This is the second of our ongoing Supply Chain Matters blog posting series that brings awareness to interesting new technology being directed toward supporting many different supply chain risk management business process needs.

Over these past months, I’ve been penning multiple commentaries on incidents of supply chain disruption and risk.  These incidents have involved natural disasters, events related to specific products, such as product contamination, as well as counterfeit parts showing up in many high tech oriented supply chains.  Last fall, the U.S. Department of Defense had to reluctantly admit that even military contractors were not immune to unsuspecting counterfeit parts entering defense-related supply parts.

Readers residing in high tech oriented supply chains may want to review a new web-based marketplace, The Verical Electronic Components Marketplace, which launches operations tommorow, October 7th.  This online trading platform is targeted toward global based high tech manufacturer’s contract manufacturers (CM’s), or distributors who wish to procure electronic components in the secondary market, and who need to mitigate risks of acquiring grey market or potentially counterfeit components.

The Verical marketplace permits only authorized channels or original parts owners to list inventory for sale.  Potential sellers of inventory may include component manufacturers, franchised distributors, or companies with excess inventory above current operational needs. I was informed that the Verical marketplace will open with 27,000 unique part numbers from over 230 manufacturers.

The site utilizes a unique scoring system that traces the pedigree of all parts listed, based on how far back Verical is able to trace chain of custody.  The higher the pedigree score, the further up the supply chain the component has been traced.  This should allow component buyers a better means to manage their purchase risk, particularly when they are purchasing critical parts in the secondary market.

Verical was the brainchild of a number of seasoned industry veterans experienced in anti-counterfeiting in the secondary market, information-sharing networks, and software management.  I had the opportunity of a pre-briefing, and had access to the beta site which has been in a testing mode since January.  The site itself has a very intuitive look and feel, and includes lots of flash and rich Internet technology to quickly filter search results as well as visually view lots of information.

The Verical online trading platform will no doubt compete with existing electronic-based marketplaces such as FreeFlow Technologies, or E2Open. The fact that Verical has been designed to track component parts pedigree to supply sources may be the most attractive feature for buyers in the secondary market, who are often chasing parts to alleviate an immediate need or schedule exception. Verical marketplace momentum will certainly be something to watch over the coming months.

Supply Chain Matters readers who check-out the features and benefits of this new site, or decide to participate in the site services, are welcomed to share your comments at the end of this posting.

 Bob Ferrari

Author’s Disclaimer: This author has received no financial or other monetary consideration from Verical, Inc. or its investors related to the insertion of this blog posting.

Over these past two weeks, in the roles of both facilitator and participant, I’ve had the opportunity to participate in two supply chain risk management discussion forums involving senior and mid-level supply chain management professionals.   I have observed that the subject of increased supply chain risks is indeed occupying increased mind share among these executives, but it still seems to me that the definition of risk is different to everyone,  and is more dependent on vertical or functional views of risk. An overall umbrella of risk management strategy for the most part, remains stovepiped.

Executives continue to validate that increased globalization, the effects of the ongoing severe economic downturn, and increased incidents of natural disasters have all elevated the occurrence and magnitude of risk.  For procurement professionals, risk is directly associated with supplier monitoring and management. Mitigation is tied to early warning mechanisms related to supplier’s business activities, accelerating invoice payments to financially troubled suppliers, as well as having back-up supplier plans in place.  Logistics and transportation professionals view risk in the context of the spike in energy prices last year, which many believe can occur once again. Financial teams are focused on a potential spike in inflation which would impacts both input and output costs. Manufacturing and materials professionals while continuing to zealously pursue lean and cost control initiatives, are deeply concerned that leaner operations present increased vulnerability to a disruption in the business when something abnormal occurs.

One of the most interesting observations I have made is that the question of who in the organization has the most ownership of risk remains clouded.  Sourcing and procurement professionals feel that they are the logical point focus to drive awareness, but clearly do not desire to have enterprise risk management ownership.  One executive described this as a “career limiting’ decision. While the majority of executives are willing to intellectually accept the fact that enterprise risk management can best be approached in a cross-functional team perspective, singular leadership of such a team does not seem to be evident in the majority of organizations that I observed.

My belief is that supply chain risk management has to have senior executive awareness, sponsorship and ongoing focus.  Any firm with a vulnerable supply chain, particularly one that is global in scope, should have an active cross-functional team with the authority to identify risk vulnerabilities and define proper mitigation strategies. 

From these discussions of these past two weeks, my sense is that more cross-functional emphasis and leadership is required.

What’s your view?  Are you sensing these same vertical vs. horizontal risk management efforts in your company or organization?

Bob Ferrari

Yesterday, the U.S. Federal Trade Commission (FTC) issued new rules regarding the relationships or endorsements and testimonials in advertising, which has a particular impact on independent bloggers.  According to an article appearing in the New York Times, beginning December 1^st, bloggers who review or endorse products must disclose any connection with advertisers, including the receipt of free products, or whether bloggers were paid in any way for posting certain endorsements.  According a Digital Media posting on CNET, authored by Caroline McCarthy, the FTC release indicates in part: … “Thus bloggers, who make an endorsement must disclose the material connections they share with the seller of the product or service.”

Include me as one blogger who endorses this new guideline. 

When writing my commentaries on this blog, I do disclose as warranted, any financial or other considerations that I might have with sponsors or clients that may benefit from a posting.  I’ve always thought that this is what readers should expect.  I have further observed that the majority of my fellow independent bloggers commenting on supply chain topics tend toward full disclosure of relationships, which is a credit to this particular blogging community.

On the Spend Matters blog, Jason Busch povided his commentary regarding this new ruling, and noted that to insure consistency of practice the FTC should look at traditional media and industry analyst firms that may well be in violation of the spirit of this ruling.  I echo these comments.  Media outlets that provide both editorial commentary and sell webcasts and other promotional marketing activities owe readers full disclosure.  All Industry Analyst firms should, in turn, disclose when a mention and/or ranking of a technology provider or company involve a paying client.

Regulation of independent bloggers is welcomed, and I trust that traditional media and industry analyst firms will also step-up to the spirit of this ruling.

What’s your view?

Should traditional media and industry analyst firms fully disclose their material connections when writing about certain providers? Provide your comments at the bottom of this posting.

 Bob Ferrari