If you're wondering what transport at zero mph is listen to the episode. Tony Hines discusses why transport at zero is on the rise. Demand is increasing for goods but supply is often short in the time of Covid. Production capacity is short too as plant closures have occurred on a regular basis. In the last episode we discussed the problems due to shipping transport. This week we take a look at one very important aspect of distribution which is often underestimated but without it we would not be able to get goods on time for business, pleausre or everyday needs. Demand for warehousing is increasing as just in time systems (JiT) falter. In the UK we have turbulence due to Brexit bureaucracy adding to the challenges faced by business. The growing demand for bigger warehouses and the lower demand for retail stores are related. As town centers have seen footfall stall finger action on mobile, PC and tablets have hit max velocity for consumer demand. Triggering demand for space to hold inventories.
Miquel Serracanta Domenech asked me a question last week about my thoughts on the disruptions in global shipping following disruption at Yantian and other ports in China due to Covid 19. A supplementary question was what will the new normal look like? Many businesses are asking the question: Where is my box? This got me thinking more about the problems currently being experienced by many businesses who want to import or export their goods and the knock on effect it has on global supply chains. In this article I want to examine global sea trade carried by containers in a little more detail.
Things are desperate for some businesses attempting to book containers to move their imports and exports. Reports of price increases as much as five times higher than a year ago for containers between Chinese ports and the UK with average box prices up by 400 per cent. Similar price increases are being experienced in the EU and in the United States. The main reasons given by shippers and logistic firms is that there is a box shortage and yet there are now more boxes in the world than ever according to the statistics held by UNCTAD, World Shipping Council and the large shippers operating in these markets. So where are they? Where's my box? Another reason given is that boxes are in the wrong places and the shippers have not been able to move as many empty boxes to the return ports as they would in normal times. Demand for boxes is also said to be higher than normal. While these reasons are plausible it is also clear that the profits earned by the largest players are increasing despite Covid 19. So is it the case that these large businesses dominating the global sea trade have seen an opportunity to clawback some profit by fixing higher prices through a quasi cartel?
In this episode Tony Hines discusses pressing problems and how to solve them. In the discussion he defines and explains what is meant by a pressing problem. Drawing on supply chain concepts he puts pressing problems in context. The theory of constraints is used to focus attention on critical problems. A number of tools and techniques are briefly discussed that may help to solve an organization's pressing problem.
So what are pressing problems? When it comes to business we often think that we have many pressing problems. In truth there will be just a few. These are the problems that will disrupt the business if they are not addressed. In the strategy literature they refer to such problems as those that are critical. Identifying such problems is not always easy. Often this is because managers spend more time doing than thinking. It is essential that tiime is set aside for thinking.
We know that reflexive managers learn from their mistakes. In developing processes and practices with the aim of improving performance we learn to adapt and respond flexibly to the circumstances we are faced with. Resilience is a term that we use to talk about effective responses to bounce back from events that disrupt performance.
The episode also contains supply chain news from around the globe.
In this week's episode Tony Hines discusses predictions and the unpredictable. Forecasts are built on the premise that the future is a continuation of the past. Data are gathered about previous performances and projected forward to give a forecast. If you have line items that are fairly standard and demand is stable then forecasting techniques are very useful but what if demand is more unpredictable? Reasons for why we assume the past is continued into the future are almost hardwired into the human psyche. In a wide ranging discusion examining reasons why this is natural arguments are advanced to explain and understand why we should be far more questioning if we want to understand forecasts and why predictions rely far more on assumptions than data alone.
To paraphrase Roald Dahl this is a tale of the unexpected. We should always think about the unexpected as the norm. Not many things in life go exactly to plan so why are we so surprised when things go wrong? If you are a supply chain professional you know with some certainty that something is likely to disrupt the best laid plans. The response is what matters. What can you do to put things back on track quickly? This is why there is much talk about resilience.
For all those students of supply chain along with professionals that spent hours playing the ‘Beer Game’ you know that disruption is normal. You also have learned from the experience and know that to correct disruption and the causes of it often makes it worse given the actions taken to make adjustment to flows within the supply chain. In other words it is not simple. It is complicated. Would a simple algorithm solve the problem?
The Science of Prediction If you follow professional sports you will know that the bookies favourite does not always win. This is one reason we like it. In our sporting lives unpredictability makes it exciting, exhilarating and a unique experience. We love the fact that you cannot be sure of the prediction. Why then when we return to our working lives do we expect things to happen as planned? Should we just learn to accept it as a matter of fact and not be too concerned? After all isn’t an exciting, exhilarating and unique experience attractive to make our working lives better?
Listen to the episode to find out more…
Also in this episode find out why container freight costs have increased by 400 per cent since 2020, get an update about the fire onboard a container ship near Columbo, Sri Lanka and find out why the Evergiven is still stuck in the Great Bitter Lake in the Suez Canal.
In this episode of Chain Reaction – All about supply chain advantage Tony Hines draws attention to key business skills developed by supply chain professionals. The skills are transferrable and could take you on a journey to the 'C' Suite and even to CEO. Many people on the Board of retail and FMCG businesses have spent some time working in the supply chains of businesses where they cut their teeth. There are a number of notable CEO's with previous when it comes to supply chains including Tim Cook at Apple, Alan George Lafley at Proctor and Gamble, Tom Hayes at Ocean Spray Cranberries Inc. and Mary T. Bara at General Motors.
Talent streaming from those with supply chain backgrounds is inevitable in today's business environment. Working in supply chain roles is most probably better for chances of becoming a business leader of the future than an MBA. It would of course be great to combine both so you could develop you professional skills in work complemented by an academic or professional qualification to recognise the talent formally.
Listen to the podcast to find out more.
Digital acceleration, cyber security risks, sustainability, cost effectiveness and fashion are also on this week’s agenda alongside the role and responsibilities of joining the ‘C’ suite and taking up a leadership role.
Remember to check out Tony Hines Blog where you will find an article entitled “Welcome to the 'C' Suite”.
This episode is about digital transformation building supply chain capabilities which are underpinned by blockchain technology.
Tony Hines discusses howDigital Transformation has impacted every aspect of supply chains from sourcing, procurement, purchase contracts, supplier contracts, transport, distribution, information systems, payments, tracking and tracing goods through the supply chain creating visibility. Many parts of the system are automated using artificial intelligence and machine learning. Trust can be established in digital systems using Blockchain Technology across the distributed networks. Transformational strategies build capabilities to optimize end to end supply chains.
In this episode Tony Hines describes and explains what is meant by supply chain strategies which is the title of his book on the topic. Supply Chain Strategies demonstrates how organizations must take strategic decisions in order to manage their supply chains to sustain competitiveness in the global economy. Tony Hines defines what the supply chain strategies are, how they work and why firms invest in them as follows: “Supply chain strategies require a total systems view of the linkages in the chain that work together efficiently to create customer satisfaction at the end point of delivery to the consumer. As a consequence, costs must be lowered throughout the chain by driving out unnecessary costs and focusing attention on adding value. Throughput efficiency must be increased, bottlenecks removed and performance measurement must focus on total systems efficiency and equitable reward distribution to those in the supply chain adding value. The supply chain system must be responsive to customer requirements” ( p76).
Supply chains are service systems linking the customer with a network of suppliers who extract, source, design, manufacture, fabricate, co-operate and combine resources to bring customers what they want (Demand), when they want it (Timeliness), complete at a competitive price. Supply Chain Advantage is achieved by lowering cost and adding value to customers providing goods and services on time, complete and better than the competition. Supply networks must be both efficient and effective. Efficiency improves productivity, profit and saves the planets resources. Strategies are about choices which need to be ethical, sustainable as well as satisfy customer demand. Organizations become more profitable by being efficient. However, this alone is not sufficient and it is necessary to be effective of you want to raise income, be more profitable and earn higher returns for supply chain partners, shareholders and other stakeholders. Supply chain strategies learn from the past and improve the future position of the organization.
There has been much discussion about terminology in the literature. Should it be a chain or is it a network? A chain suggests there are interconnected links, which is appropriate. It may suggest a sequence of value creating processes, which is accurate. However, a chain may also imply pure linear relationships, which is less appropriate, and therefore networks might better describe how supply links are spatially related. There are also discussions in the literature related to whether or not a supply chain is a cost chain or value chain. In a normative sense supply chains should be ‘value chains’ but are sometimes in a descriptive sense ‘cost chains’. They only represent value when revenues exceed cost. Therefore, at a point when the customer pays for service, value is created and all activities up to this point incur cost. Mitigating against value are service- product complexity in design, excessive engineering, over specifying quality of inputs and outputs beyond the expected service level, wastage, inventory buffers, increasing warehousing space, lengthy production lead times, lost market opportunities or contract penalties for being late or incomplete, sourcing decisions, choice of markets to enter, distribution networks, and modes of delivery. Lean practices have emerged to address many of these issues. Lean focuses on efficiency but it is worth saying that lean organizations do usually combine such practices with responsiveness and agility to ensure customer focus. These are all strategic choices where potentially costs may exceed revenue making it a cost chain.
In this episode of Chain Reaction Tony Hines discusses sourcing strategies and examines reasons why they are critical for securing supply chain advantage.One of the most important considerations for any organization is where to source product and which…