Trending Now

GT Podcast – Episode 129 – The Port Authority of NY…

New Articles

Fortifying the Supply Chain Against Seasonal Challenges: 7 Scenarios

seasonal tier
Archives, Global Logistics, Global Trade Daily, Trade Cycle

Fortifying the Supply Chain Against Seasonal Challenges: 7 Scenarios

Leave a comment

As the seasons change, so do the risks businesses face. That’s true of any industry, but these seasonal challenges can be even more impactful in a sector as complex and interconnected as the supply chain.

Resilience is key to success in an increasingly competitive industry. Supply chains must anticipate and prepare for shifting seasonal obstacles to become as resilient as possible. With that in mind, here are seven common seasonal scenarios supply chains should plan for.

1.  Demand Shifts

One of the most consistent seasonal challenges supply chains face is shifting demand. For many logistics companies, like UPS, peak season lies between November and January, while others are busier in the summer. Regardless of when it occurs, supply chains face uneven demand throughout the year, which can be disruptive.

Failure to adapt to these shifts quickly or accurately can result in shortages, delays or surpluses. The solution to this challenge is to promote more transparency throughout the supply chain and its partners. Logistics companies must communicate quickly and thoroughly with their clients and vice versa to reveal demand shifts as they occur.

Data analytics can help predict future seasonal demand shifts based on historical trends. Supply chains can utilize Internet of Things (IoT) sensors to gather this data and predictive analytics algorithms to analyze it and stay on top of these changes.

2.  Extreme Temperatures

Another seasonal challenge supply chains must account for is extreme temperatures in the winter and summer. Heat and cold add urgency to operations by endangering sensitive shipments and raising maintenance concerns.

Since most trailers aren’t temperature-controlled, extreme cold and heat could damage products if they take too long to ship. Logistics companies can mitigate this risk by prioritizing time-sensitive shipments like these and employing climate-controlled trailers. IoT trackers can help monitor product health to inform any needed route changes, which is especially helpful in food supply chains.

Supply chain organizations must also ensure all vehicles meet high maintenance standards as temperatures shift. Extreme heat and cold take a toll on trucks, so businesses may have to schedule upkeep more often to prevent breakdowns.

3. High Rainfall and Flooding

Supply chains may have to deal with high rainfall in some areas during spring and summer. This can make road transportation risky, limiting drivers’ visibility and reducing trucks’ grip on the road. It can also lead to flooding in extreme cases, further delaying shipments and damaging goods.

Logistics companies must ensure they train drivers on how to be safe in the rain. Telematics systems can help monitor speed and behavior to enforce driving policies. Supply chain managers can also incorporate weather analytics into their route planning to help drivers avoid heavy rain if possible.

Supply chains with locations near coasts, lakes or rivers should assess their flooding risk. Facilities in high-risk areas should install early warning systems and flood barriers.

4. Winter Storms

Winter storms bring snow and ice, and these conditions can also threaten supply chains. Ice will expand inside cracks in the road, creating potholes and making roads slippery, and snow may limit air travel.

Like with many weather conditions, winter storm preparedness starts with monitoring. Supply chains that see a storm approaching should develop a contingency plan if one route becomes inaccessible. Companies may need to ship items from a different warehouse as roads and airports shut down.

Communication is also essential. Every point along the logistics network should communicate with others about developing road conditions and incoming storms. That allows supply chains to respond faster to inclement weather.

5. Increased Traffic

Some seasonal challenges have more to do with behavior trends than weather threats. Increasing traffic in the warmer months can be an obstacle since 71.6% of all freight in the U.S. travels by truck. Ground shipments will likely take longer to reach their destination, and vehicles may face more hazards from other drivers.

Most traffic peaks occur in warmer months, with August consistently featuring the most miles traveled and July falling close behind. Supply chain organizations should prepare for increased transit in these months and give themselves more time for road shipments than usual. Adjusting shipment methods to prefer shorter routes can also help.

A significant portion of addressing traffic delays is managing clients’ expectations. Logistics providers may not be able to deliver on quick shipment times, so they shouldn’t promise them during peak months.

6. Fluctuating Workforces

The supply chain industry faces a fluctuating workforce throughout the year. Some months may be more challenging to find workers than others, making expansion or adjusting to meet seasonal demands more difficult.

The number of young people looking for work increases dramatically between April and July as schools and colleges let out. These may be the best times of year for supply chains to hire new workers, but they may struggle to acquire them in the fall by comparison. Understanding the context behind these shifts can inform more effective hiring decisions.

Seasonal availability may increase in the summer, but if supply chains want permanent workers, they should favor new college graduates. Hiring in the summer will give companies a broader pool of applicants to choose from, making it easier to expand.

7. Shifting Maintenance Needs

Equipment maintenance needs will also shift between seasons. Proactive maintenance is essential any time of year, but different components will wear at varying speeds depending on the weather. Understanding these uneven repair needs can help companies plan more effective maintenance schedules.

For example, dirt, insects and other contaminants may accumulate in truck engines faster during the summer. Consequently, logistics companies may have to schedule oil and filter changes more frequently in the warmer months. Similarly, since vehicle batteries consume twice as much power to start in the cold, battery checks may have to be more frequent in the winter.

Supply chain organizations should review these repair needs to create maintenance schedules that vary between seasons. Using IoT devices to enable predictive maintenance, which alerts workers to repair concerns in real-time, may be even more effective. That way, companies can address issues as they become a concern but before they become a bigger problem.

