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Supply Chain Innovation Protects Against Natural Disasters

By Samuel Greengard

Innovation in global supply chain management has emerged as a critical issue for industry and society, as the nations of the world grow increasingly interdependent through international trade. According to the World Trade Organization (WTO), merchandise exports world-wide totaled $15.46 trillion in 2016.1 But that interdependence creates supply chain risks: Extreme weather events and other natural disasters were ranked the top two global risks in the World Economic Forum’s Global Risks Report 2018, a survey of top experts from business, government, academia, and non-profits.2

Amid an uptick in volcanic activity, earthquakes, droughts, hurricanes and other deadly storms – including events such as the deadly 2017 hurricanes Irma and Maria in the Caribbean – innovating to construct a more resilient framework for global supply chain management is paramount. Natural disasters introduce problems for businesses and, often, at least a short-term contraction in an economy’s output, in addition to potentially dramatic effects on people’s lives, leading to social instability.3

 

However, recent information technology (IT) advances provide ways to improve supply chain innovation and boost supply chain resiliency. Big data, cloud computing, the Internet of Things (IoT) and artificial intelligence (AI) can allow organizations to act and react to natural disasters and other events faster and more effectively. Among other things, these technologies can aid in early warning, identify fast-changing conditions, improve the monitoring of goods, and help businesses adapt and reroute shipments as needed.

 

Global Supply Chain Management Enhanced by New Technologies

 

Natural disasters can introduce business and supply chain problems in a couple of key areas: they can destroy physical transport infrastructure; and they can disrupt computing and telecommunications networks designed to manage and automate processes supply chain processes.4 Yet, the right IT systems and the right data, applied in innovative fashion to supply chains, can increase resiliency, improve flexibility, and greatly reduce the risk of major disruptions and interruptions during extreme weather or other natural disasters.

 

At the center of global supply chain innovation is big data, which taps larger and more robust data sets to solve complex challenges. As researchers, analysts and data scientists assemble more granular and detailed information about activities – such as predicting storms and determining risk levels, vulnerabilities, and understanding how the flow of goods is disrupted during an event – it’s possible to develop far more detailed assessments and construct more accurate models for addressing natural disasters.

 

Today, much of this data streams in from sensors in mobile phones, built into machinery and attached to shipments of goods and products. The IoT makes it possible to capture and assemble data that would have gone undetected in the past. These IoT sensors include: temperature, pressure, humidity, motion, vibration, chemical, optical, flow, sound, visual, electrical, GPS, speed and many others.

 

IoT sensors can be used to predict and detect natural disasters, such as earthquakes5 or severe storms,6 and to monitor commodities, goods and products in real-time as they move from a manufacturing facility to retail stores or from farm to supermarket.7 Innovative IoT technologies can boost a supply chain’s visibility, identify logistics problems, spot storage or quality control issues, and enhance flexibility. Armed with data, a manufacturer or shipper can reroute a shipment by rail or sea if roads are closed, and tap additional labor resources in specific locations.

 

Other technologies are also contributing to supply chain innovation. Clouds and so-called “fog computing” platforms facilitate the flow of data across companies and throughout a supply chain. More advanced analytics tools, including those that rely on AI to detect anomalies and patterns, can also aid in predicting disruptions, detecting risk probabilities, understanding how to adapt to changing transportation and logistics conditions, and how to innovate more resilient and robust supply chains.

 

A New Era of Supply Chain Innovation Emerges

 

A study conducted by online publication Digital Supply Chain found that 47 percent of executives view AI and machine learning as forces of disruptive innovation.8 In fact, innovations such as machine learning algorithms are already in use by some companies’ supply chains to analyze trillions of daily events from sensors, satellites, radar, video cameras and smartphones in order to track the real-time movement of shipments. These systems calculate in real-time the estimated time of arrival by factoring in weather conditions, port congestion and natural disasters.9 Other emerging IoT and AI tools use social media, newsfeeds, weather forecasts and historical data to boost predictive capabilities, including for weather and storms.10

 

Hokey Min, James R. Good Chair in Global Supply Chain Strategy at Bowling Green State University, predicts that massive supply chain innovation and automation will result from a growing convergence of digital technologies.11 This includes: transportation network design, purchasing and supply management, and demand planning and forecasting. Researchers predict that the IoT will allow organizations to create far more flexible and dynamic capabilities – in some cases leading to autonomous supply chains. These capabilities will aid in times of disaster, but also introduce overall efficiency gains while helping companies better meet the needs of customers and partners.12

 

The

Takeaway:

Global supply chain innovation is an important issue for business. An uptick in natural disasters – and the growing intensity of these events – is a critical factor driving development of next-generation supply chains that are smarter and more automated. These systems will focus on more advanced frameworks that incorporate the IoT, clouds and AI. The result is expected to be a more efficient and resilient supply chain that’s more resilient when faced with extreme weather events and other natural disasters.

Samuel Greengard

The Author

Samuel Greengard

Samuel Greengard is a veteran journalist who has contributed to many business and technology publications. He is also the author of two books: The Internet of Things (MIT Press, 2015) and the AARP Crash Course in Finding the Work You Love: The Essential Guide to Reinventing Your Life (Sterling, 2008).

Sources

1. “Annual Report, Chapter 3: World trade and GDP growth in 2016 and early 2017,” World Trade Organization; https://www.wto.org/english/res_e/statis_e/wts2017_e/WTO_Chapter_03_e.pdf
2. The Global Risks Report 2018, World Economic Forum; http://www3.weforum.org/docs/WEF_GRR18_Report.pdf
3. Ibid.
4. "The Impact of Disasters on International Trade," World Trade Organization; https://www.wto.org/english/res_e/reser_e/ersd200604_e.pdf
5. “The Quake-Catcher Network: Citizen Science Expanding Seismic Horizons,” GeoScience World; https://pubs.geoscienceworld.org/ssa/srl/article-abstract/80/1/26/143483/the-quake-catcher-network-citizen-science?redirectedFrom=fulltext
6. “MDEEP,” International Centre for Climate Change and Development; http://www.icccad.net/mdeep/
7. “New IoT sensors allow companies to monitor shipments in real time,” TechRepublic; https://www.techrepublic.com/article/new-iot-sensors-allow-companies-to-monitor-shipments-in-real-time/
8. “Artificial Intelligence and Future Supply Chains,” Digital Supply Chain; https://www.supplychaindigital.com/scm/artificial-intelligence-and-future-supply-chains
9. “What We Do,” Transvoyant; https://www.transvoyant.com/what-we-do/
10. “Watson Supply Chain,” IBM; https://www.ibm.com/customer-engagement/supply-chain
11. “Artificial intelligence in supply chain management: Theory and applications,” International Journal of Logistics; https://www.researchgate.net/publication/247523024_Artificial_intelligence_in_supply_chain_management_Theory_and_applications
12. “Five Ways the Internet of Things Will Benefit the Supply Chain,” Gartner; https://www.gartner.com/smarterwithgartner/five-ways-the-internet-of-things-will-benefit-the-supply-chain-2/

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