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The New Normal in Manufacturing – A Digitized Future

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Archives, Global Logistics, Global Trade Daily

The New Normal in Manufacturing – A Digitized Future

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We can learn a lot from history. In the face of a global pandemic that has upended the business world, the measures taken in the short-term will lead to significant shifts that will last for decades.

We saw how the Great Depression dramatically changed the role of government within financial markets. Likewise, how the Great Recession of 2007-08 created a shift in value from ownership to experiences.

The global pandemic has already introduced and accelerated several trends that will likely become entrenched into our daily lives for years to come. We see a virtual shift happening with consumer trends like work-from-home, video communication, online purchasing, e-learning, streaming services, and more taking hold.

This is the new normal in which we live, work, and trade. And it’s here to stay. For manufacturers, the new normal is an opportunity to address short-term challenges and lay the groundwork for future resilience.

Acceleration of Industry 4.0

COVID-19 created immediate challenges for manufacturers.

1. Consumer demand shocks in both volume and variety of manufactured goods

2. Workforce shifts with social distancing regulations, hygiene mandates, and employee health-related absences

3. Supply chain fragility resulting in raw material and finished good shortages, impacts to just-in-time production processes, and stockouts

To address these short-term issues, manufacturers undertook various initiatives to build supply chain resiliencies to improve visibility, diversify their supply chains through reshoring, and deploying innovative technologies.

It’s fair to say that the pandemic is the catalyst that pushed the smart factory vision (Industry 4.0) forward faster.

Manufacturers are now able to gain a competitive advantage by adapting and building on this new normal. According to Bain & Company, “For companies willing to take the right actions during this critical recovery phase: the rewards may prove transformative, propelling them into the ranks of true performance leaders.”

The Future of Manufacturing Looks Digitized

A McKinsey survey of manufacturers found that:

-93% of manufacturing and supply-chain leaders plan to focus on the resilience of their supply chain

-39% have already implemented a nerve-center/control-tower approach to increase end-to-end transparency in their supply chain

-A quarter are fast-tracking automation programs to address worker shortages

-90% plan to invest in talent for digitization

As manufacturers look to advance their long-term strategies of building supply chain resiliency, reshoring production, introducing new distribution strategies, and implementing Industry 4.0 technologies, the key to success will be creating a digital muscle.

Supply chain resiliency – manufacturers must establish end-to-end visibility of the supply chain to improve resiliency. Enhanced visibility is made possible through technology, such as manufacturing execution systems, that can deliver network agility and visibility, digital collaboration, insights for decision-making, and team empowerment.

Reshoring – to reshore production, effective inventory management and supply chain tools that provide tracking and authentication are necessary. Automation of manufacturing processes will also be essential to make reshoring economical and attract technology-savvy workers.

New Distribution Strategies – direct-to-consumer (D2C) strategies have proven valuable during the pandemic. While it will take a cultural change to implement D2C in manufacturing, it will also require integrating technology systems, such as warehouse management systems and manufacturing execution systems.

Industry 4.0 technologies – manufacturers have rapidly deployed technologies that have better positioned them in the new normal. These technologies include 5G connectivity, IoT sensors, advanced automation, AI-powered analytics, and robotics solutions. With many of these rollouts completed in record time, manufacturers need to keep their eye on the big picture and look to further optimize these systems to increase efficiencies and transform capabilities across the supply chain.

A Partner for Your Digital Journey

At Generix Group North America, we are experts in creating efficiencies across the entire supply chain. With over 20 years of experience and a global team of 600+ experts, our series of solutions within our Supply Chain Hub product suite can help build the resilience and visibility your organization needs across your manufacturing operations and supply chain.

Our solutions are in use around the world by more than 6,000 customers and our experience is second-to-none. We invite you to contact us to learn more.

You can also read our eBook, “Manufacturing and the New Normal: Moving Forward from 2020,” to learn more about how digitization will prepare your manufacturing organization for the future.

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Doug Mefford has more than 25 years experience in the Supply Chain industry.  His diverse background includes roles across many operational functions, from inventory control to operational leadership within an Omni Channel distribution operation.  Additionally, within the software space he has held roles including quality and business analyst, design lead and product management.  He brings his cross functional experience in supply chain operations and software product delivery to bear in helping define the direction for Generix Group North America’s Solochain WMS. Prior to his time at Generix, Mefford was the operations manager for the Dallas Cowboys for eight years, overseeing their warehouse operations, retail distribution, silk screen manufacturing and direct-to-consumer order fulfillment. Doug studied at Northern Illinois University, and is greatly involved in the Illinois Special Olympics

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Archives, Global Logistics, Global Trade Daily

Omnichannel is Everything – How the Pandemic has Made Direct-to-consumer a Priority and is Upending the Old Supply Chain Model

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If 2020 taught us anything, it demonstrated that to succeed, maximize resilience, and ensure business continuity, companies need to utilize every available channel – e-commerce, direct-to-consumer, retail stores, distributors, and marketplaces like Amazon. That way if one channel is disrupted, whether by natural or man-made causes, the show will go on. In this environment, enterprise and functional silos, coupled with batch processes, won’t do. Companies will need to rely even more on supply chain networks to consolidate demand across every channel and have a view into every point of supply, to be able to satisfy customer demand efficiently, grow revenues, and minimize costs.

The pandemic highlighted the urgent need for businesses not to rely on a single channel for servicing customers. Many companies that were doing well through brick and mortar, both retailers and manufacturers, suffered a huge blow when the pandemic hit and stores closed. Many of them are now scrambling to catch up and bolster or create their e-commerce channels and just in time. E-commerce has surged with Accenture reporting that “much of this new e-commerce activity has been from new users. COVID-19 will permanently change consumer behavior. Consumers’ attitudes, behaviors, and purchasing habits are changing—and many of these new ways will remain post-pandemic.” It is clear that companies that can exploit this channel, but those who fail to do so will slip behind their competitors.

Meeting the Challenges of Direct-to-Consumer

Organizations today know the value of being customer-centric, focusing on the end-customer, and tailoring the supply chain to serve customer demand as and when it happens. However, this means having products available, keeping customers informed of the progress of their order, and ensuring a timely and smooth delivery experience. In these times, it’s extremely difficult and costly to acquire a customer, and a single bad interaction can lose them.