Create a Supply Chain for all Seasons

Changing weather and shifting human behavior can challenge supply chains if they don’t prepare for it. However, if logistics companies understand how their obstacles change throughout the year, they can become as resilient as possible.

These seven scenarios are not the only seasonal challenges supply chains may face, but they are common threats. Businesses that prepare to mitigate these obstacles ahead of time can maintain peak efficiency regardless of the season.

Strategies
3pls, Archives, Global Logistics, Global Trade Daily, Warehousing

7 Proven Strategies That Eliminate Downtime in the Supply Chain

Leave a comment

Eliminating downtime is a concern for any business, but supply chains face more pressure than most. Disruptions and delays will ripple throughout the industries that rely on them, potentially causing massive losses. By the same logic, reducing supply chain downtime likewise reduces it elsewhere.

While most organizations likely understand the importance of eliminating logistics downtime, the path to that end is less clear. Frequent delays showcase considerable room for improvement in the world’s supply chains.

Thankfully, several companies have also found effective strategies for eliminating these delays. Here are seven of these proven methods.

1. Optimized Warehouse Layouts

Poor warehouse arrangements are easy to overlook, but they’re a common source of supply chain delays. A poorly laid-out warehouse slows the picking process and makes it harder to track inventory levels. With less insight into their stock, companies are more likely to run into shortages they could’ve otherwise avoided.

Lack of stock visibility is all too common an issue, with 43% of small businesses not tracking inventory. As a result, the U.S. retail industry has an inventory accuracy rate of just 63%. Without an accurate picture of stock levels, companies can’t expect to order new items in time, leading to delays.

Better warehouse layouts improve inventory visibility, informing more accurate orders. One of the most important changes to make is implementing an electronic tracking solution, like a warehouse management system (WMS). These systems will help keep track of stock levels, eliminating downtime from inventory issues.

2. Predictive Maintenance

Equipment breakdowns are another one of the most common causes of unplanned downtime. While these situations are common and highly disruptive, they also have a fairly straightforward solution. Supply chains should implement predictive maintenance systems to keep all machinery in optimal condition.

Predictive maintenance analyzes equipment performance data to determine when it will need upkeep. While this comes with high upfront costs from the necessary equipment, the results are impressive. Operating off these predictions lets facilities prevent unplanned downtime from breakdowns and unnecessary repairs.

These benefits aren’t just theoretical, either. Studies show that predictive maintenance increases equipment availability by 5%-15% and reduces maintenance costs by up to 25%. Those savings across an entire supply chain add to a tremendous reduction in downtime.

3. Distributed Sourcing

Another common source of downtime in supply chains is delays or interruptions from suppliers. Many supply chains get parts or products from a single source, which keeps costs down but exacerbates these disruptions. When an unforeseen event occurs at these suppliers, everything else comes to a standstill.

For example, in 2017, a fire at an auto part supplier in the Czech Republic stopped production. An automaker who relied on this plant as its single supplier consequently couldn’t produce 20,000 vehicles in time. Supply chains must embrace distributed sourcing to avoid massive disruptions like this.

When a supply chain has multiple suppliers, a shortage at one won’t affect the entire operation. Other companies can make up for it, and if not, the overall loss still won’t be as significant.

4. Contingency Plans

Similarly, supply chains must also create contingency plans for likely or potentially disruptive events. Companies can’t afford to expect that no unexpected circumstances will ever arise. Having a backup plan for any possible emergencies reduces downtime from these situations and shortens the recovery period.

Some emergency response plans can be relatively simple, but companies should still standardize and record them. For example, if a vehicle dies, drivers can start it without jumper cables fairly easily if need be. However, if there’s no standard practice in place for this situation, they may waste time thinking of what to do and who to contact first.

Having a specific, codified contingency plan ensures workers can respond quickly to any eventuality. The faster they can adapt, the less likely an unforeseen event is to cause significant downtime.

5. Employee Training

Some strategies to eliminate downtime are relatively straightforward but can have a significant impact. Employee training is the perfect example. While a single worker’s mistakes may not seem to have a considerable effect on overall operations, most downtime comes from user error.

Mistakes in data entry can lead to incorrect inventory information, causing order-related shortages. Similarly, machine usage errors can end in equipment failure, leading to downtime for repairs. Employee errors can cause substantial disruption, but that also means better training can prevent many stoppages.

Periodic refresher training can ensure workers remember proper techniques and best practices. Supply chains can also look to employees themselves for information on how to improve the training process. Workers can report what types of onboarding experiences they wish they had, revealing how to improve.

6. Emphasizing Workplace Safety

On a similar note, improving workplace safety can help eliminate supply chain downtime, too. On-the-job injuries have a considerable impact on productivity, resulting in 105 million lost days in 2019 alone. That figure doesn’t include non-disabling injuries, either, which may still hinder worker efficiency, making downtime more likely.

If supply chains can reduce employee injuries, they’ll decrease these days of lost work. One of the most important parts of improving safety is better safety training. When employees know what risks they face and how to avoid them, they’ll pay more attention to workplace hazards.

Other steps like automating the most dangerous tasks and using data analytics to find where most injuries occur will also help. Even seemingly small improvements can have a substantial effect on reduced downtime.

