The “supply chain” essentially refers to the movement of goods from raw materials to end-users. The supply chain generally involves a network of producers of raw materials, component suppliers, transporters, manufacturers, packagers, vendors, distributors, storage facilities, wholesalers, retailers and customers.
The three main components of a supply chain are generally: (1) Supply, (2) Manufacturing, and (3) Distribution. The activities close to the Supply (e.g., raw material and commodities largely coming from China, South America and Africa) are known as upstream activities. Activities between Manufacturing (e.g., China, E.U., U.S., Japan and India) and Distribution to the end consumer (e.g., U.S., E.U., China, Japan, U.K.) are downstream activities.
We are currently seeing significant supply chain disruptions and industry shutdowns around the world due to COVID-19. The COVID-19 lockdowns and restrictions have had a dilatory effect on businesses worldwide. Now that the pandemic case numbers and deaths are declining, demand for consumer goods is increasing. The fragility of the supply chain and its inability to rapidly recover from COVID-19 is evidenced by the worldwide supply chain shutdowns and bottlenecks. Manufacturers and transport companies are suffering from such things as a shortage of workers, higher fuel costs, inability to obtain raw goods, customs delays, border controls and mobility restrictions.
Governments and economists are forecasting shortages, supply chain bottlenecks and inflation in industries including energy, equipment, computers, telecommunication devices, automobiles, groceries, home goods, medicine and construction starting Q4 2021 and lasting through 2022.[i]
At the time of this article, there are about 7.8 billion people on Earth, and worldwide there have been approximately 242 million COVID-19 cases (3% of the population) and 4.9 million deaths (.06% of the population). About 50% of the COVID cases are asymptomatic, 49.6% are mild to moderate, and .4% are serious or critical.[ii] Not to minimize the severity of COVID-19, but imagine what would happen to the supply chain and our ability to get water, food, household items, utilities, fuel, materials and manufactured goods in the face of an even more virulent pandemic or a bio-weapon attack. Now add a few climate disasters to the equation, and very quickly, we could see an immense supply chain shutdown, causing mass hunger, dehydration, illness, and death, not to mention massive inflation and economic collapse.
While the supply chain seems efficient because, up until recently, we could easily purchase goods at our grocer, restaurant, big-box store or Amazon, COVID-19 has raised our awareness of the fragility and inefficiency of the supply chain. However, the fragility, inefficiency and toxicity of the centralized supply chain existed before COVID-19 due to factors including the following:
(1) The supply chain relies heavily on increasingly depleting supplies of raw goods from extractive materials (e.g., minerals, oil, metals) and agricultural products (e.g., animal products, cotton, hemp, timber);
(2) The method by which the raw materials are extracted and generated often utilize ecologically damaging practices that reduce the ability of the planet to provide the resources required to meet our consumptive demands;
(3) The use of fossil fuels that emit greenhouse gasses and toxic pollutants for the transportation, manufacturing, processing and packaging utilized by the supply chain is contributing to climate change and the degradation of the quality of our air, water and food;
(4) The supply chain typically requires shipping raw goods long distances from suppliers to manufacturers, and then require shipping finished goods long distances to distribution centers, retailers and consumers;
(5) Each facility (e.g., manufacturing facilities, distribution facilities, retail stores) in the supply chain required energy and materials to build the facility and require significant amounts of energy, generally in the form of fossil fuels;
(6) The finished products frequently require packaging utilizing paper and/or plastic, which end up in landfills and the oceans;
(7) In order to get my goods, I either need to drive in my automobile (typically burning fossil fuel) to the store or have it delivered by a shipping courier such as FedEx, UPS and DHL (typically burning fossil fuel);
It is actually the inefficiencies of the supply chain that create massive profits for oil companies, transportation manufacturers, shipping and logistics companies, packaging companies, the construction industry, equipment manufacturers and retailers. While these inefficiencies give numerous industries significant revenues, these industries are largely responsible for greenhouse gas emissions, pollution, waste, climate change, and destruction of Earth’s ecosystems.
