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Uniting Forces Against Illicit Wildlife Trade in Global Supply Chains

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Global Logistics, Global Trade Daily, News

Uniting Forces Against Illicit Wildlife Trade in Global Supply Chains

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Illegal wildlife trafficking persists as a grave menace to biodiversity, economic stability, and global security. The clandestine trade not only imperils numerous species but also disrupts ecosystems and jeopardizes the livelihoods of communities worldwide. Recognizing the gravity of this issue, a coalition of ten prominent organizations has forged an alliance to combat illegal wildlife trafficking by enhancing awareness and vigilance across global supply chains.

The maritime sector, in particular, remains susceptible to the trafficking of contraband. Given the sheer volume of trade traversing the seas, coupled with demands for swift deliveries and intricate supply chains, criminals exploit vulnerabilities in maritime logistics to smuggle illicit goods.

In a concerted effort to combat this scourge, ten international organizations have banded together in an initiative spearheaded by the World Shipping Council. Supported by the United Nations Development Program, the Global Environment Facility, and the Global Wildlife Program, and in collaboration with TRAFFIC and WWF, the coalition also includes co-sponsorship from BIC, Global Shippers Forum, the International Fund for Animal Welfare, and TT Club. Together, they have developed practical guidelines for all stakeholders in supply chains, offering advice, posing pertinent questions to identify criminal activities, and furnishing guidance on reporting suspicious behavior. An accompanying “Red Flags” document serves as a daily reference for individuals involved in supply chains.

Combatting illegal wildlife trafficking necessitates collective action across international containerized supply chains. All involved parties, especially consolidators and recipients of goods for packing or transportation, must proactively undertake measures to prevent the shipment of illegal wildlife. This entails verifying cargo legitimacy, properly sealing shipments, conducting risk assessments, and promptly alerting national authorities to suspicious activities as necessary.

The Joint Industry Guidelines for Combatting Illegal Wildlife Trafficking aim to supplement existing International Maritime Organization (IMO) guidelines by offering tailored and actionable advice to private sector stakeholders. The IMO has been kept abreast of the development process, with the joint industry guidelines submitted to heighten awareness and spur action.

Illegal wildlife trafficking not only threatens endangered species globally but also fosters organized crime and undermines global security. The coalition’s unified endeavor underscores the shared responsibility of all stakeholders in combating this illicit trade. By pooling their expertise and resources, these organizations manifest their dedication to wildlife protection and the promotion of sustainable trade practices.

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Archives, Global Trade Daily, International Trade

Global Supply Chains Brace for Russia-Ukraine Conflict – Four Major Risks

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As tens of thousands of Russian troops continue to mass along the Ukrainian border, and with diplomatic talks between the U.S. and Russia yet to bear fruit, the threat of a Russian invasion within the next few weeks appear to be growing.

A Russian invasion of Ukraine has the potential to cause extensive and debilitating disruption across global supply chains, resulting in rising input costs to a heightened threat of cyber attacks (see below).

Today thousands of U.S. and European companies do business with suppliers in Russia and Ukraine, which could be at risk during a prolonged military conflict. Analysis of global relationship data on the Interos platform reveals key findings:

-More than 1,100 U.S.-based firms and 1,300 European firms have at least one direct (tier-1) supplier in Russia.

-More than 400 firms in both the U.S. and Europe have tier-1 suppliers in Ukraine.

-Software and IT services account for around 12% of supplier relationships between U.S. and Russian/Ukrainian companies, compared with 9% for trading and distribution services, and 6% for oil and gas. Steel and metal products are other common items purchased from the two countries.

While the proportion of U.S. and European supply chains that include tier-1 Russian or Ukrainian suppliers is relatively low, at around 0.75%, this figure increases significantly when indirect relationships with suppliers at tier 2 and tier 3 are included.

-More than 5,000 firms in both the U.S. and Europe have Russian or Ukrainian suppliers at tier 3 (representing 2.76% and 2.37% of their respective supply chains).

-More than 1,000 firms in both the U.S. and Europe have tier-2 suppliers based in Ukraine, with around 1,200 dependent on suppliers at tier 3.

Supply chain and information security leaders in U.S. and European organizations should review their dependence on Russian and Ukrainian suppliers at multiple tiers as a key first step in their efforts to assess risk exposure in the region and ensure operational resilience.

Four Major Risks for Global Supply Chains

In the event of a Russian invasion of Ukraine, there are four major areas where global supply chains could be negatively impacted:

1. Commodity prices and supply availability

2. Firm-level export controls and sanctions

3. Cyber security collateral damage

4. Wider geopolitical instability

1. Commodity price increases. Energy, raw material and agricultural markets all face uncertainty as tensions escalate. Russia provides over a third of the European Union’s (E.U.) natural gas, and threats to this supply could force up prices at a time when companies and consumers are already facing higher energy bills. Natural gas supply pressures likely would spike volatility in other energy markets too. By one estimate, an invasion could send oil prices spiraling to $150 a barrel, lowering global GDP growth by close to 1% and doubling inflation. Even lower estimates of $100 a barrel would cause input costs and consumer prices to soar.

Food inflation is another risk, with Ukraine on track to being the world’s third largest exporter of corn, and Russia the world’s top wheat exporter. Ukraine is also a top exporter of barley and rye. Rising food prices would only be exacerbated with additional price shocks, especially if core agricultural areas in Ukraine are seized by Russian loyalists.

Metal markets may also continue to be squeezed. Russia controls roughly 10% of global copper reserves, and is also a major producer of nickel and platinum. Nickel has been trading at an 11-year high, and further price increases for aluminum are likely with any disruption in supply caused by the conflict.

2. Firm-level Export controls and sanctions. Commodity cost pressures could be exacerbated by targeted U.S. and European export controls. The use of such controls to restrict certain companies or products from supply chains has soared over the last few years. While many have been aimed at Chinese companies, a growing number of Russian firms have been earmarked for export controls for “acting contrary to the national security or foreign policy interests of the United States”.

Prominent Russian companies already on a U.S. restrictions list include Rosneft and subsidiaries and Gazprom. Extending export controls and sanctions to Gazprom’s subsidiaries, other energy producers, and key mining and steel market firms could further impact supply availability and input costs. Not surprisingly, U.S. companies and business groups are urging the government to be cautious in how it applies any new rules.

U.S. and E.U. export controls would also likely target the Russian financial sector – including state-owned banks – if an invasion takes place, and may be a tactic for deterrence as well. U.S. officials have noted that any sanctions would be aimed at the Russian financial sector for “high impact, quick action response”.

3. Cyber security collateral damage. Entities linked to malicious cyber activity may also face further repercussions from the U.S. and its partners. Ukraine is certainly no stranger to Russian cyber aggression. Russia has twice disrupted the Ukrainian electric grid, first in December 2015 leaving hundreds of thousands of Ukrainians in the cold, and then again the following year. But destructive attacks on the country’s infrastructure could also spark significant collateral damage in global supply chains.