7. Improving Staff Communication

Another minor adjustment that can have significant ramifications is communication. Supply chains should ensure employees understand the causes of downtime and how they affect profits. This communication can help build a spirit of shared responsibility, helping workers understand their impact on the business as a whole.

Improving communication also means making it easier for staff to suggest improvements. Supply chains should reward employees whose suggestions lead to meaningful reductions in overall downtime. This will encourage more workers to take an active role in ensuring operations run as smoothly as possible.

Supply Chains Must Actively Reduce Downtime

Reducing downtime in the supply chain can minimize disruptions across an entire industry. Similarly, if supply chains don’t eliminate downtime, they could cause massive, far-reaching damage.

These seven strategies represent proven methods for eliminating downtime. Supply chains that implement them can become far more resilient and efficient.

supply chain risk
Archives, Global Logistics, Global Trade Daily, International Trade

3 Techniques to Manage Supply Chain Risk

Leave a comment

Supply chain risks threaten your business’ financial health and professional standing. These risks can affect profitability through physical effects to the building, cyberattacks to software and hardware and personal problems with employees. It is imperative to manage these risks to mitigate the damage they can do.

Supply Chain Risks

Risks to supply chain management affect the flow of goods, creating products and furnishing customers with goods. Managing these risks is how a business can mitigate risks and threats to the supply chain.

It is vital to understand how to determine what supply chain risks are and identify which can harm your business. Identifying these risks can provide you with details about internal and external threats. External risks include the following:

-Demand risks — These are unpredictable or misunderstood demands of customers.

-Supply risks — These are usually interruptions of product production or flow.

-Environmental risks — These are outside of the supply chain and can include economic, social, regulatory and climate factors.

-Business risks — These are often financial or management stability issues.

-Internal supply chain risks include the following:

-Manufacturing risks — These are usually disruptions or operations issues.

-Business risks — These can include changes in personnel, management issues, or reporting processes.

-Planning and control risks — These are inadequate assessments to include ineffective management.

-Mitigation and contingency risks — These happen through no contingency plans.

Basic Types of Supply Chain Risks

Five types of supply chain risks can affect the business in internal and external ways. These include the following categories:

1. Cybersecurity risks – These involve phishing, malware, trojan and viruses, ransomware and email scams.

2. Legal risks – These include contractual problems, including disputes, interpretation and obligations.

3. Environmental risk – These involve outside issues that can impact the business such as water, soil, air emissions and waste.

4. Project organization risk – These involve not having the right person or material when needed at a specific time.

5. Human behavior risk – These risks involve personnel issues with illness, the resignation of work, or judgment and decision difficulties.

A Practical Approach to Supply-chain Risk Management

A practical approach is to implement a risk mitigation plan. Remaining practical requires knowing if an employee is causing cybersecurity breaches, which supplier has an issue and fully identifying unknown and known risks. Build a framework to mitigate and monitor these risks. Incorporate governance and continuous review to continually monitor possible risks.

Techniques to Manage Supply Chain Risk

Here are the most important techniques to help manage supply chain risks:

Identify and Analyze Relevant Risks

Look through your business areas to determine what risks exist and the exposure they cause. Identify and analyze disruptions, internal and external threats and all scenarios involved. Determine how to prioritize and limit the damage these threats pose.

Prioritize and Monitor the Risk

Prioritize by diversifying your base of suppliers, having multiple backup plans for threats and preparing for the worst case. Risk planning involves sharing with partners, continually monitoring issues through cyber security, reporting and collecting data constantly. You can purchase tools, acquire expert assistance online or hire a specialist to better assist you.

Mitigate the Risk

Mitigation starts with understanding what you are monitoring. A good plan starts with comprehending the threats. You should also communicate with your partners, purchase insurance and continually review these risks.

Managing the Impacts Associated with Risk

To manage risks’ impact, you should create a risk prevention strategy. Some plans require prepping for environmental factors in the area. Scenario planning can help manage risks associated with most threats that arise. This involves understanding key factors such as inferior materials, employees with illness and suppliers that have a tarnished reputation.

A Key Takeaway in Supply Chain Risk Management

The takeaway involves prevention, necessary response, appropriate recovery and rebounding from threats. Key takeaway implementation involves connecting these plans. Departments and partners need a coordinated effort and joint risk management. Employees need education about risks and threats and how to avoid violations. You should also remain transparent and report matters to remain compliant.

Conclusion

Most organizations make managing supply chain risks a regular and ongoing process. This is the only way to protect your business, safeguard your reputation, and, ultimately, come out on top.

__________________________________________________________________

Emily Andrews is the marketing communications specialist at RecordsFinder, an online public records search company. Communications specialist by day and community volunteer at night, she believes in compassion and defending the defenseless.

sourcing
Archives, Foreign Trade Zones, Global Logistics, Global Trade Daily

Global Sourcing Opportunities: Reduce Your Risks.

Leave a comment

The American business sector is growing and expanding foreign sourcing at unprecedented rates. This growth is due to a number of factors. One contributing impact is the need to source competitively priced raw materials, components, and finished products from foreign markets.

While there is always a value in “Buying American” the reality is that we participate in a global economy and buying and selling in a multitude of markets offers all companies value in growth, profits and sustainability.

This holds true for all business verticals in a robust fashion. More and more USA based retailers, manufacturers, and distributors are finding alternative sourcing opportunities in other countries.

Consumer products, chemicals, electronics (both components and finished products), industrial goods are examples where we witness increased foreign sourcing.

