Future of Sourcing - Global Supply Chain https://www.futureofsourcing.com/tags/global-supply-chain en Why Transparency Matters to Us All https://www.futureofsourcing.com/why-transparency-matters-to-us-all <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/supply%20chain%20transparency%20%281%29.png"><a href="https://www.futureofsourcing.com/sites/default/files/articles/supply%20chain%20transparency%20%281%29.png" title="Organizations will emerge fitter and stronger, having learned some of the lessons of the pandemic and turning these to good use to reimagine their supply chains for the better." class="colorbox" rel="gallery-node-1909-PO2PTnSEwPc"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/supply%20chain%20transparency%20%281%29.png?itok=vcL8_6jK" width="624" height="325" alt="Organizations will emerge fitter and stronger, having learned some of the lessons of the pandemic and turning these to good use to reimagine their supply chains for the better." title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/global-sourcing-myth-versus-reality">Global Sourcing: Myth Versus Reality</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <h1>The Pandemic Has Sharpened Boardroom Focus</h1> <p>Recent months have shown us the importance of supply chains. In a year of few highlights, the ability for supermarkets to keep shelves stocked and for other vital services to keep going has been heartening. However, conversations are changing as we look to a post-pandemic world. One of these is around sustainability, and it&rsquo;s interesting to note that <a href="https://rfid.averydennison.com/content/dam/rfid/en/news-and-insights/insights/white-papers/SupplyChain-MarketInsightsReport.pdf">even now 65% of business leaders</a> identify sustainability as an even bigger priority post COVID-19.</p> <p>What was already on the boardroom agenda has become more important. Equally as important is the fact that 83% of business leaders believe supply chains and associated technologies can support sustainability objectives. There is consumer pull too with 70% of consumers now believing trust in a brand is more important than in the past. Knowing how a product is sourced and brought to market is critical to this.</p> <p><a href="https://sig.org/sustainable-business-practices-drive-positive-change-supply-chains" target="_blank"><em>&gt;&gt;Related content: Sustainable Business Practices that Drive Positive Change in Supply Chains&lt;&lt;</em></a></p> <h1>Vertical Sector Initiatives Lead the Way</h1> <p>Several vertical sector initiatives are also steering us in this direction. For example, a <a href="https://www.mckinsey.com/~/media/mckinsey/industries/retail/our%20insights/fashions%20new%20must%20have%20sustainable%20sourcing%20at%20scale/fashions-new-must-have-sustainable-sourcing-at-scale-vf.ashx">McKinsey study</a> found that eight out of 10 sourcing executives in the fashion industry plan to publish their companies&rsquo; level of transparency on at least tier two level by 2025 in the form of supplier lists.</p> <p>The cocoa supply chain has been <a href="https://d306pr3pise04h.cloudfront.net/docs/issues_doc%2Fsupply_chain%2FTraceability%2FGuide_to_Traceability.pdf">identified in a UN report</a> as &ldquo;very complex.&rdquo; The report stated that &ldquo;tagging raw materials at source is key.&rdquo; This same UN report also calls out fishing and estimates that just 8% of wild caught fish adhere to the Marine Stewardship Certified guidelines for sustainability.&nbsp;</p> <p>How can we grapple with these challenges? These are <a href="https://www.youtube.com/watch?v=HkF_o6kGxRA&amp;t=6s">examples of best practice</a> we can draw on.</p> <p>To take the first, in the UK, Emma Bonar has established 69b Boutique, the &ldquo;first store dedicated to a better fashion industry&rdquo; with a vision to bring together socially and environmentally responsible designers. Brands it works with must adhere to a strict policy on transparency and accountability with a commitment to sustainable fashion. In her words, &quot;Our customers rely on us to know where the products that they&#39;re buying are coming from.&quot;</p> <p>In terms of the second, Cacaste is a Mexican cocoa butter producer that has developed a close working relationship with a network of growers in Tabasco, enabling trust and traceability in their supply chain. Connecting raw materials at source with a unique digital identity is key as this fast-growing business supplies cocoa to beauty companies from the United States to New Zealand.&nbsp;</p> <p>Our third example is Greenfish, a seafood business in South Africa committed to ensuring their seafood is sourced from legal fishing operations and traceable back to its point of origin. Every single package includes information about the species, origin and production method.</p> <h1>Data Has Never Been More Important</h1> <p>Each organization works in a different sector with its own individual challenges, but they all share common objectives such as establishing transparency in their supply chains. In doing so, they engender trust with customers.</p> <p>If COVID-19 has taught those of us working in the supply chain industry one thing, it is the importance of data and applying the insights it gives us to every part of our operations. The more we digitize, the more we understand. It not only makes organizations more efficient but improves the well-being of the planet and those that live in it.</p> <p>With the introduction of digital identity technologies, it becomes possible to provide traceable identities for every product, enabling transparency from raw materials to end product and beyond. This means moving beyond just focusing on tier one suppliers to suppliers throughout the chain to ultimately empower people as well as products to build a more sustainable planet. In doing so, this offers consumers the highest standards of visibility, safety, education and authenticity possible, while giving businesses complete control over their supply chains.</p> <h1>Transparency Is a &lsquo;Win-Win&rsquo;</h1> <p>Not only are governments, NGOs and consumers calling for more transparency throughout the global supply chain, but organizations have a vested interest in delivering supply chain transparency. As well as the reputational cost of failing to meet these demands, researchers at the MIT Sloan School of Management found that <a href="https://hbr.org/2019/08/what-supply-chain-transparency-really-means">consumers may be willing to pay up to 10%</a> more for products from companies that provide greater supply chain transparency.&nbsp;</p> <p>The hope is that 2021 will mark a return to near normality. Organizations will emerge fitter and stronger, having learned some of the lessons of the pandemic and turning these to good use to reimagine their supply chains for the better.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/global-supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global Supply Chain</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/non-governmental-organizations-ngos" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Non-governmental organizations (NGOs)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/covid-19" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">COVID-19</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/sustainability" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Sustainability</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/data" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Data</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Why Transparency Matters to Us All - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/why-transparency-matters-to-us-all"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Fri, 15 Jan 2021 00:40:21 +0000 Francisco Melo 1909 at https://www.futureofsourcing.com https://www.futureofsourcing.com/why-transparency-matters-to-us-all#comments How Supply Chain Flexibility Will Meet an Uncertain Future https://www.futureofsourcing.com/how-supply-chain-flexibility-will-meet-an-uncertain-future <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/Supply%20Chain%20Flexibility.png"><a href="https://www.futureofsourcing.com/sites/default/files/articles/Supply%20Chain%20Flexibility.png" title="Supply Chain Flexibility" class="colorbox" rel="gallery-node-1817-PO2PTnSEwPc"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Supply%20Chain%20Flexibility.png?itok=OvzCMNNz" width="624" height="325" alt="Supply Chain Flexibility" title="" /></a></div></div></div><div class="field field-name-field-intro field-type-text-long field-label-hidden"><div class="field-items"><div class="field-item even"> <h1>How Supply Chain Flexibility Will Meet an Uncertain Future</h1> </div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/using-data-to-navigate-the-post-pandemic-workforce">Using Data to Navigate the Post-Pandemic Workforce</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>COVID-19 not only wreaked havoc on public health, but it also began a cycle of disruption in sourcing and fulfillment that may never return to any semblance of &ldquo;normal.&rdquo; In fact, for both the short and long term, supply chain executives will need to focus on &ldquo;flexible&rdquo; in their job descriptions.</p> <h2>What Has Changed?</h2> <p>To answer the question, &ldquo;what has changed,&rdquo; it may be simpler to ask, &ldquo;what has not?