Tag Archives: supply chain news

There’s One Key Reason To Buy American In 2017

With the Trump administration’s “Made in America” campaign in full swing, attention has turned to the Pentagon’s global supply chain. The reasons to Buy American might be a little more compelling than you expected….

In 1933 Franklin D. Roosevelt signed into law the 1933 Buy American Act which required the Pentagon to purchase US-manufactured products for anything over a $3,500 threshold. The military supply chain looked very different to today’s, over 80 years later.

The law required that the U.S. military’s entire supply chain be sourced domestically, from the textiles that go into uniforms to the raw materials that are used to create tanks and other weaponry. Roosevelt’s intention was clear: firstly, the law was a patriotic one, with the ‘buy American’ message resonating as strongly in the 1930s as it does among voters today. More importantly, the Act was designed to ensure a strong manufacturing base, critical to the country’s recovery from the Great Depression.

Roosevelt said in 1940: “Guns, planes, ships and many other things have to be built in the factories and the arsenals of America. They have to be produced by workers and managers and engineers with the aid of machines which, in turn, have to be built by hundreds of thousands of workers throughout the land.”

Is Buy American realistic in 2017?

While the 1933 law is ostensibly still in effect, the military supply chain draws heavily on foreign materials and components. In 2013, for example, nearly $20 billion (6.4 per cent of all U.S. military spending) went to overseas entities. This is achieved through the use of exemptions or waivers, which guarantee flexibility and security of supply.

After the White House published a “Buy American” executive order in April, the Office of Management and Budget provided new guidance to federal agencies on enforcing the existing laws, limiting exemptions and maximising the procurement of U.S. products. The Pentagon’s acquisitions office has reportedly instructed its contractors to put in place a training program on how to comply with the 1933 law.

However, there are also a number of materials that simply can’t be found or manufactured domestically, such as the rare earth element needed for flame-resistant rayon fibres used in uniforms (sourced solely from Austria), night vision goggles (91 per cent of which are from China), or lithium ion batteries, semiconductors, microchips and even missile propellant.

Is cybersecurity a reason to Buy American?

Two of the reasons for the 1933 Buy American Act – building patriotism and manufacturing jobs – still remain valid and are a key focus on Trump’s administration, but in today’s world of hi-tech military hardware, there’s a third, critical factor – cybersecurity.

Commentators are alarmed by the presence of Chinese-made microchips in America’s most advanced fighter jets, while components from other foreign entities can be found in American communication satellites, unmanned drones, bomb disposal robots and other gear. Futurist and author Peter Singer, predicted that these microchips could be used to “blow American fighter jets from the sky” if the two countries were ever to go to war.

While very little can be done about the rare-earth materials and metals found only outside of the U.S., it remains to be seen whether the Made in America push will lead to supply chains for vital components including microchips and semiconductors re-shored to the U.S.

In other news this week…

Supply Chain Management software market booming

  • Analyst firm Gartner has announced that the supply chain management (SCM) software market will reach $13 billion by the end of this year, up 11% from 2016.
  • Gartner has also predicted the market will exceed $19 billion by 2021.
  • Growth is being driven by a demand for agility, as vendors move to cloud-first or could-only deployment models, while end-users are becoming more comfortable about cloud security and recognise the benefits of software-as-a-service solutions.

Read more on MH&L news 

When does an SME need a procurement function?

  • New research from Wax Digital has found that having a procurement function is just as vital for SMEs as it is for large corporates.
  • The UK-based survey found that 75% of respondents said procurement was needed once a company reaches a £50M turnover, 77% claim to need procurement by the time it has 100 supplier contracts, and 72% said that procurement was necessary once 500 invoices per month were being processed.
  • Rising costs was the most common reason for introducing procurement, followed closely by inefficient processes and increasing business risk.

For more information visit www.waxdigital.com

Elon Musk’s Hyperloop hits the news again

  • Tech entrepreneur Elon Musk made headlines on Friday when he announced via Twitter that he had “verbal approval” to build a hyperloop – an ultra-high-speed underground transport system – linking New York and Washington DC.
  • If it goes ahead, passengers and cargo would be packed into pods and shot through a system of giant vacuum tubes on magnetic cushions, cutting the current travel time from nearly three hours (high speed train) to 29 minutes for the 355km journey.
  • Musk has also been in conversation with Chicago and Los Angeles officials about hyperloops.

Read more at Financial Review

 

Apple To Finally Get Into Bed With Amazon

Will Apple and Amazon put aside their differences and unite in time for the launch of Apple TV? 

The professional relationship between tech giants Apple and Amazon has been rocky to say the very least.

Firstly, In 2014 Amazon removed  in-app payments from the iOS versions of several of its services  in response to Apple demanding a 30 per cent share of the profits.

And then, in what was considered by many to be a bizarre decision, Amazon announced in October 2015 that it would no longer be selling Apple TV or  Chromecast because of the direct competition between them and Amazon’s own streaming products.

At the time, the move was likened to Apple TV’s refusal to play Netflix’s streaming service because they did not want to promote a competitor, but Apple eventually gave in.

Whilst certain reports this week suggest there are changes in the waters, Amazon’s Echo Show announcement  this week might be a little too close for Apple’s comfort.

Will Apple Echo Amazon’s product?

Last week, Amazon introduced the latest Alexa expansion, unveiling an Echo with a touch screen and a camera. The Echo Show features “everything you love about Alexa” with the added benefits of being able to show you things – whether it’s the weather forecast, a wikipedia page, a video, photos and more.

The device allows users to video chat with anyone who has an Echo, Echo Dot or the Alexa App, posing a big threat to Skype and  Apple’s FaceTime video-calling service.

Watch Amazon’s Introducing Echo Show video below to find out more.

The device costs $229 and is expected to be a huge hit when it begins shipping in late June, quite possibly to the dismay of Apple.  Indeed, the rapid speed at which Amazon has managed to expand its Echo hardware and the reasonable price points present a real threat to Apple.

As its already proven many times, Amazon is in the unique position to deny competitors access to its store. And that’s not to mention it’s currently ahead of the game and anything Apple subsequently releases is likely to come with a hefty price tag.