China leads the world as a source for most manufactured products. . “Hats-off” to them for creating a huge capacity, with a robust bandwidth to be both comprehensive and competitively priced, making all other markets subordinate in comparison.

The United States has lost a lot of ground to foreign competition but has still maintained a strong manufacturing profile in numerous verticals. And in recent years has begun to grow again.

Most management personnel in expanding companies … are pressured into short term profitability goals, source internationally, which can lower production and purchasing costs, so margins can be maximized.

These strategies create a dependence on foreign sourcing and a continued need to develop numerous options in purchasing both materials and finished products from low-cost countries.

Cost reduction is the main reason for foreign sourcing that comes with certain risks and challenges, that we need to navigate successfully.

Some of the examples of the challenges and risks in global sourcing:

-Making sure “landed costs” are figured into the cost of goods purchased

-Handling the complications of shipping internationally

-Dealing with U.S. Customs (CBP)

-Managing Trade Compliance

-Packing, marking, and labeling concerns

-Other government agencies, such as but not limited to: USDA, FDA, ATF, DOE, etc.

The critical step is to evaluate and understand your risks and manage solutions to mitigate the challenges of global sourcing and the import process.

In that regard we have eight recommendations:

1. Proceed with new suppliers cautiously.

Do not rush into sourcing relationships. Initially obtain a flow of samples. Check, recheck and check again. Initially buy limited quantities till you have had a number of successful import transactions.

2. Raise the Bar of Quality Control (QC)

Many Industrial Companies we have interfaced with over the last 20 years have had QC issues with foreign suppliers. We strongly suggest you acting diligently and with high reasonable care in assuring that all quality standards are being met.

3. Control the Term of Purchase

INCO Terms control international sales and purchasing. Chose terms that leverage your purchase, such as Ex Works, FOB, FCA and stay away from the DDP Term.

4. Align with Qualified Service Providers

Freight Forwarders and Customhouse Brokers become a reliable partner in your import supply chain. We maintain strong relationships with several service providers that understand the Pet Products Vertical and can refer you to several options.

5. Create Robust “Landed Cost Models”

Landed Cost Models outline all the costs in an import transaction that impact the overall expense in choosing a specific foreign supplier. Freight, duties, taxes, clearance charges, consolidation, etc are just a few of the many expenses associated with imports.

It is critical to make sure you are identifying and covering all of your expenses in the import transaction.

6. Continually do comparison purchasing and diversify your sourcing options

Foreign sourcing is a “work-in-process”. It is a best practice to always seek options, explore alternative suppliers in various countries to make sure you are truly obtaining the most competitive price and highest level of QC and product performance.

7. Utilize and leverage your Logistics Options

Bonded warehousing, foreign trade zones, tariff engineering are practices available to help lower landed costs of goods purchased and are legitimate options to reduce inbound logistics costs.

8. Pay attention to detail

Issues such as Harmonized Tariff Codes, Valuation, Transfer pricing, and Record-Keeping are all issues you have to manage successfully to keep your inbound supply chain running and managing successfully.

_________________________________________________________________

Thomas Cook is a recognized leader in global supply chain and author of 20 books on global trade and business management. He can be reached at tomcook@bluetigerintl.com or 516-359-6232.

contracts
Archives, Global Trade Daily, Software, Special Reports

Don’t Get Caught Off Guard by Expired Contracts

Leave a comment

Contracts are key to mitigate risk, secure discounts, and acquire services. Your procurement teams work hard to negotiate contracts that enforce the most beneficial terms for your company, and your AP team takes careful measures to ensure each invoice is paid on time. However, one section of the contract that’s often overlooked by finance teams is the expiration date. Surely your supplier will let you know when it’s time to renegotiate, and someone’s tracking it somewhere, right?

The truth is, in many organizations, the expiration date of a contract is often completely unknown. An expired contract can have serious ramifications to your business functions and could cost you a lot if you’re unaware of its pending arrival. Below are a few scenarios that can happen if you’re caught off guard by expired contracts.

Where are our contractors?

If you fall out of contract with your contractors, the first thing you might notice is that they simply don’t show up. This may not be a huge issue on temporary projects such as landscaping, but if you’re relying on them for long-term IT support, this could be a big issue: A few weeks of contract renegotiations can slow down your business significantly. Staying ahead of contract expirations allows you to renegotiate terms before they expire, to ensure there aren’t any gaps or delays in your projects.

Hmm, this seems more expensive than usual

If your supplier contracts expire, they’re no longer obligated to honor the price you negotiated. They can suddenly begin to charge their market rate, which is likely substantially higher than the contracted rate. This would be an unwelcome surprise for any finance team, especially if it’s after you’ve already purchased the goods (and perhaps even used them as components within your product). After a contract is expired, you lose all your leverage to find an alternate supplier, and the cost of your goods can rise exponentially. Avoid this supply chain nightmare by knowing in advance if you need to renegotiate your prices.

I can’t afford my new subscription price, but can I afford not to have it?

Contracts often include a clause that limits cost increases upon renewal, typically around 3-5% or covers the cost of inflation. However, if the contract expires, this clause will no longer be honored. Let’s say your business is using an ERP or CRM software on a six-year contract. During that timeframe, the software company raised its annual fee from $400K to $3.5M. Unfortunately for your company, you didn’t renegotiate the contract before expiration, and you now have zero leverage to negotiate a better price. Even worse, the cost of switching may be equally high, so it doesn’t make sense to look for alternative software. Your company has no choice but to pony up the money in order to keep your business functioning on all cylinders.

