The Future of Supply Chain – November 2021
Software supply chain management: can it become a new line of defence against cyber-crime?
In the past two decades or so, software development has evolved. In the past we built applications in a monolithic architecture hosted on a physical server that followed linear processes. Today, that’s more likely to involve the integration of a patchwork of open-source, third-party and proprietary tools and software from a wide array of suppliers. As Emily Freeman, head of devops product marketing at AWS pioneering new approaches to software development, puts it: “software development is a study in entropy, and it is not getting any more simple.”
On the upside, thanks to readily available free and off-the-shelf software components, the time required to build and release new software has decreased from a few years to a couple of months. On the downside, the lack of oversight over the proliferating interdependencies of source code has led to cyber-attacks that have shaken the global business world and spurred political leaders into action – while also flagging up the importance of software supply chain management to achieve all-important visibility.
Software supply chains face a similar problem to their physical counterparts. While manufacturers often have no visibility beyond their tier-one suppliers, software companies have difficulties gaining a full view of the provenance of all the code that goes into their digital infrastructure and products. The growing popularity of cloud services, the ubiquity of applications and APIs – intermediaries that let apps talk with each other – the rise of data storage and analytics as a service and, last but not least, the wealth of available open-source code have all significantly contributed to the current complexity of software supply chains.
Managing open-source software
Although the configuration flaws of off-the-shelf and customised commercial software often leave backdoors to enterprise networks, open-source code – estimated to make up 84 per cent of enterprise software code bases – poses an even bigger challenge. Convinced that potential bugs and flaws in open-source software get detected and rectified by developers of online communities, businesses typically integrate these codes into their systems without reviewing them. As GitHub, the leading platform with 73 million developer members, which is owned by Microsoft, explained in last year’s State of the Octoverse Report, the role open-source code plays can’t be overstated: “You would be hard-pressed to find a scenario where your data does not pass through at least one open-source component. Many of the services and technology we all rely on, from banking to healthcare, also rely on open-source software. The artifacts of open-source code serve as critical infrastructure for much of the global economy, making its security mission-critical to the world.”
Information security experts have already pointed out that trust in open-source software is somewhat misplaced. Although it rarely gets injected with malicious code, human error may leave flaws in it that can offer gateways to core corporate systems. Therefore, subjecting them to the level of scrutiny third-party software is normally exposed to is a great way to diminish the likelihood of sensitive data getting compromised. This is especially crucial given that only a meagre 17 per cent of organisations become aware of new open-source vulnerabilities within a day of public disclosures, which malicious actors don’t hesitate to act upon.
Tools enabling software supply chain visibility
The number of interdependencies between components of enterprise software defies a human’s ability to monitor them. Top open-source projects on Github, for example, can have thousands of contributors, and are at the same time dependencies for millions of repositories relying on them. BOMs (bill of materials) has been originally used in supply chains as an inventory of the raw materials, parts and components needed to manufacture a physical product. The Software Bill of Materials (SBOM), its digital counterpart – which vendors selling to US federal agencies are already required to provide as per President Biden’s Executive Order in May – has to include a comprehensive list of all the commercial and open-source software that a product comprises.
But having a 360-degree view of software components will not suffice. It’s equally important to understand how these components depend on each other to ensure that they all get the latest updates and patches critical to their security. Github’s Dependabot for example, which is designed to instantly patch vulnerabilities after their disclosure, is an ideal tool for making software more resilient.
Software that can enhance application security is also to play a key role in fending off cyber-threats in the future as, according to estimates, about 90 per cent of apps aren't tested for vulnerabilities during their development and quality assurance stages. Thankfully, there is also a wide range of application security testing tools, or ASTs (SASTs for static and DASTs for dynamic), while runtime application security protection (RASP), recognised by US non-regulatory agency NIST as a control to mitigate risk due to “insecure code and software supply chain vulnerabilities”, can detect and block computer attacks.
So, there are plenty of tools, many of them available at no extra cost – which means the ball is now in the regulators’ court: draft legislation that gives organisations the nudge to more widely implement these tried-and-tested controls is now needed.
DCMS’s recent initiative to boost the cyber-security of the UK's digital supply chains by considering mandating IT service providers to follow the National Cyber Security Centre’s Cyber Assessment Framework may be the first step in the UK in that direction. Watch this space.
