With signs of recovery is sight, what will we learn from dealing with unprecedented shifts in the global supply chain?
The COVID-19 crisis has intensified the competition for valuable supply sources. In certain industrial sectors, including electric vehicle production, the bargaining power has shifted from OEMs to suppliers.
While it is normal for companies to renegotiate, current extraordinary circumstances are leading to major agreements in the new context.
For example, Tesla and CATL recently announced a strategic partnership for CATL to supply EV batteries to Tesla’s Model-3 production in China, moving away from sole dependency on Panasonic.
Toyota and Panasonic also announced an agreement of a joint venture to produce EV batteries. Similarly, BMW signed a major agreement to purchase EV batteries from CATL worth of 7.3 billion euros.
Managing long-term disruption
Corporate executives traditionally consider costs, quality and delivery as key metrics when developing supply chain strategies.
But as the recent situation has shown, major global events caused by pandemics like COVID-19, along with geopolitical tensions, can create significant disruption to a normally reliable supply of parts or products.
The intricacies of supply value chains are not established overnight. It takes time and effort to qualify potential suppliers in all areas. Factors such as manufacturing quality, capacity, delivery, cost and the ability to respond to engineering or demand changes.
Therefor, supply value chains are designed for long-term needs. Once they’re established, it can be difficult to change them quickly to adapt to unpredictable disruptions. As such, making a hard turn in a short amount of time requires extraordinary agility.
The COVID-19 pandemic has reminded company decision-makers that there is a need to adapt and develop new business strategies in future supply chain designs.
Developing new models
The KPIs to be considered for future supply value chain designs will likely contain a mix of both traditional metrics (cost, quality, delivery etc), and new performance measures using the 3Rs: resilience, responsiveness, and reconfigurability.
To meet the challenge, there will be an increased need for infrastructures and technical means designed to create transparency within global supply chains.
There must be development of predictive models for proactive scheduling which takes into consideration uncertainties and risk factors. Plus a dynamic plan that accommodates the changing pressures of supply and demand for a given situation.
These predictive models will help corporate decision-makers do what-if analysis of various scenarios.
Finally, there must exist opportunities for government collaboration. Considering the continuing emergence of a globalized economy, the world truly is flat.
For the time being for example, the US and Chinese governments could eliminate artificial tariffs so that increased supplies and goods can be flown between the boarders to help mitigate the global COVID-19 pandemic.
The World Economic Forum’s Platform for Advanced Manufacturing and Production is bringing together senior operations, supply chain executives, top leaders from government, academia, and civil society.
The aim is to analyze the economic impact of COVID-19 on value chains and help companies address current liabilities and short-term challenges while keeping long-term sight goals aimed at driving systemic change.
If You Value the Quality of the Food Products You Supply, Isn’t Your Warehouse Partner Just as Valuable?
Storage is an integral part of food supply chains between the producer, processor, retailer, and consumer. Warehouses that store food products must meet extensive requirements and undergo continuous evaluation. If a facility doesn’t meet regulatory standards, they must discontinue operation.
There are several types of food-grade warehouses. Dry storage, frozen food storage, and refrigerated storage are the most common types and the most likely options for food warehousing.
Dry storage warehouses are suitable for food products that do not require temperature regulation. These products include canned food, rice, and grain. Frozen food storage warehouses have facilities to maintain a constant freezing temperature to handle perishable food products.
A refrigerated warehouse has all the necessary equipment to store food products below a specific temperature without freezing it.
Health and Sanitation Issues
Health and sanitation are crucial in food storage. If a warehouse doesn’t manage cleanliness carefully, it can result in food contamination by bacterial growth, fungi, rodents, or other pests.
Indications that a warehouse’s sanitation is compromised include:
- Rodent tracks or burrows in- or around the warehouse
- Standing water, weeds, or trash in the vicinity of the warehouse
- Leaks in the warehouse’s roof, foundation, or walls
- Holes in the warehouse windows
- Signs of damage to the warehouse building’s exterior
In addition to the issues listed above, the odour from other products in the warehouse can result in cross-contamination. Food product packaging can absorb odours from other products in the warehouse. When storing a new food item, the warehouse should consider the other products in the warehouse.