That becomes a major challenge when customers are everywhere, in stores, physical and virtual, shopping on third-party marketplaces, and researching and reviewing on social. Today, being customer-centric requires a view across all demand channels and the ability to aggregate that demand. It also requires visibility to all available supply so organizations can coordinate that supply to meet demand at the lowest cost. That might be a pick-up in store, ship from store, ship from DC, or from the manufacturer direct to consumer.

To do so efficiently requires the ability to plan, collaborate, and execute across the extended supply chain. What does it take?

A Connected Real-Time Business Network. Companies need to be connected, not just to their immediate trading partners, but to their entire supply network. This means connecting and coordinating with distribution centers, fulfillment partners, retail locations, and parcel carriers, and perhaps with “white glove” installation and service partners.

Processes to Support Order Size of One. Companies of all sizes need to become better at efficiently managing single item orders. However, those new to e-commerce and accustomed to shipping bulk order quantities to distribution centers and stores will need to move to smaller order quantities through to the end customer. The rule upstream has been to enforce minimum order quantities in order to drive efficiencies and lower costs. Today, shippers must process a “little-and-often” approach that is predicated on point-of-origin collaboration and consolidation to move smaller quantities more frequently based on real-time demand updates.

Real-Time Data. It is possible to move to smaller order quantities and actually decrease costs by using the end-to-end network since it can provide real-time data down to the item level. This eliminates information lead times and enables real-time visibility and collaboration. In turn, this reduces variability and the bullwhip effect for all trading partners by providing real-time insight into demand across all tiers. It creates better alignment between departments and partners and coordinated response to demand and makes possible truly demand-driven logistics. From a transportation perspective, mixed loads will become the new normal.

A real-time network also enables visibility to, and the ability to redirect and reallocate supply from all sources, stores, warehouses, suppliers, even product in-transit to match demand. This means more agility and accuracy in deploying inventory and using the most cost-effective source of inventory for customer orders.

Integrated Logistics. For optimal efficiency, organizations also need logistics options across every mode, from international and ocean to domestic and last-mile delivery. Networks enable this because the technology views inbound and outbound orders as two sides of the same coin. What one trading partner considers inbound, another considers outbound. Thus, the only way a last-mile solution can benefit both the consumer as well as the companies providing the goods and services, is to optimize all inbound and outbound across a single network. Providing visibility, control, and math-based or AI-based decision-making at different supply chain touchpoints empowers trading partners to make well-informed decisions about positioning and moving inventory. Telematics and full order visibility enables companies to better anticipate logistics issues, minimize disruptions, predict ETAs and drive customer satisfaction.

Alerts and Analytics. Applying real-time, network-wide data, combined with AI and intelligent autonomous agents, greatly increases visibility to potential problems and expands an organization’s range of options for resolving them. Predictive analytics enable the business to anticipate issues sooner, while prescriptive analytics provide guided resolutions to fix them optimally. In many cases, where the resolution is within predefined “guardrails,” intelligent agents can resolve issues autonomously. This type of AI-assisted and autonomous problem solving is especially important in omnichannel environments, where there are a lot of channels and a high volume of orders and shipments in flux. Applying AI can also help balance complex trade-offs and consider the repercussions of decisions across many variables and at scale, in way that human planners cannot.

The omnichannel challenge of reaching direct to the consumer is winnable. Real-time data, networks, machine learning, and intelligent agents, make it possible for an individual home-based order to trigger a response from the supply network, while also aggregating this demand in real-time across all customers to leverage economies of scale. This allows the supply chain to function as a unified and agile ecosystem to achieve the highest levels of customer service at the lowest possible cost. Yes, even when the orders are home-based for individual items.

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Joe Bellini is COO at One Network Enterprises, provider of an AI-enabled business network platform that enables all trading partners to manage, optimize and automate complex business processes in real-time. To learn more, visit www.onenetwork.com or follow One Network at https://www.linkedin.com/company/one-network-enterprises.

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Archives, Global Trade Daily, Warehousing

A Healthier Warehouse Starts with Better Indoor Air Quality

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While the “new normal” is still evolving, one thing is certain: We need to continue to focus on how we design and maintain indoor environments. Businesses need to keep occupant well-being and productivity top of mind while minimizing potential risks.

Improving indoor air quality (IAQ) has always been a priority for building operators but until recently many occupants were unaware or less concerned about how IAQ impacted their experience. The World Green Building Council notes IAQ is just one of “a range of tools and strategies” that should be employed to make buildings safer, but adds, “It is clear that an effective approach should…encompass an increased focus on the monitoring and management of air quality.” To this end, warehouses and distribution centers across the globe have taken steps to review current systems and implement new in-building technologies that improve ventilation, air quality, humidity, pressure, and safety.

While every building has some level of these functions, they may not be optimized for occupant comfort and wellbeing. With the holiday season, many warehouses and distribution centers schedule a higher-than-normal volume of employees to stay on track during the busiest time of the year. Air quality is essential to a healthy building, and it is especially important when there is an increase in the number of building occupants. IAQ can impact occupant wellbeing and productivity, energy efficiency, and potentially even real estate value.

As building owners and operators look to provide safer and healthier work environments for their employees, a good place to start is with a building audit. An audit will reveal whether installed systems are operating properly and confirm the facility is meeting ASHRAE standards for a healthier environment based on the type of building and its existing systems.

Aligning with ASHRAE Building Readiness recommendations, building operators should consider the following tips to improve IAQ:

-Increase outdoor air ventilation (use caution in highly polluted areas)

-Disable demand-controlled ventilation (DCV)

-Open minimum outdoor air dampers — as much as 100% — to eliminate recirculation

-Consider portable room air cleaners with HEPA filters

-Consider UVGI (ultraviolet germicidal irradiation) to protect occupants from radiation, particularly in high-risk spaces (e.g., break rooms or locker rooms)

-Consider altering equipment operating schedules to flush buildings with fresh air for two hours before and after occupancy

Following the audit, building operators should assess areas throughout the building to implement improvements or adjustments. Some improvement options include:

Electronic air cleaners (EACs): An electronic air cleaner is a device that uses an electric charge to remove impurities — either solid particles or liquid droplets — from the air. The EAC functions by applying energy only to the particulate matter to be collected, without significantly impeding the flow of air. They are installed at the point of air intake in an HVAC system, and maintenance of commercial EACs is often tool-free and relatively simple, due to components like removable grills for prefilter and electronic cell cleaning and replacement.

