For links and show notes, mouse over the player and click the 
.
Transcript
Kyle Rice is the chief technology officer at SAP NS2, where he has worked for almost eight years. Prior to his current role, he previously held positions at Leidos/SAIC, ManTechIS&T and McDonald Bradley. Rice holds a B.S. in physics and applied mathematics from American University as well as a M.S. in computer science from George Mason University.
David Maloney, Editorial Director, DC Velocity 00:01
Keeping supply chains secure. Attempts to move the logjam of containers at West Coast ports. And new research into autonomous trucks.
Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast. Hi, I'm Dave Maloney. I'm the group editorial director at DC Velocity. Welcome.
Logistics Matters is sponsored by Hyster Company, a global manufacturer of forklifts, high-capacity lift trucks, and container-handling equipment. Operations rely on Hyster for everything from advanced power sources for material handling equipment to their industry-leading package of operator-assist technologies, Hyster Reaction. For more information, visit Hyster.com.
As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insight into the top stories of this week. But to begin today, supply chains have been at the center of the world's attention of late, and making sure that they are secure is more important than ever. What are some best ways that companies can ensure supply chain security? To discuss that, here is Victoria with today's guest.
Victoria.
Victoria Kickham, Senior Editor, DC Velocity 01:20
Thanks, Dave. Yes, our guest today is Kyle Rice. Kyle is chief technology officer at SAP NS2, which is the national security subsidiary of software company SAP. The company provides cybersecurity, AI, and secure cloud solutions to U.S. government agencies and businesses, and as you said, he's here to talk with us about cybersecurity and supply chain. Welcome, Kyle.
Kyle Rice, Chief Technology Officer, SAP NS2 01:43
Hey, thank you, Victoria. Really happy to be here.
Victoria Kickham, Senior Editor, DC Velocity 01:45
Great. So, what are the greatest supply chain security risks, cybersecurity risks, overall for 2022, if you could just give us a general overview?
Kyle Rice, Chief Technology Officer, SAP NS2 01:53
So the supply chain is still, we're still reeling from Covid-19's impact, obviously, which which caused massive delays and staff shortages that we're all painfully aware of. That's going to continue for a while, but it's gonna lead us to what I think are the two biggest risks for 2022, and the first is a ramp up of intentional supply chain issues. Most of what we've been dealing with over the last couple of years, iit's been Covid-related. But it's also creating this ripe environment for people who don't have our best interests in mind, and world politics happening right now, you can see who some of those folks might be. But, you know, it can be traditional, you know, profit cyber exploits, a lot of those are already happening. But what we've done is we've also provided a map of how interconnected the world is, and how easy it is to cause a whole lot of problems for us by impacting that interconnectedness. The chip shortage is the obvious example. That happened organically due to factory issues and staffing outages and ordering problems and transit issues, but there's really nothing to preclude a bad actor from using cyber means or physical means, or even just a disinformation campaign to help encourage the next chip-supply shortage situation. And I think the second risk is fatigue throughout the supply chain. We've been operating in this emergency mindset for two years now, which we can see isn't sustainable. This manifests itself in staff shortages, where people who were trying to power through, but they realized this really can't continue, but it also manifests in increased risk taking. So, we saw this around the holidays: a significant increase in shoppers falling victim to fake retailers, and we get desperate. We don't make the right decisions. So, this sort of not holding it together very well anymore, these sorts of situations are really going to be popping up this year, Victoria.
Victoria Kickham, Senior Editor, DC Velocity 03:40
Thank you. Are there any particular product areas, commodities—you just mentioned the chip shortage, or chip problem—or industries that are sort of most vulnerable to cyber attacks or similar technology disruptions?
Kyle Rice, Chief Technology Officer, SAP NS2 03:54
Sure, if it's a cop out, I would say this: anything with people. You know, in today's environment, really, no one is immune to a cyber attack, but we are often the weak link, whether that's falling for a phishing email or social engineering or forgetting to patch things or writing a password on a sticky. I mean, that's why it's so important to train your personnel, but also to give them the right filtering technologies, and mainly to automate things as much as possible. But you asked about particular industries, and more specifically, I would say, there's a higher cyber risk in industries that are lower on the technology stack. Software and IT companies, you know, they're always in the cyber crosshairs, but as a result, you know, we staff and fund cyber defense efforts accordingly. But for more foundational industries like utilities, mining, agriculture, and so forth, they're less likely to have those cyber teams on staff, which means they are at risk of very unpleasant surprises that they're often going to be unaware of. And compounding this, these industries often have lower margins, so they aren't as able to invest proactively for a future cyber threat. So that really opens up this risk factor for them.
Victoria Kickham, Senior Editor, DC Velocity 05:06
Yeah, so there's been a lot of talk around those particulars you just mentioned, given what's going on in the world—the intensifying tensions over there, Russia and Ukraine. Can you talk about how sort of geopolitical events like that sort of have an impact on this issue?
