June 2022

on Thursday, June 30, 2022 0

We all want to make the world a greener place. Unfortunately, in supply chain matters, we have to deal with some of the planet's biggest polluters by the definition of our jobs. Container ships are necessary to keep the modern world functioning, but, according to NPR  they provide 3% of the world's total carbon emissions. While having no net emissions is a long way off yet, it's not too late to start considering making adjustments in your own supply chain.

So what are the benefits?
Outside of the obvious benefit of reducing emissions to help slow rampant climate change, there are some very clear benefits for moving your organization to green supply chain practices. A study done of best in class logistics providers by the Government of Canada found that the positives of a greener supply chain can be felt company wide. By switching to greener practices, companies found better distribution efficiency, lowered costs, and greater customer retention once they had switched to a more sustainable model.

Sustainability also has corporate social responsibility (CSR) implications as well. By being more sustainable, your organization can claim that you are taking a serious attempt at mitigating environmental damage and win a big public relations coup. Companies that follow through with a strong policy of CSR have more positive outcomes in very important areas. Companies with a perception of caring about their role as a social actor have better brand perception, an easier time hiring and retaining employees, and attracting investors. With the rise of environmental, social and governance (ESG) investing strategies, sustainability makes your company far more enticing. 

How you can achieve a more sustainable supply chain
Some of the changes you can make to start with your sustainability efforts are quite simple. The first thing you should be looking at is how to reduce the amount of fuel consumption by creating efficiencies. One way to make your supply chain more efficient is to consider building a circular supply chain, where trucks don't deadhead on return destinations. It's possible you could be using empty trucks for returning goods or other materials back to their starting point, or use them for deliveries of finished products on the way back. On a similar note —reducing the amount of fuel used by your vehicles can create significant cost savings and reduce fuel consumption. According to the British Assessment Board, overhauling your large goods vehicles with aerodynamic packages can reduce overall fuel consumption by around 10%, helping you realize significant savings in fuel costs and net benefits for your emissions.

In summation, supply chain management will always have an impact on the environment at large. As supply chain professionals, trying to find ways to mitigate environmental damage is critical for the profession going forward. Whether it be by looking internally, or switching manufacturers to ones that are more sustainable —  going green will only help your organization in the long term.

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on Thursday, June 30, 2022 0


We've all heard about supply chain shortages impacting every facet of our lives from a lack of electronics to the prices of cooking oil and food going up. Now, supply chain shortages could be impacting U.S. power companies, forcing them to take far longer to fix major outages. Being in a season of extreme heat that's only going to get worse as summer drags on, it may be time to look at alternative methods of cooling ourselves down in case the AC goes out.

Why is this happening?
Supply chain issues are disrupting U.S. power companies in a twofold manner. To start, critical parts are beginning to run out for many U.S. energy organizations – potentially hampering their ability to complete both routine maintenance and emergency repairs after natural disasters such as hurricanes, heat waves or earthquakes. As a chief executive at AEP stated, "We're doing a lot more splicing, putting cable together, instead of laying new cable because we're trying to maintain our new cable for inventory when we need it." Transformers are running in short supply as well, critical for getting power to homes, transformers are also some of the more vulnerable components of an electric grid to being affected by natural disaster. Part of this issue is that transformers are in low supply, with lead times of up to a year for parts. This could partially be due to the fact that semiconductors are necessary in the construction and effectiveness of electrical transformers, a product that has been in short supply due to the pandemic and growing demand. 

Another issue power companies are facing is the lack of raw materials to actually generate the power. Due to recent record increases in demand, as well as shortages of natural gas, as well as coal – companies are struggling to find enough of a stockpile to reliably operate their grids. This, combined with droughts causing issues with hydroelectric generation could spell some worries for the U.S. power grid in the coming months, leading up to the winter.

So what can be done?
For electrical equipment, and raw generation materials shortage, very little can be done in the short term — but there are long term supply chain solutions. The U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy recently released deep-dive assessments into power generation supply chains and came up with a few long-term solutions. One that was highlighted is the promotion of building American clean energy components and processing, something that has traditionally been offshored. By doing so, companies can shorten their supply chains and ensure that they both don't run out of critical fuels as well as have a nearby, reliable source of parts.

The solutions to the supply chain crisis in energy may not come quickly – but changes will need to happen in the face of our changing climate as well as the now demonstrated risk to critical infrastructure posed by current supply chain operations. For now, let's just hope our AC keeps working through the hot summer months.