Ventilation controls: Proper air exchange can help dispel odors, chemicals, and carbon dioxide while balancing energy use and reducing disease transmission Building control products like actuators and economizers can bring in the right amount of fresh air based on environmental conditions, as well as meet building regulations. Newer economizers offer onboard fault detection and diagnostics to reduce service and commissioning time for maintenance professionals.

Humidity sensors: Humidity sensors can help gain real-time measurements and keep humidity at optimized levels. Humidity control is not just about occupant comfort. High humidity can promote bacteria and mold growth as well as conditions for dust mites, while low humidity can cause dry, itchy skin and upper respiratory irritations. ASHRAE research found that keeping relative humidity in the 40% to 60% range is optimal to decreasing occupant exposure to infectious particles and reducing virus transmission.

Pressurization controls: Maintaining proper pressurization in critical spaces, including restrooms, can help reduce pathogens, bacteria, viruses, and other microorganisms that can be present in indoor air. Pressurization can also be used to contain air in a quarantined space or isolate and protect clean spaces. Pressure sensors provide low-maintenance measurement and control.

UV systems: UV systems use ultraviolet light to damage the DNA structure of microorganisms at the cellular level and has been shown in laboratory tests to inactivate certain viral, bacterial and fungal organisms, making them less likely to replicate and potentially cause disease. UV systems can be installed at HVAC coils or with an EAC to deactivate biological contaminants growing on cooling coils, preventing pathogens from spreading to building occupants.

According to the World Green Building Council, while buildings themselves cannot solve all of our current challenges, they play a crucial role in employee wellbeing. Warehouse and distribution center owners and operators must make IAQ a priority — now and in the future — to ensure healthier indoor environments for employees and keep business moving.

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Archives, Global Logistics, Global Trade Daily, Warehousing

Three Tactics for an Environmentally Friendly Warehouse

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What do buying a new car, picking up a latte in the neighborhood and clearing the table after a family dinner all have in common?

Each of these actions prompts us to think about environment and take decisions about the use we make of recyclable, compostable and biodegradable waste. As a society, we are more and more conscious of the role each of us plays when it comes to the environmental responsibility and take it into consideration when making purchase decisions.

And how about a distribution center? Governments try to remedy the alarming quantity of greenhouse gas emissions produced by the supply chain industry.

Here are 3 tactics you can consider implementing in your warehouse operations, all while taking into account the profitability and efficiency of your operations.

1. Hydrogen fuel cells for forklifts

From a cost-effective standpoint, hydrogen fuel cells may be a superior option to the traditional lead-acid batteries.

These batteries stand out thanks to the longer useful lives than their traditional counterparts. The initial investment and maintenance costs are comparable. The only potential drawback is the cost of the actual forklift model using the new technology. Depending on the model chosen, operators may or may not make a business case for an environmentally friendly alternative.

Hydrogen fuel cells also allow for greater logistical efficiency. The refueling period is relatively fast and results in significant time savings when compared to working with lead-acid batteries. What more, these forklifts travel much faster than the conventional battery-powered ones.

Finally, hydrogen fuel cells emit no GES while operating. They bring you closer to reaching the sustainable development objectives set by your organization.

2. LED technology lighting

The initial investment for LED technology will be higher than for fluorescent lights but with lower annual operating costs. In addition, the life expectancy of LED lights is much longer, and can offer as many as +200,000 hours with variations due to industry differences. Your business may reach the break-even point after only three years following the investment.

In terms of logistical efficiency, the only downside will be the brightness of the LEDs. At some point, the luminosity at your warehouse may fall below acceptable levels despite what LED suppliers may claim.

Finally, the energy efficiency of LED technology is by far more attractive than that of fluorescent lights (80% compared to 10%). In addition, LED lights do not contain any mercury.

Use of wind energy?

How about wind power? Will installing wind turbines be profitable enough to power your distribution center? To find out, you’ll need to evaluate your electricity cost as well as the wind patterns in your area. Add to that the cost of purchasing, installing and maintaining the wind turbines.

Unlike fossil fuels, wind is not a stable source of energy, and logistical efficiency may be affected. This is especially the case when the wind turbines cannot fully satisfy the warehouse’s need for electricity. On the other hand, CO2 emissions from the warehouse’s power supply would be completely eliminated.

Even though the distribution center may not be fully self-sufficient with wind power as the only source of energy, wind turbines are still a good option. Building a hybrid warehouse that relies on both wind power and network electricity is a solid contribution to sustainability.

Which tactic to implement?

All three options discussed in this article are sound from an environmental point of view. They all further environmental conservation.

Each option has to be carefully evaluated with your suppliers. The costs of acquisition, installation, and maintenance must be accounted for. This exercise will allow business owners to manage the ROI expectations and make the right decisions both for the business and the planet.

Going ahead with any of these initiatives will serve well the generations to come.

Generix Group North America provides a series of solutions within our Supply Chain Hub product suite to create efficiencies across an entire supply chain. Our solutions are in use around the world and our experience is second-to-none. We invite you to reach out to us here to learn more.

This article originally appeared on GenerixGroup.com. Republished with permission.

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Archives, Global Logistics, Global Shippers 101, Global Trade Daily

DIGITIZATION HELPS SHIPPERS ADDRESS CHALLENGES, CAPTURE OPPORTUNITIES

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For today’s shippers, these are unprecedented times. Importers and exporters were clearly challenged by a supply chain that met with disruptions unlike any others previously experienced. Now, in the “post-pandemic” period, where things are slowly starting to return to what many are calling the “new normal,” shippers still face challenges but also opportunities. The key to regaining control over supply chain operations and remaining competitive is in knowing how best to mitigate the challenges and capture the opportunities. You can be sure that digitization will play an integral role in addressing both goals.

