Supply Chain Collaboration: Validaide
By J. Tamhane
Supply Chain is a field that each and every one of us experiences constantly. Whether it is buying a carton of milk at the supermarket or getting some medication at the pharmacy, the complex chain of businesses that makes this possible is something we take for granted. The success of the chain lies in strengthening the links. One company focused in exactly this space is a start-up called Validaide, which is based in the Netherlands.
Eelco de Jong, the co-founder and Managing Director of Validaide, has an impressive past. He has an MBA from MIT Sloan School of Management and a MSc in Computer Science from Erasmus University Rotterdam. He has worked in business development roles at software and Internet of Things companies. In addition, Eelco was the Managing Director of Antaris Solutions, a provider of online cold chain management solutions for the pharmaceutical industry.
When quizzed about the industry, Eelco points out that “Supply Chain is a very broad term, which includes all activities to provide a physical product to the end customer. This covers all planning and execution activities, including sourcing, manufacturing and logistics”. Of course, a major factor in such an industry is “the coordination and communication between all involved parties”. As he delves into giving concrete cases, he mentions “the example of a pharmaceutical manufacturer that transports temperature-sensitive vaccines by air from a manufacturing site in Europe to a regional distribution center in China. The manufacturer selects a freight forwarder, who subcontracts the actual transportation to an air carrier and trucking company. The air carriers work with different ground handling agents at each airport. The pharmaceutical manufacturer remains responsible for the integrity of its products, but it is very difficult to know under what conditions the product will be handled and stored in each step of the transport process”, notes Eelco. This was, indeed, the reason behind the founding of Validaide. With “temperature-sensitive pharmaceuticals, perishable food products, chemical products or other products with specific requirements and restrictions during transportation and storage”, there is an ever-increasing need for information sharing and collaboration between all parties involved.
Another aspect of Supply Chain is the inherent risk that it carries with it. A significant portion of the risk comes from unpredictability caused by weather as well as global capacity constraints. Companies attempt to mitigate such risks through Quality Agreements and Service Level Agreements, some of which stem from regulatory requirements. Nonetheless, even these “have serious limitations, for example due to multi-tier subcontracting and legal limitations in financial liability. In the previous scenario, the pharmaceutical manufacturer may have a contract with their freight forwarder, but it remains difficult for the pharmaceutical manufacturer to know the details about the contract between the airline and ground handler that are also involved in the transportation process”. It is quite clear that better visibility and information sharing would help all parties and would result in cost-savings as risks are reduced.
In today’s world of diminishing profit margins, the logistics part of the supply chain is also not spared “with limited opportunities for differentiation”. But Digital Transformation could prove to be a game changer in this industry. Where collaboration is vital, information exchange could provide the added advantage over competitors. Eelco foresees "a growing shift between successful and unsuccessful companies, based on their successful digital transformation and access and control of data”. The more the connectivity, the more the opportunities for analytics. The more the analytics, the more the business intelligence. Validaide is currently involved in research with Vrije Universiteit Amsterdam and Technical University Eindhoven in the area of routing optimisation for air freight shipments for special cargo such as temperature-sensitive pharmaceuticals. Eelco explains that “there may be thousands of routing options available to transport a product from Europe to Asia, but it is difficult and time-consuming to identify and evaluate these options to make the optimal trade-off between costs, quality and other parameters. This is where analytics about flight schedules, supplier services and capabilities, historical supplier performance and incidents can add significant value. This may be further extended with risk assessments about potential supply chain disruptions, for example due to severe weather conditions”.
Of course, the omnipresent challenges of (lack of) data standardisation and information harmonisation are even more prominent here. A Supply Chain involves not only disparate systems but also multiple independent companies, some of whom might be fierce competitors. This is something that Validaide recognises and is working towards addressing. The mindset based upon fear of information sharing “is changing across the industry as people increasingly realise that more collaboration and sharing is the only option for the future”, says Eelco. By making collaboration a two-way street and ensuring that customers benefit from shipment information while suppliers benefit from benchmarking indicators is a key focus within the Validaide platform.
+31 615 905 506
102-108, Building 105 'Paris'
Amsterdam, 1101 AA, The Netherlands
+49 6033 1817 900
Virginia Str. 24
35510 Butzbach, Germany
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