Keys for Bringing Resilience Back to Maritime Supply Chain

RAYVNNews

Covid globe As the world is still fighting the ongoing health and economic implications of COVID-19 and its mutation, supply chains are finding themselves trapped with unique challenges of their own. What should the shipmasters and ship owners do to keep their supply chains running while facing critical events including COVID-19?
Based on a recent study conducted by Accenture, 94% of the 1,000 largest American companies allot supply chain disruption in the last few years due to impacts of COVID-19. Accenture reported that 3 out of 4 companies negatively impacted their business. Over half of the surveyed companies have underestimated their growth prediction because of the pandemic.
COVID-19 has revealed vulnerabilities and fragilities of supply chains worldwide. The disruption caused by the pandemic has left behind sharp economic consequences resulting in shrunk revenue and has exhausted the global economy. Today, organizations are in a reaction mode, focusing on securing supply and focusing on customers' needs to get back on their feet again.
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 of Fortune 1000 companies attribute supply chain disruption in the last two years due to COVID-19

0%

 of Fortune 1000 companies attribute supply chain disruption in the last two years due to COVID-19

0%

 of Fortune 1000 companies attribute supply chain disruption in the last two years due to COVID-19

COVID-19 has revealed vulnerabilities and fragilities of supply chains worldwide. The disruption caused by the pandemic has left behind sharp economic consequences resulting in  shrunk revenue and has  exhausted the global economy. Today, organizations are in a reaction mode, focusing on securing supply and focusing on customers' needs to get back on their feet again.

Part 1

What create a fragile maritime supply chain within the COVID-19 crisis

The greatest weakness of the maritime supply chain lies in the usage of outdated business practices and the lack of contingency plans that affect business continuity and resilience, as has been proven by the COVID-19 crisis.

A survey by IBM for more than 3000 executives across 22 countries revealed that many supply chain executives believed that the lack of technological aspects in their supply chains had shaken their resilience during the pandemic. While many of them indicated that their interest in adopting cloud technology increased by 20% compared to pre-pandemic time. 19% of the respondents reported that their organizations lack a proper contingency plan, affecting their capabilities to mitigate risks caused by the recent pandemic.

COVID-19 is an exceptional event, which may last for many more years to come. Still, the impact of the pandemic has exceeded anything most supply chain operators have seen before. Each phase of COVID-19 requires continuous end-to-end assessment, improvement, monitoring and adjustment to act quickly and execute short-term tactical plans to mitigate potential risks and protect the workflow of global supply chains.

The greatest danger in times of turbulence is not the turbulence, it is to act with yesterday’s logic.
Peter Drucker
Part 2

COVID-19 is not the only risk threatening the maritime supply chain: The Ever Given case

In 2021, the Suez Canal was blocked nearly for a week due to the grounding of Ever Given, the 20,000 TEU container ship.

The Ever Given owners initially stated that high winds struck the vessel, pushed it sideways, and wedged in the Canal's east bank, leading to canal blockage. The Egyptian authorities said that "technical or human errors" may be the main reasons for this critical event.

The closure of the Canal led to a massive traffic jam in the vital passage, costing global trade more than $5bn a day where hundreds of crowded ships lined up to pass. Exhausting, yet ultimately successful operations refloated the stuck vessel to reopen the Canal again, which prompted the Egyptian authorities to impound Ever Given and its crew until more than 500 million USD was paid as compensation for the losses caused by the grounded ship. 

The Ever Given incident drew attention to a unique set of critical events threatening the modern supply chain. Port overcrowding poses bloating costs for logistic firms that are experiencing heavy losses related to wasted time waiting for the load, leading to losses amounting to billions of dollars annually. For example, the United States estimated the total cost of overcrowding at $60 billion in 2021. 

A recent article by freight wages Inc. emphasizes the crucial role of the collaboration between government officials and stakeholders such as key industry players to find new collaborative paths to solve problems related to goods movement during critical events.

