This episode takes a retrospective view of supply chain disruptions during the Pandemic. In it we examine the rhetoric of policy makers and the realities of disruption and in some cases the supply chain chaos caused by a failure of planning and execution. Evidence for the claims is brought into focus. Some of the unusual events were certainly that but were they really ‘Black Swans’. One could argue that if it is something beyond experience it is rightly described as a ‘black swan moment’ and yet we also see failures of adequate planning and execution that caused disruptions that might have been avoided.
Energy Supply, Cost and Disruption This week's episode takes a closer look at energy cost and food chain disruptions occurring in the supply chain. Energy usage in the UK still dominated by fossil fuel 47 per cent Gas and 2 per cent Coal. Last week the UK had to bring back a coal source when wind powered fell short of the target.
Border Controls and Food Supply Disruption Border controls post Brexit have been called useless by Marks and Spencer saying they are not fit for purpose. It is not food that's in short supply according to Archie Norman but lorry drivers. Ian Wright of the Food and Drink Federation says big suppliers are prepared and the impact is highest on smaller suppliers.
UK Competitiveness Britain's trade with the EU have fallen by £1.7 billion in July according to ONS statistics published last week. There is some concern about UK competitiveness if the trend persists. Most commentators think it is only temporary.
Shipping Hold Ups Shipping pressures remain as economies open up. Ship availability is in short supply along with container boxes. Ships are lining up at ports in Los Angeles. One executive noted that four weeks ago there were 40 waiting and this week there are 75 so it appears the problem is worsening.
Supply Chain Geography impact on cost Time, cost and quality are essential ingredients in supply chains as we manage risk and complexity in networks of suppliers. The geography of supply chains became less relevant during the past 30 years but it now appears that geography is important to manage risk and build resilient supply chains. Tony Hines discusses what this means for supply chain strategies and just-in-time systems. Agility is necessary when supply chains are disrupted. Rethinking supply chains puts transport logistics at risk. It is more than just geography it is the economics of the geography along with the balance of risk and cost.
Where there's a will there's a way What can government do to overcome HGV driver shortages. Tony Hines offers some policy choices that could be enacted immediately.
Disruption caused by a shortage of CO2 This has been caused by the increasing cost of gas energy.
In this week's episode we follow up from last time and discuss what went wrong with supply chains in the past eighteen months and how to fix the weakest links in your supply chains.
Tony Hines makes the distinction between two types of problem that disrupt supply chains. His type 1 problem is one caused by issues in a particular supply chain. Type 2 problems are systemic and effect all supply chains. He gives specific examples of the two types he has identified and offers some suggestions on how to deal with them.
Pallet Board Problems Stateside (US) Also in this episode is the problem in the USA with regard to pallet boards and a brief explanation of why it is happening.
Visibility in Your Supply Chain Visibility is of paramount importance if you want to know where everything is in your supply chain to avoid disruptions and to plan for them when the data in your dashboard reveals the signals of trouble ahead.
Labour Problems and Supply Chain Disruption Continuing problems with labour shortages are discussed in the US, UK and EU. The impact this is having on the farm to fork supply chain is permanent according to Ian Wright CEO of the Food and Drinks Federation (UK). Brexit has been the cause of much disruption in the UK Supply Chain and the Norther Ireland protocol is disrupting supplies to supermarkets there.
Since the pandemic began in 2020 disruption to supply chains has become expected. Transport is at the centre of getting the right goods to the customer in the right place, at the right time and at the right price. On time and complete delivery was the mission for those delivering supply chain promises. Retail Logistics has been responsible for some great innovations in combining technologies to deliver goods to stores and their customers. It employs people in farms and production centres across the globe. Goods then have to be transported by road, rail and ship to their market destinations, wholesalers, retail customers and consumers. There are many challenges that retail logistics face beyond the normal supply chain issues such as natural disasters, crop failures, wars and government policies to name but a few. Each challenge brings with it a unique situation that retailers have to vercome to keep supply chains moving to deliver on time and complete. Retail supply chains have to be resilient. When the Covid 19 Pandemic emerged in March 2020 no one realised at that point all the challenges that supply chains would face. By April and May it became clear that there were problems getting personal protective equipment (PPE), Medical Supplies including ventilators and medicines. As people became sick with Covid and lockdowns closed production units and retail stores supply chains became stretched and cracks occurred in the system. The UK was continuing with its never ending saga of Brexit and that caused its own problems for retailers, food supply chains, fisheries and many other categories of goods brought into the UK from the EU or exported to it. Shortages began to emerge in supermarkets and customers began to stockpile food and household items at home. It got a lot worse before getting marginally better. However, by Christmas there were hold ups at UK Ports and the beauracracy introduced by all the new regulations and customs requirements added days to deliveries. Many EU HGV drivers based in the UK retunred home to countries in Europe since they could no longer work in the UK due to the removal of 'freedom of movement'. Today it is estimated that there is a shortage of 100,000 HGV drivers and this is and has caused immense disruption to food supplies and other goods. In March 2021 The Ever Given owned by Evergreen ran aground in the Suez Canal and remained stuck in the middle of the canal for more than a week. It caused massive disruption estimated to be in the region of $10 million (US). Even when the ship moved allowing other ships to pass through they were now off schedule and empty contaner boxes had not returned to their next port for loading. This put pressure on container prices pushing them up by 5-600 per cent from just a year ago. Ships were also in short supply to move goods.Disruption to shipping and shipments of goods from China to Europe and the US has caused major delays for customers getting their supplies. Since 70 per cent of all goods are moved by seafreight this is no small problem. The Pandemic closed some major Chinese ports such as Yantian. It was pleasing to see the Ever Globe travel from Ningbo in China to Felixstowe in just 35 days so some sailings are getting back to normal. Looking at shipping more generally most of the world's big container ships are now built in the Far East in China, South Korea and Japan. These modern container ships are huge with the lates additions to the Evergreen fleet able to carry 23,600 TEUs. A much smaller vessel the MOL Comfort had its hull break in half enroute from Shanghai to Jedda some years back when carrying just 4,300 TEUs half of its actual capacity. So these larger vessels are cause for concern. The ships now being built all run on Diesel Oil so it will be interesting to see if the shipping industry is likely to contribute to the reduction of CO2 emissions by 2050.
In this episode of Chain Reaction Tony Hines revisits some of the stories he covered in the past few months and gives an update on those disruptions in global supply chains. Shipping containers in short supply with sky high prices likely to push up prices at the store. Driver shortages in the UK since Brexit means idle trucks and disruptions to supply. See how labour shortages are affecting food supplies too. The National Farmers Union want the government to allow EU workers to help out in UK farming at harvest time. Empty shelves are a growing problem in the food supply chain. Milk supplies in the UK have been disrupted too with many dairy farmers having to throw it away. We revisit the shortage of microchips and how that is affecting vehicle production supply chains. Will the switch off of the 3G networks disrupt your tracking technology? Will your supply chain still be visible? Carriers have been investing their profits in new container vessels due for delivery in 2023 and beyond see how this is likely to help global supply chains. There are also some tips of how to stay ahead of the game in these volatile times.
In this episode Tony Hines reviews the need to achieve zero carbon to protect the planet for future generations. He examines what this means for supply chains and how supply chain thinking could contribute to help solve the problem. He offers some pointers of what we need to do and how you can play your part in the supply chain.
The problem in a nutshell is human activity and its impact on the planet. There are frequent temperatures rising in excess of 40 degrees causing wild fires in Australia, Greece, California and Turkey. There is a growing inability of the earth to reflect the sun’s rays to reduce ground and sea level temperatures. Deforestation and the imbalances that brings to capturing carbon emissions and excessive waste with chemical, plastic and other waste entering the seas and landfills. Biodiversity is reducing; animals are impacted badly by human activity destroying their natural habitat. Ocean and river fish stocks will be are depleted. Fresh water free from contamination is a problem in many parts of the world. Soil quality for growing crops is under threat as is the amount of arable land to grow food that is free from harmful fertilizers.
Many governments have now committed to achieving a zero carbon future by 2050 including the UK Government. This is an ambition target. Although many activists say it should be sooner. Doing nothing is not an option if we do not want to see average temperatures rise by 2.3 degrees Celsius by the end of this century. In a planned economy with a non-democratic government such a target might be easier to reach as dissenting voices and non-compliant behavior of citizens could be punished and enforced. In a society that is democratic and individualistic in nature it is less clear how the target can be reached in practice. Many of the statistics cited to promote the COP 26 event in Glasgow in November 2021 relate to actions and measures already in the bag. In other words it is not about the future but a record of past achievements to demonstrate the successes of the United Kingdom. While some of these achievements are not to be brushed aside we should now be focusing on the hard road ahead to meet the target of a zero carbon economy by 2050 after all we have just a short time to reach it. Every tonne of carbon emitted into the atmosphere adds to the problem. Greenhouse gases and CO2 in particular is the enemy. It remains in the atmosphere for hundreds of years. Because of this all emissions are cumulative as they stick around unless removed.
Since 1880 carbon emissions have increased average temperatures by 1.23 degrees Celsius. Each decade is hotter than the previous. It is estimated that this will increase average temperatures by 1.5 degrees Celsius in just over 11 years. This is significant because at that figure scientists claim that we will have reached the point of no return. The IPCC Report published 9th August 2021 makes uncomfortable reading about what we already know. COP 26 hosted by the UK Government in Glasgow (31st October through to 12th November 2021) will discuss further what needs to be done and what policies governments in 166 countries members of IPCC should implement.
What happens in supply chains in the production, consumption and distribution of goods contributes to global emissions. A balance has to be struck whereby industrial activity has to reduce the harmful effects of emissions and find new ways to capture carbon emissions as well as prevent them in the first place. Without the planet there is no tomorrow. Planet, people and profit are priorities in that order.
Disruption is the new normal according to Tony Hines. In this episode disruption in food supply chains are discussed in the context of food security, environment and climate change. Defintions of food security are drawn from Tim Lang’s excellent book “Feeding Britain – Our Food Problems and How to Fix Them”. Sustainability means different things to different people. It is a synonym for environment according to Lang in the context of food security.
Food logistics includes transport, trucks, ships, planes and involves distribution hubs and ports. The UK imports 50 per cent of its food supply give or take and it exports food and beverages such as whisky, fish, meat, cheese and other processed food and farm produce.
Three priorities for Government: Healthy food for healthy people; maintaining a healthy environment and ensuring sufficient food is grown for the population. Policies are needed to achieve these goals.
The success of supply chains is in part one of the things that has allowed government to be complacent when it comes to establishing appropriate policies to ensure food security. Much of the responsibility has been developed by large food retailers acting in their own interest.
In this episode Tony Hines takes a look at Kaizen a Japanese word for Continuous Improvement or Change for the Better. This approach was central to the success of Japanese manufacturing systems. Toyota embedded Kaizen in its manufacturing system. The approach is useful for all organizations and as important today as it ever was.
Developing teams that understand how they can play their part in achieving cost effective solutions to supply chain problems is key to creating value. In this episode Tony Hines discusses what it means to be cost effective and explains why it is necessary for all organizations.
Being cost effective is a culture that can be developed in any organization achieving more with less. It is a key principle for lean thinking. Everyone in the organization needs to understand cost and their part in the process of using resources wisely. Controlling cost is part of the culture but this is not necessarily just reducing cost. It is about using resources effectively.
Teams have to act and be responsible for cost within their control. To do so they need to know what these costs are and to do that they need data transformed into information. Dashboards often form the basis for action.
Agility is important for responding to the unexpected and to manage risk. Lean principles such as lowering waste is one of the pillars of being and acting responsibly when it comes to cost effectiveness.
The team leader plays a pivotal role in developing and embedding cost effectiveness in their part of the organization. The team leader sets direction in line with organization policies and cost effectiveness is a practice. Shared understanding comes from discussing and working with team members to achieve goals. The leader is a motivator and a coach. Find out more when you listen to this episode.
In this episode of Chain Reaction Tony Hines discusses cost concepts that are essential to understand for those managing supply chains. Sources of value and cost in the supply chain and the wider system are examined in the discussions. To achieve supply chain advantage you must understand cost and value. Some of the most important things to understand about costs are direct costs related to the products or activities undertaken and costs that are related to time. Cost elements are materials, labor and overheads. Risk costs, Cycle Time Costs, Conversion Cost, Non-Value Added Cost and Supply Network Cost are all necessary to control value streams. It is essential that every business understands cost concepts and how they impact the supply chain . Value is created by activities but which activities are creating value and which create cost. Do you know the difference between cost, value and profit? Do you know which costs are related to time or products? Know why this is necessary. Do you know which costs contribute to the profitability of the supply chain? Listen and find out more.
Value added is another important concept that all businesses need to be aware of. Identifying sources of value and cost is an important supply chain management issue. The difference between input costs and output costs is a measure of value added. Do you know the difference between cost and investment? It is a distinction that should be made carefully. You invest capital to capture future revenue with the investments made.
The Total Cost of Ownership is another financial concept that all supply chain professionals should have some understanding of. The purchase price of an item is one element of the cost of ownership. There are three elements of cost in TCO which are pre-ownership cost, acquisition cost and post ownership cost. These are examined in the context of supply chains.
Kaizen is briefly discussed in the context of cost in supply chains. Wastage is one of the biggest costs in any supply chain – Mura, Muri and Muda.