Importers, ship owners reconsider cargo risk tools after early COVID-19 alerts

Tools that presage risk to a shipper’s supply chain often feel like an extravagance during times of relative calm, but these tools could well be viewed similar to homeowner’s insurance in the aftermath of COVID-19. It might take an event of this proportion to overcome the historical reticence to invest in such monitoring capability, and even such tools have their own limitations in terms of their ability to alert users to so-called black swan events.

Unsurprisingly, the risk monitoring software provider Resilience360 said it’s seen an uptick in shipper interest in the last several weeks. Resilience360 sent out its first alert on COVID-19 on Dec. 31, the day the first case of the virus was reported to a World Health Organization office in China. That was two weeks before the international media began reporting on the outbreak. BlueDot, a Canadian provider of risk monitoring of disease outbreaks, released its alert the same day.

“When Wuhan went into lockdown, you want to quickly understand, do I have shipments, do I have suppliers impacted,” Shehrina Kamal, product director of risk monitoring for Resilience360, told JOC.com.

Risk forecasting technology, based on aggregating and public and private data sets and putting them in a supply chain context, has been around for years. But the unpredictable nature of COVID-19, is providing such providers, including Resilience360, BlueDot, BSI, and Overhaul, an opportunity to flex their ability to shippers.

That two-week head start Resilience360 gave its customers can be a competitive advantage, Kamal said. Companies that had already integrated alerts from Resilience360 into their planning, purchase order management, or transportation management systems were even better prepared.

To be clear, most companies using risk monitoring software prior to the COVID-19 outbreak had a clear imperative to do so. They either had supply chains based on tight production schedules or high-value goods.

“The automotive industry, for example, is highly reliant on just-in-time production processes. The automaker Ford’s European team has used Resilience360 to bring down the time it takes to detect a potentially disruptive event and figure out the impact on its supply chain from 24 hours to two hours,” Kamal said.

Whether forecasting capability is attractive to a wider customer base after COVID-19 will be dependent on whether companies with less apparent risk see value in having more advance notice of disruptions. Managing supply chain risk is not only about buying a forecasting tool, of course. It means tethering information that such a tool provides to people and processes equipped to make appropriate decisions.

“Too often, we focus obsessively on the here and now,” said Daniel Stanton, a supply chain consultant and author of the book Supply Chain for Dummies. “Or, we look at the recent past, and assume that the future will look the same. The reality is that the world is unpredictable. Supply chain leaders need to imagine what could happen, and prepare for the unexpected.”

Stanton pointed to supply chain design tools that help shippers model and test different scenarios.

“But the most effective weapon against a big disruption is really flexibility,” he said. “And that comes from having fast, accurate communications and effective decision-making,” he added.