Tag Archive: coronavirus

CBS Tampa Interview

August 11th, 2020

Since talking with CBS Tampa for a story on rising grocery prices, I thought it would be good to share with clients and colleagues as well. The bottom line is that grocery prices are definitely spiking due to supply chain disruptions due to coronavirus, not due to shortages of food. There are significant supply chain disruptions and volatility in demand and supply. For example, grocery is spiking in many categories such as eggs, pantry staples, and meat while restaurants, hospitality and schools have dropped like a rock which resulted in farmers dumping millions of gallons of milk, eggs etc. Getting the right products to the right place at the right time through available channels has been challenging due to labor shortages mainly at the farm level. The supply chain is starting to stabilize but disruption will exist while coronavirus surges and until additional channels are set up and packaging accepted in grocery so that stock can be redeployed.

Will your supply chain be impacted? Or will rising prices impact your business? Stay up-to-speed on the latest trends to stay on top of your supply chain and how to proactively navigate COVID.

 



Paying Attention to Reshoring & USMCA?

July 18th, 2020

 

As supply chain has gained in prominence in the media with the increase in tariffs and the many challenges associated with coronavirus, reshoring has become of keen interest. Surveys are showing it is more than just a passing interest with executives. Instead, it is in motion! Listen to my video on this hot topic.

What’s Happening Video Series

Supply Chain: Reshoring

In addition, the USMCA went into effect as of 7/1. Here are a few of the key components:

1) Automobiles must have 75% of their components manufactured in the U.S., Mexico or Canada to qualify for zero tariffs.
2) 40-45% of automobile parts must be made by workers who earn at least $16/hr by 2023, and Mexico agreed to pass new laws that give greater protection to workers.
3) U.S. farmers gain more access to the Canadian dairy market.
4) Intellectual property and digital trade provisions.
5) Sunset clause after 16 years with a review every 6 years.

What Should We Consider and/or What Impacts Could Arise?
As we are all very distracted with everything going on around us, reshoring and USMCA will change the global supply chain scene. They will impact almost everyone in some way or another. Have you figured out what will change and what you should do differently, if anything? If it doesn’t impact you directly, will it impact a customer, supplier or transportation partner? How will that impact you? Lastly, are there risks and/or opportunities for you to consider?

Have you thought of doing an assessment of your global supply chain footprint? What risks exist? More importantly, what opportunities exist with changing conditions? We address these topics as well as many others in my eBook,  Future-Proofing Manufacturing & Supply Chain Post COVID-19. Gain ideas and strategies to successfully emerge from coronavirus and thrive in 2021.

Please share your stories, challenges, ideas and successes. Contact us and please join in our free webinar series and listen to our archives.



What’s Going On with Asia Supply Chains

June 25th, 2020

 

Supply chains are quite tenuous, and China drives the most volume:

  1. Coronavirus: Beijing is under a soft lockdown with a surge of virus cases. Although Beijing doesn’t impact trade, it is another sign that China vastly under reported previously and it is likely to have a new surge of coronavirus and plant closures.
  2. Manufacturers in China: Small and medium size manufacturers are not doing well. They are struggling to keep up since they had to continue paying people even when they weren’t producing. Are you watching your quality and cash?
  3. Vietnam: so far, they are faring pretty well and companies that moved prior to coronavirus and quite happy with service; if they hadn’t yet moved prior to coronavirus, it is likely on hold due to the disruption.
  4. Global transportation: Volume has picked up at all 3 ports in China (although they are dealing with a short-lived vessel shortage) and we aren’t seeing goods movement issues.

International rates are rising: they are up a hefty 12% from Asia to Northern Europe & 32% on the Transpacific route. They have taken capacity out and are slow to add it back. We’ll have to stay tuned to see what will happen.

 

 

Are you taking the continued disruption into account in your supply chain plans?

 

What Should We Consider and/or What Impacts Could Arise?

