Very rarely are supply chains headline news or at the top of boardroom and government agendas. The COVID-19 pandemic, lockdowns and subsequent Ukraine/Russia crisis have changed this by uncovering the weaknesses of the supply chains that drive the global economy and forcing them into the spotlight for the first time. The logistics element of the supply chain has come under significant strain, covering all modes of transport and commerce.
As a result of these crises, and because supply chains and logistics remain strained, the traditional ways of moving goods around the world are clearly no longer fit to purpose or able to absorb new disruptions, let alone fully prepare for the next crisis. The rapid shift in demand for services to products, including eating out to eating in, after lockdown quickly overloaded global supply chains, leading to massive shortages in capacity. In addition, container and labor shortages exacerbate limitations in the ability of ports to offload, transfer and inspect cargo, and labor shortages within the wider market, have all further compounded the global supply chain crisis.
While some companies were able to quickly overcome and adapt to the supply chain chaos, many were not, and government agencies and bodies have an important role to play in mitigating the supply crisis for all. What steps should they take?
Improving coordination and transparency
Maintaining the predictability and reliability of supply chains requires closer coordination between the public and private sectors, as well as the numerous government bodies themselves. This can be achieved by ensuring that there is adequate staffing to achieve the required level of coordination that is needed, while creating real-time messaging systems will help critical information on supply chains to be shared immediately, to help deal and smooth out any issues or bottlenecks.
When it comes to increasing transparency, government agencies and bodies have a lot of work to do, especially since improving transparency will be critical in helping to build greater flexibility within supply chains. The US government has already taken steps to increase greater transparency and coordination between trading partners by launching asupply chain dashboard, which other authorities could benefit from replicating, especially in the UK and Europe.
When it comes to increasing transparency, government agencies and bodies have a lot of work to do, especially since improving transparency will be critical in helping to build greater flexibility within supply chains. The US government has already taken steps to increase greater transparency and coordination between trading partners by launching a
supply chain dashboard
, which other authorities could benefit from replicating, especially in the UK and Europe.
Embracing the latest technology
The second way that government agencies can help supply chains run more smoothly is through digitization and adopting new technologies. Eliminating paper submissions, employing advanced data analytics, blockchain and enhanced fraud detection technologies all have the power to spot and address potential risks, track goods from the factory to the consumer in real time and reduce the need for manual inspections. In turn, all of this will help to increase transparency, enhance visibility along supply chains for those who need to know and improve clearance times, ultimately helping to benefit both companies and consumers alike.
Authorities in Mexico and the US are already embracing the latest tech by combining technologies to provide multiplicative benefits. Combining optical character recognition (OCR) technology together with weigh-in-motion capabilities improves inspectional decision-making and the time to release cargo at land borders.
Several countries are employing the use of data provided in advance of a shipment’s arrival or departure to make better risk management decisions, and ultimately to improve efficiencies in the movement of goods and conveyances. These efficiencies could translate into increased throughput rates, more efficient deployment of resources and technologies (e.g., nonintrusive inspectional equipment, among others) and a better balance between facilitation and other competing priorities for customs authorities.
Belgium is leveraging port optimization technologies that allow for more effective movement of vessels of all kinds within a port, as well as the scheduling of port resources at terminals, and the movement of customs and other government officials within the port.
The increasing adoption of single window programs, such as the UK is undertaking, and enhanced services around single window such as Saudi Arabia’s end-to-end trade digitization efforts will provide cost savings and efficiencies to both the government and the commercial sector, in addition to other benefits.
The power of international collaboration
Increasing and improving international collaboration is critical to solving the current supply chain crisis. Many trade agreements were written, and even updated, prior to the emergence of new technologies and certainly well before the immediate drivers of pandemic-exposed supply chain crises were widely known. Things are slowly but surely moving in the right direction, with the US recently announcing a review of all international statutes, regulations and policies, while the EU is pushing ahead to create more robust and clear trading agreements with countries such as Mexico and India.
At a countrywide level, intergovernmental bodies, such as the World Trade Organization (WTO), are pushing for the adoption of common trading standards. For example, the WTO’s Trade Facilitation Agreement includes rules for electronic logging of documentation, certification, payment of duties and fees, as well as use ofsingle windowsand increased intra-agency and international data sharing. The World Customs Organization also recently announced its Strategic Plan 2022-2025 that outlined new policies around the use of the latest IT technologies and blockchain to help iron out the current issues within global supply chains, and better prepare for future disruptions.
At a countrywide level, intergovernmental bodies, such as the World Trade Organization (WTO), are pushing for the adoption of common trading standards. For example, the WTO’s Trade Facilitation Agreement includes rules for electronic logging of documentation, certification, payment of duties and fees, as well as use of
single windows
and increased intra-agency and international data sharing. The World Customs Organization also recently announced its Strategic Plan 2022-2025 that outlined new policies around the use of the latest IT technologies and blockchain to help iron out the current issues within global supply chains, and better prepare for future disruptions.
Finally, digitizing global supply chains, which will require a significant amount of coordination and cooperation between the private and public sector, will help to make the system more resilient and able to adapt to challenges and issues before they spiral out of hand.
By taking all of these steps, government bodies and departments will be able to provide some much-needed relief and help to create a more resilient and modern global supply chain that can withstand future crises and ensure the global economy keeps on moving whenever the next big crisis hits.