Supply chain safety or the genetic code of everything

In a recent Forbes article we could read that the CDC estimates that approximately one in six Americans get sick each year from foodborne diseases, leading to roughly 3,000 deaths. This is well in line with the horrifying stories of the milk powder scandals and 300,000 thousand affected babies. The news about shortcomings and effects of irresponsible behavior in respect to the supply chain is taking its toll. Apparently is our knowledge about the origin and the risks of materials, parts and products limited. What can be done to better protect our lives?

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Authenticity is the first step. In order to ensure authenticity, safety, security and quality of the food we eat and the products we use, there is not only the one solution needed but a bundle of protective measures. In addition to the obvious standards and efficient certification processes, we are in need of pragmatic laws and regulation. We also require reliable product tracing technology allowing the seamless follow through and detailed information about the products – about the score against the standard – and insights in the organisations involved; these can be transportation companies, traders and manufacturers. The effective protection requires data sharing, and maybe the need to establish an independent and efficient data market.

The ultimate protection of our health requires the genetic code of everything!

What we need is the full set of information of each and every product – the unique product fingerprint which can be compared with the database of safe practices. We need the measurement of truth, the proof of compliance with standards, laws and regulations. Imagine that all products we consider buying carried the QR code providing pre-checked information, including the origin, the quality and the manufacturing process. Imagine that through the internet every smart phone user would be able to retrieve the specific information about the meat we eat, the soap we love, and the paint used in the offices, the apartments, and the public buildings we are living in or we are visiting.

Total Supply Chain Visibility: a vision in the making?

Governments and organisations like the Consumer Goods Forum are working to develop and share best practices. The United States passed the Consumer Product Safety Improvement Act (CPSIA) to establish safety standards and requirements for children’s products. The supplier certifications accepted by the Global Food Safety Initiative (GFSI) aim at delivering safe food to citizens worldwide. The private sector plays its role too. Large companies help small farmers to fulfill requirements. There are around 700 global certification programmes. Probably too many, creating complexities which might slow down processes and cause unnecessary costs.

Laws and regulations have been put in place elevating traceability beyond just a value-added to the supply chain. In the European Union traceability has been obligatory for all businesses in the food chain since January 2005. In the United States of America, the Bioterrorism Act came into effect for larger companies in 2005 and for smaller players in 2006, with similar requirements regarding records to identify previous sources. Traceability becomes the new standard in the modern supply chain.

Most companies are mapping the parts of the supply chain under their control. However, the exercise needs to go beyond the borders of direct responsibility and control. We need visibility of the whole flow. Starting upstream at the mines and fields, going further along the various steps of manufacturing and assembling of products or the processing of food down to the buyers and subsequent cycles of usage. Unfortunately, in the eye of catastrophes such as the salmonella outbreaks companies sometimes appear ill-equipped to respond quickly.

With the new age of digitisation, with the emergence of sensors in almost everything – from electronics and vehicles to cloth and wallpaper governments, organisations and companies can gather and compile enormous quantities of data. More importantly the information can be transmitted to the internet where various applications can enrich, analyse, organise, and store the records. Through product identification, unique tracking numbers and labeling, we are able to link materials, parts, products and food back to specific data relating to the production, and distribution. Through the new technologies we have access to the entire cycle history. Held available in internet platforms, users can swiftly and easily retrieve this information by smart devices like phones, watches and other wearables. The proof of traceability might soon be the minimum standard for doing business in the digital age.

Where are the hurdles? Traditionally, individuals and companies struggle to exchange information and data. Furthermore, there are standardisation gaps and security concerns. Privacy protection is a challenge too. One solution might be a data market. Similar to the stock exchange this place of clear rules and supervision would allow to safely and swiftly exchange and monetise the data gathered or produced by the different parties. The data market would be an incentive to generate and share even more data.

There is much to gain!

Beyond our own individual safety, many opportunities lure in the world of the retrievable genetic code of everything. Players along the value chain, like raw material providers, suppliers, manufacturers and food processors can differentiate themselves from competition through visibility and an enlarged safety offer. Logistics and transportation companies can enhance their vertical knowledge and build new services around data management and the orchestration of the relationships along the supply and value chain. New services and players will emerge. TrueTag and CLEARthru are examples of this development.

Despite all technology and process innovation, we still need to act upon the new wealth of information and knowledge to protect ourselves. The responsibility for the health and wellbeing of the planet and society will stay with us and the many other consumers and buyers everywhere on the globe. It is up to us all to accept or reject. Finally: as most tracing technology has been available for so long, we might wish to consider to push a bit harder on the implementation and utilisation.

