Logistics — From Optimisation to Anti-Fragility
COVID19 has loomed all our lives for over a year now. In these times of crisis, we rely heavily on co-operation with and between nations. The reason being Global Logistic chains is a reality of today.
It all started with Toilet Paper Roll shortage in the US. It actually became a meme. People hoarding and fighting in the aisles of Walmart became a symbol of what America had become. Why did this happen? Well if you read various reports (here and here), one can see that the reason was of course panic buying, but on a deeper look, the logistic chain which supplies toilet paper to commercial establishments are different than that of home consumers. What does this mean? Supply Chains, logistic paths and tracks are pre-set and optimised for efficiency and selling at low price points. Any change in any of these functions upset the entire logistic chain. Panic buying led to disruption of the supply chains, newer contracts algorithms had to be devised to be prepared for the future.
Another incident happened more recently as of writing this article. The Suez Canal blockage. A large container cargo ship, Ever Given by the company Evergreen, blocked the Suez Canal, when it ran aground. Estimates say that this led to pile up, which led to holding up of trade worth $9.6 Bn .Phew!! Again our supply chains are so tuned and optimised, that any deviation from the current track, leads to excessive costs of goods, and massive loses for all involved from manufacturing to distribution to retailing.
An incident which as we speak is consuming India. People infected by COVID are dying without Oxygen. It is a grim situation, hospitals are sending out SOS messages asking reminding on 30 min or 1 hour or sometimes a few minutes of oxygen being left. Why is this happening. According to this report, India produces approximately 6500 metric tonnes of Oxygen per day, for both Medical as well as Industrial use. Out of which the Medical Industry requires 2500 Metric Tonnes/day. Well when there is so much production, why are hospitals not having oxygen and people are dying. It takes about 1–3 days of transport in Oxygen tankers from the manufacturing units to the hospitals. Moreover a lot of the hospitals do have large storage tanks. The supply chains were so tightly strung to optimise cost, that when COVID hit, and cases are are growing, the logistic chains are failing to ramp-up. Production maybe ramped up, however logistic chains are failing again in this case. The reason again being again heavily optimised logistic chains for price. As an emergency measure, the government has deployed Indian Airforce and Indian Railways to bridge this logistics gap.
In all these scenarios, we see that we optimise functions very efficiently for one purpose. (In these cases cost/price of the products). Due to this optimisation, there is imbalance in the system, when the system flow is disrupted.
It is time to re-think our logistics. From Optimisation to making it Anti-Fragile. Probably we should spend this decade as COVID has taught us, how we should convert these logistic chains to become Anti-Fragile