&rdquo; because when it comes to supply chains, consumer demands and brand objectives have changed, probably forever. Start with the shift in direct-to-consumer grocery demands. Beginning in March in the grocery retail sector alone, online sales increased 100%. Online sales in the U.S. overall increased 25% on average for daily sales March 13 to 15 compared to the first two weeks of March. (source: <a href="https://theblog.adobe.com/adobe-digital-economy-index-tracking-the-state-of-ecommerce-during-covid-19-and-beyond/" target="_blank">Adobe Analytics</a>).&nbsp;</p> <p>By June, there was even more evidence of a potentially permanent change in consumer shopping behavior. According to the recently released FMI - The Food Industry Association&rsquo;s annual U.S. Grocery Shopper Trends study<span style="font-size: 13.008px;">&nbsp;- i</span>n terms of fulfillment, 18% of online grocery shoppers (including 8% of first-timers) are opting for same- or next-day delivery, compared to 16% (including 9% of first-timers) for curbside pickup and 14% (including 7% of first-timers) for in-store pickup. Seventeen percent (including 5% of first-timers) choose home delivery with standard shipping and 8% (including 4% of first-timers) subscribe for ongoing deliveries.</p> <h2>Have Supply Chains Adapted?</h2> <p>The short answer to whether supply chains have adapted to the new D2C model is not yet. Significant investment in technology and automation will be necessary to meet the direct to consumer movement. Automation to optimize supply chain operations will be the most efficient means to deliver a higher volume of packages to the end consumer.&nbsp;</p> <p>As consumers moved online, shippers were challenged with getting products directly to the consumer, but they were also not prepared to break down pallets in the manufacturing and DC facilities. With 40% of essential items now being bought online, supply chains need to continue to evolve operations to accommodate much higher volumes in direct-to-consumer shipping.&nbsp; &nbsp;</p> <h2>What Have Supply Chains Done Right?</h2> <p>In the first weeks of the pandemic, bottlenecks appeared at nearly every point on the supply chain, which left supermarket shelves barren and deliveries delayed. The household items most in demand &ndash; masks, hand sanitizer, bleach cleaners and inexplicably toilet paper &ndash; were nowhere to be found. As speed to market increased, manufacturers, distribution centers and retailers quickly implemented temporary reconfigurations.&nbsp;</p> <p>Now that it seems there will never be a total return to normal, supply chain executives need to face a new reality that will require constant change.</p> <h2>What Other Changes Are on the Horizon?</h2> <p>Decisions are being made by brand executives that will impact supply chains from manufacturing and distribution to store shelves and consumer pantries. Over the past 40 years, consumers have become accustomed to endless varieties of favorite staples &ndash; like the 400 kinds of Campbell soups. However, the number of selections in grocery categories and even within brands, are trending downward.</p> <p>According to market-research firm Nielsen, in grocery stores, &ldquo;the average number of different items sold was down 7.3% over the four weeks ended June 13. The variety in some categories such as baby care, bakery and meat, fell as much as 30% earlier in the pandemic.&rdquo;</p> <p>Changes are already evident. For example, IGA Inc. grocery stores now offer only four choices of toilet paper. A few months ago, the chain&rsquo;s 1,100 U.S. stores typically carried about 40 varieties.</p> <p>According to a recent article in the <em>Wall Street Journal,</em> executives at some of the most widely-known food giants have said they are trimming less-efficient and less-profitable products while shelving some in development. PepsiCo Inc., for example, stopped producing a fifth of its products during the Covid-19 crisis and in their Frito-Lay snacks business will have 3-5% fewer products going forward than it had pre-pandemic.</p> <h2>How Will Brand Decisions Impact the Supply Chain?</h2> <p>By discontinuing some less popular items that may be more complicated to produce, factories and distribution networks can become more efficient. There is also an open question as to whether consumers will even remain brand loyal or retain the grab-any-brand-you-can mindset from the pandemic.&nbsp;</p> <p>In fact, shopping during the pandemic may demonstrate future upheavals that may compromise brand loyalty but will most likely streamline the supply chain.</p> <p>Fulfillment and sourcing executives must create new strategies, revamp operations and change processes.&nbsp;The starting point will be to enable end-to-end inventory visibility, which will allow the supply chain &ndash; encompassing manufacturers, DCs and retailers &ndash; to quickly respond to the ebbs and flows of consumer demand without additional labor and resource allocation.</p> <h2>Can the Supply Chain Meet D2C Demands?</h2> <p>Again, there is a short answer to whether the supply chain can meet rising D2C consumer demands: yes, they can enable D2C with total visibility into inventory levels.</p> <p>The first wave of the pandemic is instructive. If consumers had the visibility into inventory levels for essential products like hand sanitizer, masks and gloves, there would not have been panic buying and hoarding. The lack of total inventory visibility to both shippers and consumers during the pandemic was proved the absolute necessity of offering end-to-end visibility throughout the global supply chain.</p> <h2>Benefits of Automation</h2> <p>Automation is driven primarily by the digitization of goods. By giving products a unique digital identifier at the origin of the supply chain, full transparency of inventory at the product-level is possible. This is vital to meet a continued increase in direct-to-consumer expectations.&nbsp;&nbsp;</p> <p>Digitization of goods through technologies such as RFID and barcode provides full transparency throughout every step of the supply chain that will offer seamless shifts in both B2B and D2C models.</p> <p>Digitization of goods will also serve brands well as they continue to shrink product offerings. Flexibility to add and subtract items to meet production, distribution and sales goals may be an ongoing roller coaster. Historically, brand logic had focused on increasing sales by offering customers endless varieties of goods that would take up more and more retail and supermarket shelf space &ndash; especially in big box stores and warehouse clubs.&nbsp;</p> <p>With the migration to online ordering, shelf space may become less important, while speed and accuracy ensured through automation and digitization will become more essential.</p> <h2>Getting - and Staying - Flexible</h2> <p>Agility must be incorporated into lean logistics. With the shrinking of the workforce, a consequence of reduced consumer spending during and post-pandemic, cost-cutting will mean smaller staffs. At the same time, increased direct to consumer demands will present labor challenges. Therefore, the reduction in workforce means the technology to automate processes will be required to meet the needs of manufacturers, retailers and distribution centers.</p> <p>In a lean set up, operations are already set up to process inventory in order to maximize labor efficiency. However, that doesn&rsquo;t allow shifts both up and down to meet changing market demand. Agility in supply chain operations is the key. Supply chains need to have the ability to adjust operations to meet fluctuating demands.</p> <p>Adhering to the three A&rsquo;s of agility, automation and adjustment will be key to successful D2C supply chains. A future that holds so much uncertainty will require fulfillment and sourcing executives to focus on flexibility.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/global-supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global Supply Chain</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/digitization" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Digitization</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/covid-19" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">COVID-19</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/coronavirus" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">coronavirus</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/direct-sourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">direct sourcing</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="How Supply Chain Flexibility Will Meet an Uncertain Future - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/how-supply-chain-flexibility-will-meet-an-uncertain-future"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Sun, 12 Jul 2020 19:54:10 +0000 Ryan Yost 1817 at https://www.futureofsourcing.com https://www.futureofsourcing.com/how-supply-chain-flexibility-will-meet-an-uncertain-future#comments Fix Our Broken Medical Supply Chains https://www.futureofsourcing.com/fix-our-broken-medical-supply-chains <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2848%29.png"><a href="https://www.futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2848%29.png" title="covid-19 medical supply chain" class="colorbox" rel="gallery-node-1777-PO2PTnSEwPc"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Copy%20of%20FoS%20Header%20Images%20%2848%29.png?itok=was3PPTR" width="624" height="325" alt="covid-19 medical supply chain" title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/how-to-source-a-supply-chain-risk-management-services-partner">How to Source a Supply Chain Risk Management Services Partner</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>The entire world is watching aghast as our nation continues to struggle with its COVID-19 response, where our broken supply chain cannot supply medical workers with enough masks and face shields to keep them reasonably healthy. The pandemic has exposed inadequacies and vulnerabilities in supply chains that were supposed to provide the much-needed supplies in the healthcare system. But life-threatening shortages are reported daily. COVID-19 testing kits and nasal swabs, lab processing chemicals, hand sanitizer and ventilators are in desperately short supply. The list of what is missing is ridiculously long.