CES 2020: Building Resilient Supply Chains

The success of disaster recovery is entirely about the supply chain, experts said during a logistics resilience panel discussion at CES 2020 that took place a few days after a powerful earthquake struck Puerto Rico.

Eighty percent of humanitarian spending goes to logistics, according to Kathy Fulton, executive director of the American Logistics Aid Network (ALAN), an association that provides supply chain assistance to disaster relief organizations.

But “bad supply chain activities” can lead to a second disaster, Fulton said, in part because “stuff that never gets used in the disaster gets shipped to the location.” Technology advances are helping logistics companies and relief agencies disaster- proof their strategies for moving supplies to and from multiple destinations.

In the event of a catastrophe, UPS Inc (NYSE: UPS) constructs pop-up centers, where employees use a process called “dynamic sort instruction” to sort packages, said Robin Hensley, manager of the company’s Global Smart Logistics Network.

Under DSI, workers scan packages with a small device, then receive processing instructions via Bluetooth earbuds about where to route those packages. Already in use during the holiday season, DSI transforms the complex package-sorting process into a simple scan, instruction and sort process, Hensley said.

During Hurricane Harvey, when many UPS locations were flooded for weeks, the company set up alternative sites in local CVS stores and other retail locations, according to Hensley. Customers then used My Choice to change the delivery time or place of pickup.

Real-time visibility tracking is also coming to disaster relief. UPS is testing a technology with the United Nations called “relief link” that would track relief packages from origin to destination, ensuring the people who need the aid actually receive it.

Fulton discussed the concept of a “digital twin,” in which relief agencies and logistics companies make an electronic copy of their physical infrastructure — and then “play” with various scenarios, according to Fulton.

That kind of role playing allows disaster relief agencies to plan for scenarios “that seem really wild,” according to Fulton. “It’s about the unknown unknowns, the Black Swans, the things that are so beyond our comprehension.” If a supplier is down because of an earthquake, its digital twin allows agencies to see the impact on the overall network, she said.

UPS’ shift toward automation and other “dynamic network” processes basically allows geographically based centers to transform into other centers, Hensley said. During Hurricane Michael, UPS was not able to access the Jacksonville, Florida, hub. So the company moved those packages to another automated hub, turning it into a “pretend-to-be Jacksonville hub,” Hensley said.

“The centers are dynamic,” she said.

Not all supply chain practices necessarily translate into good disaster relief management.

Some strategies aimed at introducing logistics efficiencies actually create more risk when significant disruptions occur, according to Fulton.

She cited as an example the trend toward “just-in-time fulfillment,” a way of managing inventory and shipping that involves purchasing the product as orders come in.

Saline manufacturing in Puerto Rico was disrupted for months because of power during Hurricane Maria in 2017, according to Fulton. Because the island didn’t have large stocks of saline on hand, that disruption prevented hospitals from doing some elective surgeries.

In other cases, standard supply chain practices provide critical preparation for disaster relief.

“There’s a disaster every day,” Hensley said. “It’s called weather.”

This article was originally published on finance.yahoo.com