In 2017, the NotPetya attack on Ukrainian tax reporting software spread across the world in a matter of hours, disrupting ports, shutting down manufacturing plants and hindering the work of government agencies. The Federal Reserve Bank of New York estimated that victims of the attack, which included companies such as Maersk, Merck and FedEx, lost a combined $7.3 billion.

This figure could pale in comparison to the global supply chain impact of a Russia-Ukraine military conflict, which would inevitably include a cyber element. Whether Russia would target its cyberwar playbook at U.S. or E.U. targets in retaliation for any support to Ukraine remains hotly debated. But the Cybersecurity Infrastructure and Security Agency (CISA) has been urging U.S. organizations to prepare for potential Russian cyber attacks, including data-wiping malware, illustrating how the private sector risks becoming collateral damage from geopolitical hostilities.

4. Geopolitical instability. Just as cyber warfare would be unlikely to remain within Ukraine’s borders, so the destabilizing effect of a Russian invasion could have wider geopolitical ramifications. In Europe, a refugee crisis could emerge, with three to five million refugees seeking safety from the conflict. In Africa and Asia, rising food prices could fuel popular uprisings. Of the 14 countries that rely on Ukraine for more than 10% of their wheat imports, the majority already face food insecurity and political instability.

China is watching closely to see how the world responds if Russia invades Ukraine. The superpower has its own aspirations of seizing territory and extending its sphere of influence. Taiwan’s defense minister has remarked that tensions over Taiwan are the worst in 40 years. A Russian invasion could further embolden China to enlist military tactics against Taiwan – something that, as well as its far-reaching geopolitical implications, would have a significant impact on electronics and other global supply chains.

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Although many of these risks may not materialize, and represent a worst-case scenario, executives should be thinking now about the potential impact of a Russia-Ukraine military conflict on their operations over the coming months. These same leaders need to ensure that appropriate contingency plans are in place for their most critical supply chains and riskiest suppliers in the region.

Risk mitigation strategies include:

-evaluating required levels of inventory and labor in the short to medium term;

-discussing business continuity plans with key suppliers; and

-preparing to switch to, or qualify, alternative sources for essential products and services.

With proper analysis, planning and execution, it is possible to mitigate significant risk and ensure operational resilience.

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How Will Climate Change Affect Global Supply Chains?

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The world relies on global supply chains, but these networks are prone to disruption. Disease outbreaks, worker shortages, technological issues, and more can all cause substantial delays and expenses, but one factor is more threatening to supply chains than any other. Logistics professionals today must consider the impact of climate change.

Carbon dioxide in the atmosphere is increasing more than 250 times faster than in the last Ice Age, mostly due to human activity. That’s led to rising temperatures, glacial ice loss, sea-level rise, extreme weather events, and more. As climate change worsens, these factors will grow more severe.

Here’s how that could affect global supply chains.

Declining Supplies

One of the most disruptive effects climate change will have on supply chains is on the supply side. Rapidly warming oceans and increasingly extreme weather have already started to affect multiple industries, decreasing their output. As this trend continues, supply chains will have fewer and fewer reliable sources for some products.

For example, New York’s registered lobster landings decreased by 97.7% between 1996 and 2014, thanks to warmer oceans. Similarly, droughts have hampered agricultural production, with products like rice and coffee seeing dramatically smaller harvests. Supply chains will have an increasingly difficult time finding sufficient sources to meet demand as this problem grows.

Extreme weather events could reduce global supplies even faster. Wildfires in North American forests are a severe threat to the lumber industry, and they’ll become more frequent as climate change worsens. Hurricanes, flooding, and similar events will have a similar effect on oceanic and seaside industries.

Workplace Disruptions

Climate change also poses a threat to the workplaces that sustain global supply chains. The most straightforward way this would happen is through temperature-related worker exhaustion and illness. Every increase of 1° Celsius could reduce worker productivity by 1-3% for those outside or without air conditioning.

While those percentages seem small, they could add up to the equivalent of 80 million job losses by 2030. That would result in global losses of $2.4 trillion. Rising sea levels and extreme weather would also displace many workers, making it difficult for some warehouses and other facilities to maintain adequate staffing levels.

These facilities themselves could face physical damage as well. Inclement weather events like tornadoes, hurricanes, floods, and fires have all become more frequent and severe amid climate change. As those trends continue, the workplaces that supply chains rely on could see increased physical damage, disrupting workflows and lowering output.

Over time, some entire facilities could become unusable. If sea levels rise by just 1 meter, 80 airports could be underwater, limiting supply chains’ transportation options.

Transportation Risks

That leads to the next effect of climate change on global supply chains. Transporting parts and products across the world will become an increasingly challenging and even dangerous task. All of the previously mentioned severe weather events would delay transportation at best and endanger employees at worst.

Many of climate change’s effects on transportation aren’t dramatic but are still damaging. For example, climate change has increased the frequency and intensity of heavy rainfall. That alone can slow ground transportation, cause storms at sea, affect ocean transport, and delay flights, causing global disruptions.

Of course, the rising frequency of extreme weather events will also cause substantial transportation delays. Flooding will make ground transportation impossible in some areas until the waters subside and emergency responders clear the damage. Hurricanes and other storms will delay or reroute flights.

These delays will ripple throughout the supply chain and the industries that rely on it. Time-sensitive shipments could turn to waste in the face of slowed transport. Manufacturers will have to slow production in light of part shortages. Events like this already occur, and climate change makes them more common.

Rising Costs

Many of these factors will also contribute to rising operational costs throughout global supply chains. For example, as workplaces face rising worker shortages due to environmentally driven displacement, and suppliers decline, output will likely fall. As their output decreases and demand stays the same, they’ll have to raise costs to make up for it.

Supply shortages alone could have a tremendous impact on costs. The price of coffee futures nearly doubled in July 2021 as record droughts struck Brazil. Similar price hikes could affect the cost of items supply chain organizations need, like trucks, equipment parts, and fuel.

As extreme weather displaces employees, staffing costs may rise as well. Supply chains may have to offer higher wages to entice workers to remain in the area or move, raising their ongoing expenses. Some smaller companies may not be able to adapt in this way and face going out of business.

How Can Supply Chains Respond?

Climate change will undoubtedly have a tremendous negative impact on global supply chains. Many of these trends have already started to take shape. In the face of these threats, supply chain organizations must take steps to adapt to a changing world and lessen their environmental impact.

One of the most important changes is to decarbonize the supply chain. Switching to zero-emission vehicles would take a considerable amount of greenhouse gas emissions out of the equation, fighting climate change. With electric vehicles boasting ranges above 400 miles today, this option is becoming increasingly viable, too.

Switching to renewable energy in warehousing operations will further decarbonize supply chain operations. Logistics companies can encourage other businesses to follow suit by partnering with green manufacturing facilities, eliminating their third-party emissions as well.

