The food, gas, and fuel supply challenges that the UK has recently faced are a perfect illustration of the risks associated with imperfect supply chain management.
These challenges will continue – and potentially increase – given increased customs checks, the ongoing pan-European labour shortage in key logistics industries, and the trend towards national resilience in a post-pandemic world. The amalgamation of a few supply chain bottlenecks has an instant and disruptive impact on our daily lives. These issues require a comprehensive solution, particularly for the grocery and food logistics sector.
While the fuel shortage appears to be easing, facilitated by a recent government intervention to dispatch the Army to drive lorries, this is not a long-term sustainable solution to the challenges of managing supply chains. Complex supply chains, such as that of the grocery and foodstuff industries, involve a number of suppliers, inputs, storage facilities, transportation methods and distribution centres that far exceed those involved in petrol distribution. Fuel may dominate the headlines, but for months now food shortages have been at unprecedented levels.
“Britain cannot wait for Christmas to be cancelled before we act”
Britain cannot wait for Christmas to be cancelled before we act. We must invest now to address these challenges. Investment helps a problem to be spotted sooner. The undersupply of essential goods risks affecting the economy in the short term, but without a lasting solution they risk further accelerating inflation. British consumers are already experiencing this – the Office for National Statistics (ONS) reported inflation at the highest rate since 2012 in August with a year-on-year figure of 3.2%. The ONS noted that this growth is “being driven by the motor vehicles & transport equipment, and food, drink & tobacco sub-sectors” – all of which are felt at the checkout and in consumers’ household budgets.
We must adopt a holistic approach to improving all aspects of our supply chain. Resilience planning needs to be urgently built into tools for supply chain management, so that we can look to stay one step ahead of future disruptions. Doing so will give business and government the foresight necessary to identify bottlenecks and act pre-emptively to ensure the uninterrupted flow of supplies and allow all industries to improve their risk management and remain on a level playing field.
We simply cannot afford a repeat of the turbulence witnessed in the energy industry throughout September, with many firms shutting their doors and hundreds of thousands of customers being forced to switch supplier. The impacts of a repetition of these events in the grocery industry would be disastrous. This is a warning that we cannot ignore.
Technological solutions can serve to ameliorate this situation. Britain is at its best when it embraces its role as a fount of innovation and when we seek to harness our knowledge to address real world challenges. Technological solutions must include not just upgrades to the supply chains themselves, but also crucially to their management, governance, and oversight.
We should recognise the value of smart contracts and seek to institute them across the grocery industry, with government standards and requirements to ensure uniformity and interoperability. The Proof of Trust, an innovative technology company, has developed a patented smart contract dispute resolution mechanism that can serve as an early warning system for future supply chain disruptions.
The wide variety of stakeholders involved in the supplying and distributing of groceries, combined with its significance in keeping Britain and Britons running, makes the industry the ideal proof case for the implementation of such contracts. Any potholes in the sharing of data can prove extremely disruptive if not identified in time.
“Resilience planning needs to be urgently built into tools for supply chain management, so that we can look to stay one step ahead of future disruptions”
This failure to share data and map the potential repercussions thereof appears to be precisely the issue that has affected recent fuel deliveries: the shortage of lorry drivers has been recognised for some time, but how this affected petrol deliveries and distribution was not properly accounted for. Smart contracts would ensure that when one node was at risk of failing – through understaffing or failure to deliver – this could be mapped across the supply chain.
Continued competition for lorry drivers and other key workers, changing food standards, and increased customs checks are known factors for the grocery sector – smart contracts can mitigate and manage these risks and prevent them from spiralling into a crisis.
A standard for smart contracts and a programme overseeing their implementation across the industry would enable both the private and public sectors to not only map the impact of failures, but to identify, resolve, and plan a reaction to any issues that may arise from the potential failure of one link in the chain (no matter how small it might initially appear). In the event of a break in the chain, oversight can enable a resolution and can flag a needed re-allocation of resources, labour and supplies to resolve the issue.
The continued alarmist talk about Christmas being cancelled may prove to be a false alarm. But regardless, it’s an early warning sign that business – and government – cannot ignore. We need to invest in innovation now to ensure that such scenarios are not repeated in the future.