Time will tell what Apple has up its sleeve and whether consumers are willing to sack in their i-products for Echo.

Amazon Video for Apple TV

Various rumours have suggested this week that Amazon and Apple are headed in a much friendlier direction.

Last Thursday, Buzzfeed announced that the one major flaw of Apple TV was to be addressed: Amazon’s Prime Video service will, at last, be made available. Apple are expected to announce an Amazon Video app designed for Apple’s set-top box at the Worldwide Developers Conference (WWDC) on June 5 in San Jose.

Last year Amazon CEO, Jeff Bezos, explained that the company was waiting for  “acceptable business terms” with Apple before  a Prime Video app was considered.  Perhaps those terms have now been agreed.

If all goes ahead, Amazon is expected to return the favour by resuming sales of Apple TV’s on its website, following a two year hiatus.

In other news this week…

Co-op releases first slavery statement under the Modern Slavery Act 

  • Co-op has outlined how it sources, the clauses it uses in contracts and the steps it takes to audit suppliers withe regards to modern slavery. It also describes how the Co-op helps former slaves into work.
  • The 10-page statement outlines the Co-op’s ethical policies, its supplier approval process and how it carried out 444 audits in 2016.
  • The Co-op said it provided training for suppliers and it planned to develop a new procurement academy and roll out a business-wide training and awareness plan on ethical sourcing.
  • Cath Hill, group marketing director at CIPS, said: “The Co-op’s modern slavery statement is an excellent example of what organisations should be doing to combat this important issue. “

Read more on Supply Management 

Like coffee? You’ll like it even more when it’s sustainable!

  • Australians use an estimated one billion disposable coffee cups annually, but these cups are not recyclable in most states…until now!
  • Melbourne-based social entrepreneur Soula Thuring has taken the direct approach, selling biodegradable coffee cups with an additional Enviro Grow kit which turns the used cup into a plant
  • The $2 Grow Cup of Life kit contains a soil pellet that expands with water, a seed mat and instructions for growing kale, beetroot, rocket and other healthy foods. It can be planted in the backyard or elsewhere and it breaks down in a few months
  • Recently the social enterprise, Streat, teamed up with Melbourne-based coffee startup Pod & Parcel to put its coffee in biodegradable coffee pods to be used in Nespresso machines

Read more on The Guardian 

2017 FM Global Resilience Index exposes supply chain risks

  • The 2017 FM Global Resilience Index, which was recently released, provides SCMR readers with additional insights on emerging nations
  • The annual index, which is online and interactive, ranks 130 countries and territories by their enterprise resilience to disruptive events
  • Supply chain managers are being told that three of the most pressing risks to business performance in the 21st century are cyber attack, natural hazards and supply chain failure

Read more at Logistics Management 

Image credit: AppAdvice

Desperation: Somali Piracy Back On The Rise

After a relative hiatus over the past five years, international supply chains are once again threatened by a resurgence of piracy off the coast of Somalia.

At the height of the Somali pirate crisis in 2011, 151 vessels were attacked in one of the world’s busiest shipping routes. Thousands of hostages were taken and billions of dollars were lost in ransom, damage and delayed shipments.

An unprecedented international response saw the dispatch of over two dozen vessels from the EU, the U.S., China, Russia, India and Japan, which succeeded in reducing the number of attacks down to only 17 in 2015, mainly involving smaller fishing vessels.

However, last month, dozens of armed men in two small skiffs captured the Aris 13, an oil tanker flying the flag of Comoros, and escorted it to be ransomed in the semi-autonomous northern Somalian region of Puntland. The vessel was attempting to pass through the Socotra Gap, a route between Ethiopia and the Yemeni island of Socotra, when it was boarded by pirates. The route is often used by vessels as a shortcut to save time and money, but has been identified as a high-risk area by anti-piracy groups. According to reports, the Aris 13 was “low, slow and too close to the coast”, making it an easy target for armed attackers.

The Aris 13 was the first large commercial vessel to be captured since 2012, when the Greek-owned MV Smyrni, carrying 26 crew and 135,000 tones of crude oil, was held in a pirate anchorage for 10 months before being released for an undisclosed ransom.

Speaking at a news conference in late April, U.S. Defence Secretary Jim Mattis told reporters there have been “five or six” piracy incidents in the region in the past two months. An anonymous defence official told The Washington Post  that the increase in pirate activity could be linked to complacency among shipping companies, who may have relaxed their security procedures (such as carrying anti-boarding devices and armed contractors) in recent years.

What drives people to risk piracy?

Whilst the international naval response to the piracy crisis has been effective, the situation is expected to continue until the root cause is tackled – the lack of authority of Somalia’s central government. The country has been labelled a “failed state” since a bloody clan-based civil started in 1991. Other factors that drive piracy include:

  • Widespread drought and famine
  • Local anger over illegal foreign vessels fishing in Somali waters
  • Extreme unemployment with no factories or industry
  • Very low earning for fishermen (approximately US$5 a day)
  • The lure of high potential earnings from piracy and ransom money
  • Cash from piracy providing the first boom in living memory in coastal towns.

Reports are also emerging of piracy on the rise on the other side of Africa, along Nigeria’s coastline. Pirates have taken to kidnapping crew members for ransom along the major oil shipping route. Previously, hijackers would siphon off oil from commercial vessels, but now that oil prices have fallen, abductions have proven more lucrative.

In other news this week:

Uber to unveil flying taxi service by 2020

  • Uber has announced “Elevate”, a flying taxi service featuring electric vehicles capable of a vertical take-off and landing.
  • Users will be able to book a ride with their mobile phone app, with Uber’s marketing team already spreading the message of “push a button, get a flight”.
  • The biggest selling point of the urban air network is that it would be able to avoid congested streets in busy cities. The service is expected to launch first in Dubai and Dallas.

