Data has long been a vital part of trade and logistics, but harnessing this information and using it productively can be a challenge. Incumbent solutions provide access to more data than ever, helping to track the many millions of materials and products transported around the world at any given time. However, as the demand for greater efficiency and transparency increases, companies are starting to explore new technologies in order to gain greater insight into increasingly complex global supply chains.
International shipments can often involve several hundred interactions spread across tens of different parties. Yet, “most companies have only limited visibility and insight into where all their products are at any given time”, says a 2017 supply chain report by Ernst & Young.
According to a 2017 survey (German) by Hermes, only 20% of companies in Germany currently use a real-time digital supply chain. Yet 80% of those surveyed would like greater transparency to react quicker to disruptions, improve delivery quality and boost efficiency. After all, the supply chain isn’t just a way of tracking products, it can be a means of gaining an advantage over competitors.
When devices can talk
One potential solution lies with the power of the Internet of Things (IoT). By enabling many different systems and devices to ‘talk’ via embedded software and sensors, shipments can be traced in real time across the supply chain and data shared with all parties involved. One way of doing this is via radio-frequency identification (RFID) tags, which have become more prevalent in recent years. These tags can track materials without the need for manual input.
RFID is not without its flaws, however, namely cost, battery life and reliability. One alternative currently being tested by tyre manufacturer Michelin provides freighters with an affordable, real-time geolocation service of their containers at any point. It hopes to bring operational value by reducing lead-times and providing alerts about delays.
IoT can add further capabilities to products and containers, making them more intelligent and helping combat common challenges for the supply chain, from theft to damage to operator error. Temperature and humidity tracking can reduce wastage of perishable or environmentally sensitive products, for example; other sensors may record tampering or monitor vibrations and shocks for fragile goods. In the event of a problem, replacements can be ordered immediately, cutting down delays.
AI: searching for patterns
Thanks to greater computing power, machine learning and artificial intelligence can discover valuable patterns among the vast amounts of supply chain data, helping organisations make smarter planning decisions.
Algorithms can help pinpoint particularly successful or unsuccessful processes, giving greater insight into factors such as inventory levels, demand forecasting, supplier quality or even last-mile transportation management. These algorithms can be used to analyse historic journeys and real-time data to more accurately estimate delivery times and optimise routes based on local conditions, or even assess performance of drivers.
The power of blockchain
One recent technological innovation that could revolutionise supply chain management is blockchain. Essentially a distributed, digital ledger, the very nature of blockchain suggests it could be well-suited to increasing efficiency and transparency of supply chains.
By logging every transaction in the blockchain, it would ensure an indisputable record of authentic information such as location, price, date and quantity. Anyone involved in this or future transactions would have access to the same record and could trace every item to its place of origin. Records cannot be manipulated or erased, increasing trust and facilitating collaboration between different parties in the supply chain. Rules and regulations surrounding ethical sourcing will become easier to enforce – important for compliance departments, regulators and consumers.
Blockchain is already being integrated by companies across multiple industries. Walmart, for example, uses it to trace supplies of pork in China, registering the origin of each piece of meat and its sell-by-date; mining company BHP Billiton uses it to track minerals analysis carried out by external parties. According to Ernst & Young, this is just the beginning: “We expect to see significant strategic transformations and fairly quick tactical returns as these solutions gain traction.”