Managing a sustainable supply chain with real-time insights
The past 18 months have done away with ‘just-in-time’ delivery, where shippers could plan loads weeks in advance and manufacturers could schedule multiple shipments to arrive on the same day. Instead, supply chains have been stretched to breaking point as businesses around the world try to keep things running while navigating material scarcity, shipping delays and labour shortages.
With these disruptions, though, many companies are learning how to be more nimble and rely on measured data rather than previously agreed-upon plans. As operational systems rebound from the challenges of Covid-19, empowered by this new ability to use real-time, measured data, there’s a tremendous opportunity to restore our supply chains to be not only more resilient but also more efficient and sustainable.
Efficiency has long been a goal of well-run operations, but sustainability is a newer goal for the world’s logistics managers. Product shortages and fluctuating fuel prices have long been a burden on our global supply chain, but when you add in climate-related challenges such as power outages in Texas or flash-flooding in New York, you get even more uncertainty. Logistics operators are under increasing pressure to not just work around the effects but also to address the root causes of climate change. In fact, according to a recent survey from Samsara and Wakefield Research, 91 per cent of fleet and operations professionals feel significant pressure is being put on their organisation to set and meet aggressive sustainability goals.
In addition to behaving more sustainably, supply chain operators are finding they increasingly need real-time data to report and measure their environmental footprint. Going into this year’s COP26 UN Climate Change Conference, we saw NGOs such as the Centre for Economic Policy Research calling for mandatory carbon disclosures for both public and private companies. The US Securities and Exchange Commission is working on rules that will require disclosures from public companies on their carbon emissions and operations risks from climate change. These disclosure and reporting requirements are pushing more companies to not just adopt tools to measure and report on their activities but also to require their upstream suppliers and vendors to ensure sustainability is considered as a core part of their operations.
Between changes in their operations and improvements in reporting, logistics companies are on the frontlines of tackling the problem of reducing emissions. The UN warns that unless global greenhouse gas emissions fall by 7.6 per cent each year between 2020 and 2030, the world will miss the opportunity to get on track towards the 1.5°C temperature goal of the Paris Agreement. With operations making up 60 per cent of the energy consumed in the US, our ability to bring this down even slightly with the use of real-time data, increased visibility and digitisation can have a significant environmental impact.
The growth and impact of sustainable transportation
Our customers run complex supply chains and they don’t look at sustainability in a silo, but rather as a piece of the larger connected operations puzzle. When real-time data collected from a company’s assets and equipment are combined with automation and smart analysis to help identify waste and inefficiencies, sustainability becomes an integrated part of how they operate.
As more companies look to align themselves with the UN’s Sustainable Development Goals, leaders want to see measurable sustainability benefits from purchasing technology solutions. You can’t improve what you can’t measure – which is why real-time data and visibility into sustainability metrics across the supply chain have become so critical. In the same survey from Samsara and Wakefield Research, 47 per cent of respondents said real-time data on their physical operations would make it easier to meet emissions targets.
The good news is that making significant improvements won’t require reinventing entire systems. Incremental changes in things such as driving behaviour to reduce harsh acceleration and braking or using digital documents to reduce the use of paper logs can make a difference. For example, Dohrn Transfer Company used insights from Samsara to increase fuel efficiency and save about 150,000 gallons of fuel, or over $500,000, per year.
Electrifying commercial transportation
While saving fuel is good, long term we will need to move away from non-renewable fuels. Logistics and transportation companies have the potential to significantly decrease global emissions if vehicles are electrified. In fact, the transportation industry makes up 29 per cent of greenhouse gas emissions, the largest share of any economic sector. Even switching to hybrid vehicles would make a meaningful difference, and fleets are adopting new technologies quickly. Samsara has already seen customers drive more than 160 million cumulative hybrid and electric miles in the past three years.
That said, the shift to a sustainable supply chain through the use of electric vehicles comes with new infrastructure challenges. While it takes minutes to fill the tank of a fuel-based vehicle, it may take hours to recharge an EV. But companies are creating fast-charging networks for electric vehicles, so drivers can recharge quickly during a mandated break. At the same time, large logistics depots are putting in charging stations that will top up a vehicle overnight, so it’s fully charged and ready in the morning.