</p> <p>How did one of the world&rsquo;s most advanced economies end up in this ditch, and how do we stay out of it in the future? There&rsquo;s some good news: Supply chains are still there, and they have enough resilience and continuity to get us what we need if we improve them using methods we already know. This includes increased use of localized supply, supply chain mapping and visibility, i.e., assessing the supply chain risk and vulnerabilities across the entire supply chain, from first-tier suppliers and major components to the minor parts and raw materials, and product design for resilience.</p> <h1>Costs vs Control</h1> <p>Are you shocked by the shortage of N95 masks? No need to be; the country ran low when the <a href="http://content.time.com/time/health/article/0,8599,1899526,00.html" target="_blank">H1N1 influenza pandemic</a> first struck in 2009 when people and individuals and organizations rushed to buy them. And a fundamental problem in the supply chain for masks is that many are produced overseas - <a href="https://www.nytimes.com/2020/03/13/business/masks-china-coronavirus.html" target="_blank">more than 50% in China</a>, which helps keep costs low. But the lower cost comes with longer lead time and a loss of control over the source of the product.</p> <p>For critical products, the US must be willing to pay more for domestic production to meet US demand, and companies must ensure they have sufficient capacity to ramp up to meet the nation&rsquo;s demand. This can be achieved through financial incentives and long-term agreements to ensure purchases in &ldquo;peacetime&rdquo; in exchange for extra or flexible capacity during times of crisis.</p> <p>Pharmaceutical supply chains are just as vulnerable, and the US has experienced both acute and chronic shortages of <a href="https://www.nap.edu/catalog/25267/medical-product-shortages-during-disasters-opportunities-to-predict-prevent-and" target="_blank">products in recent years</a>. When Hurricane Maria hit Puerto Rico, it disrupted the leading producers of saline and IV bags in America, and <a href="https://www.theguardian.com/us-news/2018/jan/10/hurricane-maria-puerto-rico-iv-bag-shortage-hospitals" target="_blank">shortages rippled across the whole country</a>. &nbsp;Also, the government does not even know what parts of products are produced where. Multiple manufacturers can source from the same supplier of a critical active pharmaceutical ingredient, and then disruptions can hinder that supplier.</p> <h1>Supply Chain Mapping</h1> <p>It is critical that we do a complete supply chain mapping of pharmaceutical and other medical products, from the final product all the way to the lower tier suppliers of components and raw materials. Such visibility would quickly expose weak links in a supply chain due to dependency on a single supplier or sourcing from an area prone to disruptions.</p> <p>Pharmaceutical companies are concerned about sharing data because of proprietary information. This risk can be mitigated, and there is a far greater risk if the US cannot ensure a reliable supply of medicine. If necessary, we should take regulatory action to ensure supply chain mapping and visibility across products of many types are available in advance of a crisis. &nbsp;</p> <p>Critical products can be endangered when a single subcomponent is hindered. Examples abound, such as the <a href="https://www.nytimes.com/2020/03/18/health/coronavirus-test-shortages-face-masks-swabs.html" target="_blank">nasal swab</a> associated with the first Covid-19 testing kit used in the US.</p> <h1>Component Commonality</h1> <p>A classic solution is a flexible product and supply chain design. Companies often prefer component commonality, where several products depend on a common subcomponent that has sufficient supply. Examples include Coca-Cola products that use the same basic bottles and Toyota vehicles that use <a href="https://hbr.org/1998/07/another-look-at-how-toyota-integrates-product-development" target="_blank">common parts across many models</a>. Component commonality helps reduce waste and increase efficiency in supply chains. Still, it can lead to severe shortages if the component has a fragile supply chain that cannot easily be ramped up. We have seen this problem in the chemical reagents used in some coronavirus tests.</p> <p>To avoid this in critical products, we need to build some flexibility into production and supply chain design so that alternative components from other supply sources can be substituted as required.</p> <h1>Supply Chain Visibility</h1> <p>Given the interdependence of product design, manufacturing, and supply chains, it is essential for them to engage continuously and not to be siloed, which can ensure the supply chain holds up, especially for critical products. &nbsp;</p> <p>Every company producing medical products should take on full responsibility to ensure the <u>visibility of the supply chain with the ability to respond to changes in demand or supply. </u>Each one should be willing to share information with a government agency that can ensure nationwide visibility and identify vulnerabilities. Understanding and mitigating supply chain risks for critical products can only be achieved if all parties work together and proactively.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/covid-19" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">COVID-19</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supply Chain</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/global-supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global Supply Chain</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/medical-supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">medical supply chain</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/risk-mitigation" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Mitigation</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/risk-management-and-compliance-grc" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk Management and Compliance (GRC)</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Fix Our Broken Medical Supply Chains - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/fix-our-broken-medical-supply-chains"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Tue, 26 May 2020 21:48:50 +0000 Pinar Keskinocak 1777 at https://www.futureofsourcing.com https://www.futureofsourcing.com/fix-our-broken-medical-supply-chains#comments Global Sourcing: Myth Versus Reality https://www.futureofsourcing.com/global-sourcing-myth-versus-reality <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2843%29.png"><a href="https://www.futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2843%29.png" title="Global Sourcing" class="colorbox" rel="gallery-node-1764-PO2PTnSEwPc"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Copy%20of%20FoS%20Header%20Images%20%2843%29.png?itok=qfRF_N4B" width="624" height="325" alt="Global Sourcing" title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/supplier-collaboration-sharing-influence-for-shared-success">Supplier Collaboration: Sharing Influence for Shared Success </a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>Global sourcing offers numerous benefits. Unfortunately, due to misinformation, many companies overlook global sourcing as a solution and miss out on potential productivity benefits. In this article and the complimentary infographic, we will explore and debunk some of the most persistent myths about global sourcing.</p> <h1>Myth 1: With So Many Global Outsourcing Partners Available, It&rsquo;s OK to Pick the First Provider That Stands Out to You.</h1> <p>Reality: While there is indeed a vast selection of global sourcing partners available, take the time to conduct due diligence and to seek a partner that specializes in the services, products, and applications for which you need manufacturing support.</p> <p>Just like domestic manufacturers, global sourcing manufacturers specialize in different areas. Assemble a list of options, compare and contrast pros and cons, and contact facilities (or a sourcing partner), if you need more information.</p> <h1>Myth 2: To See the Greatest Benefits of Global Outsourcing, Choose the Lowest-cost Partner.</h1> <p>While global sourcing can yield significant cost benefits, the lowest-cost facility is not necessarily the right choice. Be sure that a facility can meet the capacity, timing, and quality requirements that you and your end customer require.</p> <p>Also, keep in mind that lower costs are often not the only reason for using global sourcing. A global partner can provide expanded capacity, faster turnaround for large orders, and the ability for you to focus on core processes while components are manufactured elsewhere.</p> <h1>Myth 3: Language and Cultural Barriers Detract From the Effectiveness of Global Sourcing.