This article was first published in the Spring 2014 issue of Prime
Running a business, whether it’s a one-person enterprise or a multinational company, has always involved risk. In recent years the steady shift to a global economy has pushed this higher. For manufacturers, the global economy requires managing extended supply chains in which 'outside' partners and suppliers perform critical functions. These might be product design, manufacturing or post-sales support, across various locations, perhaps globally.
Manufacturers are increasingly turning to outsourcing and off-shoring to save money. But this economic benefit can dissipate rapidly if a company doesn’t have a sound strategy for managing critical supply chain risk.
The possibility of having intellectual property (IP) stolen or otherwise comprised is among the greatest, and most harmful, risks manufacturers face. It’s also something many are ill-prepared to manage. IP is typically lost or compromised in one of two ways:
- Outright theft by an unscrupulous party
- A phenomenon often referred to as ‘leakage’. This is unintentional disclosure that occurs in the course of sharing information with individuals from various departments, within and beyond the company.
Regardless of how loss of IP occurs, it can have a devastating impact on profits. It can result in counterfeit versions of a company’s products being manufactured and sold. Counterfeiting is on the rise across the world in many industries and it can ruin reputations, damage brand status or worse.
Aerospace and defence (A&D) manufacturers face a special set of risks when it comes to protecting IP. The increasing pressure to reduce both the time and costs associated with developing complex products, such as aircraft and weapons systems, has forced them to place more responsibility for designing and integrating major subsystems in the hands of their Tier 1 and Tier 2 suppliers. That means suppliers have access to contractors’ most valuable data, which could leak into competitors’ hands.
National security considerations also must be top of mind for A&D manufacturers handling IP for government contracts. Protocols must be adhered to for ‘dual-use’ components or materials usable in either a consumer or military context. Leaking information can lead to civil and criminal prosecution.
Prime contractors typically engage several Tier 1 suppliers to handle major aspects of a programme. These engagements require the OEM to share detailed information about its products with suppliers, some of whom might be competitors on another programme. OEMs must have a way of keeping detailed records of its IP to ensure that only information necessary to fulfil the contract, and nothing else, is passed across.
Tier 1 suppliers have their own networks of subcontractors that they need to share sensitive product information with. The process continues until OEMs find they need to keep track of information travelling across contractors and suppliers around the world. Each time information moves down a level in the supply chain, the potential for IP theft or leakage grows, but the OEM’s responsibility for protecting its own IP never diminishes.
Currently, most companies attempting to protect IP are taking one of two approaches:
- Manual, ad-hoc processes in which a small group of people in a document control department track the usage and movement of data. This is much the same way books are checked out of and back into a library
- IT-based processes that call for segregating data into multiple systems, often by location, and only give certain individuals access to those systems.
Both approaches have major shortcomings. The first offers no real IP protection, as manual processes are easily circumvented. The second approach puts the company’s IT staff in charge of controlling access to IP, rather than the people who use it. This increases the difficulty of accessing information when it's needed, inhibits collaboration between programme stakeholders and leads to unnecessary IT costs.
Fortunately for manufacturers, another approach is now available. It is one that makes it easy to strike the right balance between the increasing need for seamless supply chain collaboration and the ongoing requirement for maintaining tight controls on IP.
This approach centres on the deployment of a 3DExperience software platform that federates data from multiple systems across a unified global supply chain. This creates a central repository for all data associated with a project or programme, regardless of where it was created. The platform supports the twin goals of streamlining product development using the universal language of 3D for product simulation, and protecting IP. This type of unified system is increasingly relied on as the primary platform for sharing data with everyone involved in building, selling and servicing products.
With this type of system in place, all requests for access to IP, no matter where they originate within the supply chain, are managed by a single system. This system determines in real time whether an individual is authorised to access the information they seek based on their credentials and physical location. Multinational project teams can therefore collaborate efficiently while obeying export control regulations, commercial IP laws and any security protocols of the countries involved.
The risk of having IP stolen or compromised is a huge issue for manufacturers, but one that can be managed with proper diligence from an organisational and technological standpoint. With the right processes and systems in place, manufacturers can meet the challenges of doing business in the 21st century without fear of having their most valuable assets and ideas stolen or devalued.
Stephen Chadwick is managing director of Dassault Systèmes, EuroNorth
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