For longer hauls, range anxiety will still be an issue at first, especially as heavier trucks transition to electric. One way to counter range anxiety is with advanced monitoring software that tracks each vehicle’s state of charge, plans ahead to ensure the truck can finish its route each day and monitors vehicles for unexpected low-battery situations so dispatchers can reroute a vehicle to a charger or back to base.
This electrification shift is starting to go mainstream with well-known companies deploying electric delivery trucks and whole cities – like Boston – electrifying their municipal fleets.
Real-time intelligence and resilience
This past year, we’ve seen more commercial transportation companies embrace sophisticated connected operations software that can help reduce fuel costs, provide new real-time flexibility and help them shift to more sustainable vehicles, such as EVs. This is a movement we anticipate will continue well into 2022 and beyond.
With many legacy systems running on 3G wireless networks that are slated to be shut down, we should see an even stronger push to newer, modern connected operations technologies in the coming year. An additional challenge with these older systems is that they lack true real-time visibility – data may refresh every few minutes or every hour, rather than every few seconds. For today’s supply chain, real-time visibility means resiliency. With better intelligence on where vehicles are located or how truckers are driving, we not only save fuel and time, but we can also respond intelligently to shipping delays or unexpected challenges. Of course, there will always be last-minute changes to supply chains that cause ripples of inefficiency to slow down operations. While the best shippers plan for as many scenarios as they can, the more real-time data they have, the better they can manage the realities of this uncertain industry.
When we look back at 2020 and 2021, we’re going to see a lot of lessons learned about creating more resilient and sustainable supply chains. We’ve seen challenges in tracking shipments, coordinating deliveries and getting products from one place to the other. But we’re also seeing an intelligent software revolution in how transportation is managed – a revolution that will make a big difference for our environment. Businesses, consumers and regulators alike all want to make supply chains more sustainable. Samsara’s greatest impact will come from continued innovation to build technology solutions that help our customers to meet these goals.
by Alexander Stevenson, Vice President Product Management, Samsara
INDUSTRY VIEW FROM SAMSARA
ESG investing has a blind spot that puts the $35 trillion industry’s sustainability promises in doubt: Supply chains
If you own stocks, chances are good you have heard the term ESG. It stands for environmental, social and governance, and it’s a way to laud corporate leaders who take sustainability – including climate change – and social responsibility seriously, and punish those who do not.
In less than two decades since a United Nations report drew attention to the concept, ESG investing has evolved into a US$35 trillion industry. Money managers overseeing one-third of total U.S. assets under management said they used ESG criteria in 2020, and by 2025 global assets managed in portfolios labeled “ESG” are expected to reach $53 trillion.
These investments have gained momentum in part because they cater to investors’ growing desire to have a positive impact on society. By quantifying a company’s actions and outcomes on environmental, social and governance issues, ESG measures offer investors a way to make informed trading decisions.
However, investors’ trust in ESG funds may be misplaced. As scholars in the field of supply chain management and sustainable operations, we see a major flaw in how rating agencies, such as Bloomberg, MSCI and Sustainalytics, are measuring companies’ ESG risk: the performance of their supply chains.
The problem with ignoring supply chains
Nearly every company’s operations are backed by a global supply chain that consists of workers, information and resources. To accurately measure a company’s ESG risks, its end-to-end supply chain operations must be considered.
Our recent examination of ESG measures shows that most ESG rating agencies do not measure companies’ ESG performance from the lens of the global supply chains supporting their operations.
For example, Bloomberg’s ESG measure lists “supply chain” as an item under the “S” (social) pillar. By this measure, supply chains are treated separately from other items, such as carbon emissions, climate change effects, pollutants, and human rights. This means all those items, if not captured in the ambiguous “supply chain” metric, reflect each company’s own actions but not their supply chain partners’.
Even when companies collect their suppliers’ performance, “selective reporting” can arise because there is no unified reporting standard. One recent study found that companies tend to report environmentally responsible suppliers and conceal “bad” suppliers, effectively “greenwashing” their supply chain.
Carbon emissions are another example. Many companies, such as Timberland, have claimed great successes in reducing emissions from their own operations. Yet the emissions from their supply chain partners and customers, known as “Scope 3 emissions,” may remain high. ESG rating agencies have not been able to adequately include Scope 3 emissions because of a lack of data: Only 19 per cent of companies in the manufacturing industry and 22 per cent in the service industry disclose this data.
