Tag Archive: ports

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.



People & Robots Can Co-Exist Successfully

May 23rd, 2019

We held an engaging executive panel discussion at our APICS Inland Empire spring symposium on the topic: “The Talent Transformation: People or Robots? There is quite a lot of hoopla in Inland Southern California as this geography is larger than all but 24 states (and soon will take over Lousiana) with a strong manufacturing and logistics base.  Yet, the threat and opportunity of automation is close at hand. According to a University of Redlands study, most large metropolitan areas are subject to losing 55% of their current jobs due to automation. In Inland Southern CA, that number expands to 62%. What will this mean? Disaster or opportunity?

According to a robotics expert with a background in industry, Carnegie Mellon and Harvey Mudd, the CEO of the Inland Empire Economic Partnership (IEEP), a Director at Honeywell and a recruiter and practice lead at Aerotek, we can rest assured that people and robots can co-exist successfully. Of course, this assumes we are proactive in thinking about automation, retraining and educating our workforce and providing the insights and collaboration opportunities such as the executive panel event.

We had some probing questions from the manufacturing and distribution professionals in the audience, but it was unanimous that a solution exists. We also talked about Middle Harbor which is a high-tech area of the ports. This has proven more challenging as negotiations have put some people out of a job yet still getting paid for it. With that said, there were many examples of success with business growing 3-fold while the company doubled the workforce and more. Hiding under a rock is definitely not the route to success. Instead, be a part of the collaborative effort.

As a Board member of IEEP and a supply chain expert, I am helping to lead a consortium for advanced manufacturing and logistics success to address just this topic (resulting from the Brookings study research). If you are interested in staying in the loop with updates, please email me. I’ve created a special interest list for this topic.

The students from Harvey Mudd presented some exciting robotics research they are conducting with industry on how to successfully navigate cluttered workspaces (as most manufacturing and distribution clients require). Much progress is being made.  And, robots aren’t going away. There are many positives in terms of consistency of quality, replacing competitive motion tasks, reducing workers compensation and labor risks in addition to cost savings. With that said, there are also some challenges to overcome such as what happens when technology goes wrong (like with the Boeing 737 Max). There is always risks to mitigate and people who are overlooked. The panel discussed the Challenger disaster and the employee who warned ahead of time to the technical glitch.

What are you doing to evaluate technology from a strategic standpoint? Will you be left in the dust? Grocery stores might have been a bit complacent before Amazon bought Whole Foods. Are you complacent? On the other hand, please don’t follow fads. When everyone thought outsourcing was great and Boards insisted on following the trend no matter the total impact, several companies outsourced and were sorry later when service went down and costs weren’t saved. If you’d like an assessment, contact us.

Did you like this article? Continue reading on this topic:

Profit Through People
The Talent Transformation: People or Robots?
The Resilient Supply Chain: Do You Have Resilient Employees?



The Sheer Relevance & Impact of Transportation (A Billion Here, a Billion There)

November 24th, 2018

Recently, I attended Mobility 21, the Southern California transportation coalition, and it reminded me of the sheer relevance of transportation.  No manufacturer can operate without transportation: distributors are out of business without trucks dropping off and picking up, healthcare would stop functioning and our frequent Amazon orders would be a thing of the past.  In essence, everything would come to a grinding halt!     

Certainly, trucks are what we typically think about when it comes to transportation.  They account for $722 billion in freight flows with Canada and Mexico, for example. Whereas rail still accounts for $174 billion (not pocket change).  The ports are our gateway to the rest of the world (and the Los Angeles ports alone bring in 40% of the U.S. volume). Air carries an impressive number of packages especially with the rise of e-commerce. UPS and FedEx are expanding at amazing rates, especially at Ontario airport, the hub of e-commerce activity.  For example, during the 2017 peak season, this region of UPS alone processed 13.1 million packages!

At Mobility 21, there were some interesting statistics throw out:

  • AAA has 60,000 service calls per day
  • Transportation has a $700 billion dollar economic impact on Southern California and accounts for 1/3 of the jobs in Southern CA!  
  • 350 billion miles each year are driven in California
  • The number of trucks is expected to go from 1.8 trillion to 3.9+ trillion by 2045
  • And the list goes on….