Supply chains must also become more resilient to minimize disruptions from near-term environmental hazards. Distributed sourcing, asset and environmental monitoring, supplier due diligence, and creating formal disaster recovery plans can all help. Steps like this can cause a company to lose just 5% of its revenue amid a disaster, compared to 35% for an unprepared party.

None of these steps can happen in isolation. Supply chains are complex, interconnected networks, and climate change is similarly multifaceted. As logistics companies seek to improve their own operations, they must partner with other organizations for more cohesive, global action.

Climate Change Is a Serious Threat to Global Supply Chains

Climate change is the most significant threat facing global supply chains today. It’s already causing shortages and disruptions in some industries, and these challenges will only grow more frequent and severe if organizations don’t take action.

The threat of climate change is grave, but it’s not inevitable. If supply chain companies and their partners can embrace more sustainable operations, they can mitigate climate change and protect future operations. The world and the global economy will be better off for it.

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COVID-19 Introduced a Backdrop of Uncertainty, But Also Opportunity: How Businesses Can Navigate International Expansion

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The global pandemic has reminded us all of how inter-connected the world is. As countries emerge from the global health crisis, and economies show steady signs of recovery, companies with global exposure are increasingly optimistic about opportunities outside their home markets, despite a number of headwinds. Expanding a business beyond one’s domestic market requires long-term planning, utilization of complex global supply chains, managing risk exposures and being nimble enough to flexibly respond to changing market conditions.

The results of J.P. Morgan’s 2021 Business Leaders Outlook (BLO) survey highlight how leaders are adjusting to this new environment—and finding opportunities to grow globally despite the current challenges.

In the survey, most midsize U.S. businesses are optimistic, even as they plan for continued unpredictability. Having learned in 2020 how to manage well remotely and deal with disrupted supply chains, U.S. business leaders are staying the course; global expansion plans remain at the same levels from pre-pandemic years. Most project continued steady sales growth outside their home market. This indicates the confidence they have gained from pivoting throughout the year, including accelerating technology adoption, increased digitization of core processes and managing global ventures with much less in-person travel.

Ultimately, the rollouts of COVID-19 vaccines continue to be a core component impacting the global growth outlook for businesses. In addition, geopolitical events, new trade and investment policies and continuously changing business regulations will continue to challenge business leaders seeking sustained profitable international growth.

Why Expand Globally in This Climate?

With issues such as labor shortages, severe bottlenecks in global supply chains and evolving customer expectations, it can be discouraging to consider international expansion at this time. However, according to the survey, executives remain optimistic. Those surveyed cited access to new customers/markets (72%), better opportunities to serve domestic customers with global operations (37%) and access to suppliers/materials (34%) as key reasons for expansion.

The pandemic will not deglobalize the business landscape. Business leaders have tried-and-tested remote workforces, seen governments become more flexible with business applications, and they have been leveraging new approaches and technologies to keep their business moving forward. In short, they have experience under their belt, have a long-term vision and see opportunity in international expansion—and are not letting the pandemic stand in the way. After all, adapting is what business is all about – and recognizing that extraordinary environments demand tailored strategies based on an accurate reading of market opportunities.

The World Has Changed: Three Key Strategies For Navigating International Expansion

1. Developing Strategic Partnerships & Understanding Trade Policy

Trade barriers and tariffs were cited as the top international business concern for globally-active middle-market companies in the 2021 Business Leaders Outlook survey. Complying with local regulations and the intricate differences in policy between nations can be overwhelming and time-intensive. Any little error may lead to wasted time or resources, complications, and added expenses. Developing strategic partnerships with businesses, banks, and vendors—those who already have the local intel—goes a long way in effective global expansion.

The many cultural nuances and varying consumer preferences by country also benefit from local expertise. Furthermore, the insight around local competition and market opportunities is more easily obtained through these kinds of partnerships, especially when acting quickly is critical to success.

Increasing global political changes in recent years that are challenging the status quo require extra diligence in this environment.  Additionally, the economic reforms underway in many developing countries are impacting both the volume and direction of foreign investment. We especially see this in China, India, Southeast Asia, Latin America and parts of Europe. For businesses navigating expansion in countries experiencing political and economic reform, it’s important to consider the impact these governments will have on fiscal, monetary, regulatory and foreign policy—and how significantly or quickly this may affect foreign investment opportunities.

As a positive example for businesses in North America, the United States-Mexico-Canada Agreement (USMCA) brought timely improvements to trade relationships in today’s volatile landscape. The USMCA has the potential to offer more certainty and a stronger safety net for trade and investment by promoting fairer trade and robust economic growth.

2. Investing in Technology & Digitization

Trade finance is the nucleus of the day-to-day global economy. It supports every stage of the global supply chain and ensures that buyers receive their goods and that sellers receive their payments. Yet the world faces a massive and persistent trade finance gap. The World Trade Organization estimated between 80% to 90% of global trade relies on trade finance, yet there was a $1.5 trillion gap between the market demand and supply before the pandemic.  That gap has only increased since 2020.

COVID-19 accelerated a transformative period for trade finance, primarily through digitization. The global challenge with trade finance centers around inflexible business models, paper-based and tedious processes, regulatory constraints, and outdated legacy systems.

Technology can help bring down operational costs while also increasing efficiencies, encouraging new revenue opportunities, optimizing resources, enhancing the recruiting process…the list goes on. Businesses are investing heavily in digital transformation, with cloud-enabled technology becoming the new standard of operation. This brings immense advantages, including the immediate ability to access data and machine learning (ML) with virtually unlimited computing power, in a split second. The value of AI and ML can clearly be seen across business functions including trading, risk management, marketing and operations. It enhances outcomes by streamlining processes and increasing overall efficiency.

Additionally, blockchain—a highly secure, decentralized digital record of transactions—offers a multitude of international trade-related applications, bringing high security, automation and traceability to important finance functions.

3. Streamlining Supply Chains

More than ever, managing global supply chains has become a critical skill for companies expanding internationally. Surging demand with various bottlenecks has disrupted global goods transportation and logistics. Gaining visibility over cross-border supply chains, while meeting profitability goals and evolving needs of customers, is an ongoing obstacle for most business leaders. Streamlining the global supply chain and focusing on visibility can lead to increased efficiencies throughout the entire production/solution life cycle. It entails optimizing processes by improving the accuracy of demand forecasts and schedules and improving production lines to reduce costs. This can help make businesses more agile and profitable. Secure data integration is also critical, so information can be shared across channels swiftly and seamlessly.

While concerns around tariffs and trade barriers again led the list of business leaders’ global concerns in the 2021 survey, managing global supply chains overtook currency risk for the second spot. Instead of focusing on the next crisis scenario—whether it be a pandemic, natural disaster, or cyber attack—business leaders must continue their focus on making global supply chains more resilient for future disruptions.