</h1> <p>In today&rsquo;s global industrial manufacturing landscape, facilities maintain personnel well-versed in numerous languages and cultures, to offer the best possible service to manufacturing partners.</p> <p>In addition, global sourcing agencies are available to help bridge any communication gaps. With this level of service in place, you can feel confident that your questions will be answered and that you will have total transparency at every step of the process.</p> <h1>Myth 4: Global Sourcing and Offshoring Share a Stigma.</h1> <p>Offshoring is different from global sourcing in that it involves moving core production processes to a different country &mdash; a practice that continues to have a poor reputation. In global sourcing, you maintain domestic facilities, operations, and personnel.</p> <p>You can turn to global sourcing for supporting services such as additional capacity, component manufacture, assembly, warehousing, and more. Global sourcing keeps processes onshore &mdash; avoiding the stigma associated with moving operations elsewhere.</p> <h1>Myth 5: The Cost Benefits of Global Sourcing Are a Trade-off For Lower Quality.</h1> <p>Global sourcing partners now maintain stringent quality control processes and work with you to assure that their production is up to the standards you and your customers require.</p> <p>Contracts often contain quality clauses. You and your representatives will be able to monitor outsourced processes as needed. You will have access to traceable quality data for your records and for any customers who may require additional documentation. The myth of poor quality from outsourced manufacturers is no longer true.</p> <h1>Myth 6: One Must Find a Trustworthy Global Sourcing Partner Because You Will Have No Control Over Outsourced Operations.</h1> <p>While it is true that a trustworthy sourcing partner is beneficial, you do not have to worry about a loss of control over production operations upon signing the contract.</p> <p>Due to higher quality expectations, multilingual personnel and a changing competitive landscape, you can monitor every detail of outsourced operations and can step in as needed. With this control in place, an outsourced production will be up to the same standards kept in your facility.</p> <p>The accompanying infographic shares even more myths about global sourcing, as well as information about some of the myths described above.</p> <p><iframe allowfullscreen="" frameborder="0" height="1730" marginheight="0" marginwidth="0" scrolling="no" src="https://image.slidesharecdn.com/axia-infographic-190913130946/95/global-sourcing-myth-versus-reality-1-638.jpg?cb=1568380287" style="border:1px solid #CCC; border-width:1px; margin-bottom:5px; max-width: 100%;" width="668"></iframe></p> <div style="margin-bottom:5px">Axia Sourcing is a <a href="https://axiasourcing.com/services/sourcing/" target="_blank">global sourcing</a> service provider.</div> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/global-supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global Supply Chain</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/sourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Sourcing</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/global-sourcing-procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global Sourcing Procurement</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/supplier" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supplier</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Global Sourcing: Myth Versus Reality - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/global-sourcing-myth-versus-reality"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Wed, 20 May 2020 16:01:08 +0000 Tim Baker 1764 at https://www.futureofsourcing.com https://www.futureofsourcing.com/global-sourcing-myth-versus-reality#comments COVID-19 AND TRADE REGULATIONS https://www.futureofsourcing.com/covid-19-and-trade-regulations <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2839%29.png"><a href="https://www.futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2839%29.png" title="COVID-19 TRADE" class="colorbox" rel="gallery-node-1758-PO2PTnSEwPc"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Copy%20of%20FoS%20Header%20Images%20%2839%29.png?itok=RaVKu6or" width="624" height="325" alt="COVID-19 TRADE" title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/how-procurement-can-help-address-the-covid-19-crisis">How Procurement Can Help Address the COVID-19 Crisis</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>The COVID-19 pandemic poses fundamental questions for governments and businesses about the resilience of international trade.</p> <p>How to ensure supplies of crucial goods (medical supplies, food) that are dependent on global supply chains?</p> <p>How to survive the immediate crisis and be best placed, with suppliers and customers, to resume production as soon as conditions allow?&nbsp;</p> <p>How to protect national industries while retaining the benefits of free and fair international trade?</p> <p>The immediate responses have thrown up an array of new regulations together with temporary relaxations of existing rules. These recent developments and COVID-19, primarily from a UK/EU perspective, have had an impact on supply chains, tariffs, export insurance, customs, export controls and sanctions.</p> <p>The impact of COVID-19 on international, and indeed domestic, supply chains are profound. The character of the pandemic is such as to wreak maximum mayhem. Cycling from a supply-side crunch as production in Asia was hit, to a demand-side crisis as companies in Europe and the US canceled orders, and back again to supply constraints as reinfections break out and supplier companies fail to survive.</p> <h1>Food Supply Chain</h1> <p>The food supply chain, in particular, is increasingly struggling with quarantines, labor shortages, shipping interruptions and export restrictions to ensure domestic consumption needs are met.</p> <p>Russia has proposed a seven million tonne grain export quota for April through June; benchmark rice prices in Thailand have risen more than 11% since the end of February and wheat futures in Chicago have risen 15% since mid-March. Further food security protectionist measures look likely.</p> <p>Beyond the food sector, manufacturers and retailers are torn between protecting their own financial position on one hand and extending support to their suppliers on the other,to ensure that they survive until business resumes. While some have canceled orders and extended payment terms, others have taken delivery of already produced goods and prioritized vendors that supply parts and raw materials critical to revenue generation.</p> <h1>Impact on Freight</h1> <p>The pandemic is undercutting sea freight and raising airfreight prices simultaneously. Order postponements and cancellations threaten to leave shipping containers piling up at ports and warehouses full. Ships are traveling on longer routes than usual, deliberately delaying the arrival of the cargo, but are likely soon to face falling demand and a consequent hit to freight prices. At the same time, exports of essential goods face sharply increased demand for airfreight capacity, combined with a reduction in supply as passenger jets, which usually carry some cargo, due to airlines grounding part or all of their fleet.</p> <p>For the longer term, the pandemic is exposing vulnerabilities in both critical and non-critical supply chains and may accelerate the re-shaping of global trade that was already underway:&nbsp; &nbsp;</p> <ul> <li>Companies are starting to re-evaluate the resilience of current &lsquo;just-in-time&rsquo; business models.&nbsp; Thin inventories sourced from around the world have always posed a risk, but many companies are now re-evaluating that risk and looking to build up buffer stocks produced closer to home.</li> <li>Governments will need to review the risks to national and economic security, and not only for supplies of pharmaceuticals, medical equipment and food. How far it is reviewed nationally or multilaterally is critical in avoiding a wave of protectionist trade and investment measures.</li> </ul> <p>On 27 March, <a href="https://www.consilium.europa.eu/media/43072/final-g20-leaders-statement-26032020.pdf" target="_blank">the G-20 leaders</a> recognized the severe risks that the pandemic poses to international trade. They pledged to work both to &lsquo;<em>ensure the flow of vital medical supplies, critical agricultural products, and other goods and services across borders&rsquo;</em> and at the same time to keep emergency measures aimed at protecting health &lsquo;<em>targeted, proportionate, transparent, and temporary&rsquo;</em> in the interests of realizing &lsquo;<em>a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment, and to keep our markets open.&rsquo;</em> The challenge of translating these objectives into action remains daunting.</p> <p>The changes to trade regulations and trade flows we have seen so far are only the start of the response to COVID-19.</p> <p>There will be many more challenges to come as the crisis evolves, and there will be a time when regulators begin to unwind the temporary measures that are in place.