Dissecting the Impact of Global Supply Chain Events

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Global supply chains, in their myriad complexities and broad impacts, are a fascinating topic that warrant an in-depth exploration. In the recent episode of our podcast, we dove headfirst into the topic, dissecting the impact of recent high-profile events, legislative updates, and sustainability practices.

Starting with a deep dive into recent events, we discussed potential derailments like the potential abandonment of the UK’s HS2 high speed rail link and the US auto workers’ strike. The potential abandonment of the HS2 link is a blow to the UK’s transport infrastructure and has far-reaching implications for numerous stakeholders. Coupled with the US auto workers’ strike, the impact on the auto industry supply chain is immense. The strike underscores the importance of worker rights and fair labour practices in maintaining a stable and efficient supply chain.

Another pivotal event that we examined is the recent settlement by Amazon with its labor board. The agreement, reached in 2021, required the online retailer to allow its workers to unionize. This settlement not only highlights the increasing importance of labor rights in global supply chains, but also signals a potential shift in power dynamics between companies and their workforce.

The discussion then moved to the implications of current procurement regulations in the UK and Germany. In Germany, the recently enacted Supply Chain Act requires companies to monitor human rights and environmental risks in their supply chains. While it strengthens human rights and environmental protection, it also poses significant administrative and financial challenges for companies. On the other hand, the UK’s proposed Procurement Bill, currently making its way through parliament, aims to consolidate existing procurement regulations into a single regime, providing greater transparency and value for money.

In addition to these high-profile events and legislative updates, we also touched upon the ripple effects of the recent car recalls by Kia and Hyundai in the US. The recalls, due to potential fire risks, underline the complexities and challenges inherent to global supply chains. It demonstrates the importance of stringent quality control measures and the impact of recalls on a company’s reputation and bottom line.

Lastly, the episode consistently threaded in discussions around sustainability and ethical practices in supply chains. The call to unionize Amazon workers, the German Supply Chain Act, and the UK’s proposed Procurement Bill are all indicative of a growing emphasis on ethical and sustainable practices in supply chains. Moreover, when natural events like the historic low water levels of the Mississippi River occur, it becomes increasingly clear that sustainable practices are not just an ethical obligation, but also a business imperative.

In conclusion, this episode of our podcast offers a comprehensive and nuanced understanding of the vast and dynamic sphere of global supply chains. From the impacts of high-profile events to legislative updates and sustainability practices, the intricate web of global supply chains continues to evolve, presenting both challenges and opportunities for businesses worldwide.

Artificial Intelligence in Supply Chain Management

Ready to unlock the true potential of artificial intelligence in supply chain management? Join us as we embark on a thrilling journey to explore AI’s role in predicting customer behavior, nudging them towards favorable decisions, mitigating risk, sensing market situations, increasing fleet efficiencies, and more. Learn how access to large data sets empowers AI to revolutionize industries and how digital transformations are helping organizations make better decisions in today’s competitive landscape.

We’ll tackle the hype around AI and chat about its limitations while taking a closer look at how it can be a game-changing factor in ensuring customer loyalty. Shed light on AI applications in credit risk and fraud management, electric vehicles, and manufacturing sectors, and dive into the ethics and controversies surrounding its use. Don’t miss out on this engaging discussion as we demystify the world of artificial intelligence and its impact on our everyday lives.

Ai, has been used in all kinds of applications in supply chains to improve efficiency, make better decisions and reduce cost and serve customers better. Some specific applications of AI in supply chain management include predicting customer behavior technologies that nudge people in the right direction. So nudge technology is the kind of just nudge people into a decision that’s favorable towards the supply chain in some way mitigating risk, sensing market situations, increasing fleet efficiencies in the shipping and logistics areas and, improving the customer experience.

Ai applications for supply chain management require large amounts of data, so big data is important to feed the system, so that the system can learn. So the artificial intelligence can gather that into its databases and, of course, harvest that data as and when needed and learn from interactions in the processes that take place. So AI is being used in a variety of ways, and the supply chain software solutions that are provided by artificial intelligence will be used to manage categories of goods, monitor orders, develop, procure, to pay systems that are more efficient and, of course, to manage inventories. AI underpins an integrated system with many different aspects of supply chain management.

For those of you who like numbers McKinsey, have produced some statistics about AI-enabled supply chain management and how it’s improved logistic cost by 15%, inventory levels by 35%, service levels by 65% and lower inventory carrying cost and those inventory reductions of up to 75%, as well as lowering transportation and labor costs, which are amongst the biggest areas of saving. So you can see quite a lot of saving of cost going on through the better decision making that’s happened within supply chains because of artificial intelligence. The application of technology and supply chains has been prevalent during the past decade and many organisations have undertaken digital transformations so that they can gain advantage from the technology in making those better decisions And, of course, by having better information, not only for themselves but for their partners and the customers within those supply chains. 

Want to find out more? Then pick up the Chain Reaction Podcast at your favourite podcast platform and listen to the full episode.

Ethical Supply Chains

Have you ever wondered what it means to have an ethical supply chain? Ethics is about doing the right things, and when we think about doing the right things, it’s incumbent on each of us to make judgement calls on the basis of moral judgments. Now, you might recall. That the founding father of economics, Adam Smith, was professor of moral philosophy at Glasgow University, and in 1759 he wrote his first book, a theory of Moral Sentiments. So, for Smith morality came before economics.

Back in 2013, something strange happened at the Rana Plaza Garment factory in Bangladesh, which claimed 11,130 lives and injured thousands more people. It