Above the Fold: Supply Chain Logistics News (December 2, 2022)

December, already?

I was thinking of something witty to write as we enter the last month of 2022, but all that came to mind were these lyrics by the Counting Crows:

A long December and there’s reason to believe
Maybe this year will be better than the last

With nothing more to say, here is the supply chain and logistics news that caught my attention this week:

Rail Shutdown Averted (Again)

A few days of panic, then a big sigh of relief (at least temporarily).

That’s what I wrote back in September, when talk of a potential rail strike was sending everyone into a state of panic (for good reasons, considering rail’s role in keeping supply chains and the economy running), until President Biden secured a tentative deal with the unions and railroads.

It proved to be a temporary reprieve, as several unions voted down the agreement, which sent everyone into a state of panic again.

Now, another big sigh of relief, as Congress passed legislation this week to prevent a rail shutdown. The main sticking point for the unions — additional paid sick leave — wasn’t included in the legislation, so that will remain a burning ember that will certainly flare up again between the unions and railroads down the road (or, I should say, down the tracks). 

For now, we can all breathe a little easier, unless you’re not buying that a deal between the unions and the West Coast ports will happen by February. Or if you’re dealing with the numerous labor strikes happening in Europe and elsewhere. In that case, I suggest having a cup of calming tea in the morning.

R.I.P Blockchain

Okay, maybe blockchain isn’t dead, but it suffered a setback this week with A.P. Moller – Maersk and IBM announcing that they are discontinuing TradeLens. Here are some excerpts from the press release:

TradeLens was founded on the bold vision to make a leap in global supply chain digitization as an open and neutral industry platform. Unfortunately, while we successfully developed a viable platform, the need for full global industry collaboration has not been achieved. As a result, TradeLens has not reached the level of commercial viability necessary to continue work and meet the financial expectations as an independent business.

Maersk will continue its efforts to digitise the supply chain and increase industry innovation through other solutions to reduce trade friction and promote more global trade.

The truth is that blockchain has always been a very expensive solution in search of a problem, and for the vast majority of supply chain processes, existing technologies work just fine and provide comparable levels of visibility, traceability, and security at a much lower cost.

Here’s what I wrote back in March 2018 in “Blockchain Will Solve, Save, Cure Everything”:

Blockchain is not a miracle cure for everything (or anything), so beware of anyone peddling it as one.

With regards to blockchain, my advice to supply chain and logistics executives is the same as with any emerging technology: The biggest mistake you can make is becoming too enamored with the next new shiny technology and start investing in it without first identifying or understanding the business problem or opportunity you want to address. So that’s the first step: clearly define what you want to accomplish, verify that your existing technologies aren’t capable of meeting your objectives, and explain how this new technology can potentially get the job done.

The market ultimately decides which technologies thrive and which ones wither on the vine.

Amazon Joins Microsoft and Google in Chasing Supply Chain Opportunities

Nothing like a pandemic and two years of supply chain disruptions to get technology giants interested in supply chain management.

Back in March 2022, I highlighted how Google is making inroads into the supply chain and logistics industry and placing bets on multiple fronts: as a hosting/AI/analytics technology partner to existing supply chain software vendors and logistics service providers; as a competitor in the market with its own software solutions, such as its digital twin and fleet management offerings; and via its emerging technologies such as autonomous driving (although Waymo is no longer part of Google, it is still under the Alphabet umbrella). 

I ended the post with this: “I might also place a bet on Microsoft, just to keep it interesting.”

Well, just a couple of weeks ago, Microsoft introduced its Microsoft Supply Chain Platform, “a new approach to designing supply chains for agility, automation and sustainability.” You can read my comment here

And now comes Amazon Web Services, which this week announced AWS Supply Chain, “a new application that helps businesses increase supply chain visibility to make faster, more informed decisions that mitigate risks, lower costs, and improve customer experiences.” Here’s more from the press release:

AWS Supply Chain is an application that improves supply chain visibility and provides actionable insights to help businesses optimize supply chain processes and improve service levels. Customers can easily set up a unified supply chain data lake using AWS Supply Chain’s built-in connectors, which use pre-trained machine learning models based on Amazon.com’s nearly 30 years of supply chain experience, to understand, extract, and aggregate data from ERP and supply chain management systems. AWS Supply Chain then contextualizes that information in a real-time visual map highlighting current inventory selection and quantity at each location. Inventory managers, demand planners, and supply chain leaders can view machine learning-generated insights for potential inventory shortages or delays, and create watchlists to receive alerts to take action as risks appear. Once a risk is identified, AWS Supply Chain will automatically provide recommended actions, such as moving inventory between locations, to take based on the percentage of risk resolved, the distance between facilities, and the sustainability impact. Teams can solve problems and collaborate using built-in chat and messaging functionality. With AWS Supply Chain, businesses can more accurately anticipate supply chain risks, take inventory rebalancing actions quickly to save costs, and meet customer expectations.

It all sounds so easy, doesn’t it? There are so many silver bullet solutions in the chamber now, companies should be able to solve all their supply chain problems by this time next year. Merry Christmas!

The ugly truth is that despite all these technologies, there is still “The Big (Crappy) Data Problem In Supply Chain Management.” Solving this problem goes beyond technology; it requires companies to view data as a corporate asset and assign value to it, just like they do to other assets like buildings, equipment, and intellectual property. And they need to clearly define roles and responsibilities around data quality management.

The other ugly truth is that connecting to ERPs and supply chain applications within the four walls of a company is less of a challenge than connecting to the hundreds or thousands of external trading partners that companies work with (e.g., suppliers, customers, logistics service providers, customs agencies, etc.) which is where most supply chain data resides. How do you connect, communicate, and collaborate with all these parties (especially the long-tail of trading partners, the small companies that often lack modern technology) in a cost-efficient and scalable way?

For almost 20 years, I’ve been a proponent of what I’ve termed Supply Chain Operating Networks (see “The Network Effect in Supply Chain and Logistics”). Here’s how I originally defined them:

Supply Chain Operating Networks bring together trading partner connectivity with software-as-a-service applications. Instead of companies creating hundreds or thousands of one-to-one connections with their trading partners, they make a single connection to the business network, where their trading partners and thousands of other companies are also connected, and they use the SaaS applications that reside on the network to communicate, collaborate, and execute business processes in more efficient, scalable, and innovative ways.

There are other names for these networks, with “Platforms” becoming the preferred term today, but of all the silver bullet solutions in the chamber, Supply Chain Operating Networks are the one I most believe will drive the most change and innovation in the industry. 

And with that, have a happy weekend!

Song of the Week: “A Long December” by Counting Crows