Read more at Smartcompany.com.au

 ISO 20400 launched to support sustainable procurement

  • The world’s first international standard for sustainable procurement was launched last week. ISO 20400 was created with the input of experts and industry bodies from over 40 countries and is expected to increase supply chain transparency globally.
  • The Standard is applicable to any organisation, public or private, irrespective of size and location.
  • Read more about the background to ISO 20400 in Procurious’ interview with committee member Jean-Louis Haie.

Access ISO 20400 here.

The Samsung Smartphone Debacle: Suppliers Pushed Too Far, Too Fast?

Samsung has apportioned some of the blame for its exploding Note 7 phones to two of its battery suppliers. But who is ultimately responsible? Is the pressure to innovate at all costs leading to unsafe development and testing time-frames?

What Went Wrong?

Samsung  has begun the long task of rebuilding consumer trust in its smartphones. But questions remain.   Why didn’t Samsung pick up design and manufacturing faults before they sold 1 million unsafe devices to customers? The cause appears to lie in Samsung’s rush to beat its arch-rival Apple to market. This led to a failure to properly test lithium-ion batteries in the Note 7 phone.

The pressure to innovate that tech giants such as Samsung place on their suppliers is immense. Particularly when competitors such as Apple are constantly upping the ante. Every new release on a phone must be demonstrably better than the last.  This means delivering ever-smaller and lighter batteries that customers can charge rapidly and use for a full day and evening.

Battery manufacturers responded to the challenge by using a thin “club sandwich” design. In this battery positive and negative electrodes are stacked and kept apart using layers of separators. Unfortunately, the pressure for an ever-thinner battery meant that the separators were too thin, leading to shorts and subsequent over-heating. A second, unrelated design fault lay in an abnormal welding process. This led to contact between a positive terminal and a negative electrode.

Spreading the blame

The fallout for the exploding smartphones follows a familiar pattern where, although the technical fault lies with a supplier of products and services, the big-name parent company takes the lion’s share of the blame. Even when the parent organisation attempts to publicly offset some of the blame onto its suppliers, consumers typically assign responsibility to the most recognisable brand.

An example of this famously occurred in April 2010 with the Deepwater Horizon oil spill in the Gulf of Mexico.  The owner of the well, BP, took most of the responsibility (and $54 billion in associated costs), whilst the contracting operators came under considerably less scrutiny. Tellingly, a U.S. District Judge apportioned 67% of the blame for the spill to BP, 30% to Transocean and 3% to Halliburton.

Samsung, to its credit, did accept overall responsibility for the $6.9 billion mistake even while it pointed the finger at battery manufacturers. Samsung Electronics America senior vice president Justin Denison told a press conference: “Ultimately we take responsibility for this. It’s our product, we set the specifications, and it’s up to us to catch the problem before it leaves in one of our devices.”

The long road to brand recovery

Youtube users may have noticed Samsung’s brand-repair efforts have gotten underway, with ads such as the following appearing online:

The South Korean company has invested $170 million into safety.  It is assertively broadcasting its new 8-point safety check which includes a durability test, visual inspection, x-ray test and others. Samsung’s investigation into the Note 7 failures included over 700 R&D engineers. These engineers tried to replicate the issue by testing 200,000 phones and 30,000 standalone batteries.

But, in a further unfortunate setback for the brand, one of the affiliates responsible for manufacturing the faculty batteries – Samsung SDI – experienced a factory fire last week in Tianjin, China, with 110 firefighters and 19 trucks responding to the blaze.

Senior executives from Samsung have commented that they’ve learnt an enormous amount about crisis management in the past few months. Observers, too, can draw some valuable lessons around the dangers of rushing new innovations to market and the ineffectiveness of attempting to apportion blame to suppliers.

Read more about Samsung’s smartphone battery issues.

In other procurement news this week…

Boeing’s Space Taxi to include 3D printed components

  • Boeing has commissioned 600 3D printed components from Oxford Performance Materials for use in its Starliner space taxi.
  • Boeing expects the spacecraft to fly unmanned in June 2018. and will have a first crewed test flight in August 2018. It will ferry two astronauts to the International Space Station for the first fully operational flight in December 2018.
  • The inclusion of 3D components marks a first for 3D technology usage in spacefaring technology, with increasing recognition that printed plastics perform well under the pressure of launch and in a temperature of absolute zero.

Read more at Supply Chain Dive.

New research reveals CEOs still don’t “get” procurement

  • Consultancy firm 4c Associates released the findings of a poll of 521 CPOs, managers and procurement personnel to understand how procurement is perceived by the C-Level.
  • 48% of participants claimed their boss “doesn’t get what the procurement team does, or can do”. 55% said the C-Level regards procurement as a support function. It exists to cut costs, rather than add strategic value to the organisation.
  • Mark Ellis, senior partner at 4c Associates, commented that procurement needs to proactively highlight the services they can provide beyond cost cutting. “If all the function does is speak in terms of savings, then that’s how it will be perceived: as a cost cutter”, Ellis said.

Keen on the Internet of Things? Beware of IoT Botnet Zombie Attacks!

Everyone’s talking about the Internet of Things and all of the exciting things it can do for us! But just how much have we considered the possible security risks? 

What’s All the IoT Fuss About?

CPOs are becoming ever keener on enhancing hyper-connectivity within their organisations using the Internet of Things. This is unsurprising given the potential opportunities for procurement teams; warehouses that can tell you what parts you’re running out of and reorder them for you, more efficient processes and the chance to revolutionise how they manage supply chains.

Of course, it’s not just businesses that will benefit from IoT. Early adopters are already using IoT in their homes with smart fridges, smart toasters and smart collars for their pets. Experts predict that by 2020, more than half of new organisations will run on IoT.

Given all of these benefits, you might well ask what’s not to love? Well, judging by recent events, it might be prudent for us all to exercise a little more caution as far as IoT is concerned. As it stands, the process is wide open to cyberattacks.

Botnet Zombie Attacks

Individual devices pose almost no threat to any computer or data centre but what happens if millions of them were taken over at once? IoT devices are likely to have weaker security (research suggests that default usernames and passwords for devices are rarely changed), which makes them an easy target. Hackers will pre-program their malware with the most commonly used default passwords in order to hack multiple devices.

