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Supply Chain Problems in 2021: How They Impacted the Economy and What’s Next?

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Supply Chain Problems in 2021: How They Impacted the Economy and What’s Next?

Supply Chain Problems in 2021: How They Impacted the Economy and What’s Next?

Supply chains are networks — ways to source and supply various goods and services across the globe. Unfortunately, due to complications resulting from the pandemic, both businesses and consumers have learned firsthand how vulnerable these networks are, and how critical they are to deliver what we and others often desperately need.

Here’s how the supply chain impacted the economy this year — and also what the future may hold.

Why Did the Supply Change Shortage Occur?

Supply chain shortages first began back in the first quarter of 2020 — at the beginning of the pandemic. Factories all over the world were forced to slash or halt production due to the spread of COVID-19 and the resulting lockdowns. Because factories were not shipping as many goods — or any goods at all — shipping companies responded accordingly by clearing their schedules.

Shipping companies were subsequently called to action to ship personal protective equipment around the world. Unfortunately, many of those containers were unloaded in destination countries, emptied of goods and not returned, which led to a shortage of shipping containers.

How Do Supply Chain Shortages Affect Businesses?

“Most consumers don’t truly understand how astoundingly intricate today’s supply lines are,” said economic expert Monica Eaton-Cardone, owner, co-founder and COO of Chargebacks911. “Corporations might import some parts from China, other parts from India, maybe some rare-earth elements from elsewhere — and if there are any delays at any point, it limits how quickly these products can be sourced, assembled, packaged, shipped and sold.

“As we’ve recently seen, this causes prices to rise because all the efficiencies that were so carefully built into the supply chain have collapsed. Eventually, this leads to scarcity, shortages and lots of unhappy consumers — especially during the holiday season. A broken supply chain is unpredictable, and the system cannot function without reliability in sourcing and predictability in shipping.”

Why Does the Supply Chain Make Such a Difference for Our Overall Economy?

“To compete in the global economy, businesses must outsource and create supply chains,” said Dr. Tenpao Lee, professor emeritus of economics at Niagara University. “The success of a supply chain is based on tremendous collaboration, coordination, and communication. Any small disruption would ruin the whole supply chain system. For example, car manufacturing cannot proceed without simple computer chips. Port congestion can paralyze many related industries.”

What’s Potentially Next Regarding Supply Chain Issues?

“At some point, our supply chain crisis will subside and return to normal,” said Carlos Castelán, managing director of The Navio Group, a retail consulting firm that advises businesses on how to navigate supply chain challenges.

“But until then, the key going forward is inventory,” he said. “For business retailers, inventory could be the difference between success and failure during early 2022. The first and possibly second quarter of 2022 will be a test of retailers’ supply chains and operational capabilities. With shortages of many key components for manufacturers as well as labor shortages – or stoppages in the global due to COVID – retailers are facing a variety of different headwinds across different fronts.”

Read more at Supply Chain Problems in 2021: How They Impacted the Economy and What’s Next?

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EU Launches Estimated €400M Blockchain, AI Fund to Avoid Lagging US, China

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A new fund has been set up with the aim of preventing the EU falling behind nations like the U.S. and China on blockchain and artificial intelligence (AI) innovation.

The European Investment Fund (EIF) and the European Commission have together put up €100 million (over $110 million) for a dedicated investment scheme that will make capital available to AI and blockchain projects via VC funds or other investors, EIF, an EU agency set up to indirectly fund SMEs, said in a blog post on Wednesday.

With the “cornerstone” funding in place, the EIF said private investors are expected to bring up to €300 million ($331 million) into the fund, while the total could rise further from next year, with national promotional banks being able to co-invest under the scheme.

Sifted reports that the fund could ultimately raise up to €2 billion ($2.2 billion) under the InvestEU Programme.

According to the post, the EU already spends plenty on blockchain (expected spending for 2019 is $674 million), but that is mostly directed toward research and proof-of-concepts.

The U.S. is the biggest spender, with a $1.1 billion expected spend, and China is second with $319 million, according to cited numbers from the International Data Corporation.

The new fund is aimed to address the fact that not so much is spent in the EU on developing “larger scale projects.

“Investing in a portfolio of innovative AI and blockchain companies will help develop a dynamic EU-wide investors community on AI and blockchain. By involving national promotional banks, we can scale up the volume of investments at a national level,” the EIF said.

Read more at EU Launches Estimated €400M Blockchain, AI Fund to Avoid Lagging US, China

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Retailers worth $3.3trn scaling up supply chain sustainability

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Leading retail powerhouses are stepping up on supply chain sustainability, according to the latest figures from CDP, a global environmental impact non-profit.

The world’s largest retailer, Walmart, has just been joined by three more of the top 20 retail companies – CVS Health, Target Corporation and Tesco – in collecting data from suppliers to reduce environmental risk and cut carbon emissions in the supply chain.

Ten years after CDP started collecting supply chain data on behalf of the world’s largest purchasing organisations, 115 organisations – representing a combined annual spend of more than US$3.3 trillion – are now requesting data from over 11,500 suppliers.

This is more than a 15% increase from last year, when 99 organisations requested data.

Sonya Bhonsle, Head of Supply Chain at CDP, commented: “With emissions in the supply chain on average around four times greater than those from a company’s direct operations – and rising to up to seven times greater for retailers and consumer-facing companies – large multinational corporations cannot comprehensively address their environmental impact without looking to their supply chains.

“It’s very encouraging to see so many of the world’s biggest buyers taking supply chain sustainability seriously. By requesting data from their suppliers, they are shining a light on the risks hidden deep within their production chains – and uncovering a myriad of opportunities for reducing their overall environmental footprint, boosting innovation and cutting costs.”

The rise in companies scrutinising their supply chains coincides with growing momentum behind the take-up of science-based targets – goals that allow companies to reduce their emissions in line with the decarbonisation required to keep global temperature increase below two degrees Celsius, the central aim of the Paris Agreement.

The Science Based Targets initiative (SBTi), which helps companies develop and approves such targets, requires companies to set scope 3 targets if their scope 3 emissions account for at least 40% of their total emissions. For global retailers that do not manufacture many of the products they sell, scope 3 emissions in their supply chain can be far greater than 40%.

Read more at Retailers worth $3.3trn scaling up supply chain sustainability

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Supply Chain Complexity and Risk Management

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As part of the Supply Chain Management: Beyond the Horizon research project, faculty and staff from the Eli Broad College of Business at Michigan State University conducted in-depth interviews with a number of organizations to gain insights into the development and implementation of various supply chain strategies, practices, and processes.

The focus was intentionally on the future and on identifying what challenges are driving supply chain decisions in the current environment. The following report summarizes key findings from our investigation of supply chain complexity and risk management obtained during our visit to VF Corporation.

BACKGROUND

VF Corporation is a global branded apparel company that focuses on lifestyle clothing, footwear, and accessories. Since its inception in 1899 as a glove and mitten manufacturer, the firm has grown, diversified, and reinvented itself multiple times. Today, its 30 brands are organized into five coalitions or loose confederations that include outdoor and action sports, jeanswear, imagewear, sportswear, and contemporary brands. The firm has approximately 64,000 employees, sales of $12.4 billion (2015), and a consistent track record of annual sales and earnings growth. The firm is highly diversified across brands, products, distribution channels, and geographies, which provides a strong competitive advantage relative to single- brand competitors.

Because of its focus on lifestyle brands, the firm must remain focused on its consumers and their evolving behaviors and preferences. The firm has four key components in its business strategy:

  1. Lead in innovation (drive new products and new technologies to support evolving consumer needs and tastes)
  2. Connect with consumers (engage consumers in new and meaningful ways)
  3. Serve consumers directly (reach consumers across multiple channels, wherever and whenever they want)
  4. Expand geographically (take advantage of scale to reduce risk and drive competitive advantage)

Read more at Supply Chain Complexity and Risk Management

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5 Solutions For Supply Chain EHS Performance Neglect

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5 Solutions For Supply Chain EHS Performance Neglect

The need to manage environment, health and safety (EHS) performance across our organizations and throughout our global plants has never been more apparent. While considerations of EHS performance were once limited to one organization’s performance within its four walls, things have changed. The increased reliance on supply chains extending across the globe, the visibility and traction afforded by online communications and social media, and the growing need to improve and report on end-to-end sustainability performance are compelling businesses to account for EHS performance across their supply chain.

As EHS regulations and best practices become more comprehensive and expansive, we’re seeing a new imperative in managing EHS supply chain performance. No longer is it acceptable to simply manage EHS performance within your own organization. And a number of high-profile examples in recent years have helped illustrate this trend. However, many global manufacturers are still grappling with how to extend EHS performance visibility beyond their organization and across their supply chain.

Five Ways to Improve and Integrate Supplier Performance

So, how do we proactively account for the possibility such adverse events will arise? We need to extend EHS capabilities across our supply chains.

1. Implement progressive policies that extend across the supply chain

As a global manufacturer, you may be dealing with a wide range of different levels of EHS regulations across various regions and jurisdictions around the globe.

2. Appoint an EHS and/or sustainability champion

Just as an internal EHS executive would champion exemplary EHS and sustainability performance within his or her own organization, this individual also ought to be afforded the power to apply similar requirements and accountability mechanisms across the supply chain.

3. Build a robust supplier EHS review process

Reviewing supplier EHS performance is not a new thing, but it tends to take a back seat to managing EHS performance internally.

4. Extend risk management capabilities across the supply chain

If you have risk-based capabilities built into your internal EHS performance programs, consider extending the risk frameworks you apply internally across your supply chain.

5. Drop suppliers that underperform

It’s tough medicine, but just as executives boot key members of their leadership team when a scandal arises or when systematic deficiencies persist, making an example of suppliers that underperform on the EHS front will show you’re serious about EHS

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