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/supply-chain-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supply Chain Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/global-supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global Supply Chain</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/trade" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Trade</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="COVID-19 AND TRADE REGULATIONS - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/covid-19-and-trade-regulations"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Tue, 12 May 2020 17:37:00 +0000 Andrew Hood 1758 at https://www.futureofsourcing.com https://www.futureofsourcing.com/covid-19-and-trade-regulations#comments Rebuilding a Broken Chain: How Agility Can Save The World https://www.futureofsourcing.com/rebuilding-a-broken-chain-how-agility-can-save-the-world <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2835%29.png"><a href="https://www.futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2835%29.png" title="Rebuilding a Broken Chain: How Agility Can Save The World" class="colorbox" rel="gallery-node-1755-PO2PTnSEwPc"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Copy%20of%20FoS%20Header%20Images%20%2835%29.png?itok=TiR031et" width="624" height="325" alt="" title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/making-indirect-spend-take-the-shortest-way">Making Indirect Spend Take the &quot;Shortest Way&quot;</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>There were two stories in recent news that grabbed my attention.&nbsp; All across the country, food banks are overwhelmed with demand.&nbsp; <a href="https://www.commondreams.org/news/2020/04/10/unforgettable-footage-endless-line-cars-food-banks-stark-illustration-coronavirus" target="_blank">Families in desperate need waited for hours</a> for a week&rsquo;s worth of supplies over Easter weekend, with lines of cars stretching for miles. The demand outstretched many facilities&rsquo; ability to fulfill, with some leaving empty-handed, or with less than they need.</p> <p>Even for those with the means to pay, grocery store shelves are spotty and bare in places.&nbsp; Stores run out of eggs, meat, vegetables, and milk in addition to the now-usual scarcity of toilet paper and Clorox wipes. The &ldquo;panic&rdquo; buying ended a few weeks ago, yet shortages persist.&nbsp; We&rsquo;ve all seen it as we don our masks and queue up 6 feet apart outside our local markets. At my house, we joke that grocery shopping has become an episode of &ldquo;Chopped&rdquo;: What can you make with a can of Spam, a wilted apple, and a box of Cheerios? I haven&rsquo;t been able to get vanilla, flour, or dishwasher detergent in weeks.</p> <p>The shift in demand isn&rsquo;t obvious; people have always gone grocery shopping, so why are the shelves bare? Is it possible that my neighbors have eaten every meal at a restaurant until today? We are buying more groceries, sure, but not <em>that</em> much more!</p> <p>The reality is that the current grocery supply chain is incredibly lean and efficient. Striving to decrease food waste and reduce the cost of goods, the process of ordering is optimized to a remarkable extent.&nbsp; Complex ordering systems estimate demand and precisely fill shelves according to past trends. Most grocery stores have limited &ldquo;backroom stock&rdquo; to only the most vital products, having shifted to a direct stock method. Items coming in on a truck go straight to the shelves, maximizing floor space and decreasing expenses.&nbsp;</p> <p>On a <a href="https://seekingalpha.com/article/4044095-whole-foods-market-wfm-q1-2017-results-earnings-call-transcript?part=single" target="_blank">quarterly conference call</a> in February 2017, Whole Foods EVP of operations Ken Meyer explained that the company&rsquo;s order-to-shelf initiative cleared backrooms of all items except &ldquo;never-outs&rdquo; or items continually re-stocked. He stated, &ldquo;It&rsquo;s creating a powerful, efficient process, from the way the goods are received in the back door to bring them right out to the shelf.&rdquo;&nbsp;<a href="http://www.supermarketnews.com/retail-financial/supply-chain-changes-drive-results-target-whole-foods" target="_blank">Target similarly implemented their &ldquo;Goods to Person&rdquo; initiative</a> around the same time, which resulted in a 9% reduction in backroom storage - and the ability to expand the store&rsquo;s shoppable footprint, especially in urban areas where space is at a premium.&nbsp; In addition, this precise method of distribution reduces the total time it takes to bring stock to consumers. This <a href="https://www.wsj.com/articles/retailers-rethink-inventory-strategies-1467062280" target="_blank">method has been widely adopted across the industry</a> over the last few years, resulting in lower prices, improved efficiency, and larger consumer-facing footprints.</p> <p>Behind the scenes, the entire system depends on data-assisted ordering, which is based on historical demand. ERP systems determine the ideal inventory level of a particular item based on prior sales, adjusting for trends and seasonality. Purchase-of-sale systems deplete that inventory, and orders are created automatically to backfill to the precise level of stock needed, SKU by SKU. When the demand changes dramatically, the system orders enough to refill to the prior stock level, but adjusting the &ldquo;ideal&rdquo; stock level doesn&rsquo;t happen immediately.</p> <p>So, when you walk into the store, especially national chains and urban grocers, there are holes and bare shelves.&nbsp;</p> <p>Once the initial &ldquo;panic buy&rdquo; of toilet paper stopped, why haven&rsquo;t the stores simply restocked them and ordered more? It&rsquo;s been over a month since people walked out of Target with 400 rolls of paper towels, yet some items remain in short supply. That much of a sustained demand increase doesn&rsquo;t make sense. Automated ordering isn&rsquo;t to blame for that. It&rsquo;s baffling until you consider that bulk orders of these goods used to be made by schools, hotels, restaurants, theme parks and businesses&mdash;and those packages and distribution channels are very, very different from the route a 12-pack of Charmin takes to your cart.</p> <h1>Dumping Milk and Burying Produce</h1> <p>On the supply side of the economy, there&rsquo;s an even stranger picture. Without restaurant and commercial purchasing, <a href="https://www.nytimes.com/2020/04/11/business/coronavirus-destroying-food.html" target="_blank">farmers are dumping and composting ton after ton of food</a>.&nbsp; From produce to milk to eggs, perishable food is being deliberately destroyed because the producers don&rsquo;t have a market for it.&nbsp;</p> <p>To people working outside of the supply chain, none of this makes sense.&nbsp; Why don&rsquo;t those farmers just sell their produce to the food banks?&nbsp; Why don&rsquo;t they simply sell to the grocery stores?&nbsp;</p> <p>These producers had a supply chain which was directed toward the restaurant, government, and commercial industries.&nbsp; According to the USDA, the National School and Lunch and Breakfast Programs are the largest consumer of liquid milk in the US, distributing over 1.8 billion pints to children in the last year.&nbsp; While smaller versions of the lunch program are operating, the volume has plummeted, and suppliers who specialized in the program are dumping their milk. Produce farms are facing similar issues; they package in 50-pound bags and sell to restaurants like Applebees, Chilis, and McDonald&#39;s&mdash;restaurants that are experiencing an unprecedented drop in demand. Restaurants accounted for 25% of pork and bacon purchases nationwide, and there have been processing plant shutdowns, resulting in overcrowded pig farms.</p> <p>It&rsquo;s a broken supply chain, and food/grocery isn&rsquo;t the only one.</p> <p>Re-tooling packaging and distribution is a massive task. The machines which handle packaging cost millions of dollars and take months to implement. Theoretically, producers could switch to manually repackaging, but worker shortages and the need for intense safety measures present a real barrier to that kind of agility.</p> <p>Many suppliers and distributors are questioning the wisdom of making dramatic changes to their packaging and distribution systems&mdash;if the pandemic &ldquo;blows over&rdquo; in a few weeks, and everything goes &ldquo;back to normal,&rdquo; those heroic measures would be a further drain on an already stressed or decimated bottom line.</p> <p>If, however, demand doesn&rsquo;t go back to normal, if restaurants don&rsquo;t reopen, or reopen in a limited way, the supply chain will need to adjust permanently. If this crisis continues into the fall and into 2021, or if it starts and stops in jerks and waves, we will continue to see rolling shortages and oversupply. This uncertainty cries out for agile, elastic solutions.</p> <h1>Creating an Agile, Resilient Chain</h1> <p>COVID-19 has exposed the vulnerabilities of our highly specialized and extremely lean supply chain. The good news is that we don&rsquo;t (currently) have a supply problem. Farmers can grow the amount of food we need to eat and manufacturers can make the products we use every day. We just need to fix the connection between the two and make that connection elastic enough to handle ongoing fluctuations. In the long term, that level of agility will give us a stronger, more stable system that can accommodate all sorts of disruptions, from natural disasters to economic shifts.