Blockchains for Blockheads. I think I finally get it.

This post originally appeared on the DC Velocity blog. See the original post at https://blogs.dcvelocity.com/public_sector_logistics/2017/11/blockchains-for-blockheads-i-think-i-finally-get-it.html

I think I finally understand blockchains. Blockchains are a concept that is creeping into the logistics literature. Pay attention; we might be looking at a fundamental shift in how business gets done.

I own a house. It is an interesting house, built three hundred years ago. Yup, the house is older than the United States. It was built in 1718 and is listed in the National Historic Register.

I’ve actually gone to the Registry of Deeds to read the file. It begins with a land grant from the king and that deed is in the file. The original homestead was huge, covering a big chunk of this side of town.

Obviously, I don’t live on an estate of hundreds of acres in suburban Boston. Instead, while I do live in the original house, the residence sits on about a ten thousand square foot plot that is all that remains of the original land grant. The rest of the estate has been peeled away over the years.

Starting from the bottom of the pile of documents at the Registry of Deeds, I can start with the deed from 1718. Stepping through transactional record, on paper, I can walk forward across the chain of actions. I can see every action that connects back through the pile to the original land grant, or block, all the way forward to the current deed on the top of the pile. The piece of paper at the top of the pile is my home.

What blockchain could do is take the paper in the file and make it digital and distributed. Once any transaction is encrypted and shared, there is no need for a central repository at the Registry of Deeds.  Copies of the chain could be shared virtually with all of the participants in the chain. 

Integrity is maintained by links among the copies of the transactions embedded in the chain residing with each participant: If any of the records get out of synch, the distributed technology flags the discrepancy.

Integrity is maintained by encryption: Anybody not involved in the transaction doesn’t have the key.

Integrity is maintained by an architecture that is inherently opaque: People can’t peer inside the transaction and understand what is happening, so hackers attempting crack a pile of encrypted records can’t find the on ramp to a successful hack.

Think of blockchains as information stored in stealth packets; you know that something is out there somewhere but you can’t see it so you can’t hack it.

I think I feel the world shifting. The financial community is leading the pack with block chain, and the supply chain is sure to follow. But we have a clash of the Titans coming. Should the government have the right and the power to read your transactions? Or do individuals have a right to transactional privacy? This is going to get interesting.


Diagnose first, operate later.

As I’m watching some recent local development news unfold, I’m once again led to asking the question ‘is there really a benefit here?’

In many rural cities across the country, the basic principle of economics- that scarcity exists- is painfully apparent. We, in these areas, have to use our limited resources wisely.

And yet often we see big expenditures on big projects with little understanding of anything beyond the first-degree impacts, if that. Without doing a thorough checkup, how can we treat unfavorable conditions with any effectiveness? How can we know what’s really going on and what really needs to be fixed? How can we get the best bang for our limited bucks?

These situations are like a doctor treating a sinus headache with brain surgery- there’s no basic need, there’s very high risk, and there’s very little chance of fixing the problem. And in this case, the doctor could have asked some very simple questions to find out surgery wasn’t necessary.

So are we undertaking big, newsworthy projects to make ourselves stand out through impressive activity, or are we truly trying to make things better?

We ought to be doing a little diagnosing first.

Helping millions starts with helping one.

“We have, in short, somehow become convinced that we need to tackle the whole problem, all at once. But the truth is that we don’t. We only need to find the stickiness."

- Malcom Gladwell

It’s an old adage- we have to eat the elephant one bite at a time. But we so often forget it, and we so often aim for huge goals without understanding how to get there.

The best way to solve big problems- unemployment in rural America, destroyed markets in central Asia, global poverty- is to find the right leverage points and surgically attack them one by one. Those sticky points will snowball into huge success.

The problem is, telling folks just that doesn’t often get them excited. We always search for the revolutionary, the most broadly impactful, the easiest to champion and snag headlines, and end up repackaging classic principals with new words, laundering away the original principal all along the way.

Every one of these ‘new’ and ‘revolutionary’ ideas has a root in something known, something foundational in human history. Lean startup, the ‘tipping point’, or whatever idea we find novel- they all start at the same principal; small, mobile, targeted efforts are the ones that drive even the most broad and widespread successes.

Next time you get a little down, like I often do, remember that the best and most impactful efforts all started at one leverage point. The goal is to find that point- helping millions starts with helping one.