More broadly, without accounting for a company’s entire supply chain, ESG measures fail to reflect global supply chain networks that today’s big and small companies alike depend on for their day-to-day operations.
Amazon and the third-party-supplier problem
Amazon, for example, is among ESG funds’ largest and favorite holdings. As a company bigger than Walmart in terms of annual sales, Amazon has reported emissions from shipping that are only one-seventh of Walmart’s. But when researchers for two advocacy groups reviewed public data on imports, they found only about 15 per cent of Amazon’s ocean shipments could be tracked.
In addition, Amazon’s figure does not reflect emissions generated by its many third-party sellers and their suppliers who operate outside the U.S. This difference matters: Whereas Walmart’s supply chain relies on a centralized procurement strategy, Amazon’s supply chain is highly decentralized – a large percentage of its revenue comes from third-party suppliers, about 40 per cent of which sell directly from China, which further complicates emissions tracking and reporting.
Another important ESG metric concerns consumer protection. Amazon prides itself as “Earth’s most customer-centric company.” However, when its customers have been injured by products sold by third-party sellers on its platform, Amazon has argued that it should not be held liable for the damage, because it functions as an “online marketplace” matching buyers and sellers. Amazon’s foreign third-party sellers are often not subject to U.S. jurisdiction so can’t be held accountable.
Yet major ESG rating agencies do not appear to reflect the supply chain implication on customer protection when measuring Amazon supply chain performance.
For example, in 2020, MSCI, the largest ESG ratings agency, upgraded Amazon’s ESG rating from BB to BBB, reflecting its strength in areas such as corporate governance and data security, despite its consumer liability risk.
Other countries are adding pressure
Currently there is no unified reporting standard, so different companies may cherry-pick certain ESG performance measures to report to boost their sustainability and social ratings.
To improve consistency, the next step would be for ESG rating agencies to redesign their methodology to take into account what may be environmentally harmful and unethical operations across the entire global supply chain. ESG rating agencies could, for example, create incentives for companies to collect and disclose their supply chain partners’ activities, such as Scope 3 emissions.
In June 2021, the German Parliament passed the Supply Chain Due Diligence Act, which will become effective in 2023. Under this new law, large companies based in Germany will be responsible for social and environmental issues arising from their global supply chain networks.
This includes prohibitions on child labor and forced labor, and attention to occupational health and safety throughout the entire supply chain. Those who violate the law face a fine of up to 2 per cent of their annual revenues.
The European Union’s new Sustainable Finance Disclosure Regulation, which went into effect in March 2021, adds pressure in a different way. It requires funds to report details on how they integrate ESG characteristics into their investment decisions. That has led some money managers to drop the phrase “ESG integrated” from some of their assets, Bloomberg reported.
Without similar laws in the U.S., we believe ESG rating agencies could fill an important gap. To be sure, surveying a company’s entire supply chain’s ESG performance is far more complex. Yet by tying all the ESG dimensions to a company’s supply chain end-to-end operations, rating agencies can nudge corporate leaders to be responsible for actions across their supply chains that would otherwise be kept in the dark.
Tinglong Dai, Professor of Operations Management & Business Analytics, Carey Business School, Johns Hopkins University and Christopher S. Tang, Professor of Supply Chain Management, University of California, Los Angeles
The importance of the supply chain in today’s experience economy
Customer demands are driving a tighter integration of supply chain technology data
Digitisation has been transforming the B2C buying process for years, while in B2B a preference for the traditional face-to-face sales model has remained in place. But the continued development of digital capabilities, coupled with the evolution of the buying demographic to a millennial, more digitally receptive audience, has started to challenge the status quo.
Gartner research shows that 44 per cent of millennials prefer no sales rep interaction at all in a B2B setting. Add to that the ongoing impact of the Covid-19 pandemic, and we start to build a better picture of why the past 18 months have seen a gradual rise in B2B businesses moving sales online. It sounds simple, but is it?
B2B buyers want an improved experience through the channel they prefer without completely losing the benefits they had from transactions in the more traditional face-to-face model. The ‘aftermarket’ is also becoming a fundamental component of the pre-sale – something less relevant in B2C.
Clients want to do more through a single interface – personalise, configure, order, subscribe, track, maintain and reorder. It’s a new world. So, in the experience economy, how does a manufacturer or distributor change the direction of the ship to win like they were before?