The Road Ahead: Global Outlook Optimistic for Well-Prepared Business Leaders

The overall global business outlook is optimistic, with 66% of leaders in the 2021 survey expecting their international sales to increase in the next five years. U.S. midsized, multinational businesses know that sustained growth requires access to new customers in new markets. That won’t change. However, today’s increasingly complex landscape will require greater investments in digitized products and processes, more customized local solutions in widely different international markets, and leveraging the expertise of reliable partners to understand the nuances of operating in challenging foreign markets. At the top of the list is having effective market entry and supply chain strategies, supported by a strong understanding of trade and investment policy to help shape your global market expansion.

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Why Enterprise Resource Planning Systems Fall Short with Rebate Management

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Enterprise resource planning (ERP) systems allow companies to integrate many disparate elements of their business on a single centralized platform – from human resources to supply chain logistics to financial data. While this level of centralization can create operational efficiencies, the breadth of functionality offered by ERP systems also make them less effective when it comes to handling more specialized aspects of your business.

For example, when companies need to design, track, and execute rebate agreements, ERP systems come up short. This is because rebates can be highly complex and dynamic – to manage them productively, companies need purpose-built software that will help them maintain transparency internally and with trading partners, identify where rebate programs can be improved, and react to changes in markets and distribution dynamics. ERP systems allow companies to record the rebates they’re owed, but not much else.

Although many companies get by with the rudimentary rebate management tools offered by ERP systems, supported in parallel by spreadsheets and other off-system tracking, the usefulness of these tools breaks down with complex incentive-based rebate programs and an ever-increasing drive for rebates to stimulate the business growth they were implemented for in the first place. Dedicated rebate management systems, on the other hand, are designed around the needs of complex and dynamic rebate programs, helping companies build more sustainable relationships with one another by giving them a wider range of options and the resources they need to communicate and collaborate in real-time.

How to manage complexity

Global supply chains have never been more complex than they are today – they’re more interconnected, they serve larger and increasingly diverse markets, and they often require vast logistical infrastructure to function. A 2020 survey found that 91 percent of businesses say they “can’t stay ahead of their supply chain complexities.” As if this task wasn’t already difficult enough, COVID-19 threw the global economy into chaos overnight, snapping crucial links in supply chains, straining relationships between manufacturers and distributors, and forcing consumers to deal with delays and unpredictable cost fluctuations.

One of the reasons rebates exist is to account for uncertainty – from economic shocks to shifting consumer demands. They retroactively bring volume, pricing and payments into line with projections, incentivizing trading partners to continue investing in one another. The more contingencies rebates can account for, the easier it will be for companies to predict future conditions and adapt when they change. This is why there are hundreds of different types of rebate agreements – they can be based on seasonality, sales targets, marketing commitments, the performance of specific product lines, and a range of other variables.

Many rebate agreements also change annually (or more frequently) to spur growth and react to market changes as they arise. These are all reasons why these agreements can be surprisingly intricate, which makes ERP systems blunt instruments for managing them.

Increasing efficiency and agility

ERP systems are all about efficiency – by bringing a wide range of business processes (from workflow solutions to communication tools) together on a single platform, these systems are designed to consolidate information, facilitate cooperation, and streamline a company’s processes across the board. This sounds particularly attractive to company leaders in the supply chain sector, who are hyper-cognizant of any opportunity to increase efficiency. An EY survey found that 55 percent of companies expect digitization to improve operational supply chain efficiency (the second-most-cited option) over the next three years.

But can ERP systems really increase the efficiency and effectiveness of B2B rebate programs? By failing to account for a wide enough range of variables and providing little in the way of real-time flexibility, these systems aren’t the drivers of business growth that companies need. According to Gartner, 89 percent of supply chain professionals want to invest in agility. This is what specialized rebate management solutions provide by giving companies the chance to get creative with the negotiation and implementation of deals, adjust those deals as circumstances change, and track every stage of the process on a platform that was built specifically for handling rebates.

When companies rely on ERP systems that can’t accommodate their rebate needs, they’re forced to use other forms of documentation and manual logistics management, such as spreadsheets. This can lead to costly errors and wasted time – hardly the efficiency companies are after.

Building stronger relationships between supply chain partners

Rebates help companies forge stronger relationships by allowing them to negotiate deals that satisfy both parties and giving them the freedom to alter the provisions of those deals as circumstances dictate. Dedicated rebate management platforms provide mechanisms to ensure transparency and accountability, more robust contract management, and the ability to manage hundreds of different types of rebates.

According to a recent Enable survey, more than one-third of companies say they still use spreadsheets to document, share, and sign off on deals. This doesn’t just lead to mistakes, backtracking, delays, and a series of other logistical problems – it can also be detrimental to relationships, as it requires partners to dig through scattered documents and search records that haven’t been properly systematized whenever a dispute or any other issue arises. ERP systems are typically transaction-centric, while rebate management systems make the process of creating, approving, and tracking deals an ongoing collaborative process with dedicated workflow and communication tools.

ERP systems have a clear role to play in helping companies become more productive, which is why rebate management solutions can be directly integrated with them. But rebate management is a highly specialized field – it requires digital tools that are specifically designed to manage complexity, improve supply chain flexibility, and build healthy and sustainable relationships between partners.

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AUTHOR BIO:

Andy James is the Director of Product Strategy at Enable, a cloud-based SaaS solution for B2B rebate management. The software is used by procurement and finance professionals in distribution, wholesale and manufacturing across over 50 industries so that they can have an easy, seamless solution to execute and track their full range of trading programs.

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What Will the WFH Trend Mean for the Economy and Global Supply Chains?

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A lot has changed over the last year and a half. When it comes to businesses, supply chains, and the UK economy, no one could have anticipated the changes we’ve seen throughout the pandemic. Although lockdown restrictions are now all lifted, not everything will go back to “normal” straight away. Working from home, for instance, is something that is set to continue for many workers.

Despite government officials urging employees to return to offices, there is clear reluctance. In one YouGov survey, one in five people said they wanted to continue working from home full time after the pandemic. On top of this, 57 percent of workers in the UK say they want to have the option to work from home after the pandemic at least some of the time. This represents a huge shift of opinion in comparison to how people felt about remote working before the pandemic. Before 2020, two-thirds of workers said they’d never worked from home before and only 11 percent of employees worked remotely full time.

With the shift to home-working set to continue, we are left wondering what impact this trend will mean both for the UK economy and for global supply chains. Let’s find out more about the impact home-working has had so far and what it might mean for the future.

Productivity rates

One major concern that many CEOs had at the beginning of the pandemic was the potential fall in productivity that working from home could bring. Despite concerns, there have been mixed results so far. While many companies have noticed a decrease in productivity, some reports claim that working from home can boost employee engagement and productivity. With one report stating that a quarter of companies in the UK have seen a downturn in productivity, however, it’s reasonable to be hesitant about the future of remote working. This downturn is likely to mean that the economy could continue to struggle, even with the restrictions completely lifted.