Back in October, an IoT botnet, Mirai, attacked a number of the internet’s websites including Spotify, Netflix and PayPal. The botnet works by consistently searching for accessible IoT devices protected by default passwords. Once these have been identified, the malware turns them into remotely controlled bots and is able to use them for large-scale network attacks – think robot zombie army!

This week, computer security journalist Brian Krebs posted an article on his blog, Krebs on Security, revealing the identity of Mirai author to be Paras Jha, owner of a DDoS mitigation service company ProTraf Solutions and a student of Rutgers University. Whilst Mirai has only been used mischievously so far, to shut down certain sites, the actions have brought to question what damage could be inflicted by real cybercriminals.

The Worst Case Scenario

Whilst the Mirai October attacks were relatively harmless and only resulted in some websites crashing, some tech commentators are regarding it as a test-run. It’s concerning that the next botnet attack could be aimed at data theft or physical asset disruption.

As Krebs stated in his blog “These weapons can be wielded by anyone – with any motivation – who’s willing to expend a modicum of time and effort to learn the basic principles of its operation.” Someone with a grievance against a particular website could easily have it taken offline or simply employ a hacker to do it for them.

It’s especially concerning to imagine the consequences of IoT devices being hacked within critical or high security areas such as hospitals, banking, government, transport etc. Time will tell if we are able to secure IoT before we are subject to further, and perhaps more significant, botnet attacks.

What Can Be Done?

How can individuals and organisations improve their IoT security and prevent cyber attacks? We’ve put together a quick checklist to help you strengthen your security.

  • Use strong login passwords for all your devices and strong Wi-Fi passwords. A strong password contains upper and lower case letters, numbers and symbols.
  • Make sure all the software you use is fully updates – this can fix security flaws.
  • Don’t open mysterious email links or attachments – if you weren’t expecting it, don’t open it!
  • Never reveal card information.
  • Don’t trust anyone who calls you to discuss your computer or devices – hang up the phone.

What do you think about the IoT security risks? Should CPOs halt their investments and wait for the cybersecurity to catch up with the technology? Let us know in the comments below.

Here’s what else has been going on in the world of procurement this week…

Trump Kills TPP

  • President Trump upended America’s bipartisan trade policy on Monday as he formally abandoned the ambitious, 12-nation Trans-Pacific Partnership.
  • In doing so, he demonstrated that he would not follow old rules, effectively discarding longstanding Republican orthodoxy that expanding global trade was good for the world and America.
  • Although the Trans-Pacific Partnership had not been approved by Congress, Mr. Trump’s decision to withdraw carries broad geopolitical implications in a fast-growing region.
  • Trump said American workers would be protected against competition from low-wage countries like Vietnam and Malaysia, also parties to the deal.

Read More on New York Times

Wal-Mart Cuts 1,000 HQ Jobs

  • Wal-Mart Stores began a round of some 1,000 layoffs at its corporate headquarters, with most cuts targeting the retailer’s supply chain operations.
  • The shakeups, which have been expected, suggest that Wal-Mart is willing to undo much of the work in its existing e-commerce operations in favour of Jet’s signature pricing and fulfilment algorithms, which reward shoppers in real time with savings on items purchased and shipped together.
  • The dent in its supply chain ranks could undermine one of Wal-Mart’s core strengths: its highly efficient brick-and-mortar-based distribution system.

Read More on Retail Dive

Samsung’s Exploding Galaxy Note7 Blamed on Battery Suppliers

  • Approximately 2.5 million phones have been recalled by Samsung due to explosive defects of the Galaxy Note since September 2016.
  • Recalls happen all the time, but while the Samsung case rose to infamy due to its flammable and potentially injurious nature, the revelation that Samsung’s primary and backup suppliers independently produced a faulty phone component is equally remarkable.
  • What was a supply chain problem was resolved by an operations solution in this particular case. However, batteries will be subject to more strict quality controls to avoid future issues.
  • Previous analyses also have suggested Samsung’s rush to production — both before and after the first recall — may have also impacted the finished good’s quality.

Read More on Supply Chain Dive

Procurement Salaries On The UP In 2017

  • Procurement professionals can expect to see pay rises averaging 10% in 2017, according to a salary survey
  • However, contractors will get the biggest rises – 15% – while permanent staff can expect to get 4%
  • Sam Walters, associate director at Robert Walters, said: “Across all levels of seniority we have seen demand grow for high quality procurement professionals over the past year, with those with IT procurement experience being particularly highly sought after

Read more at Supply Management

Meet The New General Secretary of Globalisation

Chinese President Xi Jinping claims world leadership for globalisation while the U.S. moves towards protectionism.

Chinese President Xi Jinping used his address at the World Economic Forum in Switzerland last week to defend globalisation and criticise the rise of protectionism in Western economies.

The speech is the latest in a series of appearances on the world stage where Xi has sought to support the existing economic order that has fuelled decades of unprecedented growth in China. Similar appearances include Xi’s address to the United Nations in 2015, hosting the G20 Summit in 2016 and his speech at the Asia-Pacific Economic Cooperation Summit in Peru in November last year.

De facto Chinese leadership?

With the Trans-Pacific Partnership scheduled for the chopping block when President Obama steps down, Xi now has the opportunity to shape global economic systems to China’s benefit and step into an apparent vacuum for worldwide economic leadership, particularly where free trade and globalisation are concerned. In many ways, the world is now witnessing the situation Obama sought to avoid with his “Pivot to Asia”, designed to maintain American influence in the East.

In a commentary following Xi’s speech, the China Daily referred to the country as now being “the one major power with a global outlook”. “Ready or not, China has become the de facto world leader seeking to maintain an open global economy and battle climate change. In effect, President Xi has become the general secretary of globalisation.”

Xi’s Defence of Globalisation

“There is no point in blaming economic globalisation for the world’s problems because that is simply not the case,” Xi said. “And that will not help to solve the problems.” The problems Xi is referring to are those often referenced by Western populists across the U.S. and Europe, including growing wealth gaps and domestic unemployment related to offshoring. Xi’s speech touched on some of the deeper causes of sluggish world growth, looking to reinforce confidence in global development.

