In March of 2021, the container ship Ever Given ran aground smack in the middle of the Suez Canal. The accident blocked the maritime thoroughfare for six days, as a queue of 369 ships formed behind the beached giant, resulting in a supply-chain disaster. Sixteen million tonnes of cargo freight were delayed, and about USD9.6bn worth of trade was lost. That disruption came on top of a pandemic, geopolitical tensions, and extreme weather – a cascade of “black swan” events that created shortages, delays and disruptions for businesses and ordinary people across the planet. If the past few years have taught us anything, it is that supply chains matter—and they are not as resilient as we thought and create a disrupted world indeed.
“What we have observed over the last 18 months with the Suez Canal blockage, Covid and then the implications of Covid, with ports being congested or shut, is that there are many external events impacting the industry,” says Rotem Hershko, senior vice president and head of business platforms at logistics giant Maersk. “We are in a perfect storm situation.”
The vulnerability of supply chains may come as a surprise to many – we live in a world where digital technology seems to be transforming nearly every aspect of our lives, and logistics is a sphere rich with talk of innovation. However, this essential digital transformation has yet to penetrate much of the industry—look closely and you’ll see that an unexpectedly analogue, paper-based model still prevails.
How digitisation can revolutionise supply chains
In order to face up to future “black swan” events, these problems must be urgently overcome. Digitisation—and the shift in mindset that both drives it and derives from it—has now become essential. The industry has learned that the hard way.
“All these disruptions have caused a rethink of how to become less dependent on human resources, and how to find ways to move the supply chain when employees are ill or there is a labour shortage,” says Professor Michael Bourlakis, chair in logistics, procurement and supply chain management at Cranfield School of Management. “One of those ways is investing more in digitalisation and automation.”
That’s why, right now, the world of logistics is experimenting with technology like never before. Maersk itself began its transformation before Covid hit and has thus become a pathfinder for the industry.
In Hershko’s opinion, that is happening because supply chains have never been as impactful as they are today. “By leveraging technology and platforms in an effective and meaningful way, you feel like there is a huge opportunity to really move the needle tremendously for customers and the industry as a whole.”
Emerging technologies are playing a meaningful role in that effort. Take TradeLens, a blockchain platform developed by Maersk in partnership with computing giant IBM. A blockchain is a digital ledger, first pioneered in cryptocurrency, that works in a decentralised fashion, allowing a plurality of parties to co-create a single source of truth without relying on a central authority. Given the vast array of actors in the supply chain sector—shippers, freight forwarders, port authorities, terminals, ocean carriers, intermodal operators, governments, customs brokers—and the need to share different information and data throughout a cargo’s journey, all kept on one unified platform, blockchain is ideally suited to addressing the problem.
Say you were shipping cargo; if you were wondering exactly where it is, the system would give you the precise location and retrace the digital “paper trail” left in its wake.
“[TradeLens] streamlines all the different transportation data in order to have it for customers to access it, to use it, to leverage it,” Hershko says. “So, we can provide customers with end-to-end visibility of where their cargo is no matter where it is in the supply chain, including aspects of the journey which are managed by other parties.”
There is another clear strand of cutting-edge innovation happening in the industry. “Artificial intelligence, analytics, and big data are very high on these companies’ list of priorities,” says Professor Bourlakis.
Delays and disruptions can be forecast and prevented by harvesting better data from a whole host of sources and using AI models to find a way around them; AI can also be harnessed to streamline vessel and container packing, saving space and money. If AI is the industry’s buzzword of the moment, a close second would be “digital twin”. This is a method to model, simulate and stress-test a process or an organisation—whether that’s a trade route or a marine terminal—and Bourlakis calls it one of the “major applications” for the increased troves of data that companies in the industry are collecting. That means if you are a company importing automotive parts, you could create a digital twin of the supply chain that brings those components from a Chinese factory to your shop floor, and this would help predict the risks and snags that could beset it.
Once you know what those are, you can put countermeasures and fail-safe mechanisms in place to mitigate disruptions. Alternatively, if you operate ships, you can create a digital twin of each one to work out how to improve its performance and minimise carbon emissions.
This is an extract of the original document available online.