What becomes fundamental is that businesses need to understand that the management and visibility of the supply chain is essential for delivering the end-to-end customer experience. While the technology is paramount to achieving this, getting the strategy and organisational change right to ensure it’s delivered effectively is just as critical.
This is something digital consultancy Enigen is heavily focused on for their clients. ‘This isn’t about giving customers some data and the ability to buy online, and removing salespeople,’ says Managing Director, Alex Love. ‘It’s about people and technology working together in a new world – the people are the information givers, the evangelists, and the technology delivers the service with speed and accuracy.’
Self-service portals are helping to deliver this in a uniformed way, using technology that’s modular – enabling you to create an entirely customised portal from building blocks that match your requirements. Those building blocks come together to deliver a tailored offering where the journey and the experience are the same whether you’re buying, consuming or servicing – all in the same place. It’s a one-stop shop for the buyer and you as a provider that incorporates product information, order management, logistics, manufacturing, and maintenance, through an e-commerce interface with rich, valuable content as and when it’s needed.
Enigen helps organisations adjust to this new way of working, which aside from purely delivering an enhanced customer experience also drives better operational efficiencies and margin management. But while the conceptual and organisational aspect is key, it can’t be delivered without it being underpinned by technology that is designed to work together, modularised, and industry-leading with the breadth that Oracle has. ‘That’s why Enigen works with Oracle on everything we do,’ adds Love. ‘The world changes rapidly, but Oracle's technology is robust, scales, and is the broadest in capability across CX and supply chain management in the market. It de-risks everything for the client and allows us to focus on delivering the change.’
‘Oracle has a fully integrated suite of applications across the enterprise, which includes supply chain and advertising and customer experience technology,’ says Oracle’s Vice President for Mid-Market Applications for Western Europe, Andre Robberts. ‘It allows us to contribute to our customers’ success in a way that is completely unrivalled. Enigen’s experience of what the market is doing, and the technology, really puts our relationship at the forefront of that digital change. It’s helping clients sell and serve and empower their own clients online.’
This was a sentiment echoed by Oracle’s Sales Director for Supply Chain Management Western Europe, Richard Buxton. He commented: ‘The enterprise space is getting disrupted and legacy technology is slowing down competitiveness. Enigen’s experience of packaging this up with our connected solutions is invaluable for B2B businesses who will need vast amounts of data and real-time information around complex orders, product availability and ongoing maintenance.’
To begin your journey, get in contact with Enigen at email@example.com
INDUSTRY VIEW FROM ENIGEN
Failure to supply will always trump cost-saving targets
The economic environment is changing so quickly it’s hard to keep pace, but you can be sure in our connected world that the number of disruptions to supply chains will rise. Trade relationships are more volatile, and protectionist measures more of a threat around the world from China to Europe. The pandemic has given supply chains the extra focus they deserve, and lessons are being learnt, but challenges continue. For example, as economies around the world open up at different speeds, virus outbreaks at key ports are still affecting suppliers - all the way down the supply chain. China’s third-biggest port, Ningbo-Zhoushan was shut for 10 days last month when one worker contracted the virus and a wave of shutdowns have affected other ports too. Supplies from food to Christmas goods are being threatened. So, what should companies be doing now?
I would say build resilience. There has been too much focus on cost savings in recent years, with just in time supply chains, and reliable sole suppliers making cost efficiencies more straightforward. The most expensive lesson you’ll ever learn is when a vital supply of goods doesn’t turn up, and your business subsequently grinds to a halt because of a previously unknown problem. Failing to supply a customer is a far greater issue for an organisation than not meeting cost savings targets. This has been the experience for many, and that’s why companies are looking to digitalise their supply chains to bolster transparency across their supply bases so any red flags such as transportation difficulties or squeezed supplies can be dealt with swiftly and efficiently.
More sophisticated and targeted technology solutions can meet this need, and give businesses access to more information, greater efficiencies in inventory and operations management, reduced costs, and even more support in product development. Take this one step further into cyber-physical systems and a company’s physical assets can be linked to computational capacity, and machines can communicate with each other, making quicker and better decisions - without human intervention. The stuff of the future, or nightmares maybe, but in terms of competitive advantage, companies are ahead of the game with these systems in place and others will be driven towards transformation in the next few years if they don’t go willingly now. Reacting with more agility when disruptions hit will be a basic expectation from customers, consumers and shareholders.