“Protectionism is like locking yourself in a dark room, which would seem to escape wind and rain, but also block out the sunshine,” Xi told the Forum. “No one is a winner in a trade war.” Xi announced that China has no intention to devalue its currency to boost competitiveness, despite ongoing criticism on this point from the new U.S. President.

Can globalisation function without the U.S.?

Despite the nation’s ongoing economic slowdown, the World Economic Forum estimates that China accounted for almost 39% of global growth last year. President Trump’s protectionist tariffs, along with his retreat from trade deals and climate pacts are likely to slow growth further. A similar level of concern is building in India, where the $150 billion outsourcing industry is under threat.

As WorldPost Editor-in-chief Nathan Gardel writes, “The optimal arrangement for making globalisation work is for the U.S. and China to join together as “indispensable partners” based on a convergence of interests to create a world order that works for all. If the world’s two largest economies, though from distinct civilizational spheres, don’t buy in, it won’t work for anyone.”

Read more Huffington Post 

 In other procurement  news…

Britain to purchase 60 trains for HS2

  • Procurement of a fleet of up to 60 High Speed 2 (HS2) trains was officially launched on Friday by Britain’s state secretary for transport.
  • HS2 is a planned high-speed railway in the United Kingdom linking London, Birmingham, the East Midlands, Leeds, Sheffield and Manchester. It would be the second high-speed rail line in Britain, after HS1 which connects London to the Channel Tunnel.
  • The contract has an estimated value of £2.75bn and is due to be awarded by the end of 2019. The overall projected project cost of HS2 is £56bn.

Read more at the Birmingham Mail

GM announces $1 billion investment in U.S. based manufacturing plants

  • GM will invest $1 billion in its existing manufacturing plants, creating or retaining nearly 7,000 domestic jobs.
  • The announcement comes after President Trump criticised GM and other automakers for building vehicles in Mexico and shipping them to the U.S., including a Tweet threatening to tax GM for importing the Chevrolet Cruze.
  • GM’s targeted areas of growth include its subsidiary, GM Financial, and advanced technology divisions.

Read more at Investopedia 

Meals on Robot Wheels

  • Autonomous robot manufacturer Starship Technologies has signed deals with meal delivery companies Postmates and DoorDash to deliver lunches in Washington and San Francisco, beginning in February.
  • The robots are able to autonomously navigate sidewalks and traffic conditions, while customers track their progress via an app as they make the delivery.
  • Each robot weighs approximately 18 kg and can carry three filled shopping bags, while travelling at speeds of 6.5 kilometres per hour.

Read more at CIO 

What Would You Do If The President-Elect Criticised Your Supply Chain?

Major US organisations are starting to rethink their manufacturing strategies for fear of being labelled “un-American” by the President-Elect. 

Every US-based supply manager with outsourced supply chains should follow Donald Trump on Twitter. Why? Because for major companies with overseas manufacturing operations, there’s every chance that the President-Elect will label your organisation “un-American”.

Since November 2016, Trump has criticised companies including Ford, Toyota, GM, United Tech and, more recently, pharmaceutical organisations including Johnson & Johnson, Pfizer and Bristol-Myers for moving U.S. jobs abroad. His focus appears to be on companies outsourcing to Mexico and China, where historically low-cost labour enables organisations to manufacture their products at a competitive level.

Companies changing plans

According to a report from Reuters, boards of a number of U.S. companies that manufacture overseas have directed their public relations teams to plan a response in case the President-Elect singles them out on Twitter.

Similarly, some companies are reportedly re-thinking mergers and other moves that would involve outsourcing to China for fear of being cast as “anti-American” by the President-Elect. Ford has backed away from plans to build a $1.6 billion plant in Mexico, while United Tech has announced plans to keep half of the 2,100 jobs it was shifting over the border. Reports have also emerged of dozens of major organisations contacting government relations and PR advisors to assess if they have any “red flags” that would draw Trump’s attention and lead to a damaging Tweet being sent.

New risk metric: weighing national interest

According to the Reuters report, “corporate leaders can no longer focus only on maximising shareholder value; they must now also weigh national interest.” Essentially, being labelled as un-American has become a new risk metric that needs to be weighed against the cost benefits of overseas manufacturing.

Trump’s aggressive rhetoric against China may also lead to a reduction of outsourcing to the manufacturing powerhouse as the relationship between the two countries is expected to decline. Trump has also flagged high tariffs as another way in which he plans to move manufacturing jobs from China back to the U.S.

The effects of a Trump Tweet cannot be downplayed. Lockheed Martin lost $4 billion in value as share prices feel immediately after Trump criticised the organisation on Twitter, while Toyota saw $1.2 billion in value wiped in five minutes following a similar Tweet. Developers have even created an App to alert investors to Trump’s market-moving Tweets. This week, the nine biggest pharmaceutical companies that use manufacturing plants in Europe, Asia and Africa lost roughly $24.6 billion in 20 minutes during a news conference in which Trump singled out the industry.

Alongside potential losses in share value, coming under fire from the soon-to-be President puts organisations at risk of brand damage and consumer boycotts.

It is unclear whether Trump will continue to use Twitter to drive his “Made in America” agenda, or use more traditional tools to affect change such as policies and import tariffs.

What do you think about “Made in America”? Are organisations right to be wary of a tweet from Trump?  Let us know in the comments below. 

We’ve kept one eye on the news headlines from around the world this week…

Proliferation of “non-human workers” accelerates

  • Amazon reportedly placed 15,000 robots across 20 fulfillment centres in 2016, increasing its machine workforce by 50%.
  • Similarly, iPhone manufacturer Foxconn has replaced 60,000 Chinese employees with robots, while Wal-Mart is automating up to 7000 jobs, including roles in the accounting and invoicing departments.
  • In the U.S. alone, up to five million jobs are expected to be replaced by robots by 2020.