Undoubtedly, you should be thinking about how to proactively manage your global footprint:

  1. Re-evaluate your sourcing strategy: as many are already doing, the least you should do is re-evaluate your sourcing strategy. Generally speaking, the total landed cost for non-commodity products is less expensive in the U.S. than in China. Check your total cost and review multiple sourcing alternatives.
  2. Review your customers’ needs: Undoubtedly, consumer and business buying behaviors are changing during these unprecedented times. What is happening with your customer base? What can you do to get in front of the changes and see opportunities for expansion?
  3. Review your customers’ requirements: Understanding where your customers are located is a good start. It can have a profound impact on your supply chain, where you should produce and how you should set up your supply chain infrastructure. In addition, what expectations do they have? Are they expecting immediate delivery? Are their preferences changing to deliver at home? These questions will have a profound impact on your supply chain setup.
  4. Understand your transportation options: Clearly, understanding the speed, cost and effectiveness of your transportation options will be integral to your supply chain infrastructure.
  5. Understand likely disruption: Do a risk assessment to understand the likely disruption and risk associated with your options. You certainly have a different situation in China vs. Europe vs. Brazil.

Read more about this topic as well as your strategy, priorities, key trends, and your restart recipe for success in my eBook,  Future-Proofing Manufacturing & Supply Chain Post COVID-19 . If you are interested in a rapid assessment, please contact us.



Being Featured on Bloomberg & the Rise of Reshoring

June 3rd, 2020

Of course, it was very exciting to be featured on Bloomberg’s ‘What’d You Miss?’ show! It speaks to the rising popularity of reshoring that Bloomberg is searching for supply chain experts to talk about reshoring and whether it makes sense.

NOTE: I am about half-way through the segment if you’d like to watch the show.

As I said on Bloomberg, of course, the answer of whether you should reshore is “it depends”; however, it is becoming quite attractive for many industries and situations. At a minimum, review whether it makes sense to source manufacturing closer to your end customers. If you need a push, look no further than the Amazon-like customer requirements, increasing labor costs in China, the lessening importance of labor costs as the Future in Manufacturing panel discussed, the risk of disruption (tariffs, COVID-19, natural disasters etc.) and more. I discuss this topic in depth in my eBook, Future-Proofing Manufacturing & Supply Chain Post COVID-19.

 We have also launched a rapid Future-Proofing Manufacturing & Supply Chain assessment if you’d like assistance in evaluating for your particular situation. Contact us if you are interested. Stay safe and healthy. We continue to post coronavirus resources, write blog articles on navigating coronavirus as well as “beyond lockdown” strategies, and we are sponsoring APICS Inland Empire‘s “Navigating Through Volatility” webinar series. Join us and learn more here



The Future of Manufacturing

May 30th, 2020

 

I was on a panel of a webinar, The Future of Manufacturing with Andrew Zanelli, president of VCC, Michael Knight, president TTI Semiconductor Group, and Seth Denson, co-founder of GDP Advisors. It was a lot of fun, and we talked about the coronavirus, reshoring, cost leadership, innovation, and other topics. Are you interested in what the future might look like and how you can position your company and career successfully?                                         

What Should We Consider and/or What Impacts Could Arise?

There is no doubt there is a renewed interest in reshoring and sourcing manufacturing closer to the customer. All panelists agreed that labor cost has reduced significantly in terms of relevant factors to consider in evaluating manufacturing and supply chain strategy.

  1. China’s labor costs have continually risen, leading progressive companies to move to Vietnam and other Asian countries to chase lower labor costs if labor is a significant factor in total cost of their products. Mexico is gaining steam as well as the latest statistics show their fully burdened labor costs are often lower than China.
  2. Advances in technology have reduced the labor component in the total cost of products, sped up the turnaround time and enabled greater customization on demand. Robotics, additive manufacturing, automated equipment, autonomous vehicles are just a few of the advances.
  3. The time component is increasing in importance in today’s environment where Amazon-like customer service is the norm. Lengthy lead times will lead to a loss in customer demand.
  4. Although cash is always king, during the pandemic, it has risen in importance. Product tied up in the supply chain which is typically 3 months minimum for Asian supply to the U.S. equates to dollars tied up that cannot be invested elsewhere.
  5. There is a higher likelihood of disruption the further away production is from customer demand and the more steps to the supply chain (such as ports, trucks, sailing through unfriendly waters).

Whatever was true last quarter or last month is no longer true. Continually reevaluate your end-to-end supply chain requirements. I’ve addressed this topic as well as your strategy, priorities, key trends, and your restart recipe for success in my eBook,  Future-Proofing Manufacturing & Supply Chain Post COVID-19. If you are interested in a rapid assessment, please contact us.