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Managing Crisis Within the Food and Beverage Supply Chain

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

Managing Crisis Within the Food and Beverage Supply Chain

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If there’s one thing France hasn’t experienced a shortage of recently, it’s supply chain issues. The pandemic affected food and drink availability in a number of ways, from issues with growth and production to a shortage of delivery vehicles. This has caused a number of issues for food and beverage manufacturers, who are struggling to keep up with demand as a supplier while also experiencing issues in their own supply chains.

The wine shortage in 2021, caused by unseasonably cold weather in key wine-growing regions, has also had a serious impact given France is the second-largest wine producer in the world. The l’Association Nationale des Produits Alimentaires attributed current and future expected shortages to price rises throughout the supply chain.

It’s clear that we’re likely to experience more supply chain issues in the near future. But there are ways food and beverage manufacturers can mitigate these risks. Here, we’ll explore the options.

Protect your existing supplies and production

At a time when food production is affected by issues such as the weather, protecting existing resources is essential. Many food manufacturers have had to recall products because of avoidable issues in the factory. Food manufacturing powerhouse Kraft Heinz made global headlines when it had to recall over 1.2 million containers of cottage cheese because they weren’t stored at the correct temperature.

Equipment maintenance is essential to prevent unnecessary product spoilage and recalls. Many manufacturers will operate on a reactive maintenance model, only maintaining machinery when it fails. Instead, switching to proactive maintenance and checking equipment regularly can help to identify issues before they become a problem. Predictive maintenance technologies are now more commonplace too and will monitor the health of systems automatically.

Food contamination is also an issue that can result in recalls and even affect the health of end consumers. It was reported in 2021 that foodborne illnesses increased between 2018 and 2019, with salmonella topping the list of pathogens. There are a range of processes that can threaten the hygiene of food – from handlers not washing their hands to unsanitary cabling. Many manufacturers use stainless steel goulottes métalliques because they’re easy to clean and decontaminate.

Diversify your suppliers

Access to, and costs of, the raw materials needed to make foodstuff is a key issue right now. it’s essential for manufacturers to diversify their suppliers in the wake of supply chain disruptions. If you rely on one or two suppliers for one key ingredient and they experience issues, you’ll feel this more acutely.

In the wake of COVID-19’s dramatic impact on small businesses, while global behemoths like Amazon increased their profits, we’ve seen a shift towards prioritising local businesses. To encourage this, the government introduced click and collect services for small businesses that didn’t have the resource to set up an ecommerce presence.

The same should go for businesses looking for new suppliers. Small businesses need support, and local suppliers can offer more security to your business because they’re more easily accessible. What’s more, with a renewed focus on sustainability in France in 2022, going local can boost a business’ green credentials.

Support the elimination of food waste

Consumer food waste is a real problem worldwide, but especially in France. Despite a number of legislations in place to prevent food waste, research by Statista has shown that bread is one of the food items French consumers waste the most often. The survey found that 16% of consumers were throwing bread away at least once a week. Given that flour is an ingredient that has soared in price, throwing away its end product is costly.

At a time of food shortages and soaring prices, the nation should be focusing on reducing food waste. France is a global leader in the reduction of business food waste, as well as helping consumers to recycle applicable soiled food. The government and businesses can build on this platform with educational campaigns on reducing the amount of food that is thrown away or recycled.

Food manufacturers can play their part too. Packaging should include information on how best to store the food, as well as tips on making it last longer – such as storing unused bread in the freezer, transferring dried food to airtight glass containers, and putting fresh herbs in water.

France’s supply chain issues are set to continue into 2022. While it’ll be difficult to completely prevent shortages and price fluctuations, there are a number of steps that food manufacturers can take to mitigate these issues and ensure they can continue to provide essential resources for businesses and consumers alike.

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Sources

https://www.statista.com/statistics/1143426/coronavirus-changes-to-supply-chain-retail-worldwide/

https://www.connexionfrance.com/French-news/Which-products-are-or-could-be-hit-by-stock-shortages-in-France

https://www.statista.com/statistics/1128445/most-frequently-wasted-food-in-france/

https://blog.winnowsolutions.com/4-ways-france-is-leading-the-food-waste-agenda

https://www.gardenersworld.com/plants/quick-ways-to-protect-plants-from-frost/

https://www.foodsafetynews.com/2021/04/france-sees-increase-in-foodborne-outbreaks/

https://www.nytimes.com/2020/11/03/business/france-shopkeepers-lockdown.html

https://www.thelocal.fr/20201102/click-and-collect-how-to-help-your-local-business-during-lockdown-in-france/

https://www.housebeautiful.com/uk/lifestyle/food-drink/a19417308/how-to-make-food-last-longer/

https://www.highspeedtraining.co.uk/hub/preventative-maintenance/

https://www.foodsystemsjournal.org/index.php/fsj/article/view/836/817

freight brokers
3pls, Archives, Global Logistics, Global Trade Daily

Three ways freight brokers can seize the endless opportunities in today’s market

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If you’re a freight broker or prospective freight broker, you should be seeing green right now, recognizing a deep well of market opportunity not only in 2022, but looking out over the next 5-10 years, too. The supply and demand imbalance is abundantly evident, and shippers increasingly are leveraging brokerages and 3PLs to manage their freight and shifting away from working directly with motor carriers.

That means billions — likely hundreds of billions, even — of dollars in transportation spending moving toward freight brokerages in the coming years.

To illustrate this point: Just over the past two years, the amount of truckload freight in North America moved through brokerages has jumped from about 10-12% on average annually to nearly 20% last year. That trend is here to stay, along with continually climbing freight demand, meaning the percentage equates to more and more loads.

In early February, the White House’s port envoy, John Porcari, said he sees the current freight volumes as a floor for the coming years — not a ceiling. If he’s right, the brokerage market likely will become one of the fastest growing sectors of the entire U.S. economy.

However, haste makes waste, and now’s the time for freight brokerages and 3PLs to be positioning themselves to take on new customers, build their carrier base, and figure out how to scale their operations to meet this demand and capitalize on the sea of opportunities they’re adrift in.

Without the right digital tools, particularly a robust TMS platform that can scale with your operation, integrate with your shippers’ tools, and seamlessly find capacity across freight modes, brokers will be leaving ripe profits on the table for their competitors to scoop up.

From finding customers and retaining staff in a highly competitive landscape, to offering new services, expanding modes, and maintaining a network of truckers — the modern freight broker simply can’t and won’t survive with just a rates sheet, some Excel files, and a well-worn iPhone.

Here’s why:

Meeting the demands of the modern marketplace.

In today’s brokerage market, no two days are alike, and customer needs change by the minute. Also, with the brokerage market bulging, logistics providers need the ability to add new customers efficiently and cost effectively. Technology has long been viewed as optional, not compulsory, on those fronts.

That’s no longer the case.