Read more at Supply Chain Dive 

Blood supply chain faces an uncertain future

  • Due to changes in medical practices, hospital demand for blood has been dropping steadily for the past decade.
  • The strong supply and weak demand for blood has led to a 10 percent drop in the cost of a unit of red blood cells in the US, with overall revenue for the blood banking industry dropping to US$1.5 billion per year in 2014, down from $5 billion in 2008.
  • S. blood banks are expected to lose 12,000 jobs in the next few years, or roughly a quarter of its workforce.

Read more at  The Conversation

 

Flying Warehouses & Fashion Buyouts – Amazon Dominates Headlines

No sooner had 2017 started than Amazon appeared in the news in a big way. From flying warehouses, to buyouts of fashion chains, no-one dominates the headlines quite like the online giant.

flying warehouse

Disruption. It was a buzzword of 2016, and even if the word is falling out of favour, the activity looks set to continue this year. And the company at the forefront (again) of this disruption is Amazon.

The online giant has proven time and again it’s not content to rest on it laurels. So when the company appeared across the news headlines for a variety of reasons, you might not have been surprised. However, when you consider the headlines it was making, you might think again.

Flying Warehouses – The New Reality

Many companies will consider the cost of new facilities to meet demand trends in their strategies. Amazon, however, appear to have bypassed the real estate question with their proposed flying warehouse.

The company submitted patents late in 2016 for these warehouses, which would be serviced by a fleet of drones. The purpose of the “airborne fulfilment centre” would be to visit spectator-heavy events (think music festivals, sports events) where they could sell in-demand goods.

Analytics firm, CB Insights, were responsible for finding the flying warehouse patent, originally filed in 2014.  Additional patents serve to outline other plans in line with the warehouses too. These include a fleet of shuttles to keep warehouses stocked, the creation of an interconnected network of drones, as well as docking stations for drones to allow them to be picked up by the shuttles.

A diagram from Amazon’s patent (image courtesy of South China Morning Post)

The idea might sound a touch fantastical, but there are serious potential benefits that Amazon could realise. Not only would it save Amazon money in building warehouses, but it would also save on energy costs. Drones would be able to glide down to deliveries before being picked up.

Add to this using the airships as flying billboards, and Amazon could sell advertising space above some of the world’s biggest events.

This could represent a huge step change in the retail environment, with Amazon at the forefront. And you wouldn’t bet against them making it a reality. After all, it wasn’t long ago they completed the first drone delivery – something people dismissed when the idea was first proposed.

The Fastest Fashion of All?

It’s not just logistics and warehousing that Amazon are interested in disrupting either. There are strong rumours in the USA that Amazon are set to purchase American Apparel out of bankruptcy.

The clothing retailer went into bankruptcy in November for a second time. Now, with bids submitted late last week, it is suggested that Amazon might come out victorious. The move would fall in line with Amazon’s strategy to add to it’s nascent fashion arm.

The buyout would help to protect 4,500 jobs in America, and allow them to access American Apparel’s 100 plus stores across the country. It could also give Amazon a political boost following heavy criticism of its practices from President-elect Donald Trump.

Throughout his Presidential campaign, Trump criticised Amazon (amongst others) over its tax payments and business model. However, by purchasing American Apparel and maintaining its ‘Made in America’ promise, it’s thought that it may help smooth tensions between the company and the future President.

Technology Trends

Finally, Amazon has also been making headlines in the technology world. Even without attending the CES gadget show in Las Vegas, Amazon is making its presence felt.

Not only is Amazon’s ‘Alexa‘ AI assistant gaining in popularity, it’s also the chosen system for many other companies. Prominent companies, including Ford, LG, and Lenovo have all opted for Alexa as the AI interface in some of their products.

Increasing number of products are integrating voice commands, and Amazon’s decision to release an Alexa developer kit last year appear to be paying off. The company is seen as the early mover in this space, and looks set to continue its dominance over its rivals.

Even if there is still potential for glitches in the system delivering unwelcome surprises!

Do you think Amazon will make its flying warehouses a reality? Is this the next step in retail? Let us know in the comments below.

With the new year flying past, we’ve saved you some time by searching out this week’s top headlines…

Tesla’s Gigafactory Begins Mass Production of Battery Cells

  • In partnership with Panasonic, Tesla has begun producing lithium-ion battery cells for energy storage products and the Model 3 vehicle.
  • The Gigafactory is being built in phases, with manufacturing beginning inside finished sections. It is expected to be the largest building in the world when completed.
  • The current structure is only 30 per cent complete, yet houses 4.9 million square feet of operational space.
  • Tesla anticipates cost reductions through increasing automation, process design, locating most manufacturing processes under one roof and economies of scale.  

Read more on the Tesla website

Trump “Personally Involved” in Procurement Decisions

  • An analysis of Donald Trump’s campaign promises and policies has revealed that he is unlikely to make significant changes to U.S. Defence procurement policy.
  • However, he will seek to be personally involved in the negotiation of major acquisitions.
  • The President-elect tweeted about cost overruns of the Lockheed Martin F-35 fighter jet, and encouraged Boeing to compete with its F-18 Super Hornet.
  • Trump’s focus appears to be on technology that is immediately available rather than future research and development, and leans towards Airforce and Navy investment rather than Army.

Read more at Defense News 

Top Supply Chain Universities Ranked in U.S.

  • SCM World has released the results of a survey ranking the top institutions for Supply Chain courses in the U.S.
  • Practitioners were asked to list their top three institutions that are “markers of supply chain talent”,
  • The top five places went to: Michigan State University; Western Michigan University; Massachusetts Institute of Technology; Penn State University; and Arizona State University.
  • Connection to industry, through practical education and internships, was also flagged as an important factor in the results.

Read more at Forbes

Apple Removes New York Times from App Store

  • Apple has removed the New York Times App from its Chinese app store, in compliance with a request from the Chinese Government.
  • The Chinese Government began blocking the NYT website after a series of articles on then Prime Minister, Wen Jiabao, in 2012.
  • An Apple spokesperson stated the reason for the removal was “that the app is in violation of local regulations”.
  • Both Apple and Chinese authorities declined to comment on what regulations had been violated, or if the app would reappear in the future.