Shippers Facing New Challenges, Opportunities

It is true that the global supply chain is far more resilient and agile today than it was as recent as a decade ago. The pandemic, however, has disrupted what was steady progress in advancing the supply chain. Most significantly, it prevented the movement of raw materials, components and goods due to national lockdowns and the cessation of various modes of transportation.

The lack of transparency and information only exacerbated the challenges shippers faced in attempting to conduct business and protect their supply lines. Those businesses that did have some degree of visibility into their supply network fared much better than those left in the dark not knowing what materials they would receive and when, how their production lines might fare, and if they could deliver any orders and if so, during what time periods. Even major natural disasters such as earthquakes, hurricanes and tsunamis caused less uncertainty.

These are undoubtedly distinct times for global trade and commerce. While boundaries between B2B and B2C began eroding some time ago, the pandemic has introduced what will be long lasting, if not permanent, changes to how trade is conducted worldwide. The Amazonified business that wants its shipments now and in smaller quantities has added to the challenges and complexities, further straining even the more efficient supply chains. The need to coordinate more efficiently across the supply chain, keep operations agile and flexible, and maintain a workforce capable of adapting to the changing environment are among the primary challenges facing today’s shippers.

According to a Forbes Insights survey, 65 percent of logistics, supply chain and transportation executives acknowledged the need to revamp their existing models and add flexibility to their business operations so that they can ensure delivery across multiple channels, reduce operational costs and meet the heightened and changing demands of today’s consumers. This revamping of the supply chain will not only help shippers address the new challenges they face but also help them position their companies for new opportunities.

It’s not all doom and gloom. As the expression goes, “Necessity is the motherhood of invention.” The calamitous effect of the pandemic on the supply chain also gave shippers pause to consider how they could improve their operations. Specifically, it introduced new opportunities to identify and access the right clientele for their companies, reduce costs through better exception management, and optimize their operations. It also presented an opportunity to plan better for the future, and other potential disruptions and disasters, by leveraging digitization and prescriptive analytics. By understanding these advanced technologies, shippers can position themselves more opportunistically and to better sustain future disruptions and uncertainties, whether caused by a global pandemic, geopolitical uprising or natural disaster.

Digitization Delivering Enhanced Decision Making

Digitization’s most valuable deliverable is in facilitating accurate decision making and, in turn, improving operational efficiencies. While improved efficiency means better coordination across the supply chain, more precise decision-making translates into a more agile and flexible corporate culture. Through this more nimble culture, customers receive a value that previously didn’t exist, which positively impacts the company’s bottom line. These two outcomes go hand in hand with an engaged workforce that understands the criticality of the digital transformation and, in parallel, benefits from it by accessing a better toolbox containing valuable data that helps them perform better.

Moore’s law, which has been empirically proven to be accurate for more than 50 years, states that computing power roughly doubles every two years, while the cost of doing so comes down. Assuming the trend continues over the near future, we should expect that new opportunities afforded to shippers will continue to be amplified since they all depend closely on how well we record, process and make sense of data –which together defines digitalization. These three things are also the key drivers for shippers looking to position themselves for today’s market opportunities.

Where Digitalization Succeeds, Manual Processes Fail

In Gartner’s “Weathering the Supply Chain Storm Survey, 2020,” participants were asked to select which of these terms–highly resilient, moderately resilient or not resilient–best described their supply chain networks. As for how Gartner described each term, it was as follows:

Highly resilient – good visibility to the supply network; recognize the need to increase flexibility/resilience as a necessary investment for the network; are able to conduct scenario planning for trade-offs in the network; can shift sourcing, manufacturing or distribution within the network fairly rapidly

Moderately resilient – good visibility to the supply network, hard to justify making an investment to modify supply chain footprint; focus more on managing disruptions once they occur than investing in resilience

Not resilient – dependent on existing sourcing, manufacturing, and/or distribution footprint, and need to find other ways to compensate for changing conditions; have yet to invest in analytics to support network decision-making

Here’s what Gartner learned: Only 21 percent of those surveyed said their supply networks were “highly resilient,” 62 percent said “moderately resilient,” and 14 percent said, “not resilient.” While just in time (JIT) systems of the past helped improve operational efficiency, they did not address the “what if” scenarios such as those introduced by the pandemic. That’s where resiliency comes in. Resilient shippers are better able to pivot and adapt to supply chain disruptions, whereas those without the prescriptive analytics and transparency that digitization provides cannot. Unlike manual processes and JIT systems, digitization supports better planning, adapting, and reacting to new “what if” scenarios.

There are also other differences in manual processes versus digital processes. Manual processes are human dependent and therefore not scalable. To get a unit of output, one must insert a certain input. Even if manual processes are made more efficient, they are still limited by human capabilities. In contrast, digital processes by default are scalable.

Consider this example: A talented member of a shipper’s company is hand stamping holiday calendars being sent to each client. The number of hourly shipments is limited by the human capacity to stamp, box, and ship each calendar. Conversely, a digital calendar can be sent to a significantly larger group of customers at a fraction of the time. As illustrated, there are finite benefits provided from manual processes that are resource-heavy, prone to human error, and non-scalable.

Making Shippers and the Supply Chain More Resilient

Through digitization, shippers can benefit from advanced platforms that are fully-connected, fully-integrated, and facilitate their ability to better cope with supply chain challenges and capture new business opportunities. The most future-proof of today’s new digital supply chain platforms give shippers the opportunity to quickly access automated rate quotes, fast bookings, and real-time tracking of their shipments. These platforms enable them to quickly view delays or disruptions through an online supply chain map and issue customer notifications promptly

This not only streamlines manual processes like back and forth phone calls and/or emails but also supports a higher level of customer communications and service quality. This real-time access to information increases shippers’ overall resiliency while decreasing their costs of doing business. Advanced reporting capabilities, paperless document sharing, and storage further support shipper’s more cost-effective operations. Ultimately, this resiliency will pave the way for the shipper’s long-term viability.

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Matt Goker is the CEO of Quloi, a Garden City, New York-based technology firm focused on providing quantified logistics solutions that leverage Artificial Intelligence (AI), machine learning and deep logistics expertise to transform and optimize the supply chain.