Public transport

Another reason that many are concerned about the ongoing impact of home-working is the impact that WFH has had on the transport sector. The transport sector has been damaged by the lack of commuting and could struggle to bounce back. As a result of home working, commuter numbers dropped by a quarter. However, the government is still being urged to spend money on public transport in a bid to encourage people to return to offices.

The move from city centers

Another concern about remote working is the impact it can have on city-center businesses. With many cafes and restaurants designed to cater to office workers, the economic impact of WFH on the service industry has been stark. An example of the impact that deserted city centers have had on food and drink businesses can be seen with Pret a Manger. This chain recently unveiled plans to expand beyond city centers to keep up with the shift in working practices.

Impact on global supply chains

The COVID-19 pandemic had also had an impact on global supply chains, extending to many different industries. From food and drink distributions to engineering equipment supply chains that transport hydraulic cylinder parts, the shift to working from home has changed the way global distribution works. Although many people who work in supply chains have carried on work in person throughout the pandemic, those who have shifted to remote working have experienced difficulties. According to one survey, 57 percent of supply chain and logistics professionals said that collaborating with colleagues while working from home was one of their biggest challenges. However, there was an even split between people who said they felt equally as productive in their roles and those who said they felt less productive. Although individuals within the supply chain industry have faced difficulties, the biggest hits that supply chains have taken throughout the pandemic are related to worldwide trade restrictions that are forecasted to lift after the threat of COVID-19 has subsided.

Although WFH might be the perfect solution for many businesses, other industries are likely to take a hit. Ultimately, each CEO’s policy on remote working must be drawn up in line with what is right for them, their employees and the local economy.

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Sources

https://yougov.co.uk/topics/economy/articles-reports/2021/04/13/one-five-want-work-home-full-time-after-pandemic

https://www.bbc.com/news/uk-57096218

https://talkinglogistics.com/2020/04/06/managing-supply-chains-from-home-insights-indago/

https://www.theguardian.com/business/2021/aug/15/pret-a-manger-post-pandemic-expand-beyond-city-centres

https://hbr.org/2020/09/global-supply-chains-in-a-post-pandemic-world

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Navigating the 12 Pitfalls of the Global Supply Chain

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With over 30+ years of international trade experience, I have witnessed numerous and repeated errors made by Sales, Purchasing, Logistics Managers, Supply Chain, and International Business Executives.

There are tremendous opportunities and benefits to be derived through global sourcing and foreign business development. Along with these opportunities are considerable challenges, obstacles, and pitfalls. In order to succeed in international business, management must mitigate these concerns through gaining knowledge and implementing processes and controls over import and export operations, including the development of robust training for all personnel.

The following section contains twelve steps companies can take to manage the solutions that will allow the navigation through these challenges and delivering success to the international operation.

These twelve steps create a pathway forward in a concise, straightforward methodology and time-tested process to ensure management accomplishes their desired corporate goals of profits, growth, and sustainability.

Avoid the following:

Step 1: “We have no personal liability”.

There is significant personal liability for individuals who operate in global supply chains.

U.S. Government enforcement agencies, such as but not limited to:

– Department of Justice

– Customs and Border Protection

– Departments of State, Commerce and Treasury

– Bureau of Alcohol, Tobacco and Firearms

– United States Department of Agriculture and the Food and Drug Administration

All above are a few of the agencies that will prosecute both organizations and individuals who are seriously out of trade compliance with their import and export regulatory responsibilities.

While criminal prosecution is a rare occurrence … it does happen every day in the supply chain, somewhere in the world of international trade.

Trade Compliance Management in companies with an international footprint is a necessary evil that needs to be managed and integrated into the fabric of the organization’s culture and business model.

Step 2: “The FOB Term is Always a Safe Incoterm to Utilize”.

The FOB Incoterm has three deadly areas of concern:

-It is used in domestic trade

-It is a gray area in the loading process

-There can be ambiguity when the point in time responsibility and liability shift from the seller to the buyer (exporter to importer).

It is used in domestic trade

For domestic trade in the United States, the UCCP (Uniform Commercial Code of Practice) currently (though in contention) utilizes the FOB term as a “term of sale or purchase”, where there are two primary options FOB Origin and FOB Destination.

Within the UCCP, FOB is defined as:

Uniform Commercial Code › U.C.C. – ARTICLE 2 – SALES (2002) › PART 3. GENERAL OBLIGATION AND CONSTRUCTION OF CONTRACT

2-319. F.O.B. and F.A.S. Terms.

Unless otherwise agreed the term F.O.B. (which means “free on board”) at a named place, even though used only in connection with the stated price, is a delivery term under which:

(a) when the term is F.O.B. the place of shipment, the seller must at that place ship the goods in the manner provided in this Article (Section 2-504) and bear the expense and risk of putting them into the possession of the carrier; or

(b) when the term is F.O.B. the place of destination, the seller must at his own expense and risk transport the goods to that place and their tender delivery of them in the manner provided in this Article (Section 2-503);

(c) when under either (a) or (b) the term is also F.O.B. vessel, car, or another vehicle, the seller must in addition at his own expense and risk load the goods on board. If the term is F.O.B. vessel the buyer must name the vessel and in an appropriate case, the seller must comply with the provisions of this Article on the form of a bill of lading (Section 2-323).

The UCCP Term allows any mode of transit or conveyance.

Some sources claim that FOB stands for “Freight on Board”. This is not the case. “Freight On Board” is not mentioned in any version of Incoterms, and is not defined by the Uniform Commercial Code in the USA.[10] Further to that, it has been found in court that “Freight On Board” is not a recognized industry term.[11] The use of “Freight on Board” in contracts is therefore very likely to cause confusion. The correct term is “free onboard”.

Keep in mind that a huge amount, if not a clear majority of domestic commercial transactions, are sold or purchased on a FOB basis and moved by truck, rail, or air. This would be ok if the FOB Term was the UCCP intent and not intended utilization under Incoterms 2020.

There is a very clear line of confusion between the domestic and international “FOB” terms in selling and purchasing. It is only when it causes a problem when it is seen as an issue.

Free on Board, or FOB is an Incoterm, which means the seller is responsible for loading the purchased cargo onto the ship, and all costs associated with same. At the point, the goods are safely onboard the vessel, the risk transfers to the buyer, who assumes the responsibility of the remainder of the transport.

FOB is the most common agreement between an international buyer and seller when shipping cargo via sea. This Incoterm only applies to sea and inland waterway shipments.

The 2020 edition of Incoterms opened the door for domestic utilization of the FOB term. The FOB UCCP term varies greatly from the FOB Incoterm.

Under Incoterms 2020, the preferred term for domestic utilization, since that door was opened, is FCA (Free Carrier At).

It is a gray area in the loading process

Under Incoterms 2000 and prior, the FOB term transferred risk and cost from the seller to the buyer once the goods passed the ship’s rail.