This is not about the latest fashionable tech trends, though 3D printing, artificial intelligence and robotics do have a certain fascinating quality about them, but about keeping up with transformations in business and supply chains. It’s not a quick fix either. Just-in-time supply chains took decades to finesse, and digital strategies will be constantly evolving along with other strategies such as multiple sourcing to mitigate sole supply problems, or customs expertise to manage the challenges of Brexit.
In this testing environment, it looks like many companies are heeding the call for more digitalisation. We found that 95 per cent of those companies surveyed last year, had adopted at least one digital technology in recent years such as cloud computing or managing their vast stores of data more efficiently; even if 40 per cent of survey respondents felt the costs of digital investment were prohibitive for now.
But at what cost, if the investment is not forthcoming? Hampered supply chains, shortages, increased risk and ensuing chaos is sure to follow and delayed payment resulting in the loss of small businesses from our economy. If we are to react with speed to unforeseen disruptions and avoid modern slavery or another horsemeat scandal, we must change how supply chains work right now and implement digital solutions to power Industry 4.0. Start with business strategy, with an eye on true value and not just cost and a more in-depth analysis of supply chains is a good start, along with training staff to fill any gaps in digital capability.
by Malcolm Harrison,CEO, CIPS Group
INDUSTRY VIEW FROM CIPS GROUP
How to make fragile global supply chains stronger and more sustainable
In 2019, global supply chains moved more than US$19 trillion in exported goods. The production and sale of many items we need and use — including toys, clothes, food, electronics and home furniture — depend on global supply chains.
For most of us, supply chains are no longer an abstract concept. The COVID-19 pandemic raised our awareness about the interdependence of our economic systems. We now understand the many ways these chains directly shape and impact our lives.
The pandemic has also revealed the fragility of global supply chains as U.S. President Joe Biden and others warn of the impact on the world economy of continuing supply-chain bottlenecks.
A supply chain is a set of organizations — like suppliers, manufacturers, distributors and retailers — that work together to provide end customers with a specific product or service.
The supply chain becomes global when the product or service crosses multiple international boundaries. Global supply chain organizations are directly and indirectly dependent on each other.
Supply chain problems cascade
Global supply chains have conventionally been focused on achieving financial efficiency above all else. The result is messy and fragile global supply chain systems.
In practice, the decisions made and actions taken by each organization affect the performance of the entire supply chain. A problem at any point feeds other problems at different stages of the chain.
Semiconductor shortages are disrupting the automobile industry. Meanwhile, the cost of moving a container from China to the west coast of North America is estimated to have increased by 650 per cent since before the pandemic.
Race to the bottom
The pursuit of financial efficiency has shifted global production to low-cost regions, increased the flows of freights, caused port congestion and eroded the resilience of supply chains. Cutting costs above all else became a race to the bottom. It resulted in global economies with limited redundancies, contingencies and safeguards.
Fragile global supply chains are exacerbated by the fragmentation of decision-making processes, limited collaboration between buyers and suppliers and transactional management. There is no obvious centralized business or authority commanding and controlling these chains. Instead, several companies co-operate and compete for the value created.
Global supply chains also account for large contributions to greenhouse gas emissions and have an impact on air, land and water biodiversity and geological resources. A typical company’s supply chain is responsible for 80 per cent of its greenhouse emissions and more than 90 per cent of its contribution to air pollution generated in the production and distribution of a consumer product.
One billion metric tonnes of emissions could be saved if key suppliers to 125 of the world’s biggest purchasers increased their renewable energy input by 20 per cent.
The impact of supply chains extends to society. For example, the problem of forced labour is well-documented in today’s global supply chains, resulting in several controversies about modern slavery. More than 24.9 million people are documented to be working in slavery conditions in these chains.
Businesses in global supply chains are facing increased pressure from different stakeholders to adopt sustainability and disclose their impacts. A Dutch court recently ordered Shell to reduce its carbon emissions by 45 per cent from its 2019 levels. In the future, supply chain disclosure and transparency will become the norm of good governance.
Robust supply chains in demand
The world needs robust supply chains that are founded on sustainability, collaboration, trust, transparency, visibility and diversification of supply. That new model of supply chains could help combat economic fragility, climate change and inequality.