Kyle Rice, Chief Technology Officer, SAP NS2 05:23
Absolutely, I think the thing we're going to see there is, it's just going to be more active disruption efforts. You know, as we've talked about, you know, if Russia does decide to go into Ukraine, it's to their interest to make the rest of the world as muddied as possible, and we've seen that, you know, the rest of the world, the U.S. in particular, we're sort of hanging by a thread from a supply standpoint, and it's not that hard to find new levers to pull that will make it that much more difficult for us. So, I think that's really going to be the key is the parts of the world who have really optimized their offensive cyber operations are also the parts of the world that may get spun up here over the next few months, and there's really no way that's not going to impact us.
Victoria Kickham, Senior Editor, DC Velocity 06:09
Are there any specific steps you can talk about that maybe the federal government is taking now that you think will help improve supply chain security in the near term, anything our our listeners should be aware of?
Kyle Rice, Chief Technology Officer, SAP NS2 06:23
Yeah, no, I think President Biden and his administration, they've done some really good things in terms of visibility, I think visibility and data sharing is really a key, both in the supply chain and the cyber impacts around that, in particular, the installation of Chris Inglis as the national cyber director, that's really a great step, because you need that level of overall focus. The key really is working together and making sure that we get this full aperture of what's happening, and that's what that Office of that National Cyber Director, making that a direct report to the President, I think, is a very key step.
Victoria Kickham, Senior Editor, DC Velocity 07:00
How can technology help supply chain companies sort of navigate the backups and disruptions we've been experiencing?
Kyle Rice, Chief Technology Officer, SAP NS2 07:06
The most important thing technology brings to the table is the ability to access and handle data. You know, supply chains have been around forever. I mean, you know, as long as people have been trading and, you know, it's only natural that the various parts of the chain have adopted technology at very different rates. You know, for example, back in the sailing days, if you were the captain of a clipper ship, and you had this newfangled sextant for navigating, but you're still using paper records for the ship's log, and maybe that kept getting eaten by rats or something. But this technology imbalance means it is not optimized. So, for a long time, we had this imbalance between supply chain data—you know, some was available, but some wasn't. But right now, we're at a point in time where there's really valuable data readily available. Logistics data, consumption data, demographic data, manufacturing data, this all combines to create a reliable picture of the supply chain and how to optimize it, and really how to predict and prevent problems from occurring. And there are capabilities that exist for this type of analysis from SAP NS2, as well as plenty of others, to detect, correlate, and report these supply chain anomalies based on a company's individual supply needs. So, this gives you just a chance, gives you a fighting chance, arms you with information ahead of time so you can better understand your risk of disruptions that might occur.
Victoria Kickham, Senior Editor, DC Velocity 08:26
So are there specific risk-management technologies or strategies that transportation and logistics companies in particular can best utilize, you know, that sort of portion of the supply chain? Do you do any work in that area?
Kyle Rice, Chief Technology Officer, SAP NS2 08:40
Yeah, no, absolutely. Thank you. You know, here's an example: About five years ago, the Port of Hamburg, you know, what they did there, they did is this IT modernization effort, trying to pull that all together. And so [what] they knit together was essentially everything that's coming into that port—and that's the second-largest container port in Europe—combining logistics data, capacity data, personnel data, demand data. And the result of that is, they doubled the throughput at that port. So, some of these things are solvable, from from a logistics and transportation standpoint. We really just need to work together and get that data flowing together.
Victoria Kickham, Senior Editor, DC Velocity 09:16
Collaboration, yeah, that seems to be the main point, or one of them. There seems to be a growing awareness, I think, in general, of the importance of cybersecurity across the supply chains. Do you agree, and what do you—do you think companies are placing enough emphasis on this issue today?
Kyle Rice, Chief Technology Officer, SAP NS2 09:34
So, I mean, I completely agree. We have seen so many high-profile breaches in the past year or so across a multitude of industries—you know, SolarWinds, Colonial Pipeline, folks of that nature—but as tensions continue to increase, you know, with Russia and China and folks of that nature, there is a growing awareness in both the private and public sector surrounding the need for cybersecurity around these supply chains. But quite honestly, I don't think there's enough emphasis on it yet, and it goes back to what I said earlier about how much Covid has really laid bare the interdependencies of the world. There are so many new angles for an attacker to leverage. You know, for example, you know, back to that chip shortage, you know, used car prices are up almost 50%. I mean, I mean, that's, that's craziness, that's an insane impact. But if I'm a state that is not friendly with the U.S. who wants to disrupt things, I'm looking very hard for that next chip shortage corollary that I can pull.
Victoria Kickham, Senior Editor, DC Velocity 10:31
What are some best practices for implementing some of the strategies and solutions we've been talking about here regarding cybersecurity, and can you share any sort of key things that companies should do?