This factor was changed in the 2010 edition of Incoterms and continues in the 2020 edition. The term now read “…passes when the goods are on board the vessel”.

However, “on board” is not clearly defined. Is that when the goods are placed on the deck, in the hold, not yet secured, secured, etc.?

We had a case in our office, where a U.S. exporter, sold a huge piece of equipment, (25 Tons, $11m in value) to a customer in Europe. It was going to be shipped via ocean, secured in a cargo hold under deck.

During the loading process, the goods were being lifted onto the vessel by a crane and longshoreman crew. In the handling, the equipment was laid down on the deck of the hold several times, while the longshoreman positioned the cargo.

In that repositioning process, the freight was damaged. The issue now became who is responsible, based upon the Incoterm of FOB Port Elizabeth – the seller or the buyer?

Were the goods actually “on board” when they were damaged? The maritime judicial system will eventually resolve that issue and court precedence will be established.

But today there is an ambiguity in defining “on board” in the FOB Incoterm. There are references to being “secured in place”, but it appears ambiguous.

Sellers and buyers need to address these specific concerns in the contract of sale and attempt to minimize the gray areas of liability, that may present themselves when using the FOB term.

There can be ambiguity when the point in time responsibility and liability shift from the seller to the buyer (exporter to importer).

This is the explanation of the FOB term from the Incoterms 2020 edition.

A2 (Delivery)

The seller delivers by placing the goods on board the vessel nominated or provided by the buyer on the agreed date, or within the agreed period as notified by the buyer, or if there is no such time notified then at the end of that period.

There is still a belief that the ship’s rail is the defining point, i.e.: before the notional vertical line above the rail is the seller’s cost and risk, and after is the buyer’s cost and risk. A court ruled that the delivery point was when the goods were on the deck but that then caused the question was the notional vertical line replaced with a notional horizontal one in line with the deck itself and what if the goods were being placed below deck? This ship’s rail concept was removed in the Incoterms® 2010 version. Typically, then, “on board” is taken to mean when the goods are safely on the deck or in the hold. If the cargo needs to be then further secured for transportation such as being lashed or separated with some material or spread evenly throughout the hold for bulk goods like grain the seller and buyer should agree in their contract what is needed and at whose cost and risk this is done.

B2 (Delivery)

The buyer’s obligation is to take delivery when the goods have been delivered as described in A2.

FOB A3 / B3: Transfer of Risk

A3 (Transfer of risk)

In all the rules the seller bears all risks of loss or damage to the goods until they have been delivered in accordance with A2 described above. The exception is loss or damage in circumstances described in B3 below, which varies depending on the buyer’s role in B2

B3 (Transfer of risk)

The buyer bears all risks of loss or damage to the goods once the seller has delivered them as described in A2.

If the buyer fails to inform the seller of where and when the vessel will be presented or if the vessel fails to arrive on time, or it fails to take the goods so that the seller cannot deliver, then the buyer bears the risk of loss or damage to the goods from the agreed date or at the end of the agreed period.

On an operational level, the seller delivered the goods to the terminal, carrier, or other agreed named place, and the goods were not loaded on board as anticipated for an array of reasons, such as but not limited to the carriers having vessel timing or loading issues and the seller appropriately notified the buyer than delivery has been made and risk of loss and damage has passed from the seller to the buyer.

The important aspect to note here is that the buyer expected to take delivery “on board” and now that did not occur as the buyer will take delivery and assume all risks at a point short of “on board”.

In general, Incoterms need to be understood in their entirety including the consequences associated with using the incorrect Incoterm or not understanding the specific responsibilities as the buyer or seller. Incoterms training is a must for all personnel engaged in global trade and more particularly those operating in Procurement, Sales, Operations, Finance, and Customer Service.

Companies involved in international trade using best practices will switch Incoterms 2020 rules in quotations, purchase orders, contracts, commercial invoices, and other commercial documentation when determining the level of responsibilities and costs they want to take on; dividing the responsibilities for risk transfer, costs, and responsibility for carrier selection between the buyer and the seller.

Step 3: Contracts Override Relationships

In international trade, relationships trump contracts. Relationships will drive a successful deal and a long tenure. I have always extolled “you can contract out risk”, but you can seriously minimize and mitigate risk by establishing favored relationships that allow the best opportunity for problem resolution and working out issues that will likely occur over time and trade.

Contracts are important to make the deal have legal standing, but it is foolish to believe that the contract eliminates any risk in the transaction. In fact, sometimes contracts can cause risk when a false sense of security is at hand.

Obtaining legal support is prudent but spending money and time at building relationships with suppliers, vendors, agents, and customers will go a long way in mitigating many of the risks in global trade.

Step 4: Service Providers are Experts in all Aspects of the Global Supply Chain

Just not so! While a small percentage of service providers are clearly experts, professionals, and aligned with teams of knowledgeable staff the majority have serious limitations.

While many have the expertise to arrange affreightment, pick up and delivery many lacks:

-the necessary local connections in all foreign markets

-trade compliance knowledge

-an understanding of how best to eliminate risk and cost from the supply chain

A high degree of scrutiny, vetting, and discerning should take place when choosing service providers, 3PL’s, freight forwarders, and customhouse brokers.

Areas of evaluation:

Service providers can be very valued partners in your global supply chain. Just because they hang out a shingle does not mean they can provide real benefit. Scrutinize robustly and vet diligently. It will pay off in the long run. Having a quality partner will make your job easier and with a greater ability to meet all the challenges successfully.

Step 5: Manage the Supply Chain with Robust Technology

Supply chains that have expansive technology in every aspect of the operation will gain great leverage in performance metrics.

Areas of technology in the supply chain are:

Technology creates efficiency, ease of operations, robust information flow, security, and other benefits. It allows for the highest levels of performance in any organization, but more particularly in the global supply chain. Technology advances forward and expands every day. Keeping contemporary is a challenge that all supply chain executives face.

Cyber Security has grown to be a significant threat. It must be contemplated and managed in every moment and keystroke of the day. There are cybersecurity solutions that must be integrated into all aspects of operation, where there is a technology interface.

Step 6: We have been doing it this way … for over 5 years with no problems.

We hear this often and clearly because a company has not encountered a specific problem, does not necessarily mean things are being done correctly.

A volcano is not a problem until it erupts. The underlying problem is waiting for emergence. Dealing with potential issues proactively and anticipating “what ifs” are a much better option.

Potential problems along with potential betterments must be proactively pursued to assure you do not have serious issues and are doing all possible to reduce risk and cost and/or business process improvements.

Continually updating a logistic SWOT Analysis, risk management assessments and process evaluations are all necessary steps in mitigating any unanticipated problems in the future.

Because no one is complaining does not mean everything is ok. You must be proactive in making sure everything is ok, without assumptions. Err to the side of conservativism as it will prevent future headaches.

The pandemic was a complete disaster and disruption to all global supply chains. Having said that, some good came out of it as companies had time for internal introspection at risk and threats leading to proactive steps in mitigation.