Global supply chains connect businesses and markets across all layers of economic, social and ecological systems. That means customers, governments and other stakeholders should encourage the emergence of robust and sustainable supply chains.
Responsible decision-making within supply chains has the potential to contribute to economic progress and societal well-being while maintaining the environmental integrity of the planet. Our preliminary research on sustainable blueberry supply chains, to be published soon, indicates that sustainability contributes to resilience.
Supply chain management is a “team sport.” Current research provides ample evidence that collaboration benefits global supply chains. Buyers and suppliers can enjoy higher service levels, more product availability and significant reductions in costs if they work together.
More preliminary research we’ve conducted on personal protective equipment supply chains in British Columbia, also to be published in the weeks to come, shows that collaboration between the supplier and customer reduces costs and risks by at least 17 per cent. Effective collaboration contributes to supply chain resilience and helps avoid future disruptions.
Building effective collaboration means rewarding responsible and long-term management of global supply chains and discouraging short-lived gains. Global supply chains should promote sharing the gains and the pains among buyers and suppliers.
Incentives need to be created to encourage this collaboration. Digitization of the economy will also contribute to better transparency and traceability in global supply chains.
Nonetheless, moving towards robust global supply chains isn’t straightforward because historically, they’ve been focused on short-term rewards. For decades, we’ve justified the development of fragile and fragmented global supply chains in the name of economic growth and financial efficiency. This may have provided short-term benefits, but it has created our current supply chain crisis.
Will that crisis reveal a way forward?
Adel Guitouni, Associate Professor, International Business, University of Victoria; Cynthia Waltho, Postdoctoral Research Fellow, Business, University of Victoria, and Mohammadreza Nematollahi, Postdoctoral Research Fellow, Business, University of Victoria
Five ways to create a better world through supply chain
Supply chains have an extraordinary opportunity to solve problems and create brighter futures for people, organisations, communities and economies.
Supply chains shape the world in which we live, having an ethical, economic and environmental impact on every person and place on Earth. And as global supply chains become more technologically advanced, complex and interconnected, the risks and opportunities continue to escalate.
Most of today’s consumers, in all corners of the world, have limited knowledge about how supply chains work, the ways in which their potential is advanced by the latest innovations, and the associated risks and opportunities they present. The future of supply chain begins with shining a light on the countless ways in which the industry affects people and the planet – and then taking action to create a better world. Here are five essential initiatives:
1. Frontier and humanitarian supply chains. By mobilising supply chain communities, skilled leaders and visionary partners, we can create opportunity and find solutions to critical problems. This effort must involve advancing supply chain knowledge and reliability in underserved markets, supporting localised capability-building efforts and furthering supply chain maturity models globally to ensure last-mile product availability.
2. Engaging students, STEM and career awareness. When the supply chain leaders of the future are engaged and educated, they will be better equipped to bring prosperity to countless lives. Those in the supply chain must be committed to the advancement of science, technology, engineering and mathematics (STEM) subjects in schools as a pathway to future opportunity in rewarding supply chain careers, as well as the creation of effective global networks.
3. Workforce development. Strengthening networks also requires addressing the supply chain skills shortage. It’s essential that we attract more people to the industry and provide the education and training necessary for career success. As supply chains grow more complicated, global and sophisticated, organisations face a mounting need for skilled professionals. Preparing individuals for these opportunities not only helps close the vast supply chain talent gap, but also provides high-quality, rewarding jobs and a meaningful path forward.
4. Diversity and inclusion. Diverse and inclusive organisations are better able to drive long-term success and improve the economies in which they operate. Furthermore, supply chain innovation depends on applying the broadest set of perspectives to business challenges. By supporting and advancing diversity and inclusion initiatives, we can foster professional environments that value equality and individual differences while inspiring people of all profiles and backgrounds to build better supply chains.
5. Consumer awareness. The products and services we depend on every day are connected to us by an often-invisible network. It fuels prosperity and makes critical resources accessible and affordable. At the same time, however, many of the millions of supply chain workers face labour rights violations, unsafe working conditions, discrimination and corrupt sourcing practices. By increasing awareness, consumers can be educated and empowered to make better choices, and businesses will come together around a shared concern about how supply chains can be improved in order to create a better world.
There is a clear and significant collaborative opportunity to advance public health and safety, improve global operations, and foster the overall advancement of end-to-end supply chain management. This is the future of supply chain.