The above scenarios would be tricky for any business to avoid. With so many contracts with so many different suppliers, it can seem impossible to be aware of each upcoming expiration date. However, AppZen’s Contract Audit notifies you of all of your upcoming expirations (and coupled with AP Audit, you can also be confident that your contract terms are reflected on each invoice too). Thanks to AppZen, you’ll be notified with enough time required to make a decision on alternative suppliers, saving you costly mistakes, and keeping your business and supply chain running at 100% efficiency.

______________________________________________________________________

David Wishinsky is a Senior Product Marketing Manager at AppZen.

risk
Archives, Global Logistics, Global Trade Daily

How to Get a Handle on Risk in Uncertain Times: 10 Important Considerations

Leave a comment

Risk: It’s the operative word on everyone’s mind right now. Whether it’s COVID-19 or oil prices, supply chain impacts or financial market concerns, understanding the impact of macro and micro-events, assessing their impact and putting in place the right action plans to mitigate that risk as best as possible is the priority task at hand.

Here we’ll examine ten steps to consider to ensure you’re being as thoughtful and rigorous as possible in your response to risk.

1. Take Care of Your People – Hopefully, this has already been priority number one for your business after the past few weeks. How do we safeguard our people? How do we handle work from home – voluntary versus mandatory? What other flexible resourcing options do we provide – from sick leave to absenteeism considerations? What are the IT implications and subsequent human resource and capacity management concerns we need to consider and fully factor in? Err on the side of caution. Better to be safe than sorry.

2. Analyze Internal Risks – Before you can do that, you need to galvanize the right teams to be able to understand, assess and action against those risks. It’s critical to build the right cross-functional teams to be able to look at, and understand, the relevant issues to consider. This will involve finance, R&D (depending on your business) and marketing and sales. It will also involve teams like quality and sustainability leaders, as there will be implications and follow on ramifications despite your very best efforts.

3. Conduct Scenario Analyses – For critical categories, it’s important to get a handle on what alternative demand/supply options are. What are the pessimistic versus expected versus optimistic cases depending on what happens with the current situation, both in terms of the pandemic but also in terms of current and expected economic conditions? As part of any such assessment, you’ll need to score, assign probabilities and weights and adjust your thinking and actions accordingly.

4. Talk to Customers –This doesn’t tend to be the first thing people think about when it comes to procurement, but understanding the demand side implications for your business will be essential. How will demand be disrupted? Will there be specific products in your portfolio that will be more directly or severely impacted? Will this result in demand cutbacks or surges? Where will you source supply from? Can you cut back supply needs for others? How will buying patterns change – will there be channel shifts from offline to online? How does that play out in terms of critical suppliers and critical buys and requirements in the near to medium terms? Maintaining a dialogue with customers to understand their needs and issues and where all of this plays through for your team is essential.

5. Develop Plans for Strategic Categories –You’ll need to revisit your plans and the related risks around your most critical categories during a time of crisis. Make sure that these plans have been reviewed, the pressure points tested, the risk points analyzed and alternative plans considered. This could mean enhancing inventory levels (and rethinking inventory buffers based on the scenario planning we talked about earlier), assessing implications for delivery performance, gaining a view of multi-tiered supplier performance, increased inbound category visibility and more.

6. Examine Logistics Implications – By the same token, businesses must assess the logistics implications both inbound and outbound, either to make products or to ensure delivery. This has cost and timeline implications. All modes of transportation can be seen to be impacted, not least of which is shipping impacts – especially to and from China, but elsewhere, as well – whether these impacts are halts on movements, ramp downs, or the subsequently phased ramp back up. Or bypassing some of these options and going to airfreight which presents another level of cost to timeline tradeoffs.

7. Assess Liquidity – This will be critical and will call for a stronger partnership and alliance with finance. Looking at cash positions, assessing payables, and of course extending that into receivables, etc. will be essential. Add to this, talk of tightening credit markets and this makes it all the more important. Cash as always will be king if we need to endure near term instabilities, revenue disruptions, supply chain impacts, sourcing problems, and more

8. Assess Supplier Health – Part and parcel to all of this is assessing supplier health and evaluating who will be the most impacted. A clear view of your supplier segments – strategic versus mid-tier versus everyone else – is essential so you can focus your time and analysis accordingly.

For the most strategic suppliers, it’s critical to have a multi-tiered view of their supply base and related dependencies so you can adequately assess their performance and supply chain bottlenecks. This will involve structured risk analyses – looking across multiple variables beyond financials, to operational performance, to industry performance factors, to geographic and locational concerns and more. You’ll also need to identify alternate supply sources to shift production as and where needed, and as quickly as possible. Not all of this can be done at a moment’s notice. Some of it should have been done as part of a prior risk assessment exercise.

9. Think Ahead – Businesses can’t afford to simply think about today. Consider what the next three to six months look like. This is where scenario planning comes into play. It is critical to assess not only how you can react now but also how to prepare for eventualities later, when things are either fully back to normal or in some altered state based on longer-lasting ramifications from the events of today.

