There are some supply chain disruptions that are extremely difficult to prepare for, such as the earthquake that recently hit Japan and forced many major manufacturing facilities to halt production. However, there are also a good amount of risks that businesses can plan ahead of time for.
Unfortunately, many organizations face difficulties when it comes to implementing effective risk management strategies. Some focus on the wrong threats while others are still relying on outdated protocols. The problem is that, oftentimes, businesses don't dedicate the necessary time, attention and resources to threat mitigation and emergency response planning until after a disaster has already occurred. And, by this point, it's a little too late.
As more companies begin integrating digital systems and the Internet of Things into supply chain operations, it is becoming increasingly important for business executives to ensure these connected processes and applications are secure. Web-based platforms present a whole array of risks that could lead to serious disruptions, even if they do help streamline workflow efficiency and reduce costs.
However, innovative technologies can also be used to safeguard supply chains from the growing risks. Spend Matters recently reported that sensors are gaining popularity among organizations looking to improve operations without resisting the shift toward digital. The reason this type of technology is so beneficial is because it gives supply chain leaders more transportation-related data on goods; sensors are capable of letting managers know not only where the products are located but what kind of condition they are in.
Savi Technologies Vice President of Solutions Jim Hayden told the source that businesses are starting to adopt the tech at increasing rates because it enhances visibility throughout the entire supply chain. Traditionally, companies would be notified if a shipment was made or not but, as the industry evolves, it is becoming necessary to go beyond these "milestone" touchpoints.
Benefits of supply chain sensors
The sensors also alert supply chain managers if a product has been altered or messed with, which more businesses will likely be interested in amidst reports of increasing cargo crime rates. Any notifications the organization gets can be delivered to employees' digital devices.
TechTarget recently explained that the use of RFID, or radio frequency identification, tags in sensors can further enhance the real-time data and analytics available to businesses. This allows them to gain even more insight and improve their ability to predict demand, instead of relying solely on historical data.
According to Spend Matters, research conducted by Deloitte and MHI revealed that these sensors, as well as automatic identification, are contributing to the "always-on" supply chain of today. Almost half, or 44 percent, of businesses use sensors in their supply chains, indicating they are being implemented almost as much as cloud computing and storage. And it may not be long before more organizations begin using them. The research also showed that 87 percent of supply chain leaders said they plan to eventually integrate the technology into operations, Spend Matters said.
Risk versus ROI
If businesses are slow to adopt sensors, however, it may be because the benefits are not immediately clear for some. Hayden told the source that companies consider the use of this technology as part of a risk mitigation plan and, therefore, assume the return on investment will be hard to prove right away.
But it is essential that supply chain managers don't wait to implement plans for disaster response and take significant measures toward investing in the technology and tools that prevent disruptions from occurring in the first place. And that is what sensors can help with. They can protect businesses from loss of sales or delays in production attributed to unexpected disturbances such as cargo theft. In addition, they can help improve efficiency and accuracy which, in turn, leads to better customer satisfaction levels.
Hayden also recently spoke with CIO on the benefits of using sensors in the supply chain and strategies for lowering adoption barriers. He pointed out that although some organizations may perceive the technology as an expensive investment, especially when they aren't able to see whether or not it will help them ultimately improve their respective bottom lines, the costs aren't anywhere near what businesses may be forced to pay if a major disruption occurs.
Risk is also a clear topic of interest as one of the Speaker Tracks for ISM2016, where Source One's risk management experts are the exclusive sponsor of the CPO Exec IN conference.