Step 7: We Handed it to the Carrier, so it must be “on board”

Tracking and tracing need to be accomplished at a very detailed and exhaustive level.

Just because you have confirmation that a carrier has received freight, does not assure it made it on board the vessel, aircraft, railcar or truck.

You need affirmation that in fact the goods have actually made it on board the conveyance with an updated ETA, followed up with daily frequency, in case of any unanticipated delays, which occur all the time.

Step 8: We Always Check the Denied Parties List

Many international executives believe their companies are consistently checking and reviewed the various lists making up the “Denied Party Screening” regulations for importers and exporters.

In many years of auditing companies engaged in global trade, only a small percentage is fully compliant with the review, checking and compliance responsibilities associated with Denied Party Screening.

There are available direct connections into the government agencies and numerous third-party technology companies with DPL Screening Capabilities.

Step 9: I am the Ultimate Consignee on these Goods, but not the Importer of Record.

Many companies who are the recipients of imported merchandise who are not participative in the import process believe they have no import responsibilities.

That is potentially and totally incorrect! Customs (CBP) has the right to evaluate any import situation and determine that the ultimate consignee could be considered the “importer of record” and therefore has all the responsibilities as the “importer of record”. This would then require adherence to all import regulations HTSUS, valuation, recordkeeping, etc.

Step 10: Domestic Packing will work for my International Shipments

Claims for loss and damage on international shipments occur every day and a major cause is inadequate packing, marking and labeling.

Just check with any marine insurance companies they will advise of the frequency and the severity of claims occurring on import and export shipments directly attributed to inadequate packing marking and labeling which could jeopardize marine cargo insurance coverage as an implicit or explicit warranty.

Step 11: Do we really need to ensure the shipment?

Loss and damage to international freight is a daily occurrence worldwide. In the overall cost of the global supply chain, marine insurance is an inexpensive purchase offering a high value of the return.

Just looked at what happened this year in the Suez Canal, with the grounding of the Ever Given (Evergreen Lines) which potentially caused losses in excess of $ 1billion.

Direct claims in delays and damage and indirectly caused by a General Average Claim. The fines, penalties, delays and lost cargo is still mounting, as only in early July, has the vessel finally exited the Suez Canal.

Marine cargo insurance is a solid, responsible, value-driven, and best practice purchase for any company shipping goods internationally.

“All Risk”, “Warehouse to Warehouse” with contemporary customized underwriting terms under standard policies are available.

Step 12: Do I need to train my global supply chain team?

The challenges of the global supply chain are numerous and daunting. These challenges can only be met by experienced well-trained managers and staff. The training needs to be consistent, contemporary and robust. Key areas to include are:

-Compliance

-Documentation

-Negotiating Freight

-Sourcing Management

-Logistics Management

-Technology Management

-Warehousing & Distribution

-International Contracts

-Risk and Spend Directives

-Foreign Trade Zones

These outlined above show a handful of the necessary skill sets required for import and export personnel to master. And “training” is the pathway to successful global supply chain management.

Summary:

The twelve examples outlined above provide a synopsis and evidence that mistakes based upon a lack of knowledge and skillsets can cause great disruption in import and export activity in the global supply chain.

Developing resources, providing training, and implementing procedures will assist in mitigating the problems and challenges identified in the above article.

Resources in international business and supply chain management will provide informed intelligence that will allow for making better decisions.

Training and skill set development will better prepare supply chain, import & export executives, managers, and staff to better deal successfully with all the challenges of global trade.

Procedures, protocols, and disciplines in management are always critical to a company’s success in business. In the global supply chain, SOPs are an integral component of freight, logistics, trade compliance, foreign sales, and overseas procurement that assure a company’s success in its international footprint.

The author can be reached at: tomcook@bluetigerintl.com for questions and comments.

supply chains
Archives, Global Trade Daily, International Trade

Biden Issues Executive Order to Review Critical Supply Chains

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President Biden issued an “Executive Order on America’s Supply Chains” (the “EO”) on February 24, 2021, ordering 100-day and 1-year reviews of certain critical supply chains.

The initial 100-day review aims to assess risks posed to the following critical supply chains:

-Semiconductor manufacturing and advanced packaging

-High-capacity batteries, including electric vehicle batteries

-Critical minerals, including rare earth elements

-Pharmaceuticals and active pharmaceutical ingredients

The EO also orders supply chain reviews of six (6) sectors with reports due within one year. The sectoral assessments will cover:

-Defense

-Public health and biological preparedness

-Information and communication technology

-Energy

-Transportation

-Agriculture

The EO leaves open the possibility that other industrial bases may be assessed as part of the one-year review and that digital networks, services, assets, and data (“digital products”), goods, services, and materials not otherwise described in the EO that span more than one sector may be assessed.

The EO directs that both the 100-day and 1-year reports shall review “critical goods and materials,” “other essential goods and materials,” manufacturing and production capabilities of such critical or essential goods and materials, supply chains’ resiliency, and all the major risks to the supply chains. The EO imagines the term “risks” broadly. Risks include physical threats such as climate and other natural events, as well as geopolitical dynamics. Risks also comprise digital products’ inclusion in supply chains and the possibility that such digital products could be exploited. Additionally, the EO directs that the risk of human-rights or forced-labor abuses along the supply chains be described.

The EO arrives as shortages or anticipated shortages of semiconductors are widely reported, especially in the automobile industry. A general policy goal of the Biden Administration is to increase domestic manufacturing capability and economic growth, particularly in communities of color and economically distressed areas. The EO could be the first step in a significant reimagining of how the U.S. incorporates civilian and defense supply chains into its national and economic security and foreign policy strategies. At this time, however, the Administration has only ordered reviews. Interested companies should anticipate and consult the relevant Secretaries’ 100-day and 1-year reports for forthcoming policy suggestions.

__________________________________________________________

Tony Busch is an attorney in Husch Blackwell LLP’s Washington, D.C. office.

Cortney O’Toole Morgan is a Washington D.C.-based partner with the law firm Husch Blackwell LLP. She leads the firm’s International Trade & Supply Chain group.

Camron Greer is an Assistant Trade Analyst in Husch Blackwell LLP’s Washington D.C. office.

JIT
3pls, Archives, Global Logistics

How to Combine Resilience With Just-in-Time Manufacturing Methodologies

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As the COVID-19 pandemic continues to disrupt manufacturing supply chains worldwide, even the largest companies are feeling the impact. Recently, Microsoft and Samsung joined the chorus of companies that are predicting stalled outputs and lost sales. The pandemic proved that existing methods for efficiency don’t necessarily translate into resilient manufacturing.

Many of the global supply chain issues companies are now facing can be attributed to the just-in-time — or JIT — manufacturing methodology that most of them employ. Companies kept inventories intentionally lean to reduce costs. New shipments and raw materials arrived just in time to fill a demand for new products.