We have the technologies to give clean water, nutritious food and renewable energy to the world. We possess the ability to grow bananas on the North Pole, harvest potable water from the atmosphere and desalinate seawater. We can power the world through natural and renewable energy sources (e.g., hydrogen, solar, wind, hydro, tidal, biomass). We have the ability to bio-energetically regenerate soil and purify water, grow food hydroponically in vertical urban towers, and regeneratively cultivate an abundance of seafood, sea vegetables and materials from the ocean. We have the ability to ship food, water, materials and supplies to anywhere in the world and alleviate hunger, suffering and death worldwide. We can convert waste streams into new materials and energy. However, we haven’t engaged in deploying these technologies and life-affirming activities in a truly meaningful way largely because the energy costs are generally too high and doing so is not profitable.
Another issue has slowed the adoption of clean and renewable energy and activities that can alleviate world poverty, hunger, and suffering. The governments around the world, who write and enforce regulations have been infiltrated by incumbent industries such as banking, oil, auto, utilities (e.g., electricity, gas and water), construction (e.g., lumber, concrete, steel, glass) and commercial agriculture. These industries have been responsible for sponsoring legislation to impede or prevent innovative progress in energy, materials, construction, transportation, supply chain efficiency, and local self-sufficiency for water, food, energy and materials. Moreover, governments generate significant revenues from the supply chain, including income tax, import-export tariffs, sales tax, utility tax, and excise taxes collected on fossil fuels. For example, the U.S. generates an estimated $36.4B annually from federal fuel taxes[iii], and California generates more than $26.4B billion in state and local tax revenues and $28.5 billion in sales and excise taxes from fossil fuels.[iv]
The U.S. energy generation portfolio by source is 60.3% from fossil fuels, 19.7% from nuclear, 19.8% from renewables, .1% from pumped hydropower, and .3% from other sources.[v] Thus, the vast majority of energy in the U.S. (80%) is from fossil fuels and nuclear sources. With the billions of dollars spent on lobbying by the oil industry and the taxes collected at the pump, governments have been loath to kill the “greasy golden goose.”
With the growth of both population and consumption, we are seeing increasing demand for energy, food, products and services while concurrently seeing a diminution of potable water and arable land. As well, human activities, including burning fossil fuels and deforestation for commercial agriculture, timber and cattle ranching, have contributed to high levels of CO2 and greenhouse gasses in our atmosphere, which the scientific community attributes to climate change.[vi]
In addition to many other transformational societal shifts that must be addressed, there are three fundamental shifts in our society that will have a material impact on improving the quality of life and creating a thriving world for future generations: (1) clean, renewable, affordable, accessible and reliable energy, (2) supply chain disintermediation through localization and regenerative communities, (3) reduced consumption, (4) creating durable goods and building a sharing economy based upon collaborative consumption, and (5) innovation leading to supply chain efficiency, security and decentralization.
With our ever-increasing appetite for the newest, shiniest, most fashionable objects, a significant amount of what we purchase ends up in the waste stream. Rather than consumers demanding durable and built-to-last products, we tend to want cheap and fashionable products and therefore promote the manufacturing of products with short life spans and built-in obsolescence.
Maybe the silver-lining of COVID-19 is that more people are waking up and realizing that the less we depend upon government, central supply-chain and central banking, the more empowered, self-sufficient and happier we become. Many people are now realizing the dysfunction of modern society with such things as destruction of the planet’s ecosystems, contamination of our air, water, and food, increasing climate disasters, food shortages, financial inequality, war, and the desire for never-ending economic growth. More people are moving out of large cities and into rural areas, seeking agriculture-based regenerative communities and learning to live simpler, more fulfilling lives.
According to The Hill article entitled Rural America booms as young workers leave the cities behind[vii],
The net rate of arrivals and departures for major cities is devastating. New York, which lost 4 percent of its population over the last year, has watched about five people leaving for every four people arriving. San Francisco has seen 20 percent more people leaving than arriving, as Seattle and Boston each had about 10 percent more people leaving than arriving.