10. Work With Facts and Manage Emotion – Fundamentally, the most important thing you can do is to continuously monitor changes in a structured fashion. Have a programmed information collection and analysis mechanism. If we accept that the crisis is still unfolding and that the true impacts from a supply chain disruption perspective may not reveal themselves for months, we need to take tangible steps.  This can be done by establishing a process to monitor other regions outside the infected areas that could be impacted. Are ports outside the infected areas being impacted through disruption or through new regulations to protect against transmission of the virus?  Are suppliers struggling financially without access to the Chinese markets, jeopardizing their viability? Data will be important but data converted to relevant insight for your specific supply chain situation will be essential.

_____________________________________________________________

Omer Abdullah is Co-founder and Managing Director of The Smart Cube and is responsible for managing the company’s Americas business.Omer has more than 25 years of management consulting, global corporate and industry experience across North America, Europe and Asia.

Prior roles include A.T. Kearney (North America), Warner Lambert (USA) and The Perrier Group (Asia-Pacific). Omer has an MBA from the University of Michigan at Ann Arbor, USA and a BBA from the University of East Asia.

disruptions
Archives, Global Logistics, Global Trade Daily

How to Manage and Overcome Disruptions in the Supply Chain

Leave a comment

Regardless of the type of disruption, supply chain resilience is highly dependant on several factors, one of which being reliable end-to-end visibility created at the first sign of trouble. Whether it’s a health crisis, a series of policy changes, or other forms of disruption, proactive rather than reactive measures are critical in staying afloat when facing a variety of disruptions or bottlenecks.

Disruptions in the modern supply chain are simply inevitable and require a different approach in data management and predictability to successfully overcome the challenge at hand.  By effectively utilizing technology tools available and developing a solid crisis plan can make a significant difference in recovery times.

Below is a helpful infographic from DiCentral breaks down various predictable and unpredictable supply chain disruptions and what it takes in the planning, reaction, and response stages of managing and navigating challenges.

food sector
Archives, Global Logistics, Global Trade Daily, In The News

Food Sector Faces Multipronged Consequences of COVID-19 Outbreak

Leave a comment

Brick and mortar, as well as online food chains, are facing the wrath of the current COVID-19 outbreak. The worldwide supply chain includes distribution, packaging, as well as sourcing of raw materials. Lockdowns are disrupting the transportation of packaged foods, prepared foods, non-alcoholic and alcoholic beverages. Before the pandemic, the major growth drivers were growing consumption of ready-to-eat convenience foods among on-the-go consumers.

Shifting lifestyle patterns, rising per capita income, and a growing population have been the prominent growth-enhancing factors associated with the food sector prior to the outbreak. However, shutdowns of restaurants and quick service facilities due to lockdowns have hindered the growth of the food & beverage industry to a large extent.

Online Food Orders Surge as Offline Food Chains Struggle to Cope with COVID-19

In view of the dual nature of the food industry, the impact of COVID-19 is multifaceted on online and offline food chains. The offline food chain comprises of cafes and restaurants that have been shut down across the globe. However, online food deliveries remain operational in most of the regions. The packaged food industry, in particular, is witnessing prolific demand for milk products and shelf-stable foods. As consumers hurry to fill their pantries, the demand is projected to surge even further. Almost every region of the world has been affected by the coronavirus crisis, namely, Asia Pacific, Europe, North America, and the rest of the world. An example of how supply chains were gravely affected is derived from Coca Cola Co.

The carbonated beverage giant, sources raw material from China where the outbreak surfaced in early December of 2019. During the initial days of the pandemic, the company faced a great deal of difficulty in managing the frontend of its supply chain. The production, supply, and export of raw materials from China were delayed due to which the company now solely relies on its suppliers in the US for sourcing sucralose. The major companies in the food & beverages industry affected by coronavirus outbreak include Subway Restaurants Inc., Starbucks Corp., PepsiCo Inc., Papa John’s International Inc., McDonald’s Corp., KFC Corp., International Dairy Queen Inc., Dunkin’ Donuts LLC, Domino’s Pizza, Inc., and Burger King Corp. For instance, Starbucks had to shut down about 2,000 outlets in mainland China after the pandemic began to spread like wildfire.

Livelihoods and Lives at Risk from COVID-19 Pandemic

The looming food crisis amid trade disruptions, quarantines, and border closures continues to endanger both livelihoods and lives worldwide. The huge imbalance between supply and demand resulted from economic shock in the midst of the widespread shutdown of businesses. The uncertainty surrounding the eventual retreat of the COVID-19 pandemic is adding to the crisis. Fast and effective measures are required to mitigate the effects of the pandemic on the vulnerable food supply chain.

Nutritious and diverse food sources are in short supply in the wake of the global health crisis. Furthermore, greater food insecurity is prevalent in regions hit hard by COVID-19 such as Spain, Italy, and the US. However, there is still the need for anyone to panic about the food crisis as the world has adequate stock of it. The only problem is making it accessible to every section of the society amid strict lockdown.

What Has the World Learned from History?

The 2007-2008 food crisis offered the world some important lessons which can be utilized to avoid letting a health crisis turn into an indispensable food crisis. Policymakers worldwide are intent on not repeating their mistakes of the past. As the measures tighten around the pandemic, it will be even more challenging to prevent the downfall of the global food system. Logistics bottlenecks are a major challenge facing the globe at present. The global food industry is certainly strained in terms of transport and accessibility.

So far food supply has been sufficient thereby disruptions have been minimal. However, the production of high-value commodities such as vegetables and fruits has declined. Hence, governments, especially in India, aim to restart the agriculture activities in parts during the harvest season.