Although JIT manufacturing is highly efficient in the best of times, it’s also highly susceptible to disruption in the worst. During a global pandemic, for instance, the need for more resilient manufacturing is stark. Fortunately, efficiency and resiliency aren’t diametrically opposed. With the right technology, companies can enjoy the best of both worlds.

Operational Flexibility Is the Missing Link

In 2019, McKinsey conducted a study that examined the performance of companies following the financial crisis of 2008. It found that the most resilient companies did something different than the others: In addition to efficiency, they built their business models around financial and operational flexibility. By quarter one of 2008, they had cut costs by 1%, and by the time the crisis reached its trough in 2009, they’d boosted earnings by 10%.

Cutting costs and focusing on growth are the traditional pillars of resilience. Today, however, a new wave of resilient manufacturing has emerged in response to COVID-related restrictions. The manufacturing workforce, supply chains, and product demand have all been affected while socializing and shopping are restricted.

In this new environment, being operationally and financially flexible is not enough. Before the pandemic, digitization was a huge accelerator to efficiency and resilience. Companies that digitized early could cut costs and increase revenues; now, they’re much further ahead than companies that are still struggling with resilience.

Being digital is a critical component of resilient manufacturing, which is why some of the larger tech companies have been slower to feel the supply chain drag. In fact, many have grown significantly faster due to their heavy reliance on digitization. For example, Tesla, which has always been entirely digital, recently reported its fourth consecutive quarter of profit.

Digitization made Tesla super resilient from the start. The entire workflow is digitized, and its people know to communicate with customers digitally — including taking, fulfilling, and delivering orders. In the industrial space, efficiency and resiliency are built by companies that invest in these same elements.

Why Resilient Manufacturing Isn’t a Lost Cause

Resilient manufacturing is essential in the current environment, and building it will provide manufacturing facilities with significant flexibility beyond the pandemic. To create a complex JIT supply chain, things need to combine and work together in a highly efficient manner. Companies have to cut out the fat by optimizing every system for efficiency.

The assumption is that each component of a product will be delivered just in time for it to be assembled on the factory floor. When a local, regional, or global crisis introduces systemic risk to any part of the supply chain, that link in the chain is lost. The component may never reach the factory floor because optionality and buffers have been optimized out.

Manufacturers must combine JIT manufacturing with resilient manufacturing methods. That requires a digital thread running through the entire operation, with end-to-end operational visibility across the whole supply chain. With greater visibility, companies can predict shifts in demand with much more flexibility.

Operational visibility also creates a wider base of optionality and suppliers. Digital visibility shows, in real time, what components or raw materials manufacturers need, how their supply chain is providing them, and how they’re manufacturing with them. Companies can efficiently switch suppliers or products in response to, or even before, major disruptions.

Operational Flexibility Combines Efficiency and Resiliency

For manufacturers to effectively combine efficiency and resilience, they need enough data, knowledge, and understanding of what their supply chains look like at any given moment. They can predict major events to reduce or completely avoid disruptions to their manufacturing processes.

To achieve this combination, companies need three important digital threads:

1. Total visibility into financial and operational flexibility: The most important digital thread is a digital space where key people in the supply chain can see it all. They can understand demand, sales, and metrics, as well as analyze production, assets, delivery networks, logistics, and supplier bases. Ensure that sales, marketing, production, and all other departments can see the same numbers in real-time and make decisions together based on that single truth. This will be the supply chain control tower.

2. Real-time machine health monitoring in all factories: In a JIT manufacturing model, efficiency is based on meeting production needs. As the primary source of that production, machines are a company’s biggest assets, and a company needs full visibility into its machines’ health and performance at all times. That includes predictive knowledge about how they’ll perform under different conditions. Machine health monitoring platforms can gather data from IoT networks and use AI algorithms to deliver predictive knowledge based on that data, creating greater visibility in every factory.

3. Remote collaboration through a connected worker platform: How machines will perform under different conditions is an important aspect of operational flexibility, but most operations rely as much on people as they do machines. It’s just as important to know how employees will work together when they can’t be near one another. Connected worker platforms allow them to work remotely, collaborate, and share operational data and insight so they can become more autonomous in the face of disruption.

JIT manufacturing methodologies have traditionally lacked this level of visibility, insight, and flexibility, which hindered many supply chains amid the pandemic. By introducing technology to boost real-time visibility and remote collaboration, however, companies can combine JIT efficiencies with an unprecedented level of operational resilience.

_____________________________________________________________________

Artem Kroupenev is VP Strategy at Augury, where he oversees Augury’s AI-based machine health, performance, and digital transformation solutions. He has over a decade of experience in building products and ecosystems and bringing technological innovation to market in the U.S., Israel, and Africa.

Microsoft
Archives, Global Trade Daily, News

Microsoft and C.H. Robinson Form Alliance for the Future of the Digital Supply Chain

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As technology continues to adapt, so does the supply chain. These challenges require solutions rooted in innovative technology, further emphasizing the need for logistics and real-time data on a global scale. According to a recent report by McKinsey & Company, companies’ success will be driven by their ability to navigate the current volatile business environment, which means they must rely on an innovative and tech-driven supply chain. As we drive the future of technology in the industry, providing a continuous competitive advantage to our customers is vital.

That’s why we are excited about our alliance with Microsoft. To meet evolving supply chain demands, we are pioneering the supply chain of the future by joining forces with Microsoft – pairing the power of our industry-leading technologies C.H. Robinson’s Navisphere® and Microsoft Azure. This builds upon TMC, a division of C.H. Robinson’s successful implementation of Navisphere, its global multimodal transportation management system, across Microsoft’s global supply chain, giving Microsoft industry-leading reliability, efficiency, and real-time visibility to all inventory, at rest or in motion, anywhere in the world.

Partnering with other best-in-class companies and products brings value to our customers and carriers as we continuously look to enhance our technology built by and for supply chain experts. Through Microsoft’s Azure cloud platform, we gain unlimited scalability, premier data security, and increased application speed, further demonstrating our commitment to technology-driven efficiencies and providing real results that impact the tech-forward supply chain for our customers and carriers.

Together, our technology helps address the changing demands of ever-evolving global supply chains. For example, as part of this collaboration, we are also integrating IoT device monitoring that measures temperature, shock, tilt, humidity, light, and pressure in shipments. This integration enables 100% real-time visibility to shipments as they move from the factory to distribution centers and ultimately to millions of customers.

We are always committed to creating efficiencies that provide unique solutions to the supply chain. Adapting in real-time to supply chain demands and providing our customers and carriers with innovative solutions, while harnessing the trajectory of technology, is key to staying ahead in the ever-evolving supply chain. Our alliance with Microsoft accomplishes exactly that.

As the pace of change in the industry remains at a pivotal moment, our unmatched commitment to tech-forward solutions and continued investment in technology to better serve customers remains a competitive advantage all of our customers can count on. Learn more and connect with an expert.