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Supply Chain Illuminations for Supply Chain Risk Management

February 27, 2024

Article

Just keeping tabs on all the tiers and links in a global supply chain is challenging enough. The ability to anticipate when things might go wrong in a complex supply chain — that’s next level.

But that’s just the kind of visibility needed in today’s complex world of geopolitical, cyber, weather and other risks that could disrupt your business operations. One solution that can deliver needed transparency is a supply chain illumination.

What Is a Supply Chain Illumination?

A supply chain illumination is an analytical assessment of related individuals or entities in a supply chain as well as the parts and raw materials that go into a product or piece of equipment. It is intended to identify supply chain risks and provide situational awareness to enable investigations, program reviews and other steps to understand and then manage risk. It goes beyond traditional supply chain management areas, such as logistics, by focusing on in-depth “entity-” and “item-level” risk analysis.

The assessment typically includes supply chain mapping as one input, producing a representation of a particular supply chain that illustrates its components and dependencies. But an illumination takes mapping a sizeable step further by providing real-time, dynamic insights into the risks and opportunities across multiple tiers of the discovered supply chain.

A supply chain illumination offers insights for informed decision-making to industries and federal departments like the Department of Defense (DoD) and its constituent agencies and services, such as the Air Force. It does so by:

Mapping supplier and distributor relationships;
Quantifying ROI for supply chain initiatives, such as the collaborative sourcing of common materials (or “directed buy”);
Uncovering and assessing sub-tier ecosystems and associated vulnerabilities across both physical and digital supply chains; and
Documenting item-level characteristics for parts and materials to comply with regulatory or trade compliance requirements or simply to drive greater standardization.

Let’s dive in and explore how to use a supply chain illumination for supply chain risk management (SCRM) to enhance your supply chain resilience, security and sustainability.

Why Supply Chain Illuminations Are Important

A supply chain illumination is crucial in today’s complex business landscape due to the widespread lack of visibility into supply chain risks. By shedding light on sub-tier suppliers and third parties (mills, distributors, wholesalers, brokers, re-packagers and re-labelers), it helps organizations proactively assess risks and prevent supply chain disruptions.

Illuminating supply chains is essential for coordinating and orchestrating the timely procurement and supply of vital components from trusted sources. In a globalized world with complex supply networks, identifying reliable suppliers ensures uninterrupted production and timely deliveries. Moreover, it streamlines supply chain processes, improving efficiency and cost-effectiveness.

A supply chain illumination is also vital for legal, regulatory and trade compliance. It helps companies identify and address issues — like conflict minerals, rare earth minerals, REACH, RoHS, NDAA Section 889 and related provisions, semiconductor imports, UFLPA, and ESG regulations — before product shipments, avoiding costly legal and regulatory challenges. Its core goal is to prevent problems and preserve the supply chain’s integrity and reliability.

Two Common Types of Supply Chain Illuminations

As supply chain leaders assess ecosystem risks, they may prioritize certain partners, organizations and individuals. Or maybe they’re mostly concerned with product parts, inputs and raw materials. These approaches fit two common categories of illumination — entity- and item-level — which have unique elements and step-by-step processes.

Entity-Level Illumination

An entity-level illumination begins with a client-identified target, ranging from something as granular as a branded diode (a microchip component) to as broad as the global industry for gallium production (a critical mineral). It can also focus on specific or generic products or componentry, government acquisition programs (e.g., weapon systems and other advanced technology), companies or organizations of interest, and even research networks of individuals and entities involved in cutting-edge science and intellectual property development. Whatever the target, the first step is for the client to meet with Exiger analysts to understand the issue or risk that is driving the request, and then for Exiger to formulate an agreed-upon methodology to answer the client’s questions.

Once an entity-level illumination is kicked off, structured “big data” sources are mined for information to map nodes across upstream and downstream entity networks, providing a clear picture of the targeted supply chain. With mapping complete, Exiger uses its machine learning-driven technology solution, DDIQ, to gather open-source information at scale on discovered entities and then to perform an automated risk assessment. The output of both the mapping and risk assessment are visualized in DDIQ Analytics, Exiger’s analytics environment, which can highlight especially risky nodes in the discovered supply chain. This in turn guides further open-source information gathering, analysis and assessment.

Exiger provides the client with a detailed report and supporting data dashboard in DDIQ Analytics that analyze the targeted supply chain and its associated risks. This information is the first step toward intelligently and responsibly managing supply chain risks such as potential disruptions and vulnerabilities — whether that step involves taking action to mitigate newly discovered risks or knowingly accepting them.

Item-Level Illumination

Obtaining an item-level illumination generally begins with an “Opportunity Assessment” with Exiger subject matter experts. The objective is to outline a course of action to achieve or exceed specific customer illumination objectives and establish realistic timelines and ROI expectations. As part of that exercise, organizations determine appropriate naming conventions, data taxonomies, and part-family classifications to standardize data across their supply chain. Exiger provides customers with four ways to capture item-level data:

Providing the data in .csv or Excel format if it already exists
Extracting the data quickly, accurately and inexpensively from customer-provided technical data packages (usually blueprints in .pdf format)
Using Exiger’s Supply Chain Explorer tool to map high-level shipments and associated shipment descriptions using commerce records and other public and private data sources
Inviting n-tier suppliers to self-report item-level data in an easy-to-use online portal in SDX

Determining the right approach to data capture and normalization, whether through a tool like Exiger’s Part Attribute Characterization (PAC) or one of the other approaches described above, is crucial for data accuracy and the success of a customer’s SCRM efforts.

A final step to an item-level illumination is integration of a customer’s demand signal(s) — ideally without requiring changes to your existing IT systems — to ensure accurate forecasting of parts and materials as well as calculation of risk and n-tier supplier dependency at each node of the extended supply chain. Documenting item-level Bills of Materials (BOMs) for products or equipment helps create a comprehensive inventory of components. Risks at the item level are then characterized and analytics employed to reduce costs, improve supply continuity and ensure compliance with legal, regulatory and trade requirements.

By pursuing item-level and entity-level supply chain illuminations, organizations can gain multi-tier visibility, mitigate risks and make informed decisions to optimize their supply chain operations.

Effectively Manage Supply Chain Risk with Exiger

To effectively conduct supply chain illuminations, you’ll need a technology solution like the 1Exiger platform. 1Exiger has tools to perform due diligence and track a complex network of supply chain relationships and ownership structures through structured and unstructured data. The process also involves a professional consultation to get the best results.

With Exiger’s supply chain risk assessments, guided by specific research questions, you can start an illumination by targeting entities or individuals relevant to your supply chain. The technology provides autonomous data scoping, suggesting initial data points for accuracy. 1Exiger also uses open-source information and structured data queries to complete DDIQ profiling. The platform can serve as the digital thread across your distributed manufacturing network, reconnecting your finished parts with the raw materials and component parts that go into them.

The Exiger approach strikes a balance between automation and human analysis, with subject matter experts consulted when necessary.

Supply chain illuminations are a vital workflow for safeguarding your supply chain against unforeseen risks. Elevate your risk management efforts by partnering with Exiger and using our comprehensive product suite backed by powerful machine learning models.

Contact us to demo the 1Exiger platform or to start your supply chain illumination.

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