Source Intelligence: Connecting and Empowering Network to Bring Transparency to the Supply Chain

Jess Kraus, CEO & Co-Founder Jess F. Kraus, forward thinker and entrepreneurial architect, leans back in his chair behind a desk made of reclaimed wood. Source Intelligence (SI) is the second game-changing Governance, Risk and Compliance (GRC) company that he’s founded. The first sold to a public company in 2010.

Referred to by the Financial Times as the “LinkedIn of Supply Chain”, Source Intelligence is a global network of businesses linked together to expedite the exchange and validation of mission critical compliance information. As CEO and Co-founder, Kraus built SI to address a hailstorm of new regulations, intensified by shareholder and consumer activism, which have catapulted social, environmental and sustainability agendas into the Board Room. “We empower global brands and their suppliers to navigate the complex web of inter-relationships up and down their vast supply chains to achieve their transparency and performance goals,” commented Kraus.

Behind his vision to leverage technology to enable the harmonious coexistence of people, profit and planet, Kraus, truly symbolizes the 21st century CEO, making the world we live in a better place.

Jess F. Kraus is CIOReview’s “CEO of the Year”.

A Thirst for Knowledge

From his days as a chemical engineering student through his entrepreneurial legacy today, Jess could see that technology would empower global brands to achieve high-performing supply chains that also deliver on social and ethical sourcing. Kraus got his start in the aerospace industry with General Dynamics, where his work was centered on sustainability and the environment. Thinking bigger, he founded his own company, which disrupted manual compliance with technology automation and a crowd-sourced, database driven approach to helping big companies meet Occupational Safety and Health Administration (OSHA) and Environmental Protection Agency (EPA) regulations related to hazardous materials.

For the next 18 years, Kraus laid his own blueprint, crafting an approach to information gathering and information exchange that would later be realized as the premise for SI.

Alongside his executive team, Kraus lamented the lack of transparency when it came to the source materials of today’s household commodities. Things as common as staplers and iPhones had an entire business’ worth of what felt like inaccessible information. What materials were used to manufacture these products? How did they affect the environment? It was in the frustration of public ignorance that another great idea was born. In 2010, after the sale of his last company, Kraus co-founded Source Intelligence. The idea was that SI would trace supply chains, determine the source of their materials and record their impact on the environment. This information would, in turn, be offered to large, global corporations on a subscription basis. As Source Intelligence came onto the scene, so did a breakthrough U.S. regulation requiring companies to investigate whether their products contained conflict minerals. The Dodd- Frank Act S1502, requires companies to trace their supply chain if they used tin, tantalum, tungsten, or gold in the manufacturing of their products.


We empower global brands and their suppliers to navigate the complex web of inter-relationships up and down their vast supply chains to achieve their transparency and performance goals.


“Officially, it’s ‘Conflict Minerals Due Diligence Compliance’, but we refer to it affectionately as the ‘Transparency Act’ because it was the first time in the U.S. where companies were required to trace their supply chain and determine if certain raw minerals were there,” says Kraus. “It’s a U.S. SEC requirement, but it’s impacted hundreds of thousands of suppliers globally who now use our platform to exchange information to address restricted substances, forced labor, anti-corruption and sustainability compliance requirements.” Source Intelligence’s rapid growth would come to include more than 200 Fortune 500 companies across 8 key industries with revenues in excess of $1 billion as well as hundreds and thousands of suppliers who are currently registered members of the Source Intelligence network. According to a recent Wall Street article, nearly 40 percent of those Dodd-Frank S1502 filers who mention a 3rd party supply chain management firm by name referenced Source Intelligence.

Coming up with an idea that went back to the intelligence gathering roots of his previous company was brilliant, but building it was a different challenge entirely.

Understanding Source Intelligence

Perhaps the most obvious question is: What is this network and how does the platform work? “We’ve built a really robust platform to collect information in the supply chain”.

