Here’s How Supply Chains Are Being Reshaped for a New Era of Global Trade

Posted on by Teddy Nee

Nearshoring. Automation. Supplier diversification. Sustainability. Companies are adapting their operations to changing market pressures and geopolitics.

When a measure of strains on global supply chains fell earlier this year to levels last seen before the Covid-19 pandemic, it signaled to some that the product shortages, port bottlenecks and shipping disruptions of the past three years were over and that a new era of stability was on the horizon.

But industry experts say a “return to normal,” as the Federal Reserve Bank of New York described its Global Supply Chain Pressure Index in February, hardly means that companies are going back to conventional, some would say complacent, supply chains.

Instead, say academics and consultants, the experiences during the pandemic, along with changes in geopolitics, are leading to broader, potentially long-lasting changes in how companies manage the flow of goods, from the sourcing of raw materials to manufacturing and distribution.

The changes are playing out at factories in India, auto-assembly plants in northern Mexico, ports from the U.S. Southeast to East Africa and mineral mines in Canada and Sweden. The sites are where companies are implementing disciplines such as resilience, regionalization and supplier diversification that came to the forefront as they coped with the severe disruptions that began in early 2020.

The turmoil that began with the declaration of the Covid-19 pandemic first hit companies with sudden shortages of consumer staples as households locked down, was followed by factory shutdowns that interrupted the flow of goods and then hit transportation networks as an abrupt snapback in demand led to overstuffed ships and enormous backups at ports.

By April 2020, the New York Fed’s supply-chain stress index had shot up to double the level it reached during the recovery from the 2009 financial crisis. It finally fell back early this year to levels more typical of a measure going back 25 years.

“Some stresses have been taken off, there are fewer supply shortages, and things are a lot less hectic, but we certainly are not back to normal,” said Patrick Van den Bossche, a partner and global analytics practice leader at consulting firm Kearney. “There is a subdued level of urgency but a lot of things have changed.”

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Unlocking the Value of Artificial Intelligence (AI) in Supply Chains and Logistics

Posted on by Teddy Nee

Speed in decision-making. Speed in reducing cycle-times. Speed in operations. And, speed in continuous improvement. The use of Artificial Intelligence in the supply chain is here to stay and will make huge waves in the years to come.

According to Gartner, supply chain organizations expect the level of machine automation in their supply chain processes to double in the next five years. At the same time, global spending on IIoT Platforms is predicted to grow from $1.67B in 2018 to $12.44B in 2024, attaining a 40% compound annual growth rate (CAGR) in seven years.

In today’s connected digital world, maximizing productivity by reducing uncertainties is the top priority across industries. Plus, mounting expectations of supersonic speed and operational efficiencies further underscore the need to leverage the prowess of Artificial Intelligence (AI) in supply chains and logistics.

Accelerating Supply Chain Success with AI in Supply Chains & Logistics

AI in supply chains can deliver the powerful optimization capabilities required for more accurate capacity planning, improved demand forecasting, enhanced productivity, lower supply chain costs, and greater output, all while fostering safer working conditions.

The pandemic and the subsequent disruptions has demonstrated the dramatic impact of uncertainties on supply chains and has established the need for smart contingency plans to help companies deal with these uncertainties in the right way.

But is AI the answer? What can AI mean for companies as they struggle to get their supply chain and logistics back on track? Let’s find out.

ACCURATE INVENTORY MANAGEMENT

Accurate inventory management can ensure the right flow of items in and out of a warehouse. Simply put, it can help prevent overstocking, inadequate stocking and unexpected stock-outs. But the inventory management process involves multiple inventory related variables (order processing, picking and packing) that can make the process both, time consuming and highly prone to errors.

WAREHOUSE EFFICIENCY

An efficient warehouse is an integral part of the supply chain. AI-based automation can assist in the timely retrieval of an item from a warehouse and ensure a smooth journey to the customer. AI systems can also solve several warehouse issues, more quickly and accurately than a human can, and also simplify complex procedures and speed up work. Also, along with saving valuable time, AI-driven automation efforts can significantly reduce the need for, and cost of, warehouse staff.