Read more at the New York Times

Are We Witnessing the End of the Fairtrade Movement?

Mondelēz International have chosen to pull the Fairtrade label from all Cadbury branded products. Are we witnessing the beginning of the end for the movement?

fairtrade movement

In 1997, the formation of FLO International brought ‘Fair Trade’ labelling to shops for the first time. Later rebranded as Fairtrade International, it was recognised as the global leader in fair trade standards and labelling.

Since that time, hundreds of organisations have hosted the Fair Trade label on their products. While the labelling was voluntary, organisations and the general public viewed this movement as a great step forward for developing countries.

However, in the past week, Mondelēz International have taken the decision to bring all of its fair trade policies in house. And it’s left many people wondering about the future of the movement in its current state.

What is Fairtrade?

Fairtrade is just as it sounds. The aim of the movement is to create better working and living conditions for farmers and workers in developing countries. This includes paying better prices for crops (which don’t fall below the market price), and embedding local sustainability.

Crops range from coffee and cocoa, to bananas and cotton. It also includes products you might not immediately link to it, like flowers, gold and wine.

Some facts and figures around the movement are (courtesy of the Fairtrade Foundation):

  • More than 1.65 million farmers and workers work for Fairtrade certified organisations
  • 56 per cent of these farmers grow coffee
  • There are 1,226 certified Fairtrade organisations across 74 countries
  • $106.2 million was paid to Fairtrade producers in 2013-14
  • 26 per cent of all farmers and workers in the organisations are female
  • Organisations invested 31 per cent of their Fairtrade premiums on productivity or quality improvements; 26 per cent was invested in education

The movement has clearly helped millions of farmers and workers around the world, giving them a better deal for their crops. And, as social consciousness has grown, so have consumer tastes for Fairtrade products.

The UK is one of the largest markets in the world for Fairtrade products. In 2012 (more recent figures are hard to come by), UK consumers spent more than £1.3 billion on these goods.

Is It Really Fair?

However, unfairly or otherwise, the movement has been dogged by criticism about how fair it actually is. As far back as 2007 (and beyond), critics were questioning how good a deal these farmers and workers were getting.

Some critics have argued that by being affiliated with the movement, farmers are actually limiting their markets. Others have argued that it doesn’t account for mechanisation in production and doesn’t give the opportunity to improve production processes.

And a report in 2014 by the School of Oriental and African Studies (SOAS) in London raised concerns that some workers were actually earning less than non-Fairtrade workers.

Some products don’t quality for Fairtrade labelling, and specialist brands are likely to miss out. Additionally, it’s often difficult for farmers to join the movement, with fees and a lack of organisation frequently cited.

And despite its position in the public eye, Fairtrade isn’t the only organisation offering this service. The Rainforest Alliance is one such organisation, but perhaps suffers from being less well-known.

Companies Changing Strategies

All of which brings us back to the change about to be undertaken by Mondelēz with its Cadbury brands. The global organisation plans to bring all of its certification in-house, under its ‘Cocoa Life‘ fair trade scheme.

While the company maintains that the move won’t impact the percentage of fair trade products it produces, it’s raising concerns about the future of the Fairtrade movement.

When Cadbury joined Fairtrade in 2009, it prompted many of its competitors to do likewise. Critics are concerned that its move away from Fairtrade might see other organisations follow suit. There are concerns that ethical standards may drop, even although Fairtrade will continue to monitor Cadbury’s work.

The company has committed to ensuring that its supply chains retain the protection they currently have. And even Fairtrade International have welcomed the move, seeing it as a company taking accountability for its supply chain and sustainability efforts.

Whether this ultimately means the end for Fairtrade is unclear. It’s highly unlikely that the movement will cease to be, but it may have to change to remain relevant. Public social consciousness will only increase, and manufacturers will need to be able to prove the transparency and legitimacy of their supply chains.

In that respect, whether it’s in-house, or done by an external NGO, sustainability labelling will continue to exist. And Fairtrade will still be seen as the cornerstone in the movement.

What do you think about the move by Mondelēz? Do you think it will make a major difference? Let us know in the comments below.

While we take some time out to evaluate our food purchases, we’ve compiled some top headlines for your consideration.

Pentagon Buries Evidence of Bureaucratic Waste

  • The Pentagon suppressed the results of an internal study which exposed huge levels of administrative waste.
  • A dramatic report from The Washington Post revealed the extent of the waste to be an estimated $125 billion.
  • Reporters believe the Pentagon feared Congress would use the findings as an excuse to slash the Defence budget.
  • The study was originally requested to help make the Pentagon’s back-office more efficient and reinvest any savings in combat power.

Read more at the Washington Post

Apple Supply Chain “On Move to USA”

  • A large part of the Apple supply chain may be on the move back to the USA, according to one report.
  • Foxconn, one of Apple’s key producers, currently carries out the majority of manufacturing in Chinese factories.
  • However, the company is in talks about expanding its US-based operations to iPhone and other product build.
  • The move comes following strong criticism of the company by President-elect Donald Trump during the US elections.

Read more at the Wall Street Journal

Trump Air Force One Tweet Sends Markets into Chaos

  • The social media habits, and impact, of President-elect Trump were highlighted again last week.
  • A tweet calling for the cancellation of an order for a new 747 Air Force One, built by Boeing, caused chaos in US markets.
  • Immediate effects included a sudden plunge in Boeing’s stock, which recovered as clarity emerged around the true budget – $1.65 billion. Boeing currently has a $170 million contract with the Air Force.
  • Trump and the CEO of Boeing have since spoken by phone regarding the order and the tweet.

Read more on ABC News

Fujitsu and DHL to Use IoT to Disrupt Logistics

  • Fujitsu has announced a partnership with DHL Supply Chain UK which will focus on using the Internet of Things in logistics.
  • The two companies plan to share expertise to jointly develop innovative solutions for supply chains, and also emergency services.
  • One example of wearable technology is UBIQUITOUSWARE which helps emergency services track individuals.
  • The technology provides real-time tracking insights, as well as ensuring timely responses in emergency situations.

