Chasing down stolen art would seem to have little to do with helping companies anticipate and mitigate the effects of a pandemic on their supply chain operations. Yet it was while working for a New York startup that helps owners recover pilfered artwork that David Shillingford first became aware of the power of data and analytics—the same tools he would later use to guide companies through the Covid-19 crisis.
From that introduction to data analytics as a loss-prevention and recovery tool, Shillingford moved on to other startups that applied similar techniques to risk management and mitigation, gradually working his way into the retail and logistics sectors. Indeed, as a senior vice president at Verisk Analytics, he was responsible for the data analytics and risk assessment firm’s entry into supply chain analytics.
Today, he serves as chairman of supply chain risk-management company Resilience360 and CEO of its parent company, Rising Tide Digital, a holding company formed by Columbia Capital to invest in and develop disruptive supply chain analytics companies. Resilience360 was originally created by transportation and logistics giant DHL in response to customers’ needs for better supply chain visibility following the 2011 Japan earthquake and tsunami. It has since become an independently operated company under the management of Rising Tide Digital.
Since the start of the Covid-19 outbreak in January, Resilience360’s risk analysts have been tracking and assessing the pandemic’s impact on global supply chains, including quarantines, company shutdowns, border closures, and other disruptions. On Feb. 27, the company started issuing daily updates on the outbreak. It has also produced 12 special reports, five webinars, and one podcast on the topic.
Shillingford recently took some time away from the crisis to talk to DC Velocity’s Susan Lacefield on the lessons we can learn from the pandemic and what to expect in the coming months.
Q: How is the Covid-19 pandemic different from other risk events global supply chains have recently faced?
A: There are two main differences. One is the geographic spread and impact of the outbreak. The speed, extent, and unpredictability are unprecedented and have resulted in simultaneous, global supply disruptions and demand shocks. The other difference is the human component of the pandemic—the loss of lives is, first and foremost, a human tragedy. Unlike most supply chain disruptions, the supply chain infrastructure is intact; it is the workforce that is unable to work and the consumer that is unable or unwilling to consume.
It is also noteworthy that the tragedy and disruption would be much worse without the dedication and bravery of frontline workers in health care and in retail stores, and those making the deliveries.
Q: Has there been anything about the recent crisis that took you by surprise or caught you off guard?
A: [We’ve been struck by the lack of preparedness among the] companies that have been contacting Resilience360 lately to understand how we can help them manage their supply chain risk. The lack of visibility to upstream supply and logistics networks, the risks they face, and the financial impact of these risks is surprising. Some companies have made efforts to risk-adjust their decision-making, but most are just about to start this journey.
Q: What are some lessons that can be learned from the pandemic from a supply chain perspective?
A: Companies need to have better visibility into their extended network and the risks that are most likely to have an impact on their ability to source, make, and deliver their products on time. The move toward digitalization needs to accelerate, and risk needs to be embedded in supply chain decision-making at the strategic and tactical level. Visibility and monitoring have become critical competencies and best practices, and will be even more so moving forward.
Q: What companies do you feel have handled the pandemic well, and what can others learn from their example?
A: At an individual company level, the ones that have responded well are those that already had a cross-functional crisis-management framework that includes supply chain risk monitoring—companies that have invested in tools that enable end-to-end network mapping and risk assessment. We also found that the industries that were hardest hit in past disruptions were the best prepared, including automotive and high-tech companies that have been impacted by various natural disasters over the last decade. The same applies across countries and regions—areas that are historically more prone to disruptions tend to be better prepared.
Q: What long-term advice would you give companies on how they can recover from the pandemic?
A: The speed and shape of each company’s recovery will depend on its size, industry, and location, but all companies need to accelerate their progress toward digitalization, and risk [management and analysis must] be a component of that [digital] transformation. Companies can no longer afford to think about risk management as a separate process; it must be embedded within their strategic and tactical decision-making.
Q: What advice would you give national governments on how they can help supply chains in the post-crisis period?
A: Private industry will always have more resources than the government, but these resources can either be hamstrung or multiplied depending upon how the government partners with industry. These types of partnerships can only be achieved with the right interface. A good example of this is the American Logistics Aid Network, which launched the Supply Chain Intelligence Center to help businesses quickly see government-imposed restrictions or waivers that impact supply chains.
Q: What industry sectors do you expect to be most changed by the pandemic and why?
A: Retail’s move to e-commerce will be accelerated, and obviously the hospitality industry will change in many ways, as trends toward eating in restaurants will reverse and [the demand for] food delivery will grow. Pharma companies will come under pressure to source from lower-risk countries and onshore more production. Companies with very lean supply chains will be under pressure to increase safety stock. Consumers will not demand the [same variety of choices they previously did], which will allow companies to reduce SKU [stock-keeping unit] proliferation and the resulting supply chain complexity.
Q: What effects do you expect to see in freight transportation for the next year? How will the pandemic affect freight rates and capacity?
A: The biggest challenge for freight transportation will be volatility. Supply and demand will come back online at different times in different parts of the world, and the likelihood of secondary outbreaks will create further supply disruptions and demand shocks. [Regions] where demand does return will see capacity challenges due to imbalances in transportation assets as well as the insolvency of many carriers over the next six to 12 months.