ENHANCED SAFETY

AI-based automated tools can ensure smarter planning and efficient warehouse management, which can, in turn, enhance worker and material safety. AI can analyze workplace safety data and inform manufacturers about any possible risks. It can record stocking parameters and update operations along with necessary feedback loops and proactive maintenance. This helps companies react swiftly and decisively to keep warehouses secure and compliant with safety standards.

REDUCED OPERATIONS COSTS

Here’s one benefit of AI systems for the supply chain that one simply can’t ignore. From customer service to the warehouse, automated intelligent operations can work error-free for a longer duration, reducing the number of human oversight-led errors and workplace incidents. Additionally, warehouse robots can provide greater speed and accuracy, achieving higher levels of productivity – all of which will reflect in reduced operations costs.

ON-TIME DELIVERY

As we discussed above, AI systems help reduce dependency on manual efforts, thus making the entire process faster, safer and smarter. This helps facilitate timely delivery to the customer as per the commitment. Automated systems accelerate traditional warehouse procedures, removing operational bottlenecks along the value chain with minimal effort to achieve delivery targets.

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Strategic financial management for women is highly effective

Posted on by Teddy Nee

Strategic financial management for women is highly effective

A look at the many ways in which women’s financial positions and needs can differ from those of men, and how women can strategically plan their finances to protect their financial futures.

The financial planning needs of women are in many ways unique – and with the shape and pace of their career trajectories being somewhat different from men’s, so too should their financial management strategies.

In this article, we explore the many ways in which women’s financial positions and needs can differ from those of men, and how women can strategically plan their finances to protect their financial futures.

Child bearers and family careers

The interruption of women’s careers as a result of childbirth and child-rearing can have long-term financial implications for women. Besides the actual loss of earnings during maternity leave and child-rearing years, it is important to factor in the knock-on financial effects.

The longer-term impact of not having pay parity

Although gender pay parity is improving, the process is a slow one and on average women still earn less than men do. Again, the effect of earning a lower income permeates across every aspect of a women’s portfolio: less group risk cover, lower investment contributions, reduced bonuses, commissions or incentives, a weaker position to negotiate from, less access to credit and financing, a weaker capacity for wealth building, and a lower net asset value over time – exacerbated, of course, by the fact that women generally live longer than men and therefore need to save for a longer – potentially more expensive – retirement.

The associated risks of living longer

According to the US Census Bureau, in 2017 the life expectancy for men was 76.1 years while that of women was 81.1 years, and it is anticipated that the gap in longevity will continue to grow. The longevity risk faced by women has a number of key implications for their financial planning which should be addressed sooner rather than later.

Wealth creation challenges of the stay-at-home spouse

Women who choose to stay at home to raise children face an enormous challenge when it comes to generating wealth. Without an income and the associated tax benefits, investing is something that many stay-at-home mothers fail to do which places them in a precarious financial position if the relationship comes to an end.

Challenges facing single mothers

The challenges that many single mothers face can have far-reaching effects on their ability to generate income and build wealth, particularly when it comes to securing maintenance and pursuing payment from non-payers.

Differing investment style

Generally speaking, women’s investment style differs from men’s, and this is often not supported by the products or advice available in the marketplace. Research shows that women are more likely to seek advice and stick to it, have a more goals-based approach to investing, and – being time-poor – require efficiency in terms of communication and administration.

Post-pandemic planning

The work-from-home regulations during the pandemic placed a massive child caring burden on many women which, in turn, impacted their ability to generate an income and save for the future. In response to the pandemic, however, many women have subsequently demonstrated an increased interest in investing, become more involved in the management of the household’s finances, and are more open to engaging in financial discussions with their partners and children.

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

Posted on by Teddy Nee

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.”

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Blockchain-based platform for fractional property ownership launches in India

Posted on by Teddy Nee

$Blockchain-based platform for fractional property ownership launches in India$

RealX blockchain-based platform allows Indian investors to buy and sell “direct deeded co-ownership” of holiday properties.

A fintech firm from Pune, India has launched a blockchain-based registry system named RealX that allows Indian citizens to purchase fractional ownership in properties.