</p> <p>In the short term, agile actions can be taken to fill gaps. On a national level, the administration is providing funds to struggling suppliers, and the national guard has been mobilized to collect surplus food from farmers and distribute it to food banks. Last week, the <a href="https://www.ams.usda.gov/content/usda-purchase-3-billion-agricultural-commodities-issue-solicitations-interested-participants" target="_blank">U.S. Agriculture Department said it would spend $3 billion</a> to buy fresh produce, dairy and meat that will be sent to food banks. Short-term, this sort of effort is absolutely necessary to ensure that producers stay in business and that people get the food they need.</p> <p>On a smaller scale, there is exceptional innovation happening in the grocery and food industry.&nbsp; Companies across the country have already made incredible shifts: just as alcohol distributors have begun making sanitizer and fashion companies are now producing masks, farmers, distributors, and retailers are undergoing a remarkable transformation.&nbsp;</p> <p>My local grocery store has been purchasing commercially packaged items and repackaging them in-store for consumer consumption. Innovative restaurants have begun to hold &ldquo;Farmers Markets&rdquo; and offer pickup service for their excess meats and produce. These creative solutions are not only a lifeline for struggling businesses but can be a blueprint to a newer, more resilient economy.&nbsp;</p> <p>Longer-term, we need to address the vulnerabilities exposed by the current crisis. The odds are that we will be facing instability in the supply chain for quite some time. Even if the pandemic resolves quickly, and people can get back out, many companies will not recover. Primary and secondary suppliers may not come back online, and we can, unfortunately, expect waves of bankruptcies in the coming months, no matter what happens with the medical crisis. Simply waiting for things to go &ldquo;back to normal&rdquo; is a recipe for disaster.</p> <p>The organizations that will thrive in the future are those who embrace change and agility. They will target their single threads of demand and supply, and work to diversify. Manufacturing and distribution will learn how to make rapid shifts in the most Darwinian environment possible&mdash;change or die.</p> <p>It&rsquo;s not time to throw out the technology that made our supply chains so lean, either. Data models that rely entirely on historical data, without the ability to adjust for trends, need to be made more elastic. Deep learning and feedback loops can detect small changes in demand and shift ordering to keep backroom stock down while adjusting for changes in demand.&nbsp;</p> <p>Big data can provide incredible connections between suppliers and customers, and can enable organizations to make the kinds of major shifts that are required to respond to a crisis. Robotic process automation (RPA) and artificial intelligence (AI) are capable of doing research on your supply chain that an army of humans couldn&rsquo;t accomplish. <a href="https://www.fairmarkit.com/" target="_blank">Fairmarkit</a> has seen an unprecedented surge in usage of our vendor recommendation engine, which identifies suppliers automatically for goods and service purchases; other agile software providers can help to bridge this gap.</p> <p>We can rebuild the supply chain together, and we can make it elastic, resilient, and equitable together. Bring on the technology and embrace the innovation!</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/global-supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global Supply Chain</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/covid-19" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">COVID-19</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/agile-methodology" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Agile Methodology</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/robotic-process-automation-rpa" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Robotic Process Automation (RPA)</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/artificial-intelligence-ai" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Artificial Intelligence (AI)</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Rebuilding a Broken Chain: How Agility Can Save The World - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/rebuilding-a-broken-chain-how-agility-can-save-the-world"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Thu, 07 May 2020 22:54:30 +0000 Erin McFarlane 1755 at https://www.futureofsourcing.com https://www.futureofsourcing.com/rebuilding-a-broken-chain-how-agility-can-save-the-world#comments COVID-19: Where is your supply disruption? https://www.futureofsourcing.com/covid-19-where-is-your-supply-disruption <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2821%29.png"><a href="https://www.futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2821%29.png" title="Coronavirus map" class="colorbox" rel="gallery-node-1737-PO2PTnSEwPc"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Copy%20of%20FoS%20Header%20Images%20%2821%29.png?itok=19pm3Tia" width="624" height="325" alt="Coronavirus map" title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/reduce-supply-chain-vulnerabilities-with-strategic-sourcing">Reduce Supply Chain Vulnerabilities with Strategic Sourcing</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>When the first few cases of Coronavirus (COVID-19) were detected just four short months ago, few could have expected what has now become our new reality. We are in the midst of a global pandemic outbreak that tragically continues to claim the lives of thousands and disrupt the livelihoods of countless others. On top of that, it&rsquo;s also causing serious business, supply chain and economic disruptions worldwide. From shortages in supply and talent, to quarantine and border closures, the impact is increasing by the day, continuing to wreak havoc on businesses and supply chains.</p> <h1>Coronavirus Impacts on the Supply Chain</h1> <p>The effects of coronavirus are trickling throughout entire end-to-end supply chains. Quarantines, travel bans, social distancing measures and other restrictions are resulting in production slowdowns, delayed land pick-up and slowed seaport and air operations. On top of that, these travel bans and logistic hurdles make it even more difficult for procurement to properly identify alternate routes and bring new suppliers onboard.</p> <p>According to riskmethods&rsquo; customer supply chain intelligence, 81% of manufacturing companies are currently experiencing supply problems due to the Coronavirus. Additionally, their customers have experienced more than 46,000 supplier sites affected in China. Perhaps even more alarming, there&rsquo;s been a 44% rise in force majeure risk and a 38% increase in production shutdowns. When suppliers can&rsquo;t fulfill contracts, it has a trickle-down effect across the supply chain and globalized economy. And as the crisis persists, expect to see a spike in financial risks relating to the viability of suppliers and manufacturers. In fact, of all related cases of riskmethods&rsquo; customers&rsquo; supply chains, more than half of coronavirus-related threats indicate financial distress and instability (56%), which accounts for a 45x increase since January 22, 2020.</p> <p>Decreased consumer spending is also further complicating global supply and demand. Not only are certain products simply not available in many stores &ndash; like the &ldquo;<a href="https://www.forbes.com/sites/carlieporterfield/2020/03/20/heres-why-the-toilet-paper-shortage-is-only-temporary/#289cf5e42672" target="_blank">toilet paper shortage</a>&rdquo; in the U.S. &ndash; but consumer behavior is changing dramatically. With many areas around the world facing quarantines and shelter in place orders, consumers are focused on necessity items &ndash; food, beverages, medicine, toiletries, etc. &ndash; rather than keeping up with the latest fashion trends, for example. As the decrease in spending due to fear continues, it will slow top-line growth, impacting the upstream supply chain.</p> <h1>What Can Procurement Leaders Do?</h1> <p>In the short term, organizations should actively assess where they have additional capacity in unaffected areas and redeploy that capacity to cover shortages elsewhere. But in order to understand the impact on the production and delivery of goods, enterprises need enhanced monitoring and better visibility into their supply chain. The sooner organizations can increase their visibility, the more quickly they can respond and mitigate the exposure.</p> <p>There are four critical questions supply chain and procurement leaders must answer right now:</p> <ol> <li>Which of your parts and products are affected?</li> <li>Which of your suppliers are impacted?</li> <li>How will the interruption affect lead times and pricing?</li> <li>Which customers are affected?</li> </ol> <p>Understanding the current state of your supply chain and factoring in unfolding events can be a difficult process, but it is an essential element of successful mitigation efforts. Visibility into your organization&rsquo;s risk exposure enables you to be better equipped to identify, assess and mitigate threats to the end-to-end supply chain.</p> <p>If there&rsquo;s two supply chain takeaways we can learn from this crisis, it&rsquo;s the importance of monitoring risk and diversifying your supply base. As we&rsquo;ve seen unfold, organizations that have been overly reliant on a small set of suppliers or a single country from a sourcing perspective, and those that are failing to continuously monitor and respond to rapidly evolving supplier risk across the globe, are facing severe supply disruptions. The other lesson: organizations should always be preparing for the next unpredictable event by prioritizing contingency plans for disruption and non-compliance scenarios.