Rentals and purchases of rural property are reaching new records. Areas within a half day drive of major metropolitan regions are growing. Among the top destinations in the last year are the town of Stowe in Vermont and also Maine for those leaving Boston, Summit County in Colorado for those leaving Denver, the Blue Ridge Mountains in Virginia for those leaving the Washington beltway, and a number of sites in upstate New York for those leaving Manhattan. In places such as Delaware County, located two hours north of New York, home sales have skyrocketed 40 percent.
Fundamental shifts required to increase supply chain efficiency and reduce reliance on fossil fuels, transport, packaging, distribution, and military spending associated with the supply chain, include (1) Localization and Regenerative Communities, (2) Collaborative Consumption, (3) Planned Durability, and (4) Clean Energy and Technological Innovation.
1. Localization and Regenerative Communities: By planning and developing our cities and communities in a way that localize the production and availability of water, food, energy, materials and goods, we can lower our dependence upon a centralized supply chain and many of the environmentally destructive ramifications of the supply chain, including greenhouse gasses and pollution. By applying regenerative planning, design and applications to our cities and communities, we can nurture and promote the Earth’s abilities to provide us with an abundant and regenerative supply of water, food, energy and materials.
In the context used herein, localization refers to urban and community planning that provides for a mix of residential, commercial, retail, industrial, social and agricultural uses within distances that are walkable (no more than 1 mile) or bikeable (no more than 5 miles). For example, if we go into our backyard and pull an apple off the tree, it’s efficient, healthy and fresh. We didn’t need any trucks, warehouses, packaging or grocery stores. We also didn’t need a military to protect the oil pipeline and we didn’t need our cars to go to the grocery store. Moreover, the environmental impact and carbon footprint were minimal.
Many of our cities and communities have been intentionally planned to promote the centralized supply chain, vehicle manufacturing and burning fossil fuels as primary energy sources. By developing new cities and communities and redeveloping/retrofitting existing cities and communities into, regenerative, walkable, mixed-use communities, with their own water, farms, clean energy generation, waste upcycling systems, materials and goods production (including 3-D printing), we can create cities and communities that promote a higher quality-of-life and are more vibrant, beautiful, efficient, economically abundant and healthier.
2. Collaborative Consumption: There has been a rapid explosion in sharing, bartering, lending, trading, renting, gifting, and swapping reinvented through network technologies on a scale and in ways never possible before. Sharing, utilizing, giving away and/or selling under-utilized resources such as homes, cars, offices, sporting goods, clothing, furniture, jewelry tools, health clubs and machine shops has created numerous multibillion-dollar enterprises (e.g., Uber, Airbnb, eBay, WeWork). “Collaborative Consumption” and the “Sharing Economy” are disrupting outdated modes of business and reinventing not just what we consume but how we consume.
According to Havas Group, “Unhappy with the results of decades of overconsumption, many people around the world are searching for a better way of living and consuming. A large majority of those surveyed in 29 markets believe that overconsumption is actually putting our planet and society at risk. Most say they could happily live without most of the items they own and that they make it a point to rid themselves of unneeded possessions at least once a year. We have entered an age when sharing, rather than buying, everything from cars and vacation homes to textbooks and pets has become socially acceptable among those who realize we have exhausted the planet and ourselves with way too much stuff and responsibility.”[viii]
Collaborative Consumption and the Sharing Economy provide greater freedom and flexibility as well as a higher quality of life, with more options and amenities, without the burdens and expense of sole ownership. In our society, we generally share public infrastructure and services such as beaches, parks, roads, schools, police, fire, sewer systems, courts, public transportation, waste management and telecommunications infrastructure. It is also fairly common to share health clubs, restaurants, entertainment venues, hotels and community amenities. By increasing our sharing, building regenerative communities, and localizing resources (e.g., facilities, community farm, community kitchen, cars, tools and equipment), we can significantly reduce the expense and environmental impact related to exclusive ownership and enjoy higher quality lives with improved health, greater freedom, more amenities, lower cost and less stress.
