On guard for breakdowns and rule breakers
Mongolian goat herders can go days without seeing a car, a building or even a power line. Yet, despite their remoteness, they are a visible part of a global supply chain.
Digital technology enables the cashmere wool they produce to be tracked from Mongolia to the point where it is sold in luxury markets across the world.
A mobile phone app, developed by Convergence.tech of Toronto, Canada, uses blockchain to help herders achieve better prices for their cashmere by verifying that it is not sourced from areas that have been overgrazed, which turns grasslands into deserts, contributing to localised climate change and air pollution.
The app is an example of how, in a complex, volatile and resource-stressed global economy, digital technology can link up parts of a supply chain and provide increasing detail.
The goat herders are not the only beneficiaries. Data and digital technologies are also helping global companies keep their operations running at a time when, according to McKinsey, the consultancy, a supply chain disruption lasting a month or more will happen every 3.7 years when averaged across industries.
To cope with such disruptions, Flex, which designs and makes electronics, has established worldwide Flex Pulse centres that use real-time data and visualisations to watch events in its supply chains. As the coronavirus spread from Asia to other continents, Flex created dedicated dashboards to track the effect of the outbreak on its operations.
“I can look at a region, at a site, for a specific customer, down to a part number, at the touch of a button,” says Lynn Torrel, chief supply chain and procurement officer at Flex.
In helping to manage supply chain disruption, one of technology’s most powerful functions is to collect and combine information from a variety of sources.
Boston Scientific, the US medical device company, integrates various supply chain indicators, from sales data to insights gained by commercial teams from customers about medical procedures being scheduled, into what it calls a “control tower”.
“We put that all together into algorithms that help drive our forecasting,” says Terrance Brick, vice-president of global supply chain.
As well as enabling companies to plan during political or economic turbulence, technology underpins transparency.
Demand for information on everything from companies’ carbon footprints to their human rights records has increased. Investors seek to create portfolios of businesses that can verify their ESG (environmental, social and governance) credentials, while consumers are keener than ever to know how products are sourced and made.
“Buyers, whether industrial or consumer, are asking for a lot more data than before — and they want it to be verifiable,” says Raj Rao, general manager of blockchain platforms at IBM Food Trust. The hunger for data extends to the food industry, where the IBM Food Trust enables foods to be traced for safety and efficiency, to minimise waste and confirm their sustainability.
For Convergence.tech, a digital transformation company that works with government bodies, humanitarian agencies and corporations, blockchain allows two functions that are critical to sustainable sourcing: defining where products come from and who has handled them on the way.
“We wanted to disrupt and add value to two very broken systems: identity and traceability,” says Chami Akmeemana, the company’s chief executive.
Technology can also make it easy to pass information to customers who want to track their own environmental footprint.
Boston Scientific does this by giving customers such as hospitals access to parts of its global data synchronisation network. This uses a cloud database as a “single source of truth” for product information.
Customers can find customised data such as the amount of carbon or plastic in the products they are about to buy, says Mr Brick.
Work to increase supply chain transparency is also under way in the public sector. The technology is critical, for instance, when governments try to rid their procurement processes of corruption and cronyism.
In Ukraine, a digital procurement system called ProZorro (“transparent”) enables government agencies to manage contracts electronically and transparently.
“You can follow all the contracts throughout their lifecycle. They collect information about the planning, bidding and winning of those contracts — and they’ve saved themselves billions of dollars,” says Gavin Hayman, executive director of the Open Contracting Partnership, a not-for-profit organisation whose aim is to improve public-sector contracting.
But digitally enabled transparency alone is not the solution, he says. It must be accompanied by changes in policy and practice. “It’s got to be linked to actions, otherwise you just get transparent corruption.”
The case studies below are a shortlist of entries to the FT Intelligent Business awards event held online on November 19.
All the entries showcase the combined use of data and tech in business operations. Source: RSG Consulting
DHL, Blue Yonder and Microsoft
DHL, the German distributor responsible for logistics for some of the biggest household names globally, worked with software company Blue Yonder to deploy robotics to automate tasks in its warehouses, with Microsoft software providing data analytics and artificial intelligence to optimise resources. One example of how Microsoft and Blue Yonder are helping businesses is with Morrisons, the UK supermarket chain, where it has forecast demand fluctuation during the coronavirus lockdown and automated inventory orders. This has improved the on-shelf availability of products by 30 per cent and reduced the in-store inventory by two to three days.
Thanks to efforts over the past five years to digitise the operations of Boston Scientific, the medical device maker took eight weeks to redeploy its sales reps using predictive data analytics of where and when demand would fluctuate, speeding up a process that would normally take six to eight months. The IT team has developed a data analytics tool that integrates sales data from the enterprise resource planning system with public data on Covid-19 rates and regional responses. Insights are presented via a dashboard that helps the business make decisions about deploying sales reps and managing inventory.
The electronics manufacturing company used Flex Pulse, its supply chain visualisation software, to respond quickly as Covid-19 spread. The database was reconfigured during the pandemic to provide more detailed information about supplier locations, allowing Flex to manage up to 8,000 daily shortages across its 16,000 suppliers. The data provided intelligence on how long the shortages were expected to last, enabling the business to look for alternative suppliers where needed. The company estimates that before Covid-19 it would usually manage between 1,600 and 1,800 shortages daily.
State of New Hampshire and Dun & Bradstreet
At the start of the pandemic, business intelligence company Dun & Bradstreet launched its Covid-19 Business Impact Research platform, with free access for government agencies. The platform has been used to verify suppliers and measure economic recovery from the crisis. The US state of New Hampshire used the platform to review suppliers 75 per cent faster than before and exclude 10 per cent of potential suppliers, allowing the state to scale up its personal protective equipment (PPE) supply chain while minimising the risk of scams or fulfilment issues. Currently, 35 of 50 states use the platform.
The introduction of 5G presented the telecommunications company with the opportunity to abandon its legacy systems and move to SAP, a single enterprise resource planning platform. This has given Verizon greater visibility into its equipment stocks, and allowed the company to consolidate its 30 wireless equipment warehouses, which were managed regionally, into three nationally managed centres, reducing working capital on inventory by 20 per cent. Increased access to data has enabled the business to identify problems in the supply chain faster and use algorithms to predict other areas that may be affected.