Facts about the Suez Canal

“The Suez Canal is a human-made waterway that cuts north-south across the Isthmus of Suez in Egypt. The Suez Canal connects the Mediterranean Sea to the Red Sea, making it the shortest maritime route to Asia from Europe. Since its completion in 1869, it has become one of the world's most heavily used shipping lanes.”
Suez canal satelite image
Part 3

Common crisis management challenges hinder the resilience of the maritime sector

Digital transformation and expensive IT systems

Continuous exposure to other unforeseen critical events (i.e. delays, cyber risks, weather uncertainty, theft)

Outdated equipment and old techniques. As they aged, the Supply chain became more prone to failure

Keeping up with the new customers/ market trends, expectations & behaviors

Fragmented manual systems to manage, handle and respond to crises

Poor connectivity and slow information flow affect decision-making and real-time communication.

Part 4

Common crisis management challenges hinder the resilience of the maritime sector

1. Move away from paper to digital

Nowadays, the trend in business is to move toward digitization, and crisis management and response are no exception! Harnessing new technologies would promote the operations of the maritime supply chain sector to be more efficient and would aid the management of critical challenges that this sector is facing. The digital transformation in this sector can help companies be more proactive when identifying potential risks and responding quickly to disruption.

Executives have become more trusting of what technology can do, and they are pushing ahead with digital transformation. -->
IBM survey report, 2020
2. Collaborate and cooperate

According to a recent survey fielded by GlobalTranz Enterprises, LLC, more than 90% of supply chain leaders stated that collaboration with other supply chain stakeholders is necessary to survive during challenging times. As for critical events like unplanned delays or onboard fire, a collaboration between interested partners and stakeholders is essential to survive. Moreover, the survey shows that supply chain leaders respond to uncertainties by seeking new partnerships with relevant stakeholders (i.e., suppliers, insurance, neighboring companies) and adapting technology that supports networking with stakeholders to maintain supply chain resiliency during disruptions.

3. Proactive crisis management is a key to survival

Even though the official maritime safety regulations provide immense guidance to improve the sector's safety and its people, it is solely suggested that general practices manage a common set of serious threats. Still, further efforts and detailed practices need more consideration from the shippers and executives themselves to maintain business continuity. Automated crisis management tools make it easier to manage a crisis from the very start. It can perfectly integrate multiple manual fragmented systems for communication, task delegation, documentation, and more all in one place. With a click of a button, shipmasters can notify many related stakeholders in seconds instead of manually calling each one on their call tree.

New technologies automate incident reports avoiding the tedious process of manual documentation of every action, response, and detail during an ongoing critical event. 

The crisis management platform can reduce the ‘golden hour’ down to five minutes by combining all needed features to handle incidents under one umbrella. To illustrate the efficient role of investing in a crisis management system, the following example compares a collision incident between two vessel ships, A and B, as depicted in the table below:

Ship AShip BAction: The shipmaster manually started to notify all stakeholders listed on his call tree. Time consumed: 25-30 Mins 3-5 sec Time consumed: Action: With a click of a button, the shipmaster notified all stakeholders on SMS, Email, in-app notifications, and automated phone calls. Task #1: Notify relevant stakeholders and other personnel Action: After a long brainstorming of who should do what, the shipmaster started his long phone calls round to assign tasks to all personnel to explain their tasks with a given deadline. Afterward, a second-round call has begun to follow up on task completion. Action: In seconds, the shipmaster assigned tasks to personnel and set deadlines, and automatically notified personnel through the platform. When tasks are completed, the information is immediately reflected in RAYVN. Time consumed: 30-40 Mins. <1 Min Time consumed: Task #2: Tasks delegationAction: One of the crew onboard has been tasked with writing a report about the whole incident. But a lot was going on around him. He ended up with an incomplete, inadequate report that lacked important details. Action: The report was automatically generated based on all the log entries and other information in RAYVN. It automatically documented all actions taken and decisions made. Time consumed: 1 day 30 MinsTime consumed: Task #3: DocumentationExisting crisis management system: Multiple manual systems RAYVN Critical Event Management digital platform Existing crisis management system: Failed Passed
Part 5

Conclusion

Modern supply chains are getting more and more complicated. With unforeseen and unexpected critical events like COVID-19, ship collisions, and even canal blockages, many organizations have prioritized efficiency and proactivity as a key to mitigating the out-turns of critical events. Investing in crisis management tools like RAYVN can help you manage, control and handle disruptions while maintaining supply chain resilience and efficiency.

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