When the Benjamin Franklin called at the Port of Los Angeles, Calif., in December 2015, it was the largest ship ever to reach the U.S. port with 18,000 containers on board.

The Panama Canal expansion has ushered in this new era of the mega-vessel in North America, and with it, the potential for more port and cargo disruptions.

To head off the congestion, the U.S. Department of Commerce is encouraging ports to implement so-called port community systems. These IT platforms permit real-time sharing of critical cargo data among all participants in the supply chain with the twin goals of improving port operating efficiency and enabling faster cargo flow.

The Benjamin Franklin arriving at the Port of Los Angeles in December 2015. Credit: Port of Los AngelesTo deliver on these objectives, Commerce launched a competition to develop prototypes for open-source port community system platforms.

(Read "Cyber Security at Marine Ports Is
Addressed.")

It also partnered with the Center for Global Supply Chain Management (GSCM) at the USC Marshall School of Business and the Ports of Los Angeles and Long Beach — the busiest port complex in the U.S. — to create a testbed to evaluate technologies that provide more information on the flow of goods.

Few dispute the idea that digital technology — notably the Internet of Things (IoT) — can modernize ports and the global supply chain. However, stakeholders first may have to clear some fundamental obstacles. Nick Vyas, executive director and co-founder of USC Marshall’s GSCM Center, explains how in this interview with contributing editor Winn Hardin.

Winn Hardin: What is lacking in today’s IT platforms for the maritime supply chain?

Nick Vyas: Over the last 35 years, global trade has become very complex. Physical flow is so complicated that IT systems have not evolved at all, especially within the supply chain. These systems exist within silos and don’t talk to each other. We are lacking the system of systems. It’s seldom they talk to each other within the enterprise.

This has created tremendous friction for the overall economy because everybody’s trying to push the data and create plugs, patches, and bridges. The flow of information within the IT system is very fragmented and inefficient. At best it’s like a caveman lighting a fire. We’re still using stones to generate the spark.

Hardin: How can the concepts of IoT drive efficiency?

Nick Vyas, USC Marshall's GSCM CenterVyas: Companies are using part of their supply chain and IoT to create efficiency, but again, it’s efficiency only in their own island. We have to be able to talk not only within an enterprise but across the silos and systems in a way that the IoT does in the financial sector so we can adopt those best practices in the supply chain.

Hardin: What are those best practices?

Vyas: At the Supply Chain Digital Conference we hosted with the Department of Commerce at USC in November, we gathered supply chain stakeholders to ask, “Why don’t we have a standard communication protocol in the supply chain when we talk about the data?”

You can draw the parallel on this by following telephone data portability. Imagine you are making a call to your friend, and she happens to be on different carrier and you’re not able to connect to her. In a worst case, you would be required to use a separate application every time you are faced with this issue. The reason we don’t see any issues is simply because we have a data standard and collaboration with carriers as a part of their license agreement.

So the question becomes, how do we create those standards in the supply chain to ensure transparency with respect to the security of data and allow you to move seamlessly between silos and systems, but still provide authentication to ensure there is no breach or competitive disadvantage?

That’s the Holy Grail: How do we get data to move agnostically across the pipeline from various systems within and outside of the silos? If you’re able to accomplish that, the supply chain of the future will be very different.

Hardin: How come these real-time data-sharing systems haven’t been adopted yet within the supply chain or at ports? Besides a missing common platform and protocol, what are the barriers to entry?

Vyas: There are several factors driving this issue: lack of trust and transparency, cost and ownership of data, and lack of collaboration among various stakeholders and service partners.

Hardin: Can you give an example of what a supply chain with frictionless data would look like? And who controls that data?

Vyas: Let’s say you’ve decided to sell boutique dresses on Amazon and placed a purchase order for 10,000 dresses. Raw material comes from Bangladesh, manufacturing is in China, and it ships from Shanghai to Los Angeles, and then ultimately the rest of the way. Imagine the data set if that purchase order information was shared with everybody in the supply chain.

It doesn’t matter if each supplier has a different system. As long as the data flows freely and you authorize those parties to have access to the data, you can track and trace your order all the way through the supply chain. It’s like a glass pipeline where the transparency would be from end to end.

As the one buying those 10,000 boutique dresses, you are the owner of the data set. But every person attached to your value chain will be a collaborator.

Hardin: What are the benefits of this data standardization from a cost standpoint?

Vyas: It could create billions of dollars in savings because you are no longer attaching spreadsheets or sending data back-and-forth through disparate systems and interfaces. You’re reducing complexity. This futuristic system would be incredibly efficient.

Hardin: Did the conference yield any pathways to achieve these objectives?

Vyas: I moderated a panel on how blockchain can revolutionize the supply chain, especially at IoT-level detail. [Blockchain is the peer-to-peer distributed ledger technology that underpins the bitcoin cryptocurrency.] Blockchain has tremendous potential to create track-and-trace capability within the supply chain in a secure way.

Hardin: What other opportunities or insights could advanced technology bring to the supply chain?

Vyas: Once you have a data set without friction, you can start to apply the intelligence that exists in the IOT evolution. The system of systems has to function as a backdrop to start leveraging artificial intelligence, machine learning, augmented reality, big data, analytics and a lot of the cloud-based applications out there. These technologies will become at least somewhat applicable once the ecosystem is established.