To acquire, support, and onboard new customers, manual procedures simply no longer work. Bringing on new customers manually can bog down operations, and it skips vital support in today’s market — properly integrating systems with shipper customers and other third-parties, like motor carriers.

Also, to adequately serve customers and compete in today’s brokerage market — but especially tomorrow’s market — the ability to scale quickly, to find capacity at a reasonable price with some level of automation, and to search across freight modes to keep shippers’ freight moving, brokers need the right tools. Those that have them will serve their shippers and attract new customers. Those that don’t will erode their own ability to compete.

Attracting and retaining the right employees.

Every business in every industry is trying to navigate the pressing issue of finding, hiring, and keeping the right people so their business can run effectively and continue to serve customers.

It’s increasingly difficult to retain employees if you’re not giving them the right tools and technology to do their jobs. For those trying to retain talent with a cumbersome, outdated, ineffective tech stack, you’re creating pressure for your employees to leave and find an organization that invests in those areas.

Also, people want to feel the rewards of the job they do, and part of that is supporting customers in a way they feel is effective and that they’re happy with. All stakeholders benefit from providing the best support and service, especially your employees.

Making scalable technology core to brokerage.

The technology access issue that’s plagued medium-sized and small brokerages has mostly vanished. As has the time it takes to set up new platforms and integrate them into your current operations.

What took months of painful and frustrating setup now takes weeks, if not days. Also, the upfront cost of platforms has become accessible to brokerages of all sizes, as has their ongoing total cost of ownership.

Adopting platforms like modern transportation management systems is no longer just about return on investment or streamlining processes. It’s not simply part of your business — it’s now core to your business.

The dollar cost is obviously an important part of this equation. But thinking of technology and digital solutions as integral, and core components of your business, you reframe the cost as a revenue opportunity. You realize what it means for your business, your personnel, and your customers to be flexible and to grow, to build new revenue opportunities, and to remain a viable competitor in this booming market.

Paul Brady is the CEO of 3Gtms.

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3pls, Archives, Global Logistics, Global Trade Daily

Want a More Resilient Supply Chain? Collaboration Is Key.

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Supply chain disruptions have now become commonplace, and the Manufacturing Leadership Council highlights supply chain improvement in 2022 and beyond as essential to the health of manufacturing. More than ever, manufacturers need resilient and agile supply chains to anticipate and overcome crises. According to the council, creating collaborative supply chain network strategies is key. Quickly sharing key data, insights, and material needs among key partners will foster agility and innovation.

But we need to update our collaboration strategies because the U.S., and much of the rest of the world, last truly focused on supply chain resilience more than 70 years ago. During World War II, manufacturers saw industry collaboration at unprecedented levels as the Allies needed a dependable supply chain for the war front. Consequently, the American government forced collaboration on a top-down, streamlined supply chain with a singular focus. Every company produced a different part, but their common goals superseded their desire to compete and spurred efficiencies.

We’re no longer facing these stark geopolitical challenges, but we are at a supply chain crossroads. The knowledge and agility needed to meet today’s challenges have reached a similar point where no company, regardless of size, can adjust individually to meet demand. The demands of the modern market necessitate collaboration.

Overcoming Reluctance Toward Cooperation Between Manufacturers

Companies hesitate to engage in collaboration, and that makes sense: If you can move faster, you have a tremendous advantage. Why bother to share? The answer lies at the intersection of philosophical and practical justifications. From a philosophical side, manufacturers that pride themselves on innovation shouldn’t be afraid of imitation.

This leads to the practical side: If you hold back on sharing innovative ideas, tools, and frameworks, you slow your whole industry. A leading company may gain a short-term advantage, but down the line, it won’t be able to gain anything from others. In the modern world, there’s no such thing as the “smartest person in the room.” It’s a global room. If you aren’t willing to share some of your insights, you could cause long-range setbacks for your business and your industry.

One globally recognized consumer product goods company gave competitors an insider look at how it made recyclable tubes. Being collaborative didn’t lower the company’s credibility. It illustrated the company’s leadership and cemented it as being true to its mission toward developing more sustainable manufacturing practices.

Moving Toward an Ideology of Supply Chain Collaboration

What will it take to make manufacturers feel comfortable establishing a two-way street when it comes to sharing their supply chain data or innovations? The following strategies will help:

1. Develop universal rules and terminology around collaborative efforts.

Right now, there’s no single language or rulebook that allows manufacturers to communicate confidently among themselves. We just aren’t sure what to share, so we think we must share everything. This makes collaboration feel overwhelming and unrealistic. Having a single language that all manufacturers use to communicate across industries and regions would reduce the latency around collaboration.

For example, we know that sharing asset-level information like makes and models can be useful. But how about the deeper metadata that involves how the item works or the best practices to maintain it? Which metadata is useful enough to send out? And how can it be shared in a commonly understood and recognized format? These are all important questions that can be answered by universal guidelines, which would allow for better machine servicing and create more efficient and sustainable production lines.

Clearer language also helps identify what information should be protected to prevent others from stealing core IP by reverse-engineering processes.

2. Share use cases regarding successes, failures, and best practices.

A lot of manufacturers struggle to use digital transformation (DX) principles to improve their supply chains. They’re stuck in the pilot phase, according to McKinsey research. Understanding how others adopted and scaled their DX initiatives could be extraordinarily helpful.

The World Economic Forum’s Global Lighthouse initiative is already facilitating the sharing of DX use cases across industry silos. There are also peer-level customer advisory boards and industry-level groups sharing implementation practices.

Make no mistake: DX is essential to unraveling knots in the supply chain. The right DX applications can improve the entire global manufacturing “organism.” The more manufacturers learn from one another’s mistakes, the faster the industry can evolve. Not participating in these forums or groups means losing out on valuable information.

3. Upskill and reskill manufacturing workers.

The Great Resignation is making it harder to source and hire talented people, especially with older workers retiring and taking key institutional knowledge with them. This is a huge challenge: Companies need to onboard new workers, and there’s intense competition for the new generation of technical talent who will drive future innovation. Even current workers may need upskilling and reskilling, too, especially in the latest digital tools to make their roles more effective.

These are significant challenges, and manufacturers need to quickly gather insights, data, and best practices around workforce development. The industry, however, lacks the tooling needed to share data efficiently like in the software industry, which has a tremendous amount of tools, academies, and online capabilities that have enabled people to learn to code and allowed collaborative employment models with apprenticeships. We need this same level of collaboration among upskilling employees.

Allowing the people themselves to collaborate helps. There are forums for VPs or management roles to share insights but few, if any, forums for technicians across different industries to collaborate.

4. Find solutions around sustainable manufacturing.

Corporate leaders constantly say, “We need to be more sustainable.” But how many are taking steps toward sustainability? The whole industry needs to become more effective, efficient, and sustainable, and the more collaboration we create there — sharing data and insights on implementing sustainable practices — the faster it’ll be to move forward.

Even if sustainability weren’t the right focus ecologically, it’s right operationally. An organization that’s not sustainable has little supply chain resilience and will need to change tactics as resources run out. If you don’t have real initiatives in place to make the supply chain more sustainable over time, resilience won’t even matter.

Ultimately, we need data-driven standards around improving sustainability. Technology allows us more real-time data than ever, but we need to improve how our initiatives use that manufacturing data. Sharing a digital roadmap of best practices and insights or utilizing cross-company supply chain initiatives makes it quicker and easier to make supply chain improvements.

Plenty has changed since WWII’s collaboration among manufacturers, but the benefits of cooperation haven’t. Let’s respond to today’s supply chain concerns by revisiting the advantages that come from coming together.

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Artem Kroupenev is VP of Strategy at Augury, where he oversees product, market, innovation, and ecosystem strategy. He has more than a decade of experience driving the adoption of disruptive technologies and has previously co-founded companies in the United States, Israel, and West Africa.

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Global aircraft charter specialist Chapman Freeborn Airchartering has appointed NAQEL Express as its exclusive partner in the Kingdom of Saudi Arabia.

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NAQEL Express, as well as Chapman Freeborn, are both well-respected companies in the aviation industry. This partnership will enable clients to receive a complete end-to-end solution, delivering an entire range of logistics covering all industries. The collaboration will strengthen both partners’ presence and coverage in the Kingdom of Saudi Arabia as well as support the Kingdom across multiple industry verticals.

Neil Dursley, Chapman Freeborn Chief Commercial Officer Cargo comments:

“We believe that this new strategic partnership will allow us to grow and develop our offering to our global clients and suppliers. Chapman Freeborn has almost five decades of experience within the air charter industry globally, this new partnership with NAQEL will allow us to service our clients’ needs far more effectively and efficiently, now more than ever.

The combined strength of Chapman Freeborn, its parent company Avia Solutions Group, and NAQEL Express will give existing and new potential clients in the Kingdom a fantastic service offering. Capabilities include access to our family members’ fleets of both passenger and freighter assets globally and in the region.

Chapman Freeborn has decades of experience in the Middle East Region and neighbouring countries and has supported missions in many challenging environments for many years and continues today with innovative solutions to support our clients.”

Michael Harradine, NAQEL Express Director, Global Freight Forwarding Division says:

“NAQEL enables the world to do business in Saudi Arabia with simplicity and transparency. The new partnership with Chapman Freeborn enhances our offerings.

This strategic partnership gives our clients within Saudi Arabia a direct access to the vast cargo air charter, passenger charter, and on-board courier capabilities of Chapman Freeborn.

Now there will be direct control with transparency for the fulfilment of air charter needs of global and local firms in Saudi Arabia.

NAQEL Express is one of a select group of firms operating as Authorized Economic Operator (AEO) for Saudi Customs.

We are also the leading and largest overland express carrier with the largest reach among any express carriers in KSA.

NAQEL is a key player in building transparent connectivity between KSA and its global economic partners, as part of Saudi Arabia’s VISION 2030.

NAQEL is also a committed leader in developing its people by enhancing leadership (Future Leaders Program) and business management skills”.

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About Chapman Freeborn:

The Chapman Freeborn group was established in the UK in 1973. The company has offices worldwide including North America, Europe, Africa, Russia, Asia, and Australia. In the cargo market, Chapman Freeborn Airchartering specialises in the charter and lease of aircraft for a wide-ranging customer base, including freight forwarders, multinational corporations, governments, humanitarian agencies, and a host of industries around the globe.

In addition to freight services, Chapman Freeborn offers specialist passenger services including private jet charters for executive travel and large aircraft for crew rotations and international group travel. As well as on-board courier services. Chapman Freeborn is a family member of Avia Solutions Group, a leading global aerospace services group with almost 100 offices and production stations providing aviation services and solutions worldwide.

Avia Solutions Group unites a team of more than 7,000 professionals, providing state-of-the-art solutions to the aviation industry and beyond.

For more information, please visit www.chapmanfreeborn.aero / www.aviasg.com

About NAQEL Express

NAQEL Express’s journey started as Hala Express in 1993 with 150 vehicles. In 2005, NAQEL Express was born as a joint venture between Saudi Post and Hala Express.

NAQEL Express is providing seamless end-to-end logistics solutions for most industrial sectors in the Kingdom of Saudi Arabia.

Being the largest logistics network in the Kingdom, with 5000+ employees and 4000+ vehicles, they serve the remotest locations and deliver to both businesses and individuals.

They offer door-to-door air and sea freight services from the rest of the world into Saudi Arabia and Middle Eastern countries.

Their freight service desk based out of the United States, Europe, United Kingdom, China, India, and Egypt ensures that you have a smooth and hassle-free experience in importing your goods from around the world.

NAQEL Express clears your shipments based on their multi-modal presence at the key airports, land ports, and seaports. They have own facilities at all the three key airports – Riyadh, Jeddah, and Dammam.

They are the first logistics company in the Kingdom that received a customs clearance license. They clear your shipments as well as deliver them to your doorstep.

NAQEL Express has now expanded their operations to 16 countries – Saudi Arabia, UAE, Kuwait, Oman, Bahrain, Jordan, Egypt, Lebanon, UK, Turkey, China & Hong Kong, USA, Germany, India, Russia, and Qatar. This presence helps their vision of uniting across borders and horizons a reality.

They are further expanding in line with their mission of giving you access to new markets and removing distance as a constraint for your business operations.

For more information, please visit www.naqelexpress.com

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Archives, Global Logistics, Global Trade Daily, Warehousing

Calculating the True Value of a WMS: Top Cost Savings for Manufacturing Companies

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When manufacturing companies consider the digitization of their supply chain, many opt to delay their project because of the investments required to acquire and implement new technology solutions. In so doing, however, they deprive themselves of their operational and financial benefits.   

SaaS solutions like the SOLOCHAIN WMS have made efficient technology solutions far more affordable than ever before. Nevertheless, a WMS still remains a significant investment to smaller manufacturing companies. However, it’s important to keep in mind that a WMS or ERP’s TOC is not indicative of the system’s actual value – at least, not in and of itself.

Any investment in supply chain infrastructure must be evaluated by relating the TOC to the ROI an operator stands to achieve. It is therefore essential that operators rigorously understand the kinds of savings and gains a given technology solution can yield to make an informed decision regarding its value.

In this paper, we look at five ways manufacturing companies achieve tangible and intangible savings and gains thanks to the SOLOCHAIN WMS.

1. Roasting Coffee to Customers Satisfaction, for Less

A coffee roasting, packaging, and distribution company is putting out a great product and garnering the attention of major players the likes of Walmart, Target, and Menards. To benefit from these new revenue streams, the manufacturer must comply with distinct customer requirements, from packaging to labeling to shipping.

With the SOLOCHAIN WMS integrated with its ERP system, the manufacturer can rely on automated compliance processes and ensure that all shipments meet their customers’ requirements. At all stages of the production and distribution cycle, employees are informed of the customer’s requirements through intuitive interfaces on handheld devices or computer stations.

Thanks to these efficiency gains, the manufacturer is able to achieve a throughput that meets the increased demand instead of having to invest in new real estate, new material handling equipment, and a larger labor force.

2. Manufacturing Cosmetics in an Attractive Work Environment

Some savings generated by the SOLOCHAIN WMS are easily quantified. Others are more intangible, but nevertheless very real.

Most manufacturers these days have trouble attracting and retaining qualified warehouse workers. For a cosmetics manufacturer, this was true before the pandemic hit and it has become a real thorn in their foot today. Labor shortages are now affecting manufacturing and distribution activities to the point where they cannot meet productivity targets. Delays in shipments are having an impact on service levels. Meanwhile, a high turnover rate leads to significant training fees and further operational penalties.

The SOLOCHAIN WMS supports workflows from production processes all the way to shipping. Thanks to clear instructions on intuitive interfaces, activities in the warehouse are more efficient and the cosmetics maker can meet its productivity targets with fewer employees.

Implementing the WMS on handheld devices similar to iPhones and Android platforms, the younger generation of workers find their work environment much more pleasant. This helps the cosmetic maker achieve a higher retention rate, which in turn reduces the training budgets.

By relying on a smaller workforce and retaining more of its employees thanks to an improved work environment, the company can meet its productivity targets and ensure customer satisfaction while saving on labor costs.

3. A Production Flow That Never Drops the Ball

The benefits of traceability might be more obvious in the Food & Beverage industry, but the truth is that all manufacturers stand to make important savings by keeping track of the items that go into making what they produce.

Through SOLOCHAIN’s traceability and automated order cycles capabilities, a baseball equipment manufacturer can keep an eye on quantities produced as well as every item consumed in the process. Management can configure the WMS so that it automatically generates POs to procure items once a certain quantity threshold is reached. In that way, SOLOCHAIN ensures that production is never halted because items are missing on the shelves.

With management in charge of determining thresholds, the system also bypasses the risk of human errors, avoiding that too many, or to few items are ordered. This leads to an optimal use of the warehouse’s storage capacity, which saves the baseball equipment manufacturer from having to make unnecessary investments in their physical infrastructure.

4. Your Counts

Weekly inventory cycle counts force a manufacturer of audio-visual equipment to close areas in the warehouse. This slows down productivity and cuts into the manufacturer’s margins. Thanks to SOLOCHAIN’s inventory management capabilities, the company can save on the costs of long weekly cycle counts.

Once implemented on handheld scanning devices, SOLOCHAIN enables the manufacturer to keep track, in real time, of the quantity and location of every item in the warehouse. While they perform cycle counts, employees are continuously supported in their activities with clear instructions, which drastically cuts down on the time required to complete their tasks.

Today, the manufacturer is attaining inventory accuracy levels of 99.6% and working on eliminating weekly shutdown periods altogether. Thanks to SOLOCHAIN’s support, annual counts can be performed in a single weekend, ensuring that their production of a5. Thinking Ahead: Intelligent Manufacturing  audio-visual equipment never misses a beat.

A food processing facility specialises in the production of organic packaged meals that are delivered daily to various organic grocers in the region. Their products are gaining in popularity and demand is on the rise. The number and complexity of customer orders are quickly overwhelming their pen & paper fulfilment processes. The resulting production and shipping errors are now eating at the manufacturer’s profits and affecting customer satisfaction levels.

The SOLOCHAIN WMS facilitates Just-In-Time Delivery through automated full cycle order management. Thanks to the system’s support, order fulfillment at the food service manufacturer is now virtually errorless. Clients are satisfied and demand is on the rise again. Meanwhile, lesser returns lead to lesser losses, which in turn saves the organic meal maker from welting margins.

About Generix Group

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

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Archives, Global Trade Daily, News

U.S. and EU Impose Sanctions in Connection with the Crisis in Ukraine: A Detailed Look

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On February 21, 2022, President Biden issued a new executive order targeting the breakaway regions known as the Donetsk People’s Republic (“DNR”) and Luhansk People’s Republic (“LPR”, and together with the DNR, the “Covered Regions”) in eastern Ukraine.  On February 22, 2022, President Biden announced further sanctions, specifically designating two major Russian banks and three close associates of Russian President Vladimir Putin, and imposed increased restrictions on dealings in Russia’s sovereign debt.  On February 23, 2022, the EU adopted, a set of new Regulations and Decisions implementing asset freezes and travel bans notably against senior Russian officials and close associates of President Putin, financial restrictions limiting Russia’s access to the EU’s capital and financial markets, and trade restrictions targeting economic relations with the Covered Regions. The actions follow President Putin’s formal recognition of the independence of those breakaway regions and react to the continued involvement of Russian military forces.

New U.S. Sanctions

February 21, 2022 Executive Order

The February 21 executive order largely extends the existing restrictions on the Crimea region of Ukraine and applies them to the Covered Regions.  In particular, the executive order prohibits:

-New investment in the Covered Regions;

-Importation into the U.S. of any goods, services, or technology originating in the Covered Regions;

-Exportation, reexportation, sale or supply from the United States or by a U.S. persons of any good, services or technology to the Covered Regions; and

-Any approval, financing, facilitation, or guarantee by a U.S. person of prohibited transactions.

The executive order further authorizes the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) to add to the Specially Designated Nationals (“SDN”) list any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:

-To operate in the Covered Regions;

-To be a leader, official, senior executive officer, or member of the board of directors of an entity operating in the Covered Regions;

-To be owned or controlled or acting on behalf of any person blocked under the executive order; or

-To have materially assisted or supported any person blocked under the executive order.

However, although some individuals in the Covered Regions have been previously designated under the Crimea-related authorities, no person has been designated yet under the executive order as of the date of this alert.

Simultaneously with the issuance of the executive order, OFAC issued six general licenses to permit otherwise prohibited activity in the Covered Regions.  Most significantly, General License 17 authorizes all transactions that are ordinarily incident and necessary to the winddown of transactions in the Covered Region until March 23, 2022.  Note, however, that a specific license from OFAC would still be required for any transactions with an SDN designated under the executive order.  The other five general licenses authorize the following activity:

–General License 18– authorizing the export or reexport to the Covered Regions of certain agricultural, medical, and COVID-19 related products and services;

–General License 19– authorizing transactions that are ordinarily incident and necessary to the receipt or transmission of telecommunications in the Covered Regions;

–General License 20– authorizing transactions by the United Nations and other specified non-governmental organizations;

–General License 21– authorizing transactions related to non-commercial, personal remittances to the Covered Regions; and

–General License 22– authorizing transactions related to the exportation of services or software from the United States or by U.S. persons that are incident to the exchange of personal communications over the internet, such as instant messaging, chat and email, social networking, sharing of photos and movies, web browsing, and blogging.

One key question following the issuance of the executive order is how the specific territories of the Covered Regions will be determined.  This may be particularly challenging, given the shifting borders of the DNR and LPR throughout their prolonged conflict with the Ukrainian government.  We anticipate that OFAC will seek to clarify this question through the guidance in the form of responses to “Frequently Asked Questions” in the coming days.

February 22, 2022 Actions

On February 22, 2022, in a speech in which President Biden stated that “Russia has now undeniably moved against Ukraine,” he announced “the first tranche of sanctions to impose costs on Russia,” promising to “continue to escalate sanctions if Russia escalates.”  Subsequently, OFAC issued a press release detailing the specific actions, all of which were taken pursuant to the existing Executive Order 14024, which included the designation of two major Russian banks and three close associates of President Putin as SDNs as well as restrictions on transactions involving Russian sovereign debt.

Specifically, the two Russian banks targeted are the Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (“VEB”) and Promsvyazbank Public Joint Stock Company (“PSB”), along with 42 of their subsidiaries.  The designations were made pursuant to a contemporaneous determination issued by Treasury Secretary Janet Yellen that Russian financial institutions are eligible for sanctions under Executive Order 14024 (previously, determinations had also been made on April 15, 2021, with respect to the technology sector and defense sectors).  Both banks are state-owned institutions and play key roles in servicing Russia’s sovereign debt and defense contracts.  Further, in connection with PSB’s designation, OFAC designated the following five Russian-flagged vessels in which PSB has an interest:

-Baltic Leader (IMO: 9220639), a cargo vessel;

-Linda (IMO: 9256858), a crude oil tanker;

-Pegas (IMO: 9256860), a crude oil tanker;

-Fesco Magadan (IMO: 9287699), a container ship; and

-Fesco Moneron (IMO: 9277412), a container ship.

In addition, three close associates to President Putin – including the Chairman and CEO of PSB and two sons of previously designated oligarchs – were added to the SDN list.  As a result of these designations, U.S. persons are prohibited from virtually all transactions with the listed parties or entities of which they own fifty percent or more, directly or indirectly.  In addition, “significant” transactions with these entities could create secondary sanctions liability under Section 228 of the Countering America’s Adversaries Through Sanctions Act (“CAATSA”).

OFAC also issued a new Directive 1A under Executive Order 14024, which replaces the prior Directive 1.  The effect of the new Directive 1A is to expand existing sovereign debt prohibitions to cover participation in the secondary market for bonds issued after March 1, 2022 by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation.  Specifically, Directive 1 previously prohibited U.S. financial institutions from, as of June 14, 2021, participating in the primary market for bonds issued by Russia’s Central Bank, National Wealth Fund or Ministry of Finance, or lending funds to those organizations.  Directive 1A keeps those prohibitions in place, and additionally prohibits U.S. financial institutions – effective March 1, 2022 – from participating in the secondary market for bonds issued by the listed organizations.  Note that OFAC clarified in FAQ guidance that the fifty percent rule does not apply to Directive 1A so that entities owned by the institutions identified in Directive 1A are not themselves automatically subject to the restrictions.

In conjunction with these restrictions, OFAC also issued General License 2, which authorizes transactions involving the servicing of bonds issued by VEB prior to March 1, 2022, and General License 3, which authorizes a winddown period with respect to VEB through March 24, 2022.  No similar general license has been issued yet regarding transactions involving PSB.

Potential Further Action

The Biden Administration has also implied that additional multi-lateral sanctions could be forthcoming, indicating an incremental approach.  A Fact Sheet issued in conjunction with the February 21, 2022 executive order explained that the executive order “is distinct from the swift and severe economic measures we are prepared to issue with Allies and partners in response to a further Russian invasion of Ukraine. We are continuing to closely consult with Ukraine and with Allies and partners on next steps and urge Russia to immediately deescalate.”  As also noted above, President Biden characterized the February 22, 2022 actions as the “first tranche” of sanctions and kept open the possibility for “escalation” depending on how Russia responds.  An embargo on semiconductors and advanced technology has reportedly been considered as part of a second tranche of actions if Russia escalates or continues its incursion further into Ukraine.

New EU Sanctions

February 21, 2022 Designations

On February 21, the Council of the European Union (“EU”)  imposed travel bans and asset freezes (including a prohibition to make funds or economic resources available) on five new individuals “for actively supporting actions and implementing policies that undermine or threaten the territorial integrity, sovereignty and independence of Ukraine,” bringing the total number of designated parties to 193 individuals and 48 entities on the EU’s list of parties subject to Ukraine-related sanctions.

The new designations include members of the State Duma of the Russian Federation, who were elected to represent the annexed Crimean peninsula and the City of Sevastopol on 19 September 2021, as well as the head and deputy head of the Sevastopol electoral commission.

February 22-23, 2022 Actions

On February 22, the Presidents of the European Council and European Commission jointly announced that an additional package of restrictive measures will be swiftly adopted by the EU in reaction to Russia’s latest aggression against Ukraine, which the EU sees as “illegal and unacceptable” under the Minsk Agreements, which stipulate the full return of the Covered Regions to the control of the Ukrainian government.

The same day, Josep Borrell, the High Representative of the Union for Foreign Affairs and Security Policy, urged Russia “to reverse the recognition, uphold its commitments, abide by international law and return to the discussions within the Normandy format and the Trilateral Contact Group.” Borrell later announced in a joint press conference with French Minister for Europe and Foreign Affairs Jean-Yves Le Drian that the 27 Member States had unanimously agreed on a new package of sanctions.

The new package has been swiftly adopted and published in the Official Journal of the EU on February 23 through 4 Council Decisions and 5 Regulations amending EU’s current sanctions program targeting Russia progressively strengthened since 2014, which already included:

-Individual restrictive measures consisting of travel bans and assets freezes on designated individuals and entities;

-Comprehensive restrictions on economic relations with Crimea and Sevastopol, including (i) an import ban on goods from Crimea and Sevastopol, (ii) restrictions on trade and investment related to certain economic sectors and infrastructure projects, (iii) a prohibition to supply tourism services in Crimea or Sevastopol, and (iv) an export ban for certain goods and technologies;

-An import and export ban on trade in arms as well as an export ban for dual-use items for military end-users or end-use in Russia;

-Financial restrictions limiting access to EU primary and secondary capital markets for certain Russian banks and companies;

-Economic restrictions limiting Russia’s access to sensitive technologies and services that can be used for oil production and exploration.

As announced, the new package of sanctions is quite wide-ranging and intended to “hurt [Russia] a lot” in the words of High Representative Borrell.

First, the legal acts of February 23 (Council Implementing Regulation (EU) 2022/260 and 2022/261 ; Council Decision (CFSP) 2022/267) formally designate individuals and entities which will be subject to individual restrictive measures, namely a travel ban and an asset freeze, in the Union. The new designations target:

-336 members of the Russian State Duma who voted for the recognition of the two self-proclaimed republics; and

-22 decision-makers involved in the illegal decision in addition to 4 entities (Internet Research Agency, Bank Rossiya, PROMSVYAZBANK and VEB) financially and materially supporting, or benefiting from them, those operating in the Russian defense sector and having played a role in the invasion such as senior military officers, as well as individuals engaging in a “disinformation war” against Ukraine.

The legal acts (Council Implementing Regulation (EU) 2022/259 ; Council Decision (CFSP) 2022/265) also provided for a derogation from the application of the new restrictive measures targeting Bank Rossiya, PROMSVYAZBANK and VEB. The competent authorities of a Member State may authorize the release of certain frozen funds or economic resources belonging to these Russian banks, or the making available of certain funds or economic resources to those entities, under such conditions as the competent authorities deem appropriate and after having determined that such funds or economic resources are necessary for the termination by August 24, 2022, of operations, contracts, or other agreements, including correspondent banking relations, concluded with those entities before February 23, 2022.

Moreover, further financial restrictions limiting Russia’s access to the EU’s capital and financial markets will now apply (Council Implementing Regulation (EU) 2022/262 ; Council Decision (CFSP) 2022/264) including notably:

-A prohibition to directly or indirectly purchase, sell, provide investment services for or assistance in the issuance of, or otherwise deal with transferable securities and money-market instruments issued after March 9, 2022 by Russia and its government, the Central Bank of Russia or any person or entity acting on behalf or at the direction of the said Central Bank;

-A prohibition to directly or indirectly make or be part of any arrangement to make any new loans or credit to the above-mentioned persons and entities;

-The current prohibitions applicable to securities giving the right to acquire or sell such transferable securities are extended to the securities giving rise to a cash settlement determined by reference to transferable securities.

Finally, the legal acts (Council Implementing Regulation (EU) 2022/263 ; Council Decision (CFSP) 2022/266) introduce extensive trade restrictions targeting economic relations with the Covered Regions of Donetsk and Luhansk, on the model of those already targeting Crimea and Sevastopol including:

-A prohibition to import goods from the Covered Regions into the EU and to provide, directly or indirectly, financing or financial assistance as well as insurance and reinsurance related to such imports;

-A prohibition to (i) acquire any new, or extend any existing participation in ownership of, real estate in or located in the Covered Regions, including the acquisition in full of such an entity or the acquisition of shares therein, and other securities of a participating nature of such an entity; (ii) grant or be part of any arrangement to grant any loan or credit or otherwise provide financing, including equity capital, to an entity in the Covered Regions, or for the documented purpose of financing such an entity; (iii) create any joint venture in the Covered Regions or with an entity in the Covered Regions; and (iv) provide investment services directly related to these prohibited activities;

-A prohibition to sell, supply, transfer or export goods and technology listed in Annex II suited for use in the transport, telecommunications, energy, oil and gas and mineral sectors, to (i) any natural or legal person, entity or body in the Covered Regions, or (ii) for use in the Covered Regions;

-A prohibition to provide, directly or indirectly, technical assistance or brokering services related to the goods and technology listed in Annex II, or related to the provision, manufacture, maintenance and use of such items to any natural or legal person, entity or body in the Covered Regions or for use in the Covered Regions;

-A prohibition to provide, directly or indirectly, financing or financial assistance related to the goods and technology listed in Annex II to any natural or legal person, entity or body in the Covered Regions or for use in the Covered Regions.

-A prohibition to provide technical assistance, or brokering, construction or engineering services directly relating to infrastructure in the specified territories in the mentioned sectors, independently of the origin of the goods and technology; and

-A prohibition to provide services directly related to tourism activities in the Covered Regions.

The new restrictive measures entered into force on February 23, the date of their publication in the Official Journal of the EU.

Potential Further Action

In reaction to the latest events, Olaf Scholz, Germany’s Chancellor, announced that Germany will halt the certification of Nord Stream 2, a gas pipeline designed to bring natural gas from Russia directly to Europe, a decision welcomed by both High Representative  Borrell and President Ursula von der Leyen.

On February 23, 2022, President Biden announced that he would direct OFAC to sanction Nord Stream 2 AG – a wholly owned subsidiary of Gazprom, which is already subject to U.S. sectoral sanctions – and its corporate officers.

The EU had warned it will leave the door open to the adoption of more wide-ranging political and economic sanctions at a later stage should Russia use “the newly signed pacts with the self-proclaimed “republics” as a pretext for taking further military steps against Ukraine.” As President Putin declared war against Ukraine and escalated military action on February 24, President Michel of the European Council urgently convened an extraordinary meeting of the European Council. EU leaders intend to meet later today to discuss further restrictive measures that “will impose massive and severe consequences on Russia for its action, in close coordination with our transatlantic partners.”

The Member States will also keep a close eye on Belarus, which is said to have “aided and supported the Russian actions” in Ukraine, and the EU is ready to enlarge the listing criteria “to target those who provide support or benefit from the Russian government – the oligarchs, in plain language,” if needed.

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Archives, Global Logistics, Global Trade Daily, Warehousing

3 Insightful Decisions That SOLOCHAIN WMS Can Assist Manufacturers With

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The digitization of supply chains is well underway. SaaS solutions, such as the SOLOCHAIN WMS, have made it easier for manufacturing companies to reap the operational benefits of new technology solutions, rapidly obtain ROI, and stimulate growth. 

In this blog, we take a quick look at the three scenarios that illustrate how the SOLOCHAIN WMS not only improves daily operations on the floor, but also provides management crucial information to help leaders make better decisions. Find out how SOLOCHAIN concretely enables more efficient and cost-effective activities in the warehouse and paves the way to better client experience, sustained growth, and higher margins.

Planning Production in a Time of Supply Chain Disruptions

Many pieces and parts go into making a forklift that usually must be acquired from various vendors. When supply chain disruptions leave items blocked in container yards here and there across the coast, it quickly becomes difficult to determine when the needed pieces will be delivered. This severely limits a manufacturer’s ability to plan production and, consequently, to adequately manage clients’ expectations.

SOLOCHAIN gives a forklift manufacturer the ability to manage orders and locate incoming items across all channels from one easy to read interface. Once SOLOCHAIN is integrated with their ERP and their vendors’ systems, the manufacturer can the leverage the WMS to identify every container, every truck, and every facility where ordered items are located, as well as any changes to delivery dates. Thanks to that data, the manufacturer can precisely determine production calendars, find alternative solutions when need be, and keep their customers apprised.

Maintaining high service levels in a time of disruptions gives the forklift manufacturer a competitive advantage that opens new possibilities for growth.

Making Candy Bars that Make Everyone Smile

Manufacturing in the food & beverage industry requires that operators pay attention to a variety of details: FIFO across different temp zones, items consumed in a batch, customer shelf-life requirements, etc. To ensure its commercial success, a candy bar processing facility must be able to rely on the right data so that items are consumed at the right time and processed products are efficiently picked and shipped that meet the client’s standards.

SOLOCHAIN supports all activities in the processing facility, from the reception of ingredients to the production of processed goods to shipping the candy. At every step, adaptable mobile workflow and graphical tools are accessible to employees on intuitive, easy to read interfaces. Dashboards provide them the right information to ensure that items are handled properly and efficiently. SOLOCHAIN will, for example, communicate FIFO data to employees picking ingredients, guaranteeing that stocks are efficiently consumed and losses are avoided. It will also inform employees of a client’s shelf-life requirements, making sure that picked items meet their standards and are not returned, which avoids costly penalties.

Meanwhile, SOLOCHAIN affords management granular visibility on crucial information: who is performing what task, details regarding production progress, all inventory modifications in real time, and the status of orders fulfilment. Thanks to intuitive dashboards and detailed reporting capabilities, the SOLOCHAIN WMS enables faster order fulfillment, improved customer satisfaction, and, ultimately, higher margins.

Download WMS SOLOCHAIN Product Sheet Here

Efficient Recalls at the Ice Cream Factory

While all manufacturers do their best to steer clear of having to perform recalls, they remain a part of the game. The real differentiator between competing companies is how well recalls are managed. The key, of course, is to achieve recalls that are precise and expedient. By doing so, operators avoid crippling financial penalties and maintain the high service levels that have allowed them to build strong customer confidence over time.

Thanks to its powerful traceability capabilities, SOLOCHAIN informs a manufacturer such as an ice cream maker of all the items that were consumed in a batch. Moreover, it allows the ice cream maker to rigorously trace each and every one of these items, from vendor to customer. And if that wasn’t enough, the WMS also contains a visual tool that makes it easy for employees on the floor to verify, understand, and comply with FDA regulations.

SOLOCHAIN therefore makes it easy for the ice cream maker to precisely identify which lot of cream was problematic, which batches of ice cream consumed that cream, and which must consequently be recalled. SOLOCHAIN let management know of the exact location of every unit from these batches, enabling them to make precise and efficient recalls. Thanks to SOLOCHAIN, no good ice cream goes wasted!

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

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3pls, Archives, Global Logistics, Global Trade Daily

4 Ways the IoT Helps Optimize Cold Chain Logistics

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Industry 4.0 technology can help to make cold chain logistics much easier to manage. Internet of things (IoT) devices are already used in a wide range of industries to gather real-time information on business processes.

In the cold chain, IoT technology can help businesses track important data on shipments — potentially allowing them to prevent temperature excursions and provide better data to stakeholders.

Here’s how businesses are already using IoT to optimize their cold chain logistics.

1. Temperature Monitoring

A key feature of IoT devices is their ability to monitor the temperatures that cold chain shipments are exposed to.

By attaching an IoT temperature monitor to the outside of a package or pallet, sensors can be used in a variety of transportation modes — including trucks, rail freight or air cargo — to continuously track the temperature of food items, important pharmaceuticals and other items that need cold chain logistics.

These sensors will gather and report this data in real-time. Because IoT sensors can automatically store data on the cloud, all relevant stakeholders can have access to the temperature data that they collect.

In the event that an IoT sensor detects a temperature excursion, an alert system can automatically notify managers, drivers, administrative staff and other workers — allowing them to take action to prevent spoilage.

Stored data can also be used to improve processes, identify bottlenecks and determine fault in the event that an excursion causes spoilage. At any time after a sensor collects temperature data, stakeholders can review captured information and trends — or use analytics software to automatically extract valuable insights from historical temperature data.

IoT temperature tracking devices can also monitor other aspects of a shipment’s journey — for example, a combination vibration, light and temperature sensor can monitor for heat as well as exposure to light, shocks, vibrations and sudden stops.

Many cold chain products don’t just require low temperatures. Many vaccines that need cold chain logistics, for example, may spoil or lose potency if exposed to light. Sudden shocks can also risk damage to vaccine containers and packing materials.

IoT devices that monitor for temperature can also help to monitor for these potential threats.

2. GPS and RFID Shipment Tracking

IoT devices are also excellent at tracking the current location of a shipment or individual product. By using technology like GPS or RFID, it’s possible for an IoT device to gather information on a shipment’s movement.

With GPS, this information will be in real-time. With RFID, the system will depend on RFID readers installed at important locations that continuously scan for RFID tags. These systems will provide instant updates whenever an RFID tagged shipment arrives at a warehouse, fulfillment center, retail location or delivery destination.

These systems can automatically alert stakeholders when an item is on the move, allowing them to track the position of all their shipments, 24/7. The same IoT device can be used to monitor both temperature and location.

The same technology can also help businesses and logistics providers offer better delivery estimates to their clients. With real-time tracking, it’s much easier to accurately forecast when an item will arrive at a destination.

3. Automated Reporting and Cloud Data Storage

Because IoT devices are connected to the internet and can collect data continuously, they can also be used for automatic report-generation and cloud data backups.

For example, data from an IoT device can be automatically delivered to relevant stakeholders or stored for monthly documentation of important information.

In addition to delivering data to the cloud, an IoT device can send information to logistics management platforms, where the information can be analyzed by stakeholders with the help of dashboards and other data visualization tools.

The device can also stream information to AI-powered analytic tools, allowing businesses to use the IoT data to power delivery time or temperature excursion prediction algorithms.

These algorithms can help businesses see a crisis coming based on patterns in IoT data, potentially long before the issue would be obvious to a manager or analyst following the data on their own.

4. Equipment Health Monitoring and Predictive Maintenance

In addition to monitoring shipments directly, IoT devices are also an excellent tool for tracking the performance and health of cold chain equipment — including delivery vehicles, warehouse machinery and even HVAC systems.

Existing IoT performance monitoring systems can track a wide variety of performance and environmental variables. Information from these systems can help businesses track machine performance and health.

For example, an IoT fleet may capture information on a machine’s timing, vibration, temperature and lubrication. If one of these variables leaves its safe operating range, the system can automatically notify site technicians.

IoT devices may also measure local temperature, humidity and CO2 levels, allowing managers of a warehouse or fulfillment center to know if local environmental conditions may be negatively impacting the performance of a site machine.

Equipment monitoring is already a popular application of IoT devices in many industries, meaning that cold chain logistics professionals wanting to adopt the technology have access to a large and growing market of IoT equipment monitoring solutions.

Experts predict that the market is on track to grow quickly over the next few years, meaning that logistics companies will have access to even more options in the near future.

With enough data, businesses can also use IoT devices to lay the foundation for a predictive maintenance system. These are systems that use AI and IoT machine performance data to predict a machine’s maintenance needs.

By analyzing information collected from IoT devices, it’s possible to predict when a machine will need maintenance or repairs.

These systems can also alert managers when they predict that machine failure is imminent — allowing for an emergency shutdown that can help to prevent significant damage to a machine that may result in more expensive repairs and greater downtime.

How IoT Devices May Help to Transform the Cold Chain

With new IoT devices, cold chain logistics providers may be able to streamline their operations. A fleet of IoT devices can provide crucial information on both shipments and the equipment used to move them.

Cold chain professionals are already using IoT devices to prevent spoilage and more effectively monitor shipments as they move from location to location.

IoT devices can also lay the foundation for predictive analytics algorithms that can accurately predict delivery times or machine maintenance needs

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Emily Newton is an industrial journalist. As Editor-in-Chief of Revolutionized, she regularly covers how technology is changing the industry

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Archives, Global Trade Daily, International Trade, Special Reports

Is It Time to Reignite North American Manufacturing?

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For the last four decades, manufacturing jobs have left North America. While this has led to lower prices for consumer goods, the supply chain issues laid bare over the last two years have demonstrated the unwritten costs inherent in this shift to foreign imports. Thousands of container ships are stranded in the Pacific Ocean, and many factories overseas are months (or even years) behind schedule. As a result, the cost of items has risen sharply for industries ranging from retail to automotive to construction, and caused brands to focus on how to reintroduce manufacturing to North America on a wider scale. 

The Plot of Every Springsteen Song  

Manufacturing jobs have been leaving North America since the 1970s, partly due to the perception that the industry has changed in ways North American workers wouldn’t like. But this is largely untrue — manufacturing jobs pay higher wages than comparable “blue collar” positions, and many come with benefits. Before the labor exodus, manufacturing jobs could support whole towns through a middle-class lifestyle. Showing the benefits of these rewarding industrial positions is North America’s best bet to reinvigorate the working middle class that fuels our consumer economy, while helping North American workers learn key technical skills for the new job market. But to do so, we’ll have to change those mistaken perceptions. 

Workers aren’t the only ones who would benefit from bringing manufacturing back. Smaller or midsize companies find themselves at a serious recruiting and production disadvantage, even before international shipping went awry. Unlike bigger companies who both have a larger stockpile of goods and talent and who can pay to expedite deliveries, smaller businesses are left adrift with their late arrivals. For these companies, investing in North American manufacturing can secure their supply chains and intellectual property while planting deeper roots in their communities. 

The Smart (Factory) Advantage  

Cutting-edge technology can give North American manufacturing the edge it needs to compete with inarguably cheaper services overseas. We are in the midst of the “Fourth Industrial Revolution” wherein the manufacturing sector integrates ideas like artificial intelligence, the Internet of Things, and Smart Factories. This increased use of machine learning and automation means the sorts of factories we can build in North America will be more productive than those overseas, while giving employees new opportunities to learn and grow. Those employees will be required more to maintain and program the machines than to assemble stock by hand, and the training they receive will also make for a more agile working class on the continent. 

Potholes and Speed Bumps  

Of course there will be challenges in reinvigorating North American manufacturing. Modern products, especially the electronics so central to our lives, require worker specialization. Even if a smart factory is automating every step, workers must know exactly what those steps are and how to ensure they’re being automated correctly. This advanced training is part of the overall cost of “scaling up” but in the end serve to illustrate the importance of manufacturing and the careers available for those who embrace the learning and development available in the industry. 

And speaking of supply, the manufacturing exodus has caused continental supply chains to atrophy, and these will need to be redeveloped to make delivery from North American factories to North American stores as fast as it is to those same stores from foreign factories. With today’s major trucker shortage, that rehabilitation is easier said than done.  

Embracing Challenges  

Many North American companies should seriously consider taking these hard but necessary steps to bring their manufacturing efforts back in-house. Not only would the investment pay off in greater independence and control over stock, but also reinvigorate industrial employment sectors in supply chains and manufacturing. While the current status quo is efficient when everything is going right, the past few years have proven how fast everything can go wrong. In those situations, the advantage lies with companies that can provide their own supply of goods and recruit and retain workers who have intimate knowledge of the products and processes.   

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Carl Schweihs is President and Chief Operating Officer of PeopleManagement, TrueBlue’s workforce management division specializing in onsite and contingent workforces. He leads three staffing businesses – Centerline Drivers, SIMOS Solutions and Staff Management | SMX, combining innovative, technology-based solutions with workforce strategy to help bridge talent gaps and prepare tomorrow’s supply chain talent for the future.   

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Archives, Global Trade Daily, International Trade, News

Surge in Production Costs May Put Pressure on U.S. Food Industry

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The food and beverage industry has many growth drivers but also some constraints. As a non-cyclical industry, there is a constant demand for food, which helps drive some growth in the industry.  Profit margins in food production and processing, however, are becoming thinner and are facing some pressure due to the highly competitive nature of this industry. Companies are facing higher commodity price volatility, disease outbreaks and weather events, which may well affect profitability and growth.

While the U.S. food and beverage industry has fared well in comparison to worldwide industry performance during the pandemic, and insolvencies have been lower than expected, due to a surge in U.S. food production costs, companies are seeing tighter margins even as higher prices are being passed on to consumers. The U.S. food and beverage output is still forecast to grow by 1% in 2022 – much less growth than seen in the past several years, however.

The recent wave of the Omicron variant felt around the globe may affect plans for a smooth path in 2022. Many businesses, specifically those in hospitality and food service subsectors, are still struggling to absorb the shocks from the beginning of the pandemic, according to a recent food industry trends report from Atradius. The absence of tourism and travel at the height of the pandemic and new variants of COVID-19, are cause for a slow rebound to the economic recovery in that subsector.

The U.S. is currently seeing the highest food price inflation since 2008 and food prices are expected to continue to rise in 2022, at least until the supply chain issues are resolved. As government subsidies disappear, pressures will mount for the U.S. consumer.

Subsectors

-Beverages: A more positive prognosis this year, with solid growth and sufficient liquidity. Beverages have seen much innovation and product development, adding to its positive performance.

-Meat and Dairy: Remains neutral as higher operating and production costs remain high and impact profit margins.

-Food Services: This sector will be the slowest to rebound from the effects of the pandemic and is much more susceptible to future Covid-19 variants.

Trends for 2022

Food will always be a necessity and consumers enjoy cooking at home, as well as dining at restaurants. Demand will always be high in the food industry, however, it is also highly competitive. Healthy and innovative products are key for food companies and restaurants to remain competitive in this landscape.

During the pandemic, food delivery skyrocketed, and this trend will persist in 2022. Options for plant-based and health-focused alternatives continue to increase as consumers demand more choices in this area. Raw material costs and lack of skilled employees will continue to be an issue for the sector in the coming year.

The credit risk assessment remains fair over the next 12 months (for nonpayment and insolvencies). Businesses that are able to effectively pass on price increases while maintaining enough labor and production capacity to meet ongoing demand will find themselves better situated in the coming months.

Sharon Benfer is a Senior Risk Underwriter at Atradius