3. Planned Durability: Almost every manufacturer in the world today designs their products to have an artificially limited useful life whereby the product becomes no longer functional or fashionable. This design and manufacturing strategy is known as “Planned Obsolescence.” Examples include (a) Apple and Samsung being accused of providing software updates that inhibit the performance of their older smartphones;[ix] (b) The “Phoebus cartel (consisting of GE, Philips, Osram and AEI) that colluded to reduce a light bulb’s lifetime to 1,000 hours when Edison’s first commercial bulb from 1881 lasted 1,500 hours,[x] © General Motors utilized annual redesign of its automobiles to drive the demand for the newer and more fashionable automobiles, and (d) short-lived and/or disposable products such as plastic forks, paper plates, plastic water bottles, unfillable ink cartridges, nylons, cheap clothes and fashion. We have been conditioned to link our identity and value to products. This conditioning has created a world of wasteful consumers who want the latest, newest, most fashionable and shiny objects. Aside from products becoming unfashionable, we have come to expect the products we purchase will have a limited lifetime of usefulness. Often these products are designed and built to fail sooner or become unfashionable. Planned obsolescence is good for manufacturers and sellers of goods and their investors but creates massive waste and is not in the best interests of consumers or the planet.
On the other hand, “Planned Durability” or “Built to Last” is better for both consumers and the planet. By designing and manufacturing products that are built last and will remain fashionable, we, as a species, can enjoy high-quality modern-day products and conveniences with reduced expense, waste and environmental impact. Moreover, by reusing products; designing products using recycled materials and parts; reducing packaging; and digitizing products (e.g., books, music, videos, games), we can significantly improve supply chain efficiency, minimize waste, and reduce greenhouse gasses and environmental impact.
4. Clean Energy and Technology Innovation: Examples of innovation that will transform the supply chain include the following:
· Clean Energy. Energy is the gating factor for quality of life in modern society. Energy is needed for such things as getting food from the farm to our table; pumping water to our homes, farms and businesses; keeping our lights on; handling waste; transportation and shipping; manufacturing and processing of materials and goods; and powering our computers, phones and other electronic devices, to name a few. Without energy, modern society virtually shuts down. While we get great benefits and convenience from energy, we urgently need to transform our energy portfolio from dirty energy sources to clean and renewable energy sources.
“Almost every way we make electricity today, except for the emerging renewables and nuclear, puts out CO2. And so, what we’re going to have to do at a global scale, is create a new system. And so, we need energy miracles.” ~Bill Gates
It is clear that we need to transform our energy portfolio from greenhouse gas producing fossil fuels (e.g., coal, oil, natural gas) and radioactive waste generating nuclear energy sources to clean, non-destructive, renewable sources of fuel and power, such as hydrogen, solar, wind, hydro, tidal, geothermal, biomass, biofuels, waste-to-energy, and microbial fuel cells (“Clean Energy Sources”).
While nuclear energy is becoming more expensive, most of the Clean Energy sources mentioned above are becoming more efficient, durable and less costly. According to a 2019 report by the International Renewable Energy Agency (“IRENA), unsubsidized renewable energy is frequently the cheapest source of energy generation.[xi] According to the report:
“Costs from all commercially available renewable power generation technologies declined in 2018. The global weighted-average cost of electricity declined 26% year-on-year for concentrated solar power (CSP), followed by bioenergy (-14%), solar photovoltaic (P.V.) and onshore wind (both -13%), hydropower (-12%), geothermal and offshore wind (both -1%), the report finds.”
While the consumption of fossil fuels has decreased from 1970 as a percentage of energy used, fossils fuels still account for almost 80% of the world’s energy source.[xii] According to Stanford University’s Professor Mark Z. Jacobson, a goal of 100 percent renewable energy is achievable by 2050 without the need for radically new technology. There is hope that by 2050, our world can be running on Clean Energy. However, achieving this goal will require trillions of dollars in infrastructure investment. This investment can also be a tipping point into creating the Regenerative Economy.
