Line of sight

From the February 2024 print edition

The COVID-19 pandemic highlighted how important supply chains are.

Now, emerging from the pandemic, only to face fresh challenges ranging from the Ukraine war, to unrest in the Middle East, to drought-induced shipping woes in the Panama Canal, knowing where goods are, and whether they were sourced ethically, is more important than ever.

Lack of visibility has ranked high among challenges that supply chains have faced over the past few years, says Abe Eshkenazi, CEO of the Association for Supply Chain Management (ASCM). That’s put risk mitigation and crisis management high among organizations’ priorities. Supply chain professionals are no longer able to claim they don’t know what’s in their supply chains.

“The challenging part is that you now know everybody in your supply chain, and there are activities, or there are players or actors there, that perhaps are unethical or that use practices that would not be in compliance with either regulatory or ethical practices,” Eshkenazi says.

Data is king
Thriving in this environment is all about having access to high-quality data. That’s notion shared
by many players in the field. “As we saw everything returning to normal, (we saw) just how critical it was to provide visibility at every stage of that supply chain,” says Brian Krejcarek, co-founder and CEO of Reelables, a company specializing in smart labels that aid in supply chain data tracking and visibility.

This means everyone is looking for efficiency, Krejcarek says, with no one wanting excess inventory sitting around doing nothing. There’s also a trend toward automating points in the supply chain. Reelables, for example, offers active beaconing Bluetooth labels with a range of about 250-to-300 feet. The labels send a signal when pallets arrive at a warehouse, for example. Digitally captured data can the translate to better accuracy and fewer human errors.

Accountability within the supply chain has emerged as a vital concern for organizations. Blockchain holds the potential to bolster that accountability, as a public record of transactions residing in the Cloud. By way of example, Krejcarek cites temperature-controlled vaccines that can be damaged if left in the sun on a loading dock. Blockchain can potentially trace where such anomalies happen, preventing them in the future. Theft is another risk that the technology can lessen.

“That’s one of the core problems in the industry, is to be able to provide accountability as to where something went awry or where something went wrong at every leg,” he says.

Several upcoming international regulations surrounding sustainability and human rights mean that organizations must ensure traceability within their supply chains, says Stanton Thomas, senior vice-president, sustainable solutions, at o9 Solutions, which provides an AI-powered integrated planning platform. The EU’s Corporate Sustainability Due Diligence Directive (CSDD), for example, obliges companies to operate fairly and sustainably. Meanwhile, the US Uygur Forced Labour Prevention Act and Canada’s own Forced and Child Labour in Supply Chain Act are exerting similar pressure.

“You’re going to have to provide a certain level of traceability for the products and services that you source,” Thomas says. “So that’s an important driver. But there are other drivers, such as competitive advantage. If you’re in a competitive marketplace, and if you can provide some hard information on the traceability and the verification that there were no issues such as deforestation or forced labour,
or conflict materials involved in the production of your product, then that’s something that’s near and dear to a large segment of the consumer population. And it’s ultimately the right thing to do.”

Supply chains are often several layers deep. Yet companies can sometimes lack visibility beyond their first tier of suppliers unless they have invested in auditing its supply chain. Companies sharing data, for example through blockchain, can help to increase that visibility, Thomas says.
One issue to overcome with that technology is the need for all supply chain participants to be on the same blockchain network. Even if you create an industry-level blockchain, you won’t necessarily be able to get everyone using it.

“The other aspect of supply chains is they’re always changing,” Thomas says. “You could audit your supply chain tomorrow or next year and it might be different. The trading partner relationships, particularly upstream where the extraction and processing happen, are dynamic. So, while technology is essential, it’s not going to solve the whole problem. There has to be cooperation and a business culture for sharing that kind of information.”

Update your tech
Brendan Heegan, founder of fulfillment company Boxzooka, agrees that the multiple players in the supply chain would benefit from talking to each other better. Organizations often still rely on “stone-aged” technology, and there can be a lack of a centralized system in place, he says. Those factors can add up to fragmented visibility.

Yet supply chain traceability enables access to the right data, which then lets organizations measure properly, Heegan says. That in turn allows them to plan better, so they can avoid problems like keeping too much or too little inventory. “Data tells us how to make decisions and when to make decisions,” Heegan says. “And you can’t manage what you don’t measure. There’s also a public relations advantage to having a sight on where your goods are coming from in terms of sustainability and making sure that forced labour or things like that aren’t embedded in the supply chain along the way.”

Traceability has been extremely important since the pandemic and that priority will only grow with time, agrees Vinny Licata, head of logistics at Fictiv, an operating system for custom manufacturing. COVID-19 restrictions reduced visibility in ports and other choke points, causing customers to focus more on where their goods were. The pandemic may be in the rear-view mirror, but geopolitical tensions are keeping traceability high on the priority list for companies.

Technology, combined with good communication, can help here. Fictiv works to get data to its customers through alerts when the potential for delays come up. For example, the company sends an alert to a customer if there’s a customs delay, notifying that customer when they need
to get involved to ensure clearance of any goods if more paperwork or other information is needed. That proactivity allows the company to meet 98 per cent of its transit times.

“We’re trying to use the technology so we can be proactive and work those exceptions, rather than wait for our customers to call and say ‘hey, we don’t have the parts that are supposed to be due today. Where are they?’” Licata says.

Post-pandemic, traceability of goods is as important as ever. Fortunately, technology and access to high-quality data is more available than ever for supply professionals.