Supply chains are the beating heart of Australia and the world’s economy.
When that heartbeat faltered at the start of the Covid pandemic two things happened: consumers became acutely aware of the importance of supply chains, and a new agenda appeared around supply chain innovation to create more agile and resilient supply chain systems.
The pandemic sharpened the understanding that supply chain industry leaders and global corporations already had, to varying degrees: supply chain disruption that has been growing in frequency and magnitude for 10+ years is not going away.
And according to Bain & Company’s Expert Partner Gerry Mattios, speaking at SigfoxConnect last month:
Industry leaders are prioritising risk mitigation as much as cost reduction. Increasing resilience is almost three times as important a priority for supply chain leaders in the next three years, compared to the last three years.
Bain & Company’s Expert Partner
Don’t Predict: Plan
You can’t predict an oil crisis, you can’t predict a war, you can’t predict another pandemic, and you can’t really predict a security hack. All you know is that any one of these, or any number of other challenges, is at some point likely to happen.
Supply chain managers can, though, focus on what they can control, rather than on what they can’t predict
As we approach the end of 2020, let’s look broadly at the outlook for 2021 and consider what supply chain organisations can do differently to manage crises and build resilience for the future.
1. Build in Redundancy to Your ERP System
Mitigating ERP cyber attacks has become a major board issue as executives now understand where that sits on the risk register. Hint: it’s ‘catastrophic impact’ and ‘likely’ to occur.
What happens when you can’t access the ERP system that is the lifeblood of your business? Your business stops.
To help mitigate this risk, supply chain leaders need to be working closely with IT security and risk management leaders to develop joint cybersecurity risk management approaches to their business.
They should consider alternate solutions that do not rely totally on ERP systems for critical data transfer.
What if you had a separate system to tell you where your assets are? A system independent from your ERP. Then you’ve controlled, mitigated and compartmentalised risk.
As I wrote about in my last article, boards are talking more about mitigating the impacts of cyber attacks on supply chains particularly sensitive to DDoS attacks (in which the network is overwhelmed with so many messages that it shuts down) on ERP systems by relying on third party asset location solutions running on 0G networks.
The reason for that is the global 0G Network is highly secure by design and less susceptible to network attacks – making it ideal for IIoT applications.
If your ERP system gets hacked in 2021, you’d see value in knowing where all your shipments are, and all your containers are across your global supply chain, via the 0G Network.
It’s one way to build in much needed redundancy.
2. Improve Connected Visibility Now – No Need to Wait for 5G
Knowing where your assets are is a very quick way of mitigating risk.
What could supply chain leaders have done differently this year, had they known more about their supply chain assets location and condition?
Investing in secure, effective tracking technologies is imperative because it means identifying risks and stopping them in their tracks.
It means faster reaction times when things go wrong. It means you can rapidly identify disruptive demand and supply situations and secure alternate suppliers. Visibility builds resilience.
In many ways, this is the promise of IIoT. And it’s being realised by more and more global supply chain businesses around the world, especially through 0G technology.
Unfortunately, marketing around 5G has become so inflated that it is seen as a ‘silver bullet’. 5G has become a ‘catch all’ term that promises to deliver a long awaited utopian future of economic prosperity. But it’s not a silver bullet. Different technologies are fit for different purposes.
The technologies that have activated most large-scale IoT sensor networks for asset tracking in the supply chain, to date; are inexpensive non-cellular low-power wide-area (LPWA) technologies like LoRaWAN and Sigfox, not 4G LTE, and not 5G at all, yet. Sure, these technologies are coming, and they will compliment existing connectivity approaches and expand the market, but smart businesses won’t wait for that day.
While 5G is intended to bring faster speeds, Sigfox 0G technology is designed to serve distinct use cases where communication range must reach further, penetrate dense physical structures, and allow battery-operated infrequent communication devices to last in the field for extended periods of time.
While 5G may be optimal for video calls or smart goods in the home, the 0G Network is ideal for supply chain asset tracking, water, gas metering, agriculture, smart building, and smart park applications among others – IoT is already revolutionizing so many of these industries.
3. Reduce Human Error – Invest in Automation
Tracking and tracing assets is the first step in improving supply chain visibility and lifting resilience.
But as we explored earlier, an ERP system going down can compromise that data access.
If you can get your assets to tell you where they are, there’s less reliance on systems, and on humans running around gathering data.
In the case of ASCAP, finding lost assets scattered across Australia took “a massive amount of work”. They were manually tracking them down, even physically putting employees on planes to fly interstate and retrieve returnable packaging units that had been lost in transit. This was before they deployed a successful IoT asset tracking project.
Within four months of ASCAP’s returnable packaging partner Loscam deploying a end-to-end IoT-enabled solution operating long range, long battery-life 0G-enabled devices, it discovered 5% of units were incorrectly delivered to a competitor’s warehouse and 8% of units moved outside the customer’s logistics provider network.
The technology brought a much needed increase in visibility and control of assets, operational efficiency and asset utilisation. In one customer scenario, it reduced the number of units needed by 25%, enabling tens of thousands of dollars of savings to be passed onto customers each year.
Track, Trace and Tell technology also improves efficiency through automating manual tasks. If nobody has to scan packages anymore, because the package informs you of its location, human error is eliminated. There is less loss, less untraceable theft.
It’s all about enabling you to do less and get information with more accuracy, and faster.
4. Screen Suppliers & Document High-value Data Access Flow
Supply chains are highly vulnerable due to the fact that they are, by nature, interconnected. Third-party suppliers can create something of a weakest link if not inspected properly for their commitment to security -an Opus and Ponemon Institute study showed that at least 59% of organisations have suffered from cyberattacks through third-party companies.
Competitive supply chains need a flexible system of suppliers and partners that offer the ability to swap input materials and components and rapidly introduce new products.
Dun & Bradstreet researchers found that 51,000 companies worldwide, 163 of which are in the Fortune 1000, had one or more direct or “Tier 1” suppliers in Wuhan, China, the city where the coronavirus hit first, while at least 5 million — 938 in the Fortune 1000 — had one or more “tier 2″ suppliers there.
There is no easy solution to ensuring end-to-end security, but organisations can start by defining their security requirements and thoroughly vetting each supplier before bringing them onboard as a regular partner.
A recent Gartner report on supply chain cyber security also encouraged supply chain leaders to research and document the flow of high-value supply chain data and information across systems outside core IT systems.
Ensuring regular communication and a strong cyber-risk management program can help companies gain a deeper understanding of suppliers and enable stronger collaboration.
Use the Lessons of 2020 to Plan for the Future
Creating a multifaceted supply chain security strategy will cost money, but investing in strong risk management could save your company and your business. Those who use a crisis to make investments and accelerate change come out better off. Resilient supply chains not only recover from disruption, with the right level of investment, they can become a source of competitive advantage.
As the year comes to an end, it’s worth reflecting on what you could have done differently with greater visibility and data in 2020, and use those lessons to plan for next year.
2021 looks to hold just as much uncertainty and upheaval, but armed with the knowledge and insight from 2020, plus innovative technologies and strong board appetite for change, supply chain leaders can succeed in building greater resilience.