Often, when trying to advise their readers on the best ways to avoid supply chain disruptions, experts and other commentators will suggest increasing your buffer stock. No doubt this is effective when it comes to staving off shortages, but it’s still a deeply unsatisfying answer. Why? Because stockpiling goods is frequently costly, and doing so can bog down your operations in the long run. Sure, it can be useful insulation against the unexpected, but it’s also the antithesis of anything resembling an agile or lean supply chain.
Pop quiz: how many of you reading this are wearing a Fitbit right now? We’re willing to bet that at least a handful of you answered in the affirmative, maybe even a large percentage of you—and on some level that makes sense, because step-counters and other pieces of wearable technology give us insight into and control over our health in ways that simply weren’t available to previous generations. A mere couple of decades ago, most people presumed themselves healthy until they received some evidence to the contrary, whether that came in the form or new pain and discomfort or a stern talking to from a primary care physician. Now, with just a wristband and a smartphone you can monitor your sleep habits, your heart rate, and your physical activity in real time, meaning that if something changes in your health status you’ll notice early and take immediate action.
In 2015, Greek Finance Minister Yanis Varoufakis made the bold claim that The Matrix (the 2000 science fiction film in which all humans were being held captive in an elaborate computer simulation) was not so much a science fiction film as a documentary about modern capitalism. We’ll leave aside for now any quibbles we have about the use of the word “documentary” in this context, but it’s worth thinking about how much the world has changed in the 18 years since the movie originally came out. Why? Because computer simulations have actually become a meaningful fact of life for many businesses across the world, particularly in the manufacturing sector.
So far, the story of Logistics 4.0 is largely one of untapped potential. As a critical counterpoint to Industry 4.0, Logistics 4.0 represents the promise of a highly responsive supply chain that can self-monitor and self-adapt, but so far this promise has only been met in a few select areas. Though smart pallets, smart containers, and smart ports are quickly becoming a reality in global shipping routes, most businesses aren’t in a position to take advantage of those things in a value additive way. That said, slow change is better than no change, and the face of logistics really is evolving. As we more firmly enter the Industry 4.0 era in manufacturing, shipping and freight forwarding paradigms will have to keep up by offering the same levels of integration and digitization as their industrial counterparts.
Let’s look at some statistics in order to dig deeper into the present-day realities of the shipping and freight forwarding industries.
Ford’s groundbreaking assembly line, which we normally think of as a watershed moment in the history of manufacturing, was just as important as a moment of negotiating customer expectations. In this case, Ford’s goal wasn’t so much to revolutionize the burgeoning automotive industry as it was to change the narrative around cars in the minds of his future customers. Where automobiles had previously been largely reserved for the wealthy, Ford wanted the general public to stop thinking of them as a luxury and start considering them to be an attainable goal for working class buyers. In order to create this new narrative, he needed to find a way to first make it reality. How? By making cars cheaply enough that they could be purchased (the story goes) by the very factory workers who were helping to build them.
As newspapers have increasingly faced existential threats from television and internet news sources, the industry’s already-thin margins have gotten even thinner. This has led many outlets to evolve and adapt to the new digital realities by supplementing their print division with digital media, or by switching to the digital media entirely. Many others, searching for any opportunity to cut costs and develop a leaner supply chain, have been experimenting with the way their papers are delivered. This has gone wrong a lot more often than it’s gone right. One company tried to use the United States Postal Service to deliver papers when it became clear that their existing carriers couldn’t maintain profitability—to disastrous results.
At this point, if you’ve heard of digital twins, it’s likely that you’ve also heard them discussed in relation to the NASA’s Apollo 13 mission. For those of you who haven’t, the modern conception of a digital twin owes a lot to the structures that NASA put in place in case of exactly the sort of malfunctions that almost doomed the astronauts aboard Apollo 13. To wit, once John Swigert communicated to NASA that the spacecraft was experiencing an issue (in this case, an oxygen tank explosion had caused a cascade of system malfunctions), engineers and planners on earth were able to replicate the problems using a full-scale, physical model of the entire craft. Using this live, physical simulation of the systems operating in space, they were able to identify the issue and communicate a plan for repairs to the crew.
In economics and game theory, writers have traditionally used the term “widgets” to refer to objects of variable characteristics in production and, to a certain extent, transport. A widget can be of any shape, size, or make, and can have any other characteristics that suit the question that’s being posed or the point that’s being made. Since the advent of personal computing, the other definition of widget (an application or interface) has in many circles become more widespread, supplanting the original meaning.
In no particular order, the top supply chain disruptions include climate and weather events, forecasting errors, new trade regulations, oil and freight price fluctuations, machine and fleet breakdowns, and poor IT and technology integration, among others. As you peruse the list above, you might notice each of these disruptions can be put into one of two categories: fast or slow. Things like machine breakdowns and catastrophic weather can happen in the blink of an eye, and supply chain managers have to be prepared to preserve value via a backup plan. But other issues, like poor forecasts or integration issues, compound slowly over time—sometimes so slowly that it can be hard to identify the root cause of whatever difficulty your company is experiencing.
Historically, we tend to think of Henry Ford’s adoption of the assembly line as one of the most important moments in the history of automotive manufacturing—a moment when, all of a sudden, automobiles could be produced in an efficient, cost effective way. While it’s certainly true that this was a watershed moment for the industry, this emphasis on the assembly line can have the effect of obscuring that other production scheme that’s so integral to lives of many modern auto makers: the job shop. Indeed, job shop environments are crucial in many production workflows for the creation of parts and even whole cars. As a result, the ability to create efficient production schedules in such an environment can be a key value added propositions for manufacturers.