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Archives, Global Logistics, Global Trade Daily

Ringing in the New Year: 2021’s Global Logistics Outlook

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It’s safe to say that 2020 will not be a year easily forgotten. This past year has been full of adjustment. Around the globe, our personal and work lives were upended with very little warning. As the pandemic spread, spending time with friends and family, water cooler conversations with co-workers, and even dependence on a resilient supply chain turned out to be necessities we had taken for granted. And normal has yet to return.

As the New Year approaches, it’s time to look at ways you can make a smart plan for global shipping in 2021. But, before I share what the outlook for 2021 looks like, I want to say thank you to the ocean and air carriers, port and airport operators, truck drivers, customs agents, and the many other logistics professionals who work hard to bring a little normal to our doorsteps and grocery store shelves.

Current events impacting global shipping in 2021

“By staying on top of supply chain management trends and issues, you can make sure that your company can readily adapt to changes”. — FinancesOnline

Headlines and news can significantly impact trade—either regionally or globally. While it’s impossible to predict all that 2021 has in store, you can at a minimum prepare for the following:

The ongoing Brexit situation

If you export from the EU to the UK and vice-versa, Brexit will mean extra administration chores and delays for your shipments. It is also to be expected that new customs charges and other fees will be introduced as of January 1, 2020.

For more information about Brexit and the impact it may have on your business, read our recent blog on the topic.

Global trade and tariffs

There are several things that may influence trade and tariffs in the coming year.

For example, some significant changes were made to the Generalized System of Preferences (GSP) recently, most notably that certain Thailand-origin goods are no longer GSP eligible as of December 1, 2020. More broadly, the entire GSP is scheduled to expire on December 31, 2020 if Congress does not renew.

Check out our Trade & Tariff Insights for more details on these and other updates.

Global demand for coronavirus vaccines

Of course, similar to 2020, the pandemic may be the largest disruptor on the shipping market again in 2021. Vaccines have started hitting some markets already and full global rollouts are expected in early Q1 2021.

The initial vaccine distribution will also coincide with the Chinese New Year when we historically see a large influx of retail merchandise ahead of the weeklong holiday in China.

With vaccines likely moving via air freight, we expect peripheral products, such as syringes, gauze, cotton to move via ocean, which could mean tightened capacity for both air and ocean shipments.

Expect challenges from 2020 to continue in 2021

Looking at the ongoing events around the world, many of the challenges we’ve experienced in 2020 are not going away—and there are potentially new challenges on the horizon. If there is one thing the supply chain industry needs to learn from these ongoing challenges, it is agility. Supply chains need to be flexible enough to absorb these shocks, major or minor, that comes on its way.

Through our technology and global suite of service offerings, including ocean, air, customs brokerage, trade compliance, and surface transportation, we help customers mitigate the unplanned risks and changes of global shipping. Our people are willing and eager to help you plan for shipping in the coming year.

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Archives, Global Logistics, Global Trade Daily

The 2020 Holiday Season Logistics Guide

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Ensuring that every item is in the right place at the right time can be quite difficult- there’s just so much work that needs to be done! If your business is middle-sized to big-sized, this task will be even harder.

But even if your company is small, you must still keep track of the planning process, including item movement and placement. If your cargo reaches its point of consumption in due time, and your point of origin equipment is ready to ship, your company’s logistics runs well. If not- time and money are quickly lost, and the company could take a hit.

You must therefore plan your resources well and learn how to move things around efficiently. Your warehouse facilities are important, but so are inventory planning, resource management, and supply coordination; not to mention transportation and customer response. These factors must be taken into account very carefully.

With the holidays knocking on our door, I can see why so many business managers are starting to freak out. The holiday season is hectic. A company’s resources can quickly change, so it’s time to develop a logistics guide and stick to it. Here’s how to prepare your supply chain for this season.

Help your customers buy early

This season is different from any other holiday season we’ve been through. That’s because the Coronavirus pandemic has changed things around for good. This year, we won’t see too many last-minute decisions among customers. Most clients already pre-ordered their Christmas gifts on Black Friday, while others did it all the way back in October. Since stores are not open to the public anymore (not everywhere in the world at least), and there’s a fear attached to in-shop purchasing, a higher number of customers decided to get their gifts online; and so, transportation can get messy if it doesn’t work right.

However, if your customers are not ordering online yet, here is what you can do to persuade them to buy now. The longer they wait, the messier your logistics process will get. Here’s what you can do.

-Present the product’s benefits in more detail. Don’t stop at only listing the product’s features. Get access to a Virtual Assistant Platform to automate your listing processes and get your personal tasks done in no time.

-Use vivid language, but don’t go overboard with it. Express what you mean in a simple yet motivating way. For example, instead of saying, This car protects people in case of an accident, you could say, If you’re driving this car, you’ll walk away unharmed in case of an accident.

-Do not use jargon, not everyone gets it, and you might lose clients because of this. I

-Customers don’t hold specific data in their minds for too long, so make it short. Present your product’s benefits in a concise way. You could even summarize your product’s strengths; for example, instead of saying, Here are 12 reasons to buy this product, change it to, Keep these two things in mind.

-Highlight your company’s benefits from a logistics perspective. If you collaborate with Amazon, for example, expose the transportation benefits that your company is offering. What differentiates you from your competition in terms of logistics?

Optimize your inventory accordingly

If you haven’t done this by now, get to work. This year, your inventory must be well-organized. So, start optimizing it.

-Measure your results by using the right KPIs such as stock rotations and customer availability rate.

-Use the classical ABC analysis to track your product quantity and measure quality- pair it with a PARETO analysis.

-Use chatbots to promote your content on social media and track those results as well.

-Make an inventory vs. sales cost analysis to examine if your products sell well, and which ones should be taken out of your inventory.

-Reduce the MOQ or the Minimum Order Quantity. Do not produce more than you can sell, this will add to your overstock. Instead, negotiate with the supplier or change it, if they don’t agree with your requirements and do not satisfy your needs.