What Should We Consider and/or What Impacts Could Arise?
At a minimum, why not take a step back to think about your transportation network?  What does it look like? How do you receive materials and products? Do you use the ports?  Air? Rail? Undoubtedly, you use trucks! How expansive is your network? Are there many players involved?  Since it could cause your operations to cease, it makes sense to find out!

Next, think about what you’d like your transportation network to deliver.  Do your customers expect rapid deliveries and “above and beyond” service? If so, who is your partner in ensuring this occurs?  

Your transportation partners are your last face to your customer. And, in today’s marketplace, there is a significant demand and challenges your transportation partners must navigate.  If you plan to be successful, you must stay on top of your transportation network and partners. Are you attractive to them? Perhaps we better think about that further….



E-Commerce Drives Industrial Space to New Heights

June 21st, 2018

Supply Chain Briefing

According to the Journal of Commerce, e-commerce is driving industrial space rents to new heights.  Our clients are definitely experiencing the same dilemma! There has been a 12.1% increase in rental rates since 2017, and the L.A. / Long Beach area has the lowest vacancy rate in the U.S. of 1.2%.  Ridiculously, the average price in L.A. was 60%+ higher than the U.S. average in the first quarter! And, stranger yet, e-commerce is driving class B space (not as desirable) to be snatched up. It is becoming the new class A!  Even Class C (even less desirable) is starting to sell like hotcakes.

Are you prepared for these Amazonian type disruptions?

 

What Should We Consider and/or What Impacts Could Arise?
First, are you thinking about the disruptors most likely to impact you?  For example, almost every manufacturer and distributor is certainly impacted by Amazon’s rapid delivery expectation.  Have you thought about what your customers expect from you? How about what is required to satisfy – or delight – them?  Undoubtedly, the bar has been raised.

Speed is a more apparent Amazon-related outcome.  Don’t stop there. In order to support rapid deliveries, what will be needed now?  Six months from now? A year from now? Currently, it has made proximity to the ports and customers of utmost importance.  What other impacts have arisen? In this case, e-commerce has changed our shipping and transportation expectations dramatically and permanently – we expect to receive only exactly what we need (whether 1 box or 1 piece) when we need it.  

This has created the need for e-commerce fulfillment operations.  Where would you prefer to locate your operation? Most likely as close to customers and your supply base as possible.  In this case, it means rates are going through the roof – if you can even get them. What can you do to proactively set up your supply chain to support these likely impacts?  And, are you building these estimates into your projections? How will you make effective decisions – can you bring your suppply chain into the process further?

Don’t delay any further….

 



TPP is Dead …. How Will it Affect Our Ports?

January 24th, 2017

On Trump’s first full day in office, he backed out of TPP, as expected — and promised. The concept behind this Trans-Pacific Partnership was to deepen economic ties among countries that border the Pacific Ocean. Will this have an effect on trade?

At the same time, I just so happened to go on a tour of LA Port on Friday (see my APICS colleagues pictured below as we sail past a container ship). Southern California’s ports bring in 40% of U.S. imports, and so we are the “big daddy” of the ports. Thus, any trade changes will affect our ports in some way. The question is how…..

Southern California ports

 

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

Certainly, since the ports and trade are tied together, it makes sense that some sort of change will occur; however, I don’t think it will be noteworthy. Since the Southern CA ports are able to accept big ships (which isn’t that common) and they are located in a prime spot for trade, the impact will not be substantial near-term.

Of course, the prices and tariffs will be impacted; however, for commodity items, it will still make sense to bring them in from lower labor cost countries. For non-commodity items, we’ll see a resurgence of manufacturing and automation/use of technology take place in North America. We will need to be more nimble and agile — including our “big daddy” ports if we wish to be competitive.

Are you prepared to leverage additional technology to remain competitive? And do you know how your partners will be impacted? If you are not incorporating those likely impacts into your strategy, you will be left in the dust for those who are thinking ahead.