</p> <p>The effects of COVID-19 aren&rsquo;t going to disappear anytime soon. But we will overcome it &ndash; we always do. The question is will we learn our lesson? It&rsquo;s not a matter of &ldquo;if&rdquo; the next crisis will hit, it&rsquo;s a matter of &ldquo;when,&rdquo; and we need to be prepared.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/global-supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global Supply Chain</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/supply-chain-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supply Chain Management</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/suppliers" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Suppliers</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/global-sourcing-procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global Sourcing Procurement</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="COVID-19: Where is your supply disruption? - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/covid-19-where-is-your-supply-disruption"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Sun, 12 Apr 2020 18:06:12 +0000 Bill DeMartino 1737 at https://www.futureofsourcing.com https://www.futureofsourcing.com/covid-19-where-is-your-supply-disruption#comments A Brave New Supply Chain World https://www.futureofsourcing.com/a-brave-new-supply-chain-world <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2817%29.png"><a href="https://www.futureofsourcing.com/sites/default/files/articles/Copy%20of%20FoS%20Header%20Images%20%2817%29.png" title="World Supply Chain" class="colorbox" rel="gallery-node-1734-PO2PTnSEwPc"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/Copy%20of%20FoS%20Header%20Images%20%2817%29.png?itok=E-GpuDOM" width="624" height="325" alt="World Supply Chain" title="" /></a></div></div></div><div class="field field-name-field-related-news field-type-entityreference field-label-above"><div class="field-label">Related news:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/three-supplier-conversations-you-need-to-have-now">Three Supplier Conversations You Need to Have Now</a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>To understand long-term transformations in supply chain and procurement technology, supply chain professionals must be able to understand present trends so they can help shape future realities. Experts believe the following predictions are viable hypotheses that we should consider for 2030.</p> <h1>Predicting the Strategic Sourcing Technology Landscape in 2030</h1> <p><strong>1)</strong>&nbsp;&nbsp;&nbsp;&nbsp; <strong>Increase in Population:</strong> In 2030, there will be more people seeking cultural and political self-determination, financial stability and personal self-actualization. Population growth means more economic activity and expanded production capacity.This also creates a greater need for food, water, healthcare, housing and education.</p> <p><strong>2)</strong>&nbsp;&nbsp;&nbsp; <strong>Extreme Weather: </strong>In 2030, the upper atmosphere will have warmed significantly. This so-called &ldquo;Greenhouse Effect&rdquo; will create more extreme weather. Because of hotter summers, colder winters and lethal storms, agricultural zones will be forced to shift. Fresh water will become more expensive.</p> <p><strong>3)</strong>&nbsp;&nbsp;&nbsp; <strong>Rising Populism and Nationalism:</strong> In 2030, more people will gravitate to populist and nationalistic movements and build political coalitions. For culture, this means that membership in clubs, societies, unions and professional networks will become more important.It also &nbsp;means that these organizations will more explicitly identify with economic and geopolitical agendas. For policy, it means that we can expect more tariffs, more walls and more trade disputes.</p> <p><strong>4)</strong>&nbsp;&nbsp;&nbsp; <strong>More Refugees:</strong> In 2030, the number of people displaced by extreme weather and rising sea levels will have massively increased, while the number of countries willing to host refugees will decrease. Stateless and displaced people will continue to become economic migrants in wealthier countries and will struggle to claim recognition and political power.</p> <p><strong>5)</strong>&nbsp;&nbsp;&nbsp; <strong>More Real-Time Data, More Real-Time Accountability:</strong> In 2030, the largest driving force for change will be the consumers, businesses and shareholders in wealthy countries who have access to data. These groups of people will be skeptical of business claims and will hold companies accountable by voting with their dollars. Consumer and shareholder activism will increase, in some cases driven by viral online outrage events that reverberate through vast global social networks.</p> <p>This is a world where the stakes of business success cannot be overestimated, particularly when it comes to the supply chain. Based on these predictions, being bullish on complexity, chaos, ubiquitous data, ubiquitous computing from a management perspective and ubiquitous feedback loops (real or simulated) will be essential for supply chain success.&nbsp;</p> <p>Consumer opinion and preference will move from analysis of abstracted trends to analysis of large numbers of real people using connected devices in real-time. Companies will be expected to know the physical location of all inventory and shipment arrival time.</p> <p>Wireless sensor networks (WSN) in logistics will automatically optimize lanes, allowing real-time response to weather events, changes in tariffs and current events. Business operations will live at the speed of the 24-hour news cycle and will be expected to take advantage of changing circumstances.</p> <p>Procurement teams will be consultant strategists, analyzing and acting on large datasets concerning real-time demand and changes in the market. They will work with outsourced customer service teams to process buying requests in compliance with approval processes.</p> <h1>Predicting Strategic Sourcing Technology in 2030&nbsp;&nbsp;</h1> <p><strong>1)</strong>&nbsp;&nbsp;&nbsp;&nbsp; <strong>Category-Focused B2B Marketplaces Using Hyperdynamic Pricing: </strong>Hyperdynamic pricing, driven by AI, is used today by travel websites like Expedia and Hopper. The price is updated in real-time relative to breaking news and responsive to buying patterns. For example, if a music festival announces a new location, plane tickets to that location may quickly become more expensive. In 2030, Hyperdynamic pricing engines, based on large-volume B2B marketplaces, will become the norm for most categories of spend.</p> <p><strong>2)</strong>&nbsp;&nbsp;&nbsp; <strong>Cradle to Grave ESG Supply Chain Accountability:</strong> Corporate leaders, in solving the supply disruptions caused by bullwhips, can leverage demand to make price changes; however, with great power comes great responsibility. In 2030, as corporate boards respond to consumer concerns about deforestation, human slavery, and limiting exposure to infectious diseases or neurotoxic contaminations, the supply chain will come under greater scrutiny. It will also be a driving force that moves the ESG numbers shareholders care about.</p> <p><strong>3)</strong>&nbsp;&nbsp;&nbsp; <strong>The Customer as Procurement Stakeholder:</strong> Think about how data moves through most enterprises today: customers buy things through a website. That data goes to business analysts, to sales, to operations, then to suppliers. As more businesses move to customized, made-to-order inventory, because of process mapping and mining, pressure is put onstakeholders to represent the voice of the customer.</p> <p>In 2030, new data pipelines will enable customers to generate the specifications, evaluate the criteria, and establish the requirements for selecting and managing suppliers. As consumers become more data-driven in their buying habits and more particular about customization, brands will scramble for tools that can incorporate consumer participation directly into their supply chains through interactive web portals.</p> <p><strong>4)</strong>&nbsp;&nbsp;&nbsp; <strong>Strategic Suppliers as Fully Integrated Partners: </strong>In 2030, as data from connected devices becomes more readily available and deliverable to ubiquitous interfaces, supplier partners will be brought further along into real-time visibility of sensitive operational data. As videoconferencing, distributed and remote workforces, and work-from-home cultures become normalized, more firms will use both a contingent workforce and integrated suppliers. They will operate more like part of the company&rsquo;s internal team than as an external party.</p> <p><strong>5)</strong>&nbsp;&nbsp;&nbsp; <strong>Sourcing Events: </strong>There is supported business evidence that sourcing events add value to a company. In 2030, they will become far more common. Sourcing events will have an arms race effect on CPOs buying the latest and greatest in digital sourcing technology. CPO&rsquo;s will want to arm their category teams so that they are buying the latest and greatest CRM, targeted prospect research, and lead nurturing tools. CFOs will insist on a minimum number of sourcing events per year. Still, CMO&rsquo;s, alongside corporate boards, must demand that procurement delight consumers with suppliers that can deliver on the company&rsquo;s ESG goals. Sourcing event networking is the key.