Some renewable energy sources, such as wind and solar, provide intermittent power. Solar doesn’t produce energy when the sun isn’t shining, and wind doesn’t produce energy when the wind isn’t blowing. Therefore, intermittent clean energy sources require storage to be used effectively and reliably on a 24–7 basis. Today’s batteries generally store energy using relatively expensive metals, including lithium, vanadium and cobalt. Innovations in storage include massless carbon batteries, where, the structure becomes the storage medium (e.g., the body of a car being the battery); zinc-air batteries; and Noon Energy’s ultra-low-cost batteries utilizing elements carbon and oxygen that are targeted to cost much less than current storage solutions and provide much longer durations.
Hydrogen produced from renewable sources and waste will likely become a dominant fuel source in the future. With its portability as a transportation fuel and its use as an industrial power source, hydrogen (the most abundant element in the universe) promises to deliver clean 24–7 energy with virtually no greenhouse gas emissions. According to the Forbes article Top Technologies Transforming Energy In 2021, green hydrogen is likely to take a significant lead in future energy portfolios:[xiii]
“Green hydrogen is the renewable energy source to watch in 2021, as the E.U. and many other states around the world pump investment in the burgeoning sector. It is seen as a crucial way to accelerate decarbonisation efforts, particularly for hard-to-abate sectors where electrification is not viable — eg, for heavy industry, chemicals and transportation.”
· Internet of Things (“IoT”). IoT involves the integration of technologies that allow for automation and increased efficiencies in the supply chain, our cities, communities and homes. Primarily, IoT provides us the ability to use sensors to provide data that can be used to make smarter and more efficient decisions, as well as automate processes to reduce human involvement and intervention. The foundational technologies of IoT are wireless technologies (e.g., wi-fi, cellular, Bluetooth); sensors; Internet; data analytics, storage and management; object recognition, Machine-to-Machine Learning and Communications, Global Positioning Satellites (“GPS”), Radio Frequency Identification (“RFID”), Artificial Intelligence (“A.I.”), Augmented Reality (“A.R.”) and predictive modeling, software, hardware and storage.
Some of the benefits of using IoT, include (1) conserving precious water by using sensors that determine moisture levels to turn on and off watering systems; (2) saving energy by turning off lights and reducing HVAC when no person is present; (3) creating greater energy generation and distribution efficiency by utilizing locally generated energy and distributing it on demand to where it is most needed; (4) powering autonomous driverless vehicles that safely take us to our destinations and provide efficient supply chain transportation and delivery services with motion sensors, cameras, A.I. and predictive modeling; (5) having traffic control and parking systems that change signals and guide routes based upon real-time data; (6) tracking the movement of commodities, parts, manufacturing progress, finished goods and shipments through the supply chain; and (7) providing robots instructions on tasks and monitoring their accuracy and efficiency.
The promise of IoT is that many of the robotic and mechanical activities that humans currently do can be automated and made more efficient, thereby freeing humankind to engage in higher and more inspiring activities and work.
· Robotics and Drones. Robots will contribute significantly to the efficiency of the supply chain. We often think of robots as machines that resemble humans and are capable of carrying out human movements and functions. However, robots are machines capable of carrying out complex functions from instructions programmed into a computer and can be designed to carry out certain functions better than humans. Using cameras, sensors, object learning and A.I., robots are now becoming capable of doing such things as growing, identifying and picking our foods, loading trucks, driving trucks, unloading trucks, picking, packing and shipping orders from a warehouse and delivering the order to the end purchaser. Robots will soon be able to also do a significant amount of mechanical services, customer service and tech support.
Drones are technically unmanned flying robotic aircraft. Drones can be controlled remotely by a human or given instruction through software-controlled flight plans working with integrated systems such as GPS, sensors and object recognition. Aside from Drones being used by the military, they can be used to more effectively deliver packages. For example, Amazon has unveiled a plan to use drones to more efficiently deliver packages directly to its customers.