Learn more about how ASCM is working to create a better world through supply chain at ascm.org.
Abe Eshkenazi, CSCP, CPA, CAE, is the chief executive officer of the Association for Supply Chain Management (ASCM).
INDUSTRY VIEW FROM ASCM
Smart labels and allergy sensors – how to make sure the future of food is ethical
Imagine you’re shopping in your local supermarket. You pull out an app on your phone and scan a product. Instantly, it flashes with a personalised risk rating of how likely it is to set off your allergies.
In the next aisle, smart packaging on a ready meal updates you in real time with the carbon footprint of your food’s journey. But once you take it home, the label changes to display a live warning: allergens were detected unexpectedly in the production factory, and your food may have to be recalled.
How much extra energy would be used to power such a system? Who makes sure the app is taking care of your personal medical information? And what if an accidental alert meant you were told to throw away your food when it was perfectly edible, or resulted in a small business being blacklisted by supermarkets?
These are just some of the questions that will require our attention if we manage to connect up the vast amounts of data flowing through the food system by storing and sharing it in systems called data trusts.
Food production is the largest sub-sector in UK manufacturing, and currently the subject of much scrutiny. In the face of climate change, there is increasing pressure to make supply chains more efficient and cost-effective, as well as to promote sustainability and reduce waste: objectives that new technologies are helping to achieve.
These technologies will allow us to collect data on our food like never before: from sensors which track every moment of a crop’s life cycle; to instant temperature readings on chilled or frozen meat deliveries; to detailed records of what moves on and off supermarket shelves and when.
Sharing this data between different parts of the food supply chain, which may involve many organisations, could bring enormous sustainability benefits: especially if we can then use advanced technologies such as AI prediction and recommendation algorithms to pinpoint customer needs and reduce waste even further.
Many organisations are wary about this data sharing, especially if it might reveal private business information. This is where data trusts come in. The idea is that their trustworthy infrastructure, bolstered by strict policy and legal agreements, will allow companies to be sure that private data will not be seen by, for example, their competitors. But data trusts are likely to also present their own set of unforeseen problems.
Our working group assessing data trusts, funded by the Internet of Food Things project and the AI3SD project, is made up of experts from many different specialities including computer science, law and design. Before we could start thinking about data ethics, we had to make sure we all understood each other’s language.
Our first task was to create a glossary of terms to tease out the ways in which we use language differently. For example, when we talk about AI, we may be imagining the super-smart intelligence of science fiction, new forms of machine learning that do tasks we cannot, or simply the algorithms that already support many of our day-to-day activities.
Building a common understanding helped us move onto analysing the ethics of data trusts: which do not yet currently exist. By the time they do, it may be too late to correct any major problems they cause.
This is an example of the “Collingridge dilemma”. This philosophical quandary suggests that in the early stages of a new technology, not enough is known about its potentially harmful consequences. By the time these consequences become clear, it may be too expensive – or too late – to control the technology.
One way to get around this is to map out these harmful consequences by imagining, in great detail, what a future which includes these technologies might look like. This is what we do in the research method called “design fiction”, where we create real objects representing a fictional future.
Some of the things we’ve created include minutes from a board meeting that never took place, a clip from a documentary reporting on something that hasn’t happened, a website showcasing a non-existent allergy alert app, and smart packaging that simulates the shopping experience depicted earlier.
In creating these, we tried to consider all the different people who might be positively or negatively affected in the future world to which our objects belonged: including not only decision-makers at large supermarket chains but also smaller suppliers, consumers and workers.
The next step was to use these objects to delve even deeper into what challenges they might present. We used a set of cards called the Moral-IT deck, which were developed to evaluate the ethics of technology.
These cards helped lead a discussion with experts about possible harms created by the use of new food systems. For instance, we considered whether smaller food businesses might be unfairly excluded from supermarkets due to not being able to afford the myriad of sensors needed to hook their products up to AI-enabled prediction systems.
Although we focused on the food sector, these methods can be carried over to analyse other areas where new technology is being introduced, such as adding smart bins (that sense when rubbish collection is needed) to public spaces. Our next step is to use what we’ve learnt to create a formal framework guiding people towards informed decisions around how to ethically introduce new technology.
We hope that, through using new, creative methods to analyse and imagine future technologies, we can help people create technological systems that are fairer and more ethical.