My month long hiatus is the result of too much demand and too little supply, especially of personal time and energy.
I was surprised by how surprised so many seemed to be by the Colonial Pipeline cyberattack. Anytime so much supply capacity for such a high demand product is so tightly concentrated, risk accumulates and will, one way or another, result in disruption. In this case the disruption was short-lived. Anxiety-driven consumer purchases prompted about as much disruption (even more?) than the shut-down of flow.
I was still involved in helping clients and others make-sense of the Colonial Pipeline event when a similar ransomware attack hit JBS, the world’s largest meat processor. Meat processing in the United States is a high volume, high velocity network featuring significant concentration. But once again, the specific disruption was rather brief.
Here’s the core of what I sent several clients and colleagues on June 5: From a Supply Chain Resilience perspective there are some key strategic factors to recognize:
1. The more consolidated/concentrated the flow, the more consequential the outcomes: JBS represents one-fifth to one-quarter of US meat production. Colonial Pipeline moves the majority of refined fuel consumed between Atlanta and Washington DC. Finding, understanding, and being in an active relationship with these concentrations can be very helpful. [Fuel racks and Grocery Distribution Centers are other examples.]
2. The more high volume (like Colonial and JBS) and high velocity (like JBS) the supply chain, the more the network depends on digital inbound and outbound scheduling/sorting functions. These digital functions must be more widely distributed and accessible than most other SCADA functions to facilitate high volume, high velocity flow. This innate network characteristic increases vulnerability to cyber attacks. Finding, understanding, and being in an active relationship with the owners/operators of these key functions can support improved private-public mitigation preparedness and response. [Grocery store Point-of-Sale transaction functions and fuel rack scheduling/transaction are other examples.]
3. Failure of these key functions for these very concentrated, high volume, high velocity networks will almost always prompt sudden, unsustainable demand spikes… regardless of cause, cyberattack or otherwise. Mitigation and preparedness should include much more serious attention to demand management. In the case of the 2020 meat shortage and the recent Colonial Pipeline hack, consumer reaction was arguably the most troublesome factor.
In my opinion, cyberattacks involving these functions for these sorts of highly concentrated networks will recur again and again.
And… while the recent ransomware attacks sounded like a trumpet blast or timpani strike, the steady decline in covid vaccinations lends our late Spring supply chain symphony an anxiety-inducing thrum of dissonant violins. For meat, fuel, or vaccines preexisting demand shapes direction, speed, volume, variability — the flow — of supply. In each case — and in most cases — demand can be predicted and demand is susceptible to shaping. Since this time last year it has been widely recognized that vaccination rates above fifty percent of the population would be increasingly difficult and require increasing investments. This blog discussed these issues in fall 2020. The surge in demand for gasoline in markets served by Colonial Pipeline should have surprised no one. The last year has shaped demand for meat to anticipate spot shortages, as a result the consumer reaction to the JBS attack was muted.
High volume, high velocity demand and supply cannot really be controlled, but with knowledge, attention, and skill, demand can be shaped and supply can be targeted.