What Does the Immediate Future Hold for Food Sector?

The food supply chain disruption is expected to continue through at least May 2020 as new cases of COVID-19 continue to rise. Movement restrictions will continue for at least two more months in various parts of world, which is why minimizing bottlenecks will remain crucial for major manufacturers in the food industry. Agricultural production, on the other hand, will be affected by a shortage of veterinary medicines, fertilizers, and other inputs. Moreover, demand for seafood products and fresh produce will continue to decline in view of less grocery shopping and closure of restaurants. In particular, aquaculture and agriculture sectors are among the most adversely affected by the pandemic. Canned seafood and other frozen food products will be on the other hand in demand. The suspension of school meals in emerging nations in India is another area facing the brunt of the COVID-19 outbreak.

One thing is certain: the poorest sections of the society including the migrant workers will be the worst affected by the pandemic. In India, migrant workers are terrified of dying from hunger even before the pandemic can strike. Feeding millions of poor families is a daunting task being faced by the government of India. Individuals continue to contribute their part to help the vulnerable ones. However, feeding them every day requires uninterrupted production and supply of essential food items. The food sector in developing nations will thus certainly face greater strain over the entire system in the foreseeable future.

_____________________________________________________________________

Nandini is a senior research consultant working with Future Market Insights (FMI), a global market research and consulting firm. She has been serving clients across Food & Beverages, Pharma, and Chemical domains. Currently leading FMI’s Food & Beverages division, Nandini handles research projects in various sub-sectors, viz. Food Ingredients, Food Innovation, and Beverages. The insights presented in this article are based on FMI’s research findings on Impact of COVID-19 on Food Sector Industry of Future Market Insights

crisis
Archives, Global Logistics, Global Trade Daily

How Can Businesses Prepare For A Worldwide Crisis? 4 Tips To Survive.

Leave a comment

The coronavirus that emerged in China is now shaking the world economy – including some major U.S. companies – and stoking fears of a global recession.

But, as companies go about mitigating damage, there are lessons they can learn to be better prepared for another rare worldwide crisis, says Hitendra Chaturvedi, a professor at the Supply Chain Department of W.P. Carey School of Business at Arizona State University and an expert on global supply chain sustainability and strategy.

“The coronavirus is an abnormal occurrence,” Chaturvedi says. “Businesses cannot completely insulate themselves from such events, but they can certainly reduce risk so it will hurt but not be life-threatening. The whole idea is, what is the strategic insurance policy against such unexpected events, and what is the cost businesses are willing to bear?

“We have had risk mitigation and disaster recovery plans for data centers for decades now. Why should we not have the same for our manufacturing operations?”

Chaturvedi offers these suggestions for companies to prepare for a worldwide crisis that could affect their business:

Localize more inventory. “Holding inventory in multiple locations closer to your customers makes sense in many cases, even if it may be costlier than in other countries,” Chaturvedi says. “I think companies in the U.S. will start to keep more inventories here as a reaction to the coronavirus.”

Localize core manufacturing. “If your current business relies heavily on products being made in China, you’re probably concerned right now,” Chaturvedi says. “Consider having a manufacturing operation in the U.S., or at least part of your operations here, so even though the cost may be high, business survival will not be severely impacted. It’s another way for companies to have more control when events happen out of their control.”

Separate R&D from manufacturing locations in other countries. “If it makes sense to maintain your core manufacturing outside the U.S., keeping research and development work closer to home ensures your future product development does not get impacted,” Chaturvedi says.

Invest in new technology for transparency in supply chain and disaster simulation. “Blockchain can easily provide transparency across the supply chain, Chaturvedi says. “Get visibility across at least tier 1 and tier 2 suppliers.

The more you know, the better you will be at spotting trouble spots and handling a crisis. Moreover, investing in Artificial Intelligence-driven risk simulation models based on numerous factors, including a global pandemic, nature events, or political instabilities may be a prudent choice. Just as schools conduct fire drills, companies should conduct pandemic drills as part of their risk mitigation and disaster recovery plan.”

“Events such as a worldwide health crisis are a standalone business risk and an amplifier of vulnerabilities,” Chaturvedi says. “The coronavirus may serve as another reason for companies to reassess their supply chain exposure. We often get complacent after a crisis settles down, but businesses who prepare for the next time will be in a stronger position to respond and recover.”

_____________________________________________________________________

Hitendra Chaturvedi (https://wpcarey.asu.edu/people/profile/3541031) spent over 30 years in progressive technology leadership positions with Microsoft, Newgistics, E&Y e-Business and A.T. Kearney. Chaturvedi also built a $100 million software company in India, GreenDust, where he implemented proprietary reverse logistics software at Amazon, Flipkart (Walmart), Samsung, Panasonic and Whirlpool. A computer engineer with a master’s degree from Louisiana State University and an MBA from Southern Methodist University, Chaturvedi has been widely covered in the media and is a subject matter expert on global supply chain strategy, sustainable supply chains, reverse logistics, ecommerce, artificial intelligence and machine learning. Chaturvedi is now a professor at the Supply Chain Department of W.P. Carey School of Business at Arizona State University.

wildfires
Archives, Global Trade Daily, News, Special Reports

10 Steps Businesses Can Take to Manage the Risk of Wildfires

Leave a comment

As prolonged drought, heat, other climate factors, and population growth trends intensify wildfire risks in the Western U.S., parts of Australia, Europe, South America, Africa and several other industrialized areas of the world, many governments have expanded their precautions to reduce the likelihood or severity of these devastating events, including massive temporary electrical power shutdowns and large-scale evacuations of at-risk residential populations.