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on Thursday, June 30, 2022 0

Semiconductors are one of the most important components of almost all the electronic devices we use today, and are in high demand from corporations globally. With the rise of the internet of things, and our general reliance on more and more complicated technologies, the value and necessity of semiconductor manufacturing on a large scale will only become more important. Currently the world is in the midst of a major shortage that isn't expected to lift for a long period of time, but how did we get here and what have the effects been?

How we got here
As with the majority of today's supply chain issues, it started with the COVID-19 pandemic. When mixed with the spike in demand for electronic devices that has occurred over the past few years and shows little sign of slowing, semiconductors are in short supply. While manufacturing companies are attempting to increase their production output, building new facilities takes time as the product is very specialized and difficult to create. Even the largest companies in the world are swamped by demand. Taiwan's Semiconductor Manufacturing Company, the world's largest manufacturer, has little extra capacity to create more, and other producers are sold out of product completely.

What does this mean?
Virtually every industry has felt the effects of the semiconductor shortage. According to Fortune, the global auto industry lost $210 billion in revenue in 2021 alone, and the rising prices of semiconductor chips have been passed on to the end consumer by increasing the price of new automobiles. So far, in 2022 alone, the chip scarcity has prevented the manufacture of 2 million new cars, putting a dent in the total supply. While the shortage is affecting most manufacturers of electronics, the broadband and medical device industries being the hardest hit along with auto manufacturing, according to Bloomberg. 

For other organizations which rely on these chips, depleted supply has left little room for error in supply chain management. The average inventory of semiconductors for an American company that relies on them was 40 days. But by 2021, that fell precipitously to only five days. According to a report by the United States Department of Commerce, this lack of inventory means that any disruption of major semiconductor manufacturing plants, such as a natural disaster, has the potential to damage manufacturing capacity in the US.

Do we need to worry?
While new facilities are being created to help alleviate this swing in supply and demand, some worry it might not be fast enough. The CEO of Intel attributed weakened second quarter results to lowered quantities of the semiconductors required for key manufacturing operations, bottlenecking the company. He was quoted in an interview with CNBC as saying "That's part of the reason that we believe the overall semiconductor shortage will now drift into 2024, from our earlier estimates in 2023, just because the shortages have now hit equipment and some of those factory ramps will be more challenged." With the increase in manufacturing capacity ramping up, bank on the shortage to end in the next few years, but also expect a little more tightening of the belt for a while longer.

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on Tuesday, June 21, 2022 0

The world is a difficult place to be as a supply chain expert today and will only get more difficult in the future. We're living in a time of near unprecedented uncertainty in the modern era and the risk it brings to supply chain management is immense. To manage the potential chaos, you must be proactive and prepared to shift your strategies on a dime. From natural disasters and wars, to trade disputes and unreliable suppliers, you must be ready for everything.

How to create a strong risk management strategy.

Train your team in risk awareness and build organizational habits around it

Risk management is built from the ground up. When you're trying to make plans around what could go wrong in your organization, you need to build a framework that allows individual employees to not only spot potential risks, but to report them with no fear or reprisal. Regular training programs on risks for your company and fast-response drills are integral to being ready when something goes wrong. These processes should be well known at all levels of your organization and practiced regularly. Another important lesson to learn, as underlined by McKinsey, is that employees should not worry about coming to their managers or executives with problems or mistakes they've made. A culture of blame, shooting the messenger and heavy punishment means that potential risks or mistakes in a company will remain hidden out of fear.

One acronym could save you a lot of headaches

While a common acronym in the supply chain world, it's always best to keep prevention, preparedness, response, and recovery (PPRR) front of mind when you think about developing your risk management strategy. In order to make your plan fully effective, you should be doing the following for each step.

Prevention

An ounce of prevention is worth a pound of cure. Building the aforementioned organizational habits of risk management is just the start. Your organization should also be building a comprehensive risk management plan in order to properly identify and mitigate risks before they happen. You should also be conducting regular reviews of both your internal processes as well as of the readiness of your suppliers to deal with risk and unforeseen events.

Preparedness

This is the simplest step, the best way to prepare is to develop a list of your known risks and create strategies and tools to react quickly.

Response

You must be ready to respond immediately in the face of a supply chain crisis or employee mistake as the effects of inaction can compound the problem. Having a rapid response team trained in common situations and defined before a problem can arise will help mitigate the effects of the issue.

Recovery

In order to ensure your business can continue as normal, your organization should develop strategies in order to recover in case of a supply chain emergency. From having backup sources for crucial materials to having a public relations plan in place in case of shortages, having a clear idea of what to do in the most dire circumstances is critical to bouncing back after a setback.