Kyle Rice, Chief Technology Officer, SAP NS2 10:45
Yeah, I—there's a few here, and the first goes back to the to the people, you know. Employee education is just a critical part of your cyber implementation. Employees were always going to be the weak links, so you want to help people understand the risks and the schemes to watch out for. I mean, just education can can eliminate a whole lot of your risk. But also, you know, help them out. You know, deploy good phishing tools, things of that nature, to support them. But I think the second key point is that you have to expect all this to fail. You have to expect your prevention efforts to fail. When that happens, you have to limit the impact. This is why, you know, a zero-trust approach, we hear about that a lot, that is critical. Because you can never assume that someone is who they say they are, just because they're in your network. You have to make sure that you can minimize that impact if it is a bad actor. The final thing is, you need detection tools. You need a way to have security monitoring, you need to have threat intelligence, because you can't kick someone out if you don't know they are there. So, you have to—so, first I would say education; second, zero trust, expect [the] problems, expecting prevention to fail. And third is, is make sure you can detect so that you can kick people out and remediate that situation.
Victoria Kickham, Senior Editor, DC Velocity 12:00
Great. Thank you. All good advice. Kyle, thanks so much for being here with us today. We've been talking with Kyle Rice of SAP NS2. And back to you, Dave.
David Maloney, Editorial Director, DC Velocity 12:12
Thank you, Kyle and Victoria. Now let's take a look at some of the other supply chain news from the week. And, Ben, for months now, you've been following efforts to relieve container delays at West Coast ports. What's the latest?
Ben Ames, Senior News Editor, DC Velocity 12:26
Exactly, Dave, yeah, and anyone who works in logistics knows that container imports have been backed up and delayed everywhere, thanks to the pandemic, combined with the peak season, and that discussion has spread to, you know, general newspapers and the nightly news shows lately. Everyone's talking about supply chain. But this week we learned that we may finally be making some progress on chipping away at that congestion and helping ships unload their containers faster and move goods into the economy. One strategy that seems to be working is sort of the simplest, and that's just to find more space to put the backlogged containers, simply moving them off the docks to a nearby parking lot so trucks can reach them more easily to pick up the loads, and so that new ships can then have a place to push and offload their latest containers. So, the latest example of seeing this came when the state of California, this week, made a deal to use six state-owned plots of land for that kind of temporary cargo storage. The plots were three armories, two fairgrounds, and a former prison site. So, together, those fields, they have enough space to hold 20,000 containers, and California will manage the space through an arrangement with a company called Chunker. They're a Utah-based firm that provides a marketplace for trading short-term warehouse space. Specifically, Chunker has leased those six sites from the state for a year with an option for a second year. Other examples recently include a 22-acre pop-up container yard announced in January by the Port of Oakland; a similar approach by a South Carolina company throughout the southeast and Gulf; and last week, a Los Angeles-based fulfillment provider called Taylored Services said it had opened [a] new location directly at the Port of Los Angeles, where it can support things like cross docking, transloading, and other container transitioning services.
David Maloney, Editorial Director, DC Velocity 14:28
Those approaches all sound like intuitive strategies, but is it actually helping to solve the problem?
Ben Ames, Senior News Editor, DC Velocity 14:34
Great question, because you really need to see progress on the thing, and we did actually get some statistics this week as well. We're seeing that freight import backups at the West Coast ports began to ease slightly in January. That was probably helped by a manufacturing pause in China during the Lunar New Year celebrations, which are still ongoing. And retailers in the U.S. have been drawing their inventory after the winter holiday peak shopping season. So, that's great, but the answer is a little more complicated because of the delicate balance of global trade. Everything that moves from one point has to go to another. So according to the supply chain visibility provider project44, the easing of congestion in the U.S. has shifted some disruptions to Asian ports. Project44 said that the number of ships waiting per day to berth at U.S. ports, on average, fell from 14 ships in December to seven in January, so that's clear progress. Likewise, European ports, they have a similar trend. They noted a month-to-month average decline from seven ships per day in December to six ships per day in January. However, from December to January, the same time period, Asian ports had an increase, from 13 ships to 17 ships waiting to berth. So, the pulse has to go somewhere. According to project44, they have a vice president of supply chain insights, Josh Brazil, said in January there were signs of improving conditions at some ports, but we still have a ways to go before there's a return to so-called normalcy. According to Brazil, whether or not there will be enough empty containers positioned in the right locations after the Lunar New Year, that's a big unknown, and if they're not, then we may see new kinds of delays as business picks up again in March and April.
David Maloney, Editorial Director, DC Velocity 16:28
Yeah, I guess we will have to wait and see, but there does seem to be at least a sliver of hope that things might improve. Thanks, Ben.