Customers who are selecting their 3PL should also consider the products that a warehouse stores as many facilities don’t pay attention to products that can result in cross-contamination.
Four Principles for Food Grade Storage
Substances for pest control at strategic locations around food grade storage perimeter eliminates the presence of rodents, insects, birds, and other animals. A warehouse should inspect the perimeter at least once every quarter to check for infestations.
Master Sanitation Schedule
The warehouse should schedule and document regular cleaning sessions to ensure that the food-grade facility is sterile from the roof to the floor. Records of cleaning sessions should be readily available. The warehouse should either appoint a skilled cleaning staff or hire an industrial sanitation service provider.
Personal Hygiene and Training Program
All the employees who work in a food-grade warehouse should regularly wash their hands at company-supplied stations with soap and hygienic hand-drying devices. Employees should also undergo training in personal hygiene, food safety, incident and crisis management, and quality awareness. The warehouse must keep a record of all employee training sessions.
The warehouse’s food-grade logistics operation unit traces lot and date codes on the products to ensure that the warehouse rotates them on a first-in, first-out (FIFO) basis.
The four principles above are central to the operations of a food-grade warehouse. Contact Brimich Logistics to learn more about our 3PL warehousing solutions and value-added services.
Futuristic Sails are Helping Keep the Seas Green
European and U.S. tech companies, including one backed by Airbus, are pitching futuristic sails to help cargo ships harness the free and endless supply of wind power
While they sometimes don’t even look like sails – some are shaped like spinning columns – they represent a cheap and reliable way to reduce emissions for an industry depending on notoriously dirty forms of fossil fuels.
Denmark’s A.P. Moller-Maersk , the world’s biggest shipping company, is using its Maersk Pelican oil tanker to test Norsepower’s 30 metre (98 foot) deck-mounted spinning columns. Maersk pledged this week to cut carbon emissions to zero by 2050, which will require developing commercially viable carbon neutral vessels by the end of next decade.
The shipping sector’s interest in “sail tech” and other ideas took on greater urgency after the International Maritime Organization, the U.N.’s maritime agency, reached an agreement in April to slash emissions by 50 per cent by 2050.
Shipping, like aviation, isn’t covered by the Paris agreement because of the difficulty attributing their emissions to individual nations. Resistant to change, the maritime shipping industry is facing up to the need to cut its use of cheap but dirty “bunker fuel” that powers the global fleet of 50,000 vessels – the backbone of world trade.
A Dutch group, the Goodshipping Program, is trying biofuel, which is made from organic matter. It refuelled a container vessel in September with 22,000 litres of used cooking oil on behalf of five customers, in what it called a world first that cut carbon dioxide emissions by 40 tons.
Building a conventional fossil-fueled vessel “is a bigger risk than actually looking to new technologies … because if new legislation suddenly appears then your ship is out of date,” said Orvik.
Wind power is also feasible, especially if vessels sail more slowly. “That is where the big challenge lies today,” said Jan Kjetil Paulsen, an advisor at the Bellona Foundation.
Wind power looks to hold the most promise. The technology behind Norsepower’s rotor sails, also known as Flettner rotors, is based on the principle that airflow speeds up on one side of a spinning object and slows on the other craeting a force that can be harnessed.
On a windy day, Norsepower says rotors can replace up to 50 per cent of a ship’s engine propulsion. Overall, the company says it can cut fuel consumption by 7 to 10 per cent.
One big problem with rotors is their footprint. They get in the way of port cranes that load and unload cargo. To get around that, U.S. startup Magnuss has developed a retractable version involving two 50-foot (15-meter) steel cylinders that retract below deck.
Spain’s bound4blue’s aircraft wing-like sail and collapses like an accordion, according to a video of a scaled-down version from a recent trade fair. The first two will be installed next year followed by five more in 2020.
The company is in talks with 15 more ship owners from across Europe, Japan, China and the U.S. to install its technology, said co-founder Cristina Aleixendrei.
Ship owners are now “more desperate for new technology to reduce fuel consumption,” she said.
Airseas, backed by plane maker Airbus, plans to deploy its parachute-like automated kite sails on ships ferrying fuselages from France to Alabama starting in 2020. The company predicts that the “Seawing” will reduce fuel use by 20 per cent on the 13-day journey.