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on Tuesday, June 21, 2022 0

Implementation of ERP systems is a complicated process that requires a high degree of attention to detail. While snags in the process of implementation are something to be expected, action must be taken immediately to ensure that it doesn't negatively impact your business. A major food distributor recently revealed that they had lost $20 million in revenue during a transition of ERP systems that also raised their operating expenses by $7.6 million. This isn't an uncommon phenomenon either. A McKinsey report shows that two-thirds of all ERP transformation projects have a negative ROI and three-quarters of them fail to stay on budget and end up taking far longer than expected.

To help you through the ERP implementation process, we've collected three of the best tips to help you avoid potential pitfalls.

3 Success Tips for ERP Implementation

1. You have to know your data well

One of the most important things you can do before your implementation is make sure you have a consistent, single source version of the truth through data. Without  such consistency feeding your system, your ERP will not work nearly as well as you want it to, and cause major issues with both your suppliers and your internal systems. In projects as big as ERP implementation, it's recommended to perform a thorough review of your data and sources, as well as carry out a full data cleanse to ensure optimal effectiveness.

 2. Negotiate a longer period of more intensive support

ERPs are tricky, whether you're bringing in a new one or transforming your current solution, issues are bound to come up months after implementation. To help combat this, ensuring you have a greater window of intensive support is critical to ensuring your organization adopts the platform correctly. According to a study done on a major Canadian oil and gas company, three months is a great amount of time to make sure you can get the support you need for real problems that could affect your business.

 3. Communication is king

This is a success factor in almost any area of a business. You need to communicate to your employees at every level what the change is going to be, and how it will benefit them. The ways you can communicate with them are varied, but it is essential you get buy-in from your workers. There are a few ways you can accomplish this, one of them being to get demos that show the benefits of the project started very early in your implementation process. It's important that employees are fully aware of the potential benefits to them early on to help smooth out the complicated change-management processes that accompanies such a large project. With proper communication between all levels of your company, many of the pitfalls that have the potential to crush your ERP ROI can be avoided before complications arise.

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on Tuesday, June 21, 2022 0

Self-driving cars are all the rage in popular culture – and their widespread adoption, even in a limited form, seems just years away. With that in mind, many technology leaders have been pushing boundaries of what is possible in terms of autonomous driving, and are proposing self-driving trucks as a way to alleviate projected supply chain issues, and drive efficiencies. Could autonomous trucks be the real future of shipping and hauling?

The benefits
From an American perspective, the trucking industry is facing a major shortfall of drivers that is projected to get even worse. The American Trucking Associations (ATA) has stated that the U.S. is short around 80,000 drivers as of today, with projections of being short 160,000 by 2030 This is no insignificant shortage, and a situation that having an autonomous truck could alleviate. Even a semi-autonomous vehicle could take some of the pressure and strain off of truck drivers, helping them complete their routes faster.

If we imagine a world in which the technology for these trucks is here today, the benefits and speed that they'd convey to the supply chain is significant. Efficiency is one of the most talked about positives for a self-driving truck. As discussed in a Fortune article, long-haul trips would be simplified, as regulations on driving time affect humans to a maximum of eight hours of work, self-driving trucks would be able to stay on the road for 17 hours. The implications are clear – the longer trucks are on the road, the more goods they can deliver. Patrick Penfield, professor of supply chain practice at Syracuse University stated about self-driving efficiency that "Freight will arrive at a destination faster. A human truck driver usually takes five days to go from New York to Los Angeles. It'll take an AT (autonomous truck) 48 hours."

The issues
There are unfortunately some problems with relying on autonomous trucks for solving shipping and hauling issues, especially in the near term. The technology just isn't there yet, and factors like weather can throw off current builds. This issue, and other navigation snags, isn't likely to be fully solved by the time the trucking industry hits its severe shortfall.

Something else to consider is the potential unrest that many companies may experience due to wide-scale economic anxieties from shipping workers who may feel pushed out of their jobs. It's estimated that in the U.S. alone, there are 3.5 million truck drivers, many of whom could staunchly oppose any measures taken by fleet owners and companies to move to automated solutions.

Are autonomous trucks the answer to supply chain woes?

It remains to be seen if self-driving trucks will revolutionize the shipping industry in the near future, but many are confident the change to autonomous shipping is inevitable as a slow process. To quote Andrew Culhane, the CSO of Torc Robotics in an interview with FleetOwner.com, "... this technology isn't a question of if, but when."

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