A report from The Economic Times states that RealX has partnered with Tripvillas, a holiday home rental service, to blend ownership of holiday properties in accordance with usage and yield. Tripvillas will also be responsible for managing the basket of holiday properties intended for co-investment.

According to RealX chief operating officer and co-founder Neera Inamdar, the COVID-19 pandemic was a key driver for the platform’s launch, as the real estate market’s instability concerned both property developers and investors. Citing the return of a comparatively stable market, she said:

“We offer ‘direct deeded property co-ownership’ and it is in the best interest of investors to become direct co-owners of the property.”

Roshan Lionel Dsilva, founder and CEO of Tripvillas, said that the RealX platform will soon allow Indian investors to co-own international properties on the platform to incentivize dollar-denominated income.

While Indian regulators’ stance on crypto adoption is still unclear, the country continues to experiment with blockchain technology in non-financial niches.

Recently, the government of Maharashtra implemented a credentialing system for providing tamper-proof diploma certificates using the Ethereum blockchain. In partnership with blockchain startup LegitDoc, the Maharashtra State Board of Skill Development has started issuing digitally verifiable certificates.

LegitDoc is also in talks with a few other educational institutions in India that intend to implement a similar solution for countering the ongoing forgery of documents.

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Cold-chain transport vital to COVID-19 vaccine distribution

Posted on by Teddy Nee

Cold-chain transport vital to COVID-19 vaccine distribution

COVID-19 vaccines developed by China are being shipped to countries across the world.

Produced by one of China’s major vaccine makers, Sinovac Biotech, they must be kept below a specific temperature to remain active.

Before they’re shipped out of a production plant in Beijing, the vaccines are loaded into temperature-controlled containers and sent to the airport by cold-chain trucks.

On Wednesday, a cargo flight from Swissair picked up vaccines at the Beijing Capital International Airport to deliver them to Brazil before Christmas. With international commercial flights hampered by the pandemic, airfreight is now a major mode of vaccine transport.

Beijing Aviation Ground Service (BGS) is the local logistic company responsible for handling the vaccines from the production plant until they are loaded onto an airplane. It is the second company in China certified by the International Air Transport Association (IATA) and the Center of Excellence for Independent Validators in Pharmaceutical Logistics (CEIV Pharma).

“This isn’t a new task for us, but delivering vaccines in such a great quantity is something we haven’t seen before,” said Yan Xin, director of BGS’s International Cargo Division. “We’ve set up a special team to handle the process and to ensure the vaccines are well protected and shipped out in the most efficient way.”

Temperature sensors were put both inside and outside the container to record the temperature throughout transportation, and the team also checked to make sure the containers’ battery was fully charged before it was loaded onto the airplane.

Aviation medicine cold-chain logistics has always been the focus of global airlines. However, opportunities and challenges co-exist in the huge market.

The freight business has become a “sanctuary” for airlines in extremely difficult times, with many operating at unprecedented profits in 2020. When quarantines and blockades disrupt flights, freight costs soar, helping operators keep the remaining passenger routes open and avoid bigger deficits. IATA forecasts that airfreight revenues will triple this year to 36 percent, thanks to a 30-percent rise in average freight prices.

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Inventory Management: We Can Do Better

Posted on by Teddy Nee

Inventory Management: We Can Do Better

Each day through the COVID-19 pandemic, I tune into Anthony Cuomo’s (governor of New York) daily briefings. It is my break in the day. As a multi-tasker, when Governor Cuomo broadcasts, I use the time to work out on my rowing machine.

His opening line is, “Let’s start with facts. While we all have opinions, let’s start by reviewing the facts.” When he says this, I smile and row harder. I wish that all discussions could start with the facts.

Reflection

In my day-to-day work in supply chain management, I find more encounter more opinions than facts. …most discussions are fueled by over-zealous and self-serving marketing programs. Strong opinions and egos (mostly male) abound… For over two decades, I obediently tapped my foot to technology leaders’ glibly spouting opinions. I seek facts, but I find that they are few and far between.

The lack of fact-based discovery makes me itch…

A Story

Last week on my Network of Networks call, a proud technology salesperson, let’s call him Jim, announced, “I am speaking at Logimed next week on the impact of Just-in-Time (JIT) on the COVID-19 response. Downsizing inventories over the past decade crippled the response.” As I heard Jim speak, I twisted in my seat unsure what to say.