Read more at Supply Chain Digital

Peak Oil – From Global Catastrophe to Global Opportunity

Modern economics is a matter of supply and demand. And when it comes to ‘peak oil’, it’s the difference between catastrophe and opportunity.

peak oil

Since the early 20th Century, scientists, experts, and economists have been predicting the manifestation of ‘peak oil’. For years, many people viewed ‘peak oil’ as a herald of global catastrophe, and the end of major economies.

However, in recent years, the supply and demand situation for oil has turned in favour of supply. It now appears that peak oil demand is what organisations and countries need to be aware of.

What’s more, some experts are predicting that this demand will happen sooner than expected. And global oil and gas organisations need to consider their next move in order to stay competitive.

What Do We Mean By ‘Peak Oil’?

Peak Oil‘ describes a situation where global oil production hits its peak, then is in perpetual decline. The first prediction of this was in 1919, and an expectation that peak would be reached by the mid-1920s.

Throughout the last century, a number of geoscientists have continued to make predictions. And these predictions have all been proved to be wrong. However, some experts believe this peak may already have happened without anyone really noticing.

Studies have shown that in North America, the volume of oil discovered has dropped consistently since the 1930s. In addition, production of oil in the region has dropped year on year since the 1970s. That’s not to say that overall fossil fuel production has dropped – we’ll come to that shortly.

What people have agreed upon is that the concerns over ‘peak oil’ have abated, or disappeared entirely. The expected global economic collapse is unlikely to take place (or at least be a result of running out of oil).

Supply Outstripping Demand

So what has changed? Well, there are three reasons that keep appearing in a lot of the articles written about ‘peak oil’. They are:

  1. A huge increase in the volume of shale oil being produced. The oil is produced differently, but can be a direct substitute for crude oil.
  2. The US-Iran deal signed in 2015 has lifted sanctions on the oil-rich Middle-Eastern country.
  3. OPEC, which accounts for 43 per cent of global oil production, has, until recently, refused to cut supply. This surplus of supply was the reason the price of a barrel of oil dropped dramatically earlier this year.

This has shifted the thinking on a surplus of demand for crude oil, to a surplus of global supply. Or from ‘peak oil’ to peak oil demand.

Simon Henry, the Chief Financial Officer at Royal Dutch Shell, has predicted that this could happen in as little as five years. Henry stated that, “peak may be somewhere between 5 and 15 years hence…driven by efficiency and substitution.”

This view is at odds with many of the other major global oil producers, however. Exxon Mobil is anticipating a 20 per cent rise to 2040, while Saudi Arabia, the world’s largest crude oil producer, has argued that demand will rise on the back of increased consumption in emerging markets.

But, as some experts point out, even these predictions are built of shifting sands. The global trade slowdown, combined with the events of 2016, could adversely impact demand in developing countries.

Consumers & Organisations Shifting Focus

Whether it’s five years, or fifty years, what is clear is that oil is still a finite resource. Production will eventually diminish, and consumer requirements will change alongside this. This is where the global opportunities come in, but only for organisations willing to keep pace with change.

Public interest in renewable energy is increasing rapidly, and consumer buying habits are changing too. Even industries traditionally driving oil consumption, like the automotive industry, are seeing massive change.

In the UK alone, sales of electric cars have increased by 48 per cent in the past year. Sales of hybrid cars during the same period have increased a whopping 133 per cent. There are large solar panel fields being built around the world, and Ikea is even selling them to consumers in the UK.

Shell and BP are just two of the organisations expanding their portfolios into renewable energy sources, such as biofuels and natural gas. Greater investment in the renewables industry by major organisations has also helped to reduce costs associated with it. And as costs fall, demand from organisations and individuals will inevitably rise.

It would be foolish to make predications given how difficult it is to predict correctly about oil and energy. It’s a topic that is unlikely to go away any time soon, and one that organisations and wider supply chains need to be keeping up to date with.

Do you have a view on ‘peak oil demand’? Do you think it’s time to focus more on renewable energies? Let us know what you think in the comments below.

Like a treat behind each door of your advent calendar, we’ve found the tastiest procurement headlines this week.

Robotic Exoskeleton Gives Workers Super-Strength

  • SuitX, a Californian robotics company, has unveiled a new Modular Agile Exoskeleton for manual workers.
  • The suit is expected to greatly improve worker productivity and limit exposure to long-term health risks such as back injuries.
  • The exoskeleton is comprised of three modules – backX, shoulderX, and legX – which can be worn separately or as a single system.
  • The exoskeleton supports the body, reducing the amount of effort required to perform tasks such as lifting heavy weights.

Watch the video on THOMASNET

U.S. CEOs Face Consumer Backlash over Trump Victory Response

  • US Corporate CEOs have not hesitated to make their political views known in light of Donald Trump’s election victory.
  • Responses have ranged from congratulatory, to calls for unity, and commitments to company diversity policies.
  • Statements in support or against President-elect Trump have put brands at risk of consumer backlash.
  • Some CEOs who have spoken out have seen calls for boycotts of their brands on social media. Other CEOs have experienced backlash from their own employees on the other side of the political spectrum.

Read more at the Washington Post

Bank of England Seeking £5 Note Solutions

  • The supplier for the new £5 is looking for solutions to the make-up of the note’s base polymer following a backlash this week.
  • It was revealed that the note’s polymer contains animal fat in the form of beef tallow.
  • A petition on behalf of groups including vegetarians, vegans, and religious groups garnered more than 100,000 signatures in two days.
  • The Bank of England has said that their supplier, Innovia, is working with its supply chain to come up with a resolution.

Read more on Supply Management

Maersk Line Acquires Hamburg Sud

  • A.P. Moller-Maersk has agreed a deal to acquire German shipping line Hamburg Sud from the Oetker Group.
  • It’s estimated that the deal is worth over $4 billion, after Maersk won out in the bidding process.
  • The deal brings Maersk’s share of the global container market to 18 per cent, and it hopes to use the deal to return to profitability.
  • It’s the latest in a long line of mergers and acquisitions in the shipping industry, thanks to a huge downturn in 2016.

Read more on Supply Chain Dive