Can technology help businesses mitigate logistics and supply chain risks?
MITIGATING logistics and supply chain risks is something every business leader is concerned about — whether in manufacturing, e-commerce, or even agriculture.
Some of the typical risks that logistics and supply chain managers worry about include carrier delays, theft, tampering of goods, natural disasters, environmental and economic risks, and so on.
Technology can provide a great deal of relief in this respect, despite the fact that most of the innovations in the logistics and supply chain space that make headlines are related to operational efficiencies.
Since import and export of goods have been growing quarter on quarter, especially for Asia (as visually highlighted by the world merchandise exports and imports by region), logistics and supply chain businesses are looking at accelerating the use of technology to mitigate risks.
Technologies that assist with risk mitigation
Truth be told, professionals in the logistics and supply chain space have been looking at how technologies can assist with risk mitigation for over a decade.
Way back in 2009, for example, researchers from the University of St. Gallen (HSG), the University of Mannheim, and the Swiss Federal Institute of Technology (ETHZ) wrote a paper ‘technology-enabled risk management along the transport logistics chain‘ which explored the benefits of collecting telematics data via sensors along with big data analysis for more reliable, actionable insights.
Now, the technology discussed in the aforementioned paper is not only commercially available off-the-shelf, but also widely understood by industry professionals.
That, and most other risk mitigation solutions on the market, combine what is commonly known as the internet of things (IoT), big data analytics, and artificial intelligence (AI) and machine learning (ML), among other ancillary technologies.
The arrival of 5G, will, of course, give new momentum to these solutions and drive more interest from the industry.
Although the 2009 paper studied road transport, it goes without saying that most of the leading solutions in the market are able to harness technology to support any mode of transportation in any geography.
What does today’s risk-adjusted logistics and supply chain network look like?
Being risk-adjusted means using technology, in a financially prudent way, to mitigate risks in logistics and supply chain operations.
For example, in the pharmaceuticals sector, given the sensitivity and nature of the business, and the repercussions of failing to guarantee safety, timeliness, etc, the option with all the bells and whistles makes the most sense.
Using temperature-sensors in pallets, choosing refrigerated containers with satellite-based tracking, and using AI-powered cameras for asset security is key.
However, for those making high-volume, low-cost rubber tires, it makes sense to only pick some of the technology solutions based on the risks that need to be mitigated. Ideally, in such cases, companies will prefer to ensure the security of the goods, while ignoring theft and other risks that make less of a financial impact.
What’s important, therefore, is that professionals in the industry exploring possible technology use cases must remember to factor in their organization’s size, industry, and so on, before deciding on which solutions to pick.
After all, the essence of risk management suggests that we minimize risks that are practical, and accept all of the others.
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