How the cloud makes central planning a reality

Imagine the delivery of the hairdryer you ordered 18 hours ago was planned in a center 5,000 kilometres away – roughly the distance between Warsaw in Poland and Kashgar in China. Impossible? In fact, this is not a far-fetched fiction but soon to come reality.

Since the 1980s, the personal computer has helped businesses to plan and control many activities locally – from sending mass mailings to local customers to the managing of inventories and orders. The decentralized planning has helped to make products cheaper and more adapted to the local situation. For example the Spanish subsidiary of a global transportation company has replaced the 9am global service by a 10am local delivery option, as more people are expected to be in the office at that time. However, these local advantages pose major challenges to the international standards multinational customers expect from global brands. Therefore, global brands require central planning and control, which is back on the agenda – thanks to the internet and the cloud.

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How can the cloud bring the planning back to the center? While the personal computer helped create enormous efficiencies in almost each and every unit of a business, the cloud will surpass its abilities and ease the work of those charged with ensuring global standards and organisational efficiencies. The cloud is the place where all relevant data, information and applications can be stored available for all – locally and at the center – who have the necessary access rights. With easy to access storage capacity provided by providers like Amazon and IBM, the cloud offers an almost unlimited range of tools and databases – not only to the large but also to the small and mid-sized enterprises. This brings enormous advantages to the world of the so-called global supply chain.

It is the supply chain bringing the goods, ranging from food and medicines to the above mentioned hairdryers, to the supermarkets and stores, as well as everything that is needed to factories and other businesses and organizations. Thanks to the road and rail systems, water ways and air corridors, bilateral and multilateral trade agreements, this chain of continuous flows spans across borders and continents, cuts across international manufacturing networks and multiple distribution hubs and centres.

Today materials and parts are treated and transformed – in various stages and different locations on the globe – into an unprecedented variety of products. These goods are delivered globally, whether to consumers in the metropolitan areas like New York and Mumbai or to factories in the South African city of Uitenhage and in the province of Bac Ninh in Vietnam. This highly proliferated, and at the same time dense, global labyrinth of flow of goods is also exposed to many potential risks and disruptions.

The more precisely this supply chain is understood, i.e. described, analysed and planned, the higher the chance of smooth delivery and proper responses to market dynamics and unexpected shocks. Although the cloud allows the collection of data from stations, customers and situations all over the world, whether in the most distant corner of sub-Saharan Africa, the tip of South America or the tiniest island in the Philippines, only a central team closely collaborating with the country organisations might be capable of capturing the trends, threats and opportunities to determine quickly the most appropriate response.

How does the central way of supply chain planning and management work in practice? Each time when, for example, delivery plans are needed, the order requirements for customers are uploaded to the cloud. There, a powerful computing unit, utilising multiple parallel processors – called the optimisation engine – generates delivery plans satisfying the many constraints imposed by weather and climate, geographic and traffic situation, as well as the delivery location, which could be on the 45th floor in a high rise in Hong Kong or at a tiny farm on an island in Indonesia.

The optimisation engine evaluates alternative ways of transport and determines the best options for delivery. These optimized plans are then transferred to computers or tablets at decentralised warehouses where the orders are loaded to reach the buyers by road, boat or planes. In real-time and constantly the data about the moving of these goods can be collected and analysed to preserve the highest level of central control and chance of an on-time delivery. Furthermore, all data and analysis – including information about the status of production in the factories of possibly thousands of suppliers, as well as the actuals versus the sales plans of the many employed or serviced third-party sales teams – can represent valuable input for upcoming planning cycles.

The benefits of central planning are more than obvious: compliance with global standards, better forecasting, cost and carbon optimized routes, reduced hiring and training costs, and higher customer satisfaction and lower recovery costs through better quality control and more appropriate and timely responses to irregularities and disruptions.

Therefore, the next revolution in the supply chain will be the central orchestration team which collaborates closely across entire organisations to establish full visibility and ensure well informed decision-making. Applying predictive analytics and artificial intelligence will enable manufacturers, traders and logistics companies to receive clear predictions in respect to potential disruptions and even more so recommendations to store hairdryers at specific quantities and the perfect location – possibly long before we even thought about placing the order 18 hours ago.

This blog was originally posted on the World Economic Forum Agenda.