-Develop a more centralized inventory, especially if you have more than one warehouse, store, or factory. Estimate your transportation costs accordingly and include specific analyses on financial, logistical, promotion, destruction, or productivity costs. Be sure to include everything in your inventory.

Be prepared for this year’s shipping costs

During the COVID-19 pandemic, things have changed for the worse. The transportation costs will most likely increase as the holiday season gets closer. Some transportation companies offer little to no help to small businesses; others are kind enough to work with the managers. Your best option would be to hire a mix of carriers and choose the one you like the best.

You could look at regional carriers first since their costs are usually lower. Check out their services, and if you’re not satisfied, change the company. Another important thing to look at is the last-mile delivery costs. Choosing a local or even a national company will help you out financially.

Get the necessary support

And here’s the last thing we’ll be discussing today- getting the necessary help. If you’re not doing well and don’t know where to start, seeking support should be something to prioritize. You could develop new partnerships and engage with new elements. Think about what changes you could benefit from.

Could you be working with superior technology? Could you offer your staff a more flexible schedule?  What other valuable assets could you be bringing to the company? How could you change it for the better? What part of your logistics process could actually improve?

Preparing your company for this holiday season will be nothing but ordinary. However, you must learn how to predict 2021 trends and bring your logistics process to a new level. Do not leave things for the last minute, start preparing now. If you realized that you need support, go get it. If you realized that you could change some things to save your business, go do them.

Conclusion

You could be needing eCommerce support or new delivery options. Maybe your KPIs aren’t functional. Maybe your customer’s orders are not in place at the right time. Maybe you are not working with a cost-effective delivery company that gets your goods safely from the warehouse to the customer. Maybe something must change- but you don’t know what.

If that is the case, follow the guideline above, and add whatever you see necessary to it. You will have a great holiday season from a logistics perspective if you can set everything up for success ahead of time. Prepare, work hard, and accomplish. Make this your 2021 goal.

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This guest post is contributed by Kurt Walker who is a blogger and college paper writer. In the course of his studies, he developed an interest in innovative technology and likes to keep business owners informed about the latest technology to use to transform their operations. He writes for companies Edu Birdie, XpertWriters, ResumeWriterReviews, and uk.bestessays.com on various academic and business topics.
masks
Archives, Global Trade Daily, News

Will Usage of Abaca Fiber Face Masks During COVID-19 Help to Reduce Wastes During the Pandemic?

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With the demand for face masks and other PPE equipment soaring high worldwide due to the dreaded COVID-19 pandemic spread, it is quite impossible to not ignore the burgeoning plastic wastes created by their disposal. According to estimates by Greenpeace Taiwan, the country produced and used about 1.3 billion surgical masks during the apex of the pandemic- from early February to mid-May. This number generates over 5,500 metric tons of general waste within a span of 3 months.

Such numbers signify that although face masks add to the general protection during the pandemic situation, they also contribute massively towards environmental degradation and landfill pollution, demanding a bio-degradable solution and substitute. This has gradually led to the emergence and usage of abaca fiber-based surgical and sustainable masks.

Recently, a Philippines-based firm- Salay Handmade Products Industries, Inc. had come forward to commercialize and supply masks made from raw abaca fibers, which boast of the property to decompose in just two months. Abaca fibers are generally rooted from banana leaf and are considered to be strong as polyester but high on the sustainability front. A proper validation on the use of abaca fibers for the production of face masks is offered by the country’s Department of Science and Technology. The researchers found that abaca mask is potent of absorbing nearly 3% to 5% of total water applied, while N95 and surgical masks absorbed 46% and 0.17% respectively.

Essentially, the abaca masks repel water far better than an N95 mask and is considered to be extremely safe for use. Although these abaca masks are eco-friendly, they are also quite highly-priced. That said, environmentalists concerned with the plastic crisis plaguing the entire planet will hopefully witness the benefit of investing in biodegradable masks providing an impetus to the global abaca fiber market.

Abaca fibers, also known as ‘Queen of natural fibers’ offer a huge potential to be used as a renewable bio-resource and are claimed to have a high content of lignin (about 9%) and cellulose (roughly 77%) that provide significant resistance to abrasion, traction, UV rays, and saltwater. These properties allow the fibers to be abundantly used for various industrial or extra-industrial applications across automotive, shipping, construction, pulp and paper, furniture, and textile industries.

Why are abaca fibers gaining massive momentum across the automotive industry?

It was in late 2004 that a major automotive giant, Chrysler-Damlier had explored the possibility of incorporating abaca or banana fiber in polypropylene thermoplastic as a substitute to glass fiber used in the exterior of most of the cars. In fact, it was reported that the company was able to demonstrate that PP composites reinforced with abaca fibers showed high structural as well as tensile strength similar to that of glass fiber. Additionally, abaca reinforced PP composites are relatively lighter compared to glass fiber, which could lead to enhanced fuel and energy saving for vehicles while also reducing their weight by up to 60%.

Elaborating further, the DOST Industrial Technology Development Institute sees abaca’s potential as a roofing material for various public utility vehicles. The polymer’s low heat conductivity could help prevent most of the sun’s heat from entering the automobile’s cab, which is especially helpful during the long summer months.

Speaking of the importance of abaca fibers in the automotive industry, the Philippines, which currently produces about 85% of the world’s abaca firmly states that the use of these fibers could potentially augment the country’s local automotive industry in the years to come.

Abaca fiber market trends across the Philippines

The Philippines has over the years remained a dominant region for the abaca fiber market as it stands to be the largest global producer of abaca fiber, ever since its introduction. Reports state that the region produces about 80% of these fibers in about 130 thousand hectares of land. The market is witnessing a massive boost owing to the mounting demand for toys, gifts, and houseware products. Not only this, rising customer inclination for lifestyle products is also stimulating the industry progression.

What has been fueling the industry growth in the Philippines is the introduction of several initiatives that look toward the promotion and production of high-quality abaca fiber in the region. The federal government is responsible for mandating and creating initiatives and measures which strengthen the hold of the country in the overall abaca fiber market while also creating additional growth opportunities for new market players to foray into the regional market.

