Fortifying Global Supply Chains Against Sanctions and Stresses
By Adam Hanft & Steve Statler | Featured in Techonomy
It took decades to build today’s complex world of interdependence. It’s a world of global supply chains linked by technology and delivered by connected modalities of land, sea and air transportation. We have exquisitely-tuned distribution and replenishment models. Or so it seems.
Now, unfortunately, the work of those decades of painstaking, layer-by-layer construction can be unwound with dramatic and consequential rapidity. It can happen sometimes in months, as we saw with the slow-roll of the pandemic, and sometimes even in days and hours. And we are now seeing that with the Russian invasion of Ukraine and its impact on the global oil market – and on the billions of products that are petroleum derived, in one form or another. Global agriculture supply chains are also in turmoil as a result.
Other supply chain jolts can emerge with expected ferocity: Just recently the world’s deficit in neon, of all things,starting flashing red.
There is no way for global business to predict such black swan events – although technologies are emerging, like GeoQuant, that can apply machine learning and AI to geopolitical risk. The New York Times headlined one articleon March 12 – “Russia Sanctions Snarl Shipping as Pandemic Pressure Eases.”
But black swans don’t require abject surrender. Business leaders can and often do empower their supply chains – and hence, their entire operational models – with the ability to better cope with – if not triumph over - exogenous events like these that shake the foundations of the global economy.
The most fundamental–and newly fixablez-flaw in the global supply chain has been the case over many decades––it is fundamentally a black box. Or more accurately, it is a linked series of black boxes. While they might appear to be marvels of technological sophistication–the Harvard Business Review and others have celebrated Walmart’s supply chain prowess, for example–but most of them still give participating companies little real visibility into what is happening to the trillions of items moving through them.
This lack of visibility has surprising and cascading impact on sustainability, and inflationary pressures as well.
The internet of things (IoT) has long promised to be the solution to such supply chain opacity. But it has failed to scale, as supply chains grew from just a few billions of items to the trillions that today must be tracked to bring the supply chain from dark to light.
The depth of the problem is no secret. One well-known supply chain solutions company, iGPS, recently noted:
“Storing pallet loads of products in an improper environment will result in the products having to be disposed of even if the packaging remains intact. Cold chain products, like certain foods and pharmaceuticals, are very sensitive to temperature. A small oversight–like failing to secure a cooler door–can cause temperatures to spike and render a product unsafe and unusable.”
This lack of intelligence at the level of the pallet–let alone at the level of the item––is a problem every day, in tens of thousands of cases. In short, the black box crises – and I use the phrase literally - has been a longstanding, intractable problem that the industry has come to accept. It’s a form of learned helplessness.
The good news is that existential problems are a trigger for innovation. Intractable problems that are seen as insurmountable obstacles are catalysts that make us ask the most challenging questions – and then, sometimes, developing light-year-jumping technology to answer them.
Here are four “why didn’t someone ask them before” questions. They have been around for as long as the IoT has been.
- Why can’t we create a scalable sensing solution that enables trillions–literally––of “things” to communicate essential data about their circumstances, to turn shadows into substance? Everything from a zucchini to a vial of vaccine to a favorite hoodie could then be smart and fully communicative.
- Why can’t these “circumstances” include environmental awareness of these “things”? It should include information about not just location, but temperature and humidity, as well as broader sentience: who touched them, and where are they in the first in/first out calculus?
- Why can’t this awareness start with the factory – or farm – and extend through the entire supply chain and its logistical footprint, all the way to retail? And perhaps even then to the refrigerators of consumers, creating a “brainiac replenishment economy”.
- Why can’t this enlightenment make it possible for the IoT to become the Internet of Trillions – empowering “things” ultimately to fix supply chain breaks themselves? Can’t we address the 40 percent of food that’s wasted because our dinosaur kale has a dinosaur brain? We definitely do not yet have smart cruciferous veggies.
Those “what if” questions might appear to drift into H.G. Wellsian science fiction. They also point out the limits of today’s RFID tags, which have been around for decades and have failed to scale to the trillions required to significantly impact the global economy.
Even active RFID tags – as opposed to passive – are limited in the data they can gather and transmit, and lack a critical cloud component. And they require batteries.
It was the challenge of a creating a new paradigm – a postage-stamp-sized computer that could harvest energy without a battery and send it to the cloud – for pennies – that led to the creation of company called Wilot.
Could such IoT Pixels – with the ability to illuminate every dark element in the supply chain – be able to compensate for and neutralize all the tectonic disruptions cause by a global pandemic and war in Europe?
Of course not. But massive disruptions have second- and third-order effects which a smarter and full-sensing IoT can address.
As the world grapples with the impact of the sanctions on Russian oil exports, consider, for example, the range of items produced from oil. They include everything from diesel fuel to vitamin capsules, lipstick, and contact lenses, as well as thousands of other consumer and industrial products.
So no single innovation can solve the consequences of the oil shock by itself. But in our interdependent economy we can bring intelligence and efficiency to those elements of the supply chain that are facing inflationary pressures and shortages based on the underlying price of oil, or pandemic disruptions to the global economic system.
If manufacturers can actually see the inventories of their product in stores, continuously in real time, be it a pallet of Lady Danger lipstick or a shelf of organic Alpha Omega fish oil, this will enable them to balance their inventories and not overbuy or oversupply when commodity prices spike. Being able to ascertain the precise location of an item has a vast economic impact for individual companies and the global economy.
Similarly, you might not think there is a connection between the temperature at which a zucchini is warehoused and shipped and what happens in the Ukraine. But the cost of produce is dependent on the cost of agricultural inputs, which include urea – the primary ingredient in fertilizer. And urea is in turn driven by commodity costs which are reactive to sanctions and the macro economy.
This transformative future, which companies like Wiliot are bringing to life, is one that CEOs need to internalize and act on. They shouldn’t, in fact, need much prompting, since a recent survey found that a monumental and Everest-ian percentage of them – 72 percent – say they are worried about getting axed because of “supply chain woes.”
Those travails will only intensify. And the need to turn supply chains light and bright with every twist and turn of their now-shadowy journey will only intensify. Bloomberg in fact warns that climate change will be the next “supply chain pain.”
As Wiliot brings peak intelligence to what it calls “IoT2”–the Internet of Trillions of Things–it will only make those who’ve chosen the discipline as their career even more delighted by their choice. Survey after survey (after survey) find the overwhelming majority of those who work across supply chains feel rewarded by what they do.
Trillions of self-aware things moving successfully through their supply chains will create undreamed of levels of resourcefulness, resilience, and self-correction.
That should make supply chain professionals even happier to come to work every day.
About the Authors:
Adam Hanft, CEO of Hanft Ideas, is a globally-known expert in strategy, marketing, branding and messaging; he is also a prolific cultural critic and journalist. This combination of skills and experiences is the confluence of disciplines that define the future of marketing.
Steve Statler is the author of Beacon Technologies, the presenter of the Mister Beacon podcast and SVP of Marketing at Wiliot, a company he joined shortly after it was founded. Wiliot is a Sensing as a Service, cloud and semiconductor company, providing “Intelligence for Everyday Things” using its IoT Pixels tags.