The combination of actual wildfires and government preventative measures have made it critical for businesses with operations, suppliers and customers in vulnerable areas to develop comprehensive plans to prepare for and manage power outages and operational shutdowns that can be implemented safely and quickly – especially during seasonal periods when wildfire risks are most severe.

From developing, adjusting and testing a business continuity plan to preparing for and evaluating the impact of potential wildfires, related government-mandated power outages, evacuations and highway closures, business leaders and managers need to assess their potential vulnerabilities to wildfire risk and develop and implement appropriate measures to mitigate them.

Accordingly, here are 10 steps for managing exposures related to wildfires. Note that many of these measures apply to areas where scheduled power outages may occur, but facilities may continue to be occupied and can be operational using alternative or back-up power sources.   

1. Review and update your company’s emergency plan. This includes developing any contingencies that might need to be added to account for the evacuation or residential areas where employees with emergency responsibilities may be located. Ensure that personnel with assigned responsibilities will be able to get to the facility in the event of a power outage. Plan for the possibility that some employees with emergency duties may reside in areas being evacuated and won’t be available for work. If possible, choose back-ups who reside in different areas. Double-check that your communication plan is established and that you have up-to-date call trees so employees can be contacted on a timely basis when emergency situations arise.

2. Assess power-down procedures. Make sure they are up to date with respect to any new equipment or recent facility expansions or modifications. At the same time, be sure your managers understand the steps for restoring your plant or facility to full operation once power is restored.

3. Check emergency power resources. Start by testing and securing any generators available. In addition, make sure your company has adequate fuel to withstand multiple power outages within certain time periods.

4. Evaluate lighting and equipment. Ensure emergency lighting is operational and that computer systems are backed up and current. During periods of high wildfire threats, such as during extended drought conditions, employees with laptops should be instructed to back-up data on a daily basis and make sure they are fully up to date in the event they need to work off-site for extended periods. In the event of an outage, make sure desktop computers, mainframes, servers, and other critical electrical equipment is switched off, so it will not be adversely impacted when the power is restored. If the facility is to be vacated and time permits, consider removing valuable equipment.

5. Check perishable products and vulnerable inventory. Consider offsite warehousing for any products that may be affected by the loss of temperature or humidity controls. Alternatively, consider using reefer trucks and/or dry ice for maintaining appropriate temperature control to protect inventory and equipment during an outage.

6. Revisit facility security measures. Make sure all doors and windows are secure and consider restricting access to the entire property through the use of perimeter fencing. Keep in mind standard security alarm and access control systems may not be functioning in the event of power outages.

7. Request assistance from law enforcement. Notify local police authorities to request additional patrols and increase internal security rounds (as installed CCTV systems may be inoperable during any power outages that result from mandated, preventive shutdowns or those arising from the spread of wildfires).

8. Establish planned fire watches. Whether for preventive purposes or as a result of damage related to wildfires, any electrical power outage may result in impaired fire protection systems. As practical, businesses should designate a safety team member to conduct an ongoing fire watch during any area of power outages to spot signs of potential exposures as well as other system impairments. In areas where wildfires may be expanding, personnel should also continually monitor the news media for civil instructions regarding potential evacuations.

9. Consider options for reporting fires. Designate a safety, maintenance, security or operations team member to contact the local fire department in the event of a fire as a fire alarm system, transmission and notification may be interrupted during any electrical power outage.

10. Check premises for fire hazards. Trim foliage on property and evaluate risks of any combustibles on premises, including any being stored away from the building; if appropriate, consider relocating to indoors or other locations to minimize potential fire hazards. Eliminate any hot work or hazardous operations.

During the past several months, wildfires in various areas of the world have resulted in the loss of life, devastation of wildlife, caused several billions of dollars in damage and had a significant impact on business and industry. By taking steps to prepare for these exposures, businesses can help reduce their risks and speed their recoveries from these perils.

________________________________________________________________

Jeff Borre, a director in Aon’s Property Risk Control Practice, manages the firm’s Field Services group, which provides a wide range of consulting services, including property risk control site surveys, to meet the property risk management needs of commercial and public sector clients. He joined Aon in 2001, after serving with Ahern Fire Protection and Nexus Technical Services Corporation where his responsibilities included designing fire protection systems. He earned a bachelor’s degree in civil engineering from Southern Illinois University-Edwardsville and holds the Associate in Risk Management (ARM) designation. A Professional Engineer (PE) licensed in Illinois and Wisconsin, he is a member of the National Fire Protection Association, Society of Fire Protection Engineers, American Society of Safety Professionals, and American Society of Civil Engineers. He can be reached at jeff.borre@aon.com. 

 

Christian Ford, a managing director of Aon, serves as chief operating officer – Property Claims Advocacy within Aon’s Global Risk Consulting group. In addition to various leadership responsibilities for the group, he works directly with numerous clients on complex property claims advocacy and resolution. Earlier in his career, Ford served as a multi-line claims adjuster at two large commercial insurance companies. He earned a B.S. degree in business administration from John Carroll University and also holds the Senior Claim Law Associate (SCLA) designation. He can be reached at christian.ford@aon.com.