</p> <h1>Betting on Innovation</h1> <p>Predictions are, by their very nature, uncertain. A lot can change in 10 years. Startups like ours (Bid Ops) are notoriously fast paced. Our team tends to think in 30-, 60- and 90-day cycles using annual technology roadmaps. Sometimes, however, we find it advantageous to take the time to make long-term predictions using the following inputs to correct our own inherent biases:</p> <p>1) What do forecasters tend to underestimate and overestimate?</p> <p>2) What are the current supply chain trends? How might they affect the future?</p> <p>3) What are the status quo pain points that can be solved by technology?</p> <h1>A Hopeful Future</h1> <p>There is no doubt that supply chains will look very different in 2030. It is the responsibility of procurement professionals in 2020 to know present trends and understand their impact on the future. &nbsp;We need to embrace technology, but not at the expense of humanity. We need to continue to care about diversity, sustainability and societal impact. Education is now more than ever of the utmost importance.&nbsp;</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/global-supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global Supply Chain</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/strategic-sourcing" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Strategic Sourcing</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/global-sourcing-procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global Sourcing Procurement</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="A Brave New Supply Chain World - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/a-brave-new-supply-chain-world"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Tue, 07 Apr 2020 19:49:03 +0000 Edmund Zagorin 1734 at https://www.futureofsourcing.com https://www.futureofsourcing.com/a-brave-new-supply-chain-world#comments Global supply chains: understanding and managing key legal risks https://www.futureofsourcing.com/node/840 <div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item even" rel="og:image rdfs:seeAlso" resource="https://www.futureofsourcing.com/sites/default/files/articles/partner-supplied-content.jpg"><a href="https://www.futureofsourcing.com/sites/default/files/articles/partner-supplied-content.jpg" title="Global supply chains: understanding and managing key legal risks" class="colorbox" rel="gallery-node-840-PO2PTnSEwPc"><img typeof="foaf:Image" src="https://www.futureofsourcing.com/sites/default/files/styles/juicebox_medium/public/articles/partner-supplied-content.jpg?itok=4lixfbG2" width="239" height="86" alt="" title="" /></a></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"> <p>As supply chains become increasingly complex, identifying the legal risks inherent in managing such a widely dispersed network of suppliers, manufacturers and other trading partners is key to spotting issues and being able to solve them as soon as possible. Global supply chains come under threat from a wide range of risks including natural disasters, financial crisis, strikes, and, perhaps a most prominent concern of late, cybercrime and terrorism.</p> <p>Global supply chains also expose organisations to increased regulatory risk both in the UK and elsewhere. Take as example the Bribery Act 2010 which recently saw the first Deferred Prosecution Agreement or DPA, being entered into by the Serious Fraud Office with Standard Bank (now known as ICBC Standard Bank) relating to payments made, down the chain, by its Tanzanian affiliate to a local partner in Tanzania. This DPA, which was approved by Lord Justice Leveson in the Royal Courts of Justice at the end of last month, sees the bank pay some $25.2 million in fines, a further $7 million in compensation to the Government of Tanzania, and &pound;330,000 for the SFO&rsquo;s costs.</p> <p>Law-makers are increasingly looking at not just the organisation itself but at its supply chains. The Modern Slavery Act 2015, for example, requires increased transparency by companies with a global turnover of &pound;36 million or more who carry on business in the UK. The Act requires the publication of an annual statement setting out steps taken to ensure that slavery and human trafficking is not taking place in their business which includes supply chains. Whilst currently there are no fines or penalties for such a statement, the Secretary of State can bring civil proceedings in the High Court to require an organisation to comply with the disclosure requirement.</p> <p>How then can businesses best manage the risks of a global supply chain? Supply chains typically comprise a large number of actors across widespread functions including sourcing, manufacturing, logistics and distribution, meaning that there is an increased need to focus on managing and mitigating the associated risks. However, a survey published by the University of Tennessee&rsquo;s Global Supply Chain Institute in June 2014&nbsp; found that 90% of firms surveyed did not quantify risk when outsourcing production and that, whilst 66% did have legal and/or compliance risk managers, supply chain risk was virtually ignored.</p> <p>From a contracting perspective, a wide range of commercial agreements, such as long-term supply, distribution, outsourcing, contract manufacture and standard form agreements, are used at various interaction points between different supply chain actors.&nbsp; Starting with their highest value and most strategically important contracts, businesses should evaluate their exposure in the event of the interruption of a key supply.&nbsp; Where a business subcontracts in order to deliver services or products to a customer higher up the chain, a failure of one of its suppliers can put it in contractual breach with its customer with the risk of a damages claim for losses incurred, liquidated damages or service credits. Commercial contracts often contain clauses which provide relief for events outside a party&rsquo;s reasonable control (e.g. force majeure) but care needs to be taken to ensure that the actual wording reflects the agreed balance of delivery risk in unforeseen and unavoidable circumstances.&nbsp; These clauses can be buried at the back with other standard looking terms and conditions but should not be overlooked. Insurance contracts should also be regularly reviewed from a supply chain risk perspective.</p> <p>Companies should also work closely with their insurers and brokers who will willingly share best practices &ndash; practices which must be operationalised on a day-to-day basis if they are to be effective mitigants of stress points in the supply chain. For example, where a customer identifies that is has a dependency on a small number of key suppliers, mitigating actions can include regular monitoring of these suppliers for early signs of financial stress which might lead to insolvency, increased relationship management and governance, and development of a multi-sourcing strategy.</p> <p>As we saw with the tragic collapse of the Rana Plaza garment factory in Bangladesh in 2013, which caused significant loss of life, getting caught up in a supply chain disaster can have a negative impactor for your brand, with some 20 or so well-known brands including Walmart, Primark, Benetton, Monsoon and Mango all affected by that disaster.&nbsp; Companies&rsquo; risk and legal functions increasingly need to devote time and effort developing policies and programs to help manage and mitigate, across the supply chain, compliance with diverse laws and regulations. The risk to reputation cannot be understated.</p> </div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item even" rel="dc:subject"><a href="/tags/supply-chain-management" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Supply Chain Management</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/risk" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Risk</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/global-supply-chain" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global Supply Chain</a></div><div class="field-item odd" rel="dc:subject"><a href="/tags/procurement" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Procurement</a></div><div class="field-item even" rel="dc:subject"><a href="/tags/cybersecurity" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Cybersecurity</a></div></div></div><div class="field field-name-field-addthis field-type-addthis field-label-hidden"><div class="field-items"><div class="field-item even"><div class="addthis_toolbox addthis_default_style " addthis:title="Global supply chains: understanding and managing key legal risks - Future of Sourcing" addthis:url="https://www.futureofsourcing.com/node/840"><a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_linkedin"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_facebook"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_twitter"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_googleplus"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_pinterest_share"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_reddit"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_email"></a> <a href="https://www.addthis.com/bookmark.php?v=300" class="addthis_button_print"></a> </div> </div></div></div><div class="field field-name-field-region field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Region:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/regions/global" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Global</a></div></div></div> Mon, 04 Jan 2016 17:22:42 +0000 Tim Wright 840 at https://www.futureofsourcing.com