Transforming supply chains with hyperconnectivity

As the logistics industry becomes ever more integrated, hyperconnectivity takes it one step further. Connecting people, devices and systems through advanced technology and data - it can transform the efficiency of supply chains and increase fulfilment rates. But the acceleration and success of hyperconnectivity relies on technological advancement and the ability of businesses to invest in it, implement it and inspect it.

The role of hyperconnectivity in the supply chain

A robust supply chain strategy begins with understanding the interconnected nature of global logistics. As Brad Martin, director at the RAND institute for supply chain security said in an interview for The Logistics Trend Map: “It’s not enough to just know who your immediate suppliers are. You need to understand the systemic risks from factors beyond your control that you must mitigate.”

Visibility is the key. In a hyperconnected supply chain, when disruption happens you are not only alerted to the isolated incident but given access to the whole picture. You could, for example, receive an alert of a typhoon that is causing delays to a container’s delivery. A fully informed business decision can only be made when you know how all the other parts of your supply chain are working in that moment. Perhaps your stock levels are high and a week’s delay on that specific container isn’t a problem. Or something happening further down the supply chain, now means that container is urgently needed. Connecting the web of different systems and data helps make these informed decisions.

How advanced technology is revolutionising hyperconnectivity

Interconnectivity requires a high level of technology derived from AI, Internet of Things devices, cloud computing, and big data.

“When we think about the supply chain, people often draw it as a linear chain - from factory, to truck, to ship, to distribution centre, to customer. In reality it's a network with multiple factories, multi-tier level suppliers, different components coming together, going to different destinations. This multiplies the data and increases the complexity exponentially. The challenge is to gather data from all different sources and somehow make sense of it,” Jacco Weterings, Global Head of Integrated Supply Chain Engine at Maersk says.

The amount of data available globally is rising at a rapid rate. According to a Forbes report, it’s predicted that 181 zetabytes of data will have been created by 2025, which is the equivalent of 200 billion iPhone 14s. This is where Artificial Intelligence (AI) comes in. AI models and machine-learning models process the data, propose recommendations and execute actions based on data analysis. If you take the example of the typhoon and delay; AI can check if this delay is a problem within a supply chain and then recommend the right action or even in certain cases, take the action, within a certain bandwidth. With such intuitive capabilities, it is not surprising that the logistics sector is the third largest user of generative AI globally and its role within logistics is only set to grow.

In The Logistics Trend Map, AI is ranked as the tenth top trend, cited as relevant among 38% of global logistics decision makers. The Internet of Things (Iot) is ranked even higher. Among the survey of 570 global logistics decision makers for The Logistics Trend Map, 85% found IoT important for their company, placing it as the second top trend for this year.

IoT can be used across many areas of the supply chain. The integration of IoT with predictive analytics means historical and real-time data can forecast disruptions, such as supplier delays or adverse weather. IoT sensors used in high-value shipments mean journeys can be tracked. IoT can automate stock monitoring in warehouses and IoT systems also assist in locating vehicle parking spots and loading sites. 74% of decision makers would like to see the implementation of IoT by their logistics partners in the next two years, according to the survey in The Logistics Trend Map, which will in turn optimise interconnectivity.

Overcoming challenges in hyperconnected supply chains

One of the big challenges within hyperconnectivity is the current limitations of AI. This is highlighted by the fact only 3% of decision makers say AI is fully implemented in their company’s logistics.

“It’s not yet an all-seeing and all-understanding entity,” Weterings says. AI models learn by gathering information and analysing it. They still need to be trained on certain parameters and variabilities in key points of the supply chain, to find suggestions and solutions and eventually take action. Then there’s the cost. The investment and integration of this technology into a business is currently high and requires specialists to maintain it. Once implemented there’s also the risk of data security breaches and cyber attacks. It is estimated that approximately 27 cyber security incidents impacted transportation and logistics companies between 1 July, 2023, and 30 July, 2024.

Enhancing fulfilment rates with hyperconnectivity

Once fully implemented, the potential benefits of hyperconnectivity are huge, with “significant business value to be unlocked”, according to Weterings. “Taking the right decisions can prevent stock outs, lost sales, reduce costs, and improve your working capital. The gains of efficient decisions in logistics, could be multiples of the total logistics cost,” Weterings says. However, due to the investment in hyperconnectivity - implementing the systems and the costs of running them - the businesses that will currently benefit are those with high-value products, at large volumes.

Chemical company BASF is using IoT to increase fulfilment rates by tracking goods, monitoring cargo status, and understanding fuel efficiency. "Another key aspect is demand-forecasting. With our ERP system, we can monitor fluctuations in customer orders and analyse trends in order patterns. This back-end data enables us to forecast customer demand effectively. IoT also integrates with our Material Requirements Planning (MRP) system, providing real-time inventory and location tracking. We set safe inventory levels for different chemical categories. If inventory drops below these levels, an alarm is triggered. This helps maintain a smooth supply chain and ensures uninterrupted operations," Tilly Liu, Senior Supply Chain Manager Asia at BASF says.

The future of hyperconnectivity

The effectiveness of hyperconnectivity is something that will accelerate over the coming years, as technology develops, and its costs reduce. As IoT integrates more deeply with machine learning and artificial intelligence, it will enable more systems to process the data and provide solutions and actions to the supply chain in an efficient, agile and cost-effective way. Companies investing in IoT and AI technologies today, along with training staff and prioritising cyber security to safeguard their operations, will gain a competitive edge and build resilient supply chains for the future.

Be ready for hyperconnectivity to go all the way! Discover more with Maersk Logistics Insights, and learn more about Application Programming Interface Solutions (API) or for more logistics trends and insights, read and download The Logistics Trend Map.