· Blockchain. While cryptocurrencies such as Bitcoin and Ethereum have become fairly well known, the underlying blockchain technology and its importance are less known. A blockchain is, in essence, a distributed ledger technology with a list of records (known as “blocks”) that are linked together using cryptography (encrypted security communication protocols). A blockchain is a decentralized, distributed, and public digital ledger used to record transactions across many computers so that any involved record cannot be altered retroactively without the alteration of all subsequent blocks. Each block contains a hash, a timestamp and transaction data. Once recorded, the data in a block is subject to network consensus to validate the authenticity of the block and thereby ensure the block is unalterable. Because the data in the blocks are redundant, validated and decentralized, blockchain has very high security and tolerance to attack and alteration. Also, using embedded smart contracts (contracts with predefined conditions that are digitally and automatically executed by the blockchain pursuant to the instructions) can create significant efficiencies for the execution and settlement of agreements.
The impact on supply chain efficiency is that tracking status, transport, manufacturing and distribution of supplies, components and goods in the supply chain can be done much more securely and efficiently. Utilizing blockchain can create end-to-end visibility from origin to consumer and can be used to (1) bring transparency and hold companies accountable for their energy, sourcing, and their environmental, social and governance (“ESG”) policies, and (2) minimize inefficiencies, counterfeit products, theft, embezzlement, kickbacks and much of the corruption currently found in the supply chain. Additionally, blockchain can ensure transparency and security of claims and certifications, such as organic, fresh, local, and fair trade certifications. Moreover, using blockchain, the contents of international containers can be easily, securely and transparently verified to ensure greater efficiency at customs.
As mitigating climate change, carbon reduction and localization become more critical to consumers and regulators, blockchain can be used to provide indelible proof of origin, quality, claims and compliance, as well as providing a reliable local currency.
By transforming our energy portfolio to use renewable and clean energy sources; reducing our consumption; localizing our needs; designing and developing communities to be regenerative and locally self-sufficient; sharing built-to-last products; and minimizing our dependence on the existing supply chain and fossil fuels, we are likely to see a significant reduction in greenhouse gas emissions and pollution, and a positive transformation in the health of humankind and our planet’s
[i] https://www.wsj.com/articles/supply-chain-bottlenecks-elevated-inflation-to-last-well-into-next-year-survey-finds-11634479202
[ii] https://www.worldometers.info/coronavirus/
[iii] https://en.m.wikipedia.org/wiki/Fuel_taxes_in_the_United_States
[iv] LAEDC, Oil & Gas in California: The Industry and Its Economic Impact; https://laedc.org/2017/06/08/oil-gas/
[v] EIA, https://www.eia.gov/tools/faqs/faq.php?id=427&t=3
[vi] Sources consulted include: NASA Global Climate Change, Scientific Consensus: Earth’s Climate is Warming, https://climate.nasa.gov/scientific-consensus/https://climate.nasa.gov/causes/; https://www.ucsusa.org/resources/global-warming-faq ; https://www.nrdc.org/stories/fossil-fuels-dirty-facts; https://www.eesi.org/topics/fossil-fuels/description;
[vii] https://thehill.com/opinion/finance/539871-rural-america-booms-as-young-workers-leave-the-cities-behind
[viii] Havas Group, https://download.havas.com/prosumer-reports/the-new-consumer-and-the-sharing-economy/
[ix] IT World, Apple and Samsung fined for planned obsolescence; https://www.itworld.com/article/3316958/apple-and-samsung-fined-for-planned-obsolescence.html
[x] https://en.wikipedia.org/wiki/Phoebus_cartel
[xi] International Renewable Energy Agency, Renewable Power Generation Cost in 2018, (2019), https://www.irena.org/publications/2019/May/Renewable-power-generation-costs-in-2018
[xii] The World Bank, Fossil fuel energy consumption, https://data.worldbank.org/indicator/eg.use.comm.fo.zs?most_recent_value_desc=false
[xiii] https://www.forbes.com/sites/feliciajackson/2021/01/27/top-technologies-transforming-energy-in-2021/?sh=7272d4913775
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