink.

2 Responses to Open source and the transformation of supply chains

  1. Open Source Supply chain is a open market to share all these things demand/supply in global market Face book or other social networking sites are attached people globally & share information globally. Maybe there is an opportunity to link up both to improve supply chain.

  2. Ganesh.V says:

    Hi Rob,
    This is Ganesh from NIT Trichy. You had written in your earlier post about the indo-italian tie up for leather tanning Industry. But these are tie up between companies that manufacture the same product. In such tie ups the Italian company will have a clearer idea about the Indian scenario. And the Indian company will be benefited with technology transfer ( as Italian technology is better).so here is the first question.

    Who stands to benefit more?

    Though on paper it looks like a simple symbiotic tie up. The two companies are competitors. So each company will try to be the one that gets more benefited. So the second question.

    Is it possible to have a completely ideal scenario where each company helps the other without reservations?

    Next, is there a chance to have such a tie up between companies that manufacture different products (may be not those that are completely different in nature and essence but may be those that fall under the same cluster say FMCG). In this case there can be a free technology transfer as they are not direct competitors. Also, because they are in the same cluster of items aspects like logistics will be similar. In fact the tie up can be this way.

    Assume an English company manufactures chocolates and a French company manufactures cosmetics and both the companies have target markets in both the countries then each company builds a strong logistic network in their country alone and shares their logistics (including storage and distribution) with their partners. This will save a lot of cost and will build a supply chain that will be stronger than any that can be built by a single company in an alien country.

    Now this will not work with companies manufacturing same products as the competition will spoil the cordial relationship. Here is the final question.

    Is the above idea feasible. If not, have I made some wrong assumptions. Please Clarify

    Regards,
    Ganesh

Leave a Reply

Your email address will not be published. Required fields are marked *

jMnw

Please type the text above: