Category Supply Chain Advantage

Supply Chain Critical could well describe many supply chains around the globe right now. In this episode Tony Hines takes a look at US food and other supply chain disruptions following President Biden's initiative to get parties around the table to discuss issues. On November 29th the Federal Trade Commission (FTC) issued an order to discuss what's going on in those supply chains.  The FTC stated “Supply chain disruptions are upending the provision and delivery of a wide array of goods, ranging from computer chips and medicines to meat and lumber.” Price hikes and anti-competitive practices are also under the spotlight. With US inflation at 6.2% and some goods coming in at higher than that for consumers this is cause for concern. Availability of products is also of concern. Ranges have thinned and there are reported shortages in specific categories. “The FTC is issuing the ordersunder Section 6(b) of the FTC Act, which authorizes the Commission to conduct wide-ranging studies that do not have a specific law enforcement purpose. The orders are being sent to Walmart Inc., Amazon.com, Inc., Kroger Co., C&S Wholesale Grocers, Inc., Associated Wholesale Grocers, Inc., McLane Co, Inc. Procter & Gamble Co., Tyson Foods, Inc., and Kraft Heinz Co. The companies will have 45 days from the date they received the order to respond.”
  In the UK inflation is 4.2% and on the rise. There is also concern about shelf availability for many goods. The Office for National Statistics has been gathering data fortnightly from businesses in the UK. We take a look at some of the findings from the data and what it means for supply chains. The ONS Business Industry and Conditions Survey reports on 'the impact of challenges facing the economy and other events on UK businesses.' The survey is based on responses from the voluntary fortnightly business survey (BICS) including financial performance, workforce, trade, and business resilience. Businesses currently trading who reported that the prices of materials, goods or services bought in the last month had increased compared with normal expectations for this time of year was 38%.   In the last month, 17% of businesses reported they were either not able to get the materials, goods or services they needed from within the UK, or had to change suppliers or find alternative solutions to do so.  A few weeks back we reported the distressed ship Xpress Pearl was on fire and sinking off the coast of Sri Lanka with diesel and other chemicals on board the vessel leaking into the Indian Ocean. Since then it has come to light that nurdles were also on board, Nurdles a small plastic pellets that are used to produce packaging materials. Being plastic they are of course produced from oil (fossil fuel). However, nurdles are not classified by the International Maritime Organization (IMO) as hazardous waste. The damage to the local ecology and economy from the leakage has been devastating to livelihoods of fisherman in Sri Lanka. Listen to the episode to find out more.
Notes:
1.  250,000 tons of plastic pellets known as nurdles pollute our oceans every year.  https://cbsn.ws/2QXCkxO Trillions of small plastic pellets have been escaping from petrochemical plants into waterways and oceans for decades.
2. The IMO is aware of the problem but so far has not classified nurdles as hazardous waste which they clearly are.

Inflation in the US is at a thirty year high standing at 6.2% and in the UK the Consumer Price Index stands at 4.2% in November up 1.1% from a month ago. As demand goes up and supply remains short inflation is one consequence. In this episode Tony Hines discusses cause and effect and what it means for supply chains.

Shipping is such an important part of global supply chains and 90 per cent of global trade is moved at some point by ships. As container vessels get bigger and bigger what is the shipping industry doing to lower carbon emissions? Also what other impacts does this growth in shipping have for the planet and people as well as for profit? Is the shipping industry on track to play its part in a greener, cleaner more sustainable world?

In the UK this week apart from some disturbing inflation measures we had news that the UK Government would not be proceeding with part of its investment in the rail network for the High Speed 2 Project (HS2). This has major implications for the North of England particularly the North East where the Government had previously indicated it wanted to invest to level up. If you don't have the investment in infrastructure it is unlikely you will develop the economy to do that.

In this episode Tony Hines provides a short summing up of the recent COP26 event in Glasgow UK and discusses what's next for supply chains beyond COP. He also takes a look at the importance of supply chain partnerships and the benefits they bring to organizations. It is a way of accessing complementary skills. He revisits some early lessons that he thinks are just as important as ever for supply chain professionals and businesses that want to improve performance.  Cost, Time, Quality, Capabilities, Capacities, Experience and Expertise are all part of the rich mix that organizations manage to improve supply chain performance. This is discussed in the context of his 7V Framework used to do just that. He takes a look at some of the early lessons managing inventories and what it means for profitability. 

In this episode Tony Hines discusses greener, cleaner, frictionless trade as well as catching up on some news issues. The fire on the container ship off the coast of Victoria British Columbia is another reminder of the hazards involved in transporting chemicals. A new way to produce electric vehicles is discussed focusing on Arrival's Oxfordshire site. Some interesting innovations point to the green vehicle revolution and how it will differe from anything the industry has previously seen. It promises to deliver some real benefits. Moving freight by rail is discussed as a future option that has some environmental benefits too. Transaction costs causing friction in supply chains is discussed in the context of the UK's departure from the European Union and why friction is bad for supply chains. Externalities and the cost of pollution moving from producer to consumers and public clean up operations. Eighty per cent of the world's plastic bottles end up in land fill, in the oceans of the world or are burned releasing Co2 in the process. Producers keep the profits and externalise their costs.

In this episode Tony Hines discusses why supply chain research is such a rich area of knowledge generation with both practical relevance and academic rigour. The episode will be of particular interest to those doing research into supply chains as well as new entrants to supply chain management.

Timing is everything says Tony Hines when it comes to achieving supply chain advantage. Whether it is how long it takes to procure goods, process work-flows or transport goods (raw materials, work-in-progress or finished inventories) to the customer. Time endows advantage. Of course time can also be a problem if you do not manage it well. Managing time in supply chains is a risk. Ther are uncertainities beyond your control that give rise to risks that you may not have factored in. Even the most savvy supply chain professionals are subject to it. Take the current issues in global supply chains with ports experiencing delays in handling cargo. Satelite pictures of ports in California showed about seventy ships lining up waiting to discharge containers at Los Angeles. Long Beach too has delays. About 40 per cent of US Container traffic passes through these two ports. In the UK too at Felixstowe which handles about 36 per cent of the UK container traffic there are similar problems. In the US it has been taking up to 14 days to get ships into port and in the UK 6 days. There is also increased dwell time in turning around containers. It has risen form 4 days to 10 in the UK. The Biden Administration brought those involved in the US crisis to the table to discuss practical solutions and gain commitments.  This is seen as a postive move and parties are keen to operate ports 24/7 to get the job done. In the UK the underlying problem is the shortage of 100,000 HGV drivers to clear the ports and get containers in the right places. Time is everything because these delays are costly for everyone the shippers, the ports, the hauliers, the customers and those managing the various operations. A number of large retailers have been agile in trying to manage the risk by hiring their own vessels to move goods. These are generally smaller ships to weave in between the larger ships and to drop cargo at smaller facilities to avoid the backlogs. Home Depot's Sara Caliga said the idea started as a joke saying they would charter the ships themselves to get the job done but that's exactly what they have done. Wal-Mart said their strategy was to hire smaller ships to move goods more quickly. IKEA, Target and Costco are all doing something similar. Cocal Cola said it was using smaller vessels usually used for grain or coal to move their products around. In the UK the John Lewis Partnership runs 34 department stores and about 374 Waitrose Stores and it too committed to charter ships on 16th September to ensure they had supplies for the run up to Christmas. Hiring ships is not cheap. It is also not a skill expected of retailers to run the shipping operation so it will be interesting to see how they do. These retailers are looking to secure the high velocity inventories the goods that make them most profit. Listen to the podcast and find out more.

Electricity shortages in China have impacted production capacity as factories in some of the biggest industrial areas have had to close. This is in addition to the problems experienced from the pandemic shutdowns that occur with China's no tolerance policy to Covid. This will mean more disruptions to some goods. Recent closures in Vietnam have also seen some production move from their to China but Vietnam is now opening up again. 

The UK is still impacted from the HGV driver shortage (100,000) meaning goods are not moving as quickly as they should. This is impacting the UK's largets container ports. This week the reintroduction of cabotage by the UK Government means that EU drivers can do more pick ups in the UK but this has not gone down well with UK hauliers who fear their work will be taken away by EU firms.

In this episode Tony Hines looks at the troubled waters everywhere in supply chains. As the world is slowly opening up trade again excessive demand for energy, shipping and other goods has put pressure on struggling supply chains grappling with labour shortages. In Europe wholesale gas prices increased by 60 per cent in just one day before falling back. This was a result of Russia controlling supplies into the EU. In the United Kingdom the rocketing price of energy has resulted in industries that are big energy users such as steel, chemicals, aggregates, ceramics and glass asking for the government to help out. Government policies to decarbonize and to switch to renewables and greener sources have put energy supplies at risk because they have not developed sufficient green and clean energy capacity at the same level that they have removed fossil fuels sources and nuclear. 

Shortages are everywhere in supply chains from supermarket food supplies through to fuel for transport and energy. This week in the UK David Lewis a former CEO of Tesco was appointed by the UK Government as an adviser on supply chains so let's hope he can bring some order to the chaos. Meanwhile the PM is on holiday not playing his fiddle but painting in Spain.  

In California we still have ships lining up to be unloaded at ports and now in the UK too at Felixstowe ships are waiting six days to get unloaded. Some large container vessels have been rerouted to Rotterdam and Antwerp and cargo is being sent to the UK on smaller vessels to avoid the queus. It is also taking 10 days to move boxes whereas this dwell time usually averages just 4 days.

Government in the UK are under pressure to introduce policies to hel out some industries that are big energy users. All in all we have troubled waters in supply chains.

This episode discusses some issues affecting supply chains in the news this week. They include: Problems for Pig Farmers in the UK; The Oil Spill in the Amplify Pipeline in California; Ways to lower your carbon footprint in supply chains and what governments are doing to achieve net zero targets; There are still supply chain issues in the UK because of a shortage of HGV drivers and the shortages of fuel at service station forecourts. Increasing costs are driving up inflationary pressures along with wholesale gas prices all of which will feed into consumer prices. The UK is still adjusting to life outside of the European Union and a failure of planning and preparation has exacerbated the disruptions to supply chains being experienced.
 
 Many efficiencies achieved in supply chains have come about during the past thirty years as just-in-time systems were implemented. JiT reduces time taken to produce and move goods to customers but some of that good work has been undone by recent supply chain disruptions and people are beginning to question the approach. Tony Hines argues that efficiency is the key to having a successful supply chain and Just-in-Time is a concept and practice to do that. He argues you can be resilient and efficient but it takes a little work, keeping costs low in supply chains helps everyone and the benefits outweigh any disadvantages. Some of the key benefits are: lower cost; reduces carbon footprint; customers get goods when they want them and wastage is reduced in production.

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.