Why do we have to be so complex, after all?

“Simplicity is another reason for some theories to be preferred over others…more complex theories may be preferred to simpler theories when those complex theories meet emotional or other criteria.”

- Thomas Sowell

As intellectuals, economic developers, and professionals, we believe that positive change can only be created by the radical or the complex.

While pursuing the sexy solution we often put on blinders to a return to the foundational.  Could it be possible that the foundational is foundational for a reason? Do we always need to be so creative?

Turning back to the simple just may help more people than we know. It may also lead us to question whether our pursuit of the haughty is for others or just for ourselves. At the very least, getting simple is certainly worth considering.

Beware of Target Fixation in Supply Chain Risk Management (SCRM)

Drawing on more than 15 years of research and client support around Supply Chain Risk Management, one of the top dangers is target fixation. By focusing on a single threat, most supply chain managers ignore much of their risk spectrum. This leads to considerable investment in myopic strategies and limited (if any) preparation for the full spectrum of threats.   Distinct vectors align to Strategy, Operations, Infrastructure, or Financial impacts. By providing leadership with visibility into the spectrum of risks, organizations enable those in the field to focus on specific threats, supported by broad spectrum support plans in place to sustain mitigation and response.

By categorizing threats into portfolios of risk (see figure below), leadership can create support plans and a full spectrum of responses in the portfolio. One of our clients prepared for financial risks of dramatic increases in the price of internationally procured materials (steel in this case). Whether the increase was due to a spike in fuel or continued consolidation of raw resources by China, the plan was in place to mitigate financial impact. Once a specific threat - trade barriers, in this case -, emerged, the organization purchased a 3-year supply of steel for the pre-tariff price.

This approach requires a three-tiered view of Supply Chain Risk Management.

·        The top tier is the strategy and organizational context for managing risks

·        The middle tier is the SCRM planning and execution, including the monitoring and response process.

·        The foundational tier is Human Performance, and the skills and role-based capabilities necessary to effectively plan for, monitor, respond and communicate risk management elements.

Typically, organizations focus on field-level training and planning to mitigate supply chain risks.  From Continuation of Operations planning (COOP) and OSHA standards to facility security operations the topics are familiar. However, this can lead to inconsistently reported risks to senior leadership.  By extension, it results in ineffective response and response management protocols. Poorly designed oversight processes provide leadership with no comprehensive view of the risks the field are facing every day or of the lessons learned. By structuring a SCRM strategy around the three tiers, we do not drastically change those in the field sensing and responding to threats daily. Instead, we enable them with consistent support processes and better targeted funding to prepare for and more rapidly overcome the impacts of a realized threat.

Over the past 15 years, SCV has assembled 19 leading practices in SCRM. These practices have been reviewed, applied, and refined in more than 400 client engagements. These clients range from traditional risk management venues like counter insurgency operators in Baghdad to municipalities with a need to secure their water supply. These types of client challenges fortify the tiered view with lessons learned and proof points across the risk spectrum of Strategy, Operations, Physical, and Financial.

Target fixation is an expensive problem. Fixation on one threat, whether is a hurricane, cyber intrusion, or market fluctuations, carries the cost of allowing all other threats go unmonitored and unmanaged. In the U.S. intelligence community, the age-old adage of “a Russian behind every bush” encapsulates the thought well. While our specialists in the field must manage specific active threats, at the leadership level, we must remain vigilant around the spectrum with SCRM efforts. This means allowing specialists to remain focused, while supporting leadership enables their efforts with a broader view and flexible resources ready to support mitigation and responses.

Guarding against supply chain risk with small business suppliers

In the year following President Trump’s May 2017 executive order targeting industrial base security and stability, supply chain risk management has launched back into the fore in both government and industry news cycles. As usually happens with supply chain risk management, most individuals and organizations see only the emphasis on cybersecurity in the headlines and bylines announcing the order. But when taken as a whole, and combined with the anti-trafficking orders and guidelines from the administration, a more holistic approach to supply chain transparency becomes clear. 

Logistics is Invisible, Until it Isn’t...

A good logistician operates out of sight. A great one is like the Wizard of Oz, orchestrating an amazing choreography somewhere behind the curtain. The fact that great logistics and supply chain functions are generally “invisible” is also a double edged sword. Since logistics and supply chain operations are mostly “invisible,” where do you find the next generation of talent needed to run them?