Although the market has been expanding prolifically over the past few years, it is currently facing some challenges which might hinder its growth in the near future. A major disadvantage being the application of these fibers as reinforcement. Since abaca fibers cannot blend uniformly with polymer composites owing to their natural properties, this complicates the composite fabrication process in the textile industry, limiting its use in the overall textile business space.

Nevertheless, abaca fibers’ eco-friendly and bio-degradable properties have enabled the global abaca market to grow profusely over the span of 2020 to 2026.

WMS
Archives, Global Logistics, Global Trade Daily, Warehousing

Out-Of-The-Box WMS is a Natural Step on the Road to Custom Development

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Sergei Leonov, the head of Axmor’s development department, explains which companies stand to benefit from developing their own warehouse management system.

In my professional experience, I have often come across the following situation: a company is utilizing a popular ERP system yet refuses to use the built-in WMS (warehouse management system) module. How can we account for this? WMS modules are both inexpensive and convenient: vendor consultants are already on board and the system has all the necessary functions to help simplify dozens of warehouse business processes. Typically, the companies that I have described have similar extensive experience working with standard solutions.

An out-of-the-box WMS is a guiding thread for fledgling businesses

Ready-made solutions for warehouse management have a significant number of advantages. As a rule, companies are willing to use them because such systems are an intrinsic part of an ERP system, i.e. they have a ready-made infrastructure platform, resulting in a relatively low implementation cost. In addition, boxed WMSs have debugged and ready-to-use warehouse business processes; thus, you can bypass the trial and error stage when using them as a template from which to build your own. Lastly, turnkey solutions are attractive because of the vast and detailed documentation that exists in the public domain. Furthermore, during the solution’s implementation stage, the company can benefit from the support of highly qualified business consultants: a crucial factor for fledgling organizations.

Typically, problems emerge as the company gains awareness of the limitations that a standard solution imposes on unique operations or their sequence. As the company grows, it requires an agile system, capable of adapting to non-standard ‘outside-of-the-box’ business processes, and the company is presented with a dilemma: shoehorning business processes into the limitations of the current boxed system or customizing the boxed WMS to fit the more demanding requirements. The latter option will result in the system having an increased cost of ownership: the cost of changing the core configuration of the system and modifying business processes is added to the price of licenses and implementation. Improvement costs increase the total cost of ownership by 5 times on average. Another point that increases the overall price of the system is the unused functionality of the box, which is now rendered a ‘dead weight’ and does not contribute anything to return on investment.

 

It should therefore be noted that at the outset of a company’s operations an out-of-the-box WMS can provide a decent springboard; however, as the company matures, it can also hamstring the growth of warehousing efficiency (reducing time of operations, etc.), when the company’s warehouse operation technology becomes more complex, or when there is a desire to continuously optimize warehouse processes.

A custom WMS is not the opposite of ready-made software

In contrast to an out-of-the-box solution, a custom WMS does not have any restrictions when it comes to further developing its functionality, nor on the speed of development. On the other hand, a custom WMS does not have a ready-made infrastructure, and its development necessarily begins with the creation of an expensive set of basic functions: the ability to work with directories, viewing and editing documents, reports, etc. This infrastructure needs to be created from scratch and integrated within the broader IT system.

The disadvantages, however, are outweighed by the increased freedom of development and the ability to test alterations to business processes both quickly and at low cost. Especially in light of the fact that as the system develops, the cost of developing it will decrease.

As a rule, incurring high initial costs and capitalizing on limitless possibilities for positive innovation, is possible for mature or highly flexible companies; thus, I believe it is fallacious to contrast a “boxed” WMS with a custom system. It ultimately boils down to two fundamentally different approaches to business. For some companies, one approach is preferable due to the increased level of influence over various processes, whereas for another company the ability to generate cost-benefits from experiments and innovations is an intrinsic part of their business model.

Two kinds of companies for which the development of a custom WMS solution makes sense

Business Process Experimenters

Such companies typically operate in highly competitive or dynamic markets. It is reasonable to assert that they make a considerable profit thanks to constant experimentation and optimization with their WMS, since the search for non-standard solutions leads to faster, more flexible, and cheaper operations, or allows them to implement unique, highly sought-after unique services.

For example, a company is constantly refining the process of goods intake in order to make it faster and to avoid additional recounts. For this purpose, several options are considered in order to eventually arrive at the optimal one: storekeepers can simultaneously manually input data into the desktop system, they can use a mobile application, or they can use a barcode scanner. If a company wants to test all of the possibilities listed above and include them in a standard solution, it would be more expensive, time-consuming, and would meet with resistance from the vendor. In short, it would, in the vast majority of cases, be completely unfeasible.

It should be noted that companies need to be ahead of the competition in case they fall foul of new government initiatives concerning industry regulations. Increasingly, goods from all sectors find themselves subjected to new requirements, often entailing the capital restructuring of warehouse and logistical processes. Companies working with boxed WMS are left at the mercy of both the developer and the vendor as necessary alterations are developed and implemented. For a company that prides itself on agility and flexibility, this loss of valuable time is potentially catastrophic.

Companies that have analyzed the cost-effectiveness of their limitations

These companies have significant experience working with various standard solutions, which at the initial stage of their history helped them to build business processes in accordance with internationally recognized best practices and contributed towards the company’s growth. In time, however, the limitations of the system began to negatively affect the company as a whole and the cost of WMS and the lack of flexibility started to obstruct optimization. The characteristics of the warehouse evolve, new loading and robotic equipment appear on the market, bringing with it the need to increase automation. The necessary changes cannot be quickly implemented using an out-of-the-box warehouse accounting system. When one small inconvenience of the system is scaled to a hundred employees, each subsequently performing 50 unnecessary operations, the efficiency of the warehouse decreases.

With this comes awareness of the cost of limitations. The real price that the company pays for tolerating the inconveniences caused by the “box” is estimated. At this point, it is already possible to assess how justified/expensive/risky/profitable/cheap it would be to create a custom-made system, and in addition, it is possible to understand what features the custom system should contain.

The experience of such companies shows that it is not always correct to contrast the boxed and custom WMS, because the second is often impractical without the first, and without having lived through the limitations of the standard solution, it is unlikely a company would invest time and money to remove these restrictions.