Indeed, the Source Intelligence platform works like a networking site. Upon registering to the platform, users provide information about their company and their suppliers. This cycle continues until the supply chain is fully traced. “Think of a pyramid shape, you start with the peak which is a customer who’s deploying our platform to their next level,” explains Kraus. Users are able to employ a comprehensive full service compliance solution that provides the ability to focus on oversight and strategy while empowering suppliers, agents, and distributors to take charge of their supply chains and share the benefits.

Source Intelligence’s platform customers seek to ensure that their suppliers operate within the parameters of SEC, DOJ, EPA regulation requirements as well as their own internal CSR policy. The incentive is simple: compliance with the law and brand loyalty. The “Millennial” and “GenX” generations represent a new breed of consumers expecting substantiated data to support socially and ethically responsible product claims. This verified diligence can only be achieved with the technology, enormous database, and subject matter expertise found at Source Intelligence.

“We’ve spent over 4 years amassing over 200,000 platform users to form the largest data driven supply chain network across all industries, regions, and compliance initiatives,” commented Kraus. “This allowed us to create a centralized network that empowers suppliers to be more efficient and global brands to be more diligent around mission critical supply chain data.” Source Intelligence adds two to three major brands every week and gains upwards of 3000 suppliers in the same timeframe.
That’s an average of 1000 suppliers with every customer that registers to the Source Intelligence platform. “It’s easy to sign up and connect with people on LinkedIn. It’s the same with our platform; we make it easy for suppliers to register themselves and their suppliers,” says Kraus. Suppliers complete surveys, the algorithms of SI’s platform determine if the questions are being answered properly and compare each response to industry standards. Answers that don’t fit are red flagged and probed for validity. Moreover, the innovative platform that recently received a GRC 20/20 innovation award for user experience, meets downstream customers and upstream data requests. This means a contingent flow of information that meets the challenge of aggregating data to make it available through Source Intelligence’s Network and supported by a 24/7, multi-lingual supplier support team.

Supply Chain Transparency

While Source Intelligence is most recognized for its Conflict Minerals solution, the emerging growth tech company offers an expanded feature set. Their forced labor and anti-corruption solution works similarly to the Conflict Minerals solution and SI offers a Restricted Substances solution, enabling global brands to manage OSHA, EPA and EU restricted substances at the country and state level—a throwback to 3E.


We empower global brands and their suppliers to navigate the complex web of inter-relationships up and down their vast supply chains to achieve their transparency and performance goals.


The Influence of Brilliance

The robust Source Intelligence platform may be able to verify smelters and conduct supplier diligence, but has it really produced worthwhile results across the globe?

Based on public filings, a resounding ‘yes,’ echoes. Take SEC filer, Mattel, a popular toymaker. According to their report, with the aid of Source Intelligence, they were able to develop a five-step due diligence plan for their Conflict Minerals program. Now they are able to establish strong company management systems, identify and assess risks in the supply chain, design and implement strategies to respond to those risks, support the development and implementation of third party audits, and report on supply chain due diligence. The company has even taken steps to mitigate the risk of inadvertently supporting dangerous regimes. These include engaging suppliers on uncertain information, developing procedures to ensure they don’t purchase the wrong materials and more.

Numerous examples found in SEC filings demonstrate substantial benefits from the Source Intelligence platform. Recognizable names including Aerojet Rocketdyne, Amerisource Bergen Corporation, Weight Watchers, Costco Wholesale, HanesBrands, and Trimas Corporation represent market leaders across retail, apparel, consumer goods, aerospace, electronics, automotive, and even manufacturing verticals.

As far as the future is concerned, Kraus, a ranked chess competitor, will continue to make strategic, bold moves. Source Intelligence has already set anchor in the EU and plans on offering unique supplier-specific solutions. With a steady growth rate, whatever path Source Intelligence takes, it’s bound to be one that leads to an inevitable lasting success.

Company
Source Intelligence

Headquarters
Carlsbad, CA

Management
Jess Kraus, CEO & Co-Founder

Description
A SaaS-based vendor risk management company that minimizes operational and brand risk, and improves efficiency, provides visibility into supply chains.