Ben Ames, Senior News Editor, DC Velocity 16:35
Of course.
David Maloney, Editorial Director, DC Velocity 16:36
And Victoria, you wrote a couple of news stories on new advancements in autonomous trucking. What have you found out?
Victoria Kickham, Senior Editor, DC Velocity 16:43
Yeah, that's right. So, there's a lot happening with self-driving trucks for logistics, at least in terms of research and development toward actually putting these vehicles on the road. So, this week, Waymo Via, which is the goods-moving division of autonomous driving tech company Waymo, and logistics provider C.H. Robinson announced a partnership that combines the benefits of Waymo's driving technology, which is called Waymo Driver, and C.H. Robinson's logistics technology platform, Navisphere, essentially to explore and develop autonomous trucking benefits for logistics in general. And in the first phase of the collaboration, the companies will use Waymo Via Level 4 autonomous trucks to haul freight for C.H. Robinson customers between Dallas and Houston. Now, these are self-driving trucks that are part of Waymo Via's test fleet, but they'll also include a safety driver in the truck, so there'll be human supervision there. This is pretty standard for how these tests are done, I'm told. The companies are not saying when the tests will begin, but they did say they'll be running multiple pilots over the next few years—again, concentrating on the Dallas-Houston freight lane. An interesting aspect of this partnership is that the companies are leveraging C.H. Robinson's business with small and mid-sized carriers to explore how autonomous trucking can benefit that segment of the industry. The companies presented all this news in a press release on Wednesday, but in a separate call with reporters, they said they really want this partnership to focus on getting the, quote, voice of the smaller carrier into the conversation about the industry's autonomous future. So, not a lot of details yet on the actual testing phase, but certainly a step aimed at moving autonomous trucking forward and really getting more stakeholders involved.
David Maloney, Editorial Director, DC Velocity 18:26
Right. Victoria, did they say what their long-term objectives are, aside from, of course, exploring how the technology can benefit logistics?
Victoria Kickham, Senior Editor, DC Velocity 18:35
Yeah, there are a lot, but ultimately, Waymo will supply its technology in a driver-as-a-service business model, meaning that it will partner with truck manufacturers to provide Waymo Driver as a service available on trucks. The company is already working with Daimler Truck to develop an autonomous chassis that will be equipped with the technology, so that's in the works. And there are other efforts aimed at that same long-term goal. In a similar announcement last week, autonomous trucking developer Embark Trucks and truckload carrier Knight-Swift announced a partnership designed to put Embark's autonomous vehicle technology directly in the hands of Knight-Swift's drivers. They're calling this their Truck Transfer Program. Essentially, Embark's autonomous driving technology is being installed in new trucks that are on order from Knight-Swift so that the carrier's drivers, mechanics, technicians can all work directly with the technology in the field. The companies didn't share any details on the timing of when the testing will begin, except to say that they're waiting for the trucks to arrive, which is taking longer due to supply chain delays—no surprise there—and they didn't say which truck manufacturers they're working with on this specific project, but Embark has said it's testing its platform-agnostic technology with different OEMs—Cummins is one example. So, it's yet another example of the R&D that's happening sort of more collaboratively between the tech developers and actual logistics and transportation companies, so thought that was a couple of interesting examples recently.
David Maloney, Editorial Director, DC Velocity 20:09
And those are interesting, and of course, we'll continue to follow these technologies as they develop. Thank you, Victoria. You're welcome. We encourage listeners to go to DCVelocity.com for more on these and other supply chain stories, and also be sure to check out the podcast Notes section for some direct links on the topics that we discussed today. Thank you, Ben and Victoria, for sharing highlights from the news this week.
Ben Ames, Senior News Editor, DC Velocity 20:32
Oh is glad to do it.
Victoria Kickham, Senior Editor, DC Velocity 20:33
Yes, happy to be here, Dave.
David Maloney, Editorial Director, DC Velocity 20:35
And again, our thanks to Kyle Rice of SAP NS2 for being our guest today. We welcome your comments on this topic and our other stories. You can email us at podcast@dcvelocity.com.
We also encourage you to subscribe to Logistics Matters at your favorite podcast platform. Our new episodes are uploaded each Friday.
And speaking of subscribing, we encourage you to check out our 11-part limited podcast series from CSCMP’s Supply Chain Quarterly on the Top 10 Supply Chain Threats. Search on your favorite podcast platform to listen to the episodes.
And a reminder that Logistics Matters is sponsored by Hyster. With strength, durability, and their industry-leading suite of lift truck operator-assist technologies, Hyster powers your possibilities. For more information, visit Hyster.com.
We'll be back again next week with another edition of Logistics Matters, when we will look at the latest on vaccine mandates and cross-border trucking. so be sure to join us. Until then, please stay safe and have a great week.
Go to main Logistics Matters archives page | 2021 archives | 2020 archives