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Sergei Leonov is the Head of Development at Axmor with 19 years of experience in software engineering. He enjoys Arduino and is building a smart home in his spare time.

supply management
3pls, Archives, Global Logistics, Global Trade Daily, Warehousing

The Shared Supply Management Glossary

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To enable manufacturers and distributors to reduce their inventories while still meeting consumer expectations, supply management today has become increasingly collaborative. From shared management of supplies to deported or consigned stocks, cross-docking, multipick or multidrop; organizational methods and models are multiplying to improve the efficiency of the Supply Chain and meet the needs of manufacturers and distributors. Generix Group is revisiting the primary mobilizable techniques and their benefits.

4PL

Managing all the players involved throughout the Supply Chain represents a real challenge for some companies. Therefore, they prefer to entrust this coordination mission to a 4PL (or “fourth-party logistics”) provider. In addition to the storage, order preparation and transport operations usually carried out by a 3PL, the 4PL also assumes the responsibility of independently managing supplies for its customer.

Category Management

Another component of an ECR approach, Category Management is a distribution strategy consisting of optimizing sales by categories, rather than by product families, from a customer satisfaction perspective. Thanks to SSM, Category Management can improve efficiency: product organizations work together more closely, customer knowledge is refined, and dashboards are more easily shared. In fact, market placement and product assortments can be executed more precisely. Since the manufacturer has an in-depth knowledge of its products and their potential, it decides which quantities to put on the market. The distributor, therefore, benefits from better management of its product assortment, and the manufacturer can direct its production lines accordingly.

Collaborative Planning Forecasting and Replenishment (CPFR)

Based on SSM, this collaborative practice pushes cooperation further upstream by integrating planning and forecasting. The aim is to improve the Supply Chain through increased collaboration between manufacturers, distributors, and logistics providers. Under this approach, sales and production forecasts are developed jointly, promotions are managed in a more participative manner, and there is a greater dialogue surrounding new products’ marketing.

Consigned Stock

On a principle similar to that of deported stocks, this time the consigned stock is stored by the logistics provider. These stocks remain the property of the supplier for as long as they remain at the provider’s location. Once the goods leave the warehouses, they become the responsibility of the distributor, who must then pay for them. Very often adopted by small manufacturers with low storage capacity, this solution also allows distributors to reduce the immobilization of their capital.

Consolidation and Collaboration Center (3C)

Often initiated by distributors, this solution allows small and medium-sized enterprises (SMEs) without large logistical means to meet the challenging demands of their customers by organizing fast and frequent deliveries, shipment of packages and not whole pallets, and optimizing the filling of trucks without increasing logistical costs. Therefore, 3Cs are generally aimed at suppliers who cannot access pooling, multidrop or cross-docking.

Cross-docking

In this tight-flow supply management process, goods are delivered to a grouping/unbundling warehouse and shipped directly to the final point of sale, without intermediate storage. The aim is to allow the distributor to reduce its inventory by increasing the frequency of delivery to points of sale, but also to improve the filling rate of trucks by shipping potentially heterogeneous products.

Deported Stock

Deported stocks are stocks established at the customer’s site, but that remain the property of the supplier. Through this consignment technique, the distributor can increase its inventory levels and improve its working capital requirements (WCR). The supplier gains visibility through the dispersal of its products and can adjust its production accordingly. For the manufacturer, it also assures better in-store availability of its products, and indirectly, a guarantee of satisfaction for the final customer. The practice of deported stock is similar to that of 3C (Center for Consolidation and Collaboration).

Multidrop

In this supply management model, resources are pooled between several manufacturers with customers in common. Like cross-docking, multidrop aims to optimize truck filling and increase delivery frequencies. However, to be beneficial, this mode of operation requires a geographical approximation of the delivery points, whether they belong to the same brand or not.

Multipick

In this variant of pooling, goods addressed to the same delivery point are collected in different industrial warehouses. To be effective, warehouses must be located within 30 minutes of one another. Multipick, however, remains a complex process to coordinate without a mediator. It requires a good understanding of the different players in order to organize the loads in a coordinated and functional way.

Pooling

Complementary to the SSM, pooling is another model of collaboration, this time established between several manufacturers. Also known as Mutual Supply Management, this way of organizing allows manufacturers to pool their resources. The goals are to reduce logistics costs, increase delivery frequencies and make supply flows more reliable, all to ensure better availability of products in stores while maintaining a lower carbon footprint.

Retailer Managed Inventory (RMI)

In this organizational model, supplies are managed directly by the distributor in the form of firm orders to the supplier. By transmitting information about its inventory movements, the distributor allows the manufacturer to anticipate its production needs and optimize its inventory management.

Shared Supply Management

Considered a tool of the Efficient Consumer Response (ECR), SSM is a method of supply management whose responsibility is shared between the manufacturer and the distributor. In this collaborative organization model, the supplier is tasked by the distributor to supply the products as closely as possible to the needs. The inventory and/or sales data provided by the distributor allow it to adapt its production and logistics resources, and to calculate the quantities of products to be supplied according to those needs.

Vendor Managed Inventory (VMI)

Derived from the SSM, VMI relies on the provider supplying the optimal inventory to the distributor, without prior approval. Since the order has to be accepted and shipped by the distributor, VMI requires a great deal of trust in the customer/supplier relationship. Primarily practiced in the United States, this method is becoming more widespread in France via the impetus of a few distributors.

Working Capital Requirement

A key indicator of business performance, the working capital requirement is directly impacted by inventory levels that generate delays in cash flow. But with SSM and pooling, it is possible to have a better overall view of supplies, and thus to better control this cash flow. The level of WCR then becomes an indicator allowing the company to know if it deviates from its objectives, but also to measure the logistical and financial consequences of doing so. With projections of 3 months or 6 months, it becomes possible to anticipate the costs associated with the intervention of a logistics provider in case of shortages and seek to reduce these penalties.

You now know (almost) everything about the many organizational models that can meet your supply management logistics needs. To improve the performance of your operations through collaborative management, check out the Collaborative Replenishmentoffer built into the Generix Group Supply Chain Hub platform, or contact us!

This article originally appeared on GenerixGroup.com. Republished with permission.