I struggle when I hear opinions that don’t align with facts. So, let’s start with the data. (Yes, am that geeky kind-of-gal that likes to ground discussions in data.) In Table 1, I share research collected for the Supply Chains to Admire analysis on the average days of inventory by industry across the period of 2004 to 2019 by increments to match economic shifts. The period of 2007-2008 was the downturn of the recession while the period of 2009-2013 marked the recovery. (The source of this data is a syndicated data provider of public reporting termed “Y-Charts.”)

So when we start with the facts, it is clear that every industry peer group increased the days of inventory. In addition, each peer group is markedly different. So, why have we not reduced inventory?

Now I will share my opinion.

Complexity. Supply chain leaders in the beverage and household products industries struggled to manage complexity.

Supply Chain Leadership. With average operating margins of 20-22%, medical device and pharmaceutical companies are supply chain laggards.

Supply Management. Industries like automotive pushed cost and waste backward in the supply chain.

Network Design. Only 9% of companies actively design the supply chain with a focus on buffer design.

Factory Scheduling. With the evolution of the advanced planning market and the growth of the market share of ERP expansionist companies, solution capabilities in factory scheduling weakened.

Executive Understanding. Many executives do not understand the form and function of inventory and the need for inventory buffers.

Balance in S&OP. While 82% of companies have an S&OP process, less than 50% of company processes are balanced and only 1/3 of companies actively run “what-if” scenarios.

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AI This. Not So Fast.

Posted on by Teddy Nee

AI This. Not So Fast.

Grounded during this pandemic, and unable to interact with clients in person, I try to write 3,000 words a day. Morning after morning, fueled by good black coffee, I type away. I share insights, based on research, for the supply chain leader. I write for this blog, craft reports from research for our newsletters, create blogs for Linkedin, and build articles for Forbes. I am also developing a framework for my new book. Stay tuned.

Frequently, when I post about an issue, a well-intending consultant or an aggressive business development executive will tout the evolution of the autonomous supply chain as the answer. The comment is usually something like, “Implement RPA or AI to solve this problem.” Or, “If you need an answer, implement my solution.” When this happens, I sigh. This type of response is just not helpful. Everyone tries to be a cool kid with over-zealous comments on posts, but unfortunately, there is no truth in advertising in the supply chain market. (If the industry were grounded in truth in advertising repercussions, there would be far fewer signs in the airports from consultants and technology providers.)

Background

The autonomous supply chain is a vision, but it is not today’s reality. I find in my Supply Chains to Admire research that 96% of companies (when compared to their peer groups) are unable to drive improvement while delivering higher performance year-over-year on a balanced scorecard of growth, inventory turns, operating margin and Return on Invested Capital (ROIC). I define supply chain excellence as year-over-year performance better than the peer group on this balanced scorecard. Ecolab, L’Oreal, and TJX are exceptions. They did it. Each company ranks in the 4% of companies beating their peer groups.

Shifts in Technology

Data science and cloud-based delivery offer promise, but supply chain planning is morphing slowly. …and at the edges. No technology company is attacking supply chain planning at the center.

Let’s celebrate that over the last two years, there were four significant acquisitions by traditional supply chain planning providers to deepen analytics capabilities:

07/2018 JDA purchases Blue Yonder (Purchase price confidential.)

11/2017 Logility acquires Halo for 9.3 M$

10/2019 Llamasoft merges with Opex (Amount not disclosed.)

06/2020 Kinaxis buys Rubikloud for 60M$

Examining The Current State

The analyst mindset is to track software evolution by taxonomy where like solutions are grouped, named and tracked. Supply chain planning is a subset of the decision support technology taxonomy. Other forms of decision support include revenue management, trade promotion management, cost-to-serve, and network design. Now in its fifth decade of evolution, supply chain planning is starting to change. The shifts are happening slowly at the edges. I am celebrating, but my hope is to drive seismic changes from the center. What we have now is not good enough, and I have my fingers crossed that COVID-19 will drive a significant and positive shift by highlighting the deficiencies.

Read more at AI This. Not So Fast.

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Seven Supply Chain Processes To Stop Doing In The Pandemic

Posted on by Teddy Nee

Seven Supply Chain Processes To Stop Doing In The Pandemic

I remember standing in the temperature screening queue in Doha. As the line wound around multiple stations, my backpack cut into my shoulders. I was tired and cranky as I read the overview of MERS. As an United States resident, I was blissfully unaware of this virus and worried about catching my flight to Singapore. My ignorance of a potential pandemic was low.

Changing My Mental Model

The Middle East Respiratory Syndrome (MERS), first reported in Saudi Arabia in 2012, didn’t make headline news. Likewise, I watched the coverage of SARS, H1N1, and Ebola from my TV screen. As the COVID-19 saga unfolded, this was my mental model. My first articles dealt with the virus as a Chinese localized phenomenon. My jaw dropped when a friend became ill in Dallas in January from a visit to Dubai. I never conceived that it would become my reality.

Start Doing

In my prior articles, I have written extensively on the need for outside-in demand sensing processes based on market consumption data. I have also written about the need for supplier development programs and building robust supply chain capabilities in value networks. (I list these articles at the bottom of this post for reference.)

Stop Doing

What can we stop doing? The first step is to stop traditional demand planning processes based on conventional order pattern modeling. (This is the ouput of the conventional Advanced Planning models.) The modeling of historic order patterns is worthless through the pandemic. Why? The sales order pattern is no longer a predictor of future demand. Instead, invest in market sensing and the use of market consumption data. Attempt to read market shifts as they happen and drive a response.

Wrap-up

In closing, let me leave you with some thoughts. The pandemic is the result of a novel virus. Today, we have more that is unknown than known. What we stop doing will give us resources to focus on managing the supply chain in these uncertain times. Let me know your thoughts, and good luck.

Read more at Seven Supply Chain Processes To Stop Doing In The Pandemic

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Coronavirus Pandemic Turns U.S. Food and Beverage Supply Chains on Their Heads

Posted on by Teddy Nee

Coronavirus Pandemic Turns U.S. Food and Beverage Supply Chains on Their Heads

Current U.S. food supply chains are facing a severe emergency due to the current health situation, so how can these companies meet crisis-level fulfillment goals while avoiding introducing pathogens into an already stressed food supply chain?

Food and Beverage Supply Chains

Our current coronavirus-world has turned food and beverage supply chains on their heads, highlighting the importance of supply chain visibility and meeting U.S. FDA Food Safety Modernization Act (FSMA) guidance.

FSMA aims to prevent and mitigate food-borne illnesses, which, according to the FDA website, under “normal” conditions, sicken about 48 million Americans annually – a significant public health burden.

But current U.S. food supply chains are facing a severe emergency due to the current health situation – store closings, social distancing, self-isolation, and panic grocery buying.

Food and beverage manufacturers are scrambling to fulfill orders.

How can these companies meet crisis-level fulfillment goals while avoiding introducing pathogens into an already stressed food supply chain?

FMSA Guidelines for Short- and Long-Term Food Safety

If your company is responsible for manufacturing, processing, packing, transporting or storing raw or finished food products or beverages and must comply with food-borne pathogen reduction requirements, consider the following steps.

They’ll ensure your customers receive non-damaged, top-quality foods:

Familiarize or refamiliarize your personnel with existing FSMA guidelines that define safe food management criteria.

Explore the recent FSMA draft guidance, “Mitigation Strategies to Protect Food Against Intentional Adulteration: Guidance for Industry” to ensure your food materials remain in compliance with government guidance. This newest guidance covers necessary written actions, training, procedures, and steps to take if mitigation strategies have been incorrectly implemented–including corrective steps to identify and correct a problem that has occurred and measures to reduce its recurrence. Corrective actions must be documented and are subject to verification.

Employ tools that ensure you bypass common food contamination problems by providing overarching supply chain visibility and optimal shipping and handling decisions, so you can deliver the highest-quality food products as soon as possible while remaining compliant.

Read more Coronavirus Pandemic Turns U.S. Food and Beverage Supply Chains on Their Heads

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