The Suez Canal Nightmare Calls Attention To Lack Of Process Agility
By Dr. Reginald Twigg, supply chain solutions director, ABBYY
The Suez canal crisis compounded disruptions in a global supply already straining under the ongoing impacts of the pandemic. At least 367 vessels were backed up waiting to cross, which included container ships, bulk carriers, and oil tankers. Some ship operators opted to re-route around the Cape of Good Hope, adding more than a week of additional sailing time. Ultimately, the disruption caused the canal authorities in Egypt alone to lose $95 million in revenue.
About 12% of global trade passes through the Suez Canal; nearly 19,000 ships passed through the canal last year, an average of 51.5 per day, according to the Suez Canal Authority. And Lloyd’s List estimates that more than $9 billion worth of goods pass through the 120-mile waterway each day, translating to around $400 million per hour.
While we’re relieved to see that the Suez Canal is open for business again, it shines a spotlight on the urgent need for process agility in the shipping and logistics industry.
Nearshoring Isn’t The Answer For Short-Term Problems
The Suez Canal crisis happening so quickly after the impact of the pandemic underlines the reason why as many as 64% of manufacturing companies are planning to bring production back to North America. A BDO Consulting survey found only 24% of 100 manufacturing company CFOs polled plan to relocate production to another country this year. As more companies nearshore, many supply chain management companies are investing in digital transformation and stepping-up automation. But even with new technology in place, the majority cannot adapt quickly – a key element in a time of crisis. Nearshoring may cut down on time and expense, however, it’s a long-term strategy that takes several years and may or may not solve problems like the Suez Canal blockage.
The more immediate problems are knowing how supply chains handle delays, source supply shortages, and overcome lack of visibility into their operations. The Suez Canal crisis highlights the need for companies to have a deeper understanding of their supply chains. As the pandemic has shown, the demand for flexible, accurate supply chain logistics is on the rise and it’s important to be able to adapt to larger, more complex methods of information and product transportation.
Protect Your Supply Chain With Process Agility
Organizations are realizing that there must be a shift in the way the industry works to seamlessly connect all who are involved in shipments. They need the flexibility to adapt to change, but they cannot gain flexibility without visibility into their processes that can expose delays, shortages or even assess vulnerabilities that can be remediated before they occur. Supply chain leaders must realize that ‘not all automation is created equal,’ meaning how a process is automated is becoming more important than the fact that it is automated.
An average end-to-end container shipment involves more than 30 organizations, more than 100 people, and over 200 information exchanges, yet the processes and technology supporting such shipments rarely match up. Processes are requiring the delivery of accurate information to enable smarter business decisions in real time, and access to critical data such as bills of lading, trade bills, waybills, dock receipts, packing lists, and invoices. Much of the systems of trade are currently conducted through a chaotic mess of email, paper, fax, and misaligned Excel spreadsheets. Triaging disruptions via manual tasks like sending email and updating spreadsheets can only further break processes.
Additionally, swiveling chairs between different screens to monitor schedules, routes, tracking numbers and inventory allows for human error and missed opportunities. A higher level of digital intelligence is needed that enables the supply chain to properly identify and understand how to process workflows work and how intelligent automation impacts downstream and upstream processes. It can fix time-wasting processes while immediately predicting and reacting to adverse conditions, and thereby allow staff to spend more time analyzing trend data, forecasting, and focusing on exception handling and relationships with clients.
This level of digital intelligence empowers organizations to better connect their people, processes, and content. Whether your data is sitting in a spreadsheet or a database, process intelligence can retrieve the data you need and provide you with a full, end-to-end process visualization. By gaining full transparency of your processes, you can make better data-driven decisions, quickly identify opportunities for improvements, and create contingency strategies to resolve future supply chain crises.
About The Author
Reginald J. Twigg, Ph.D. is Director of Digital Enterprise, at ABBYY, a digital intelligence company. He has been in Enterprise Software for the past two decades focusing on emerging AI, ML, NLP, and hyper-automation technologies. Developing the earliest natural language processing (NLP) applications for ECM, later with Artificial Intelligence and Machine Learning (AI, ML), he has led their introduction into Document Imaging and Capture. At ABBYY he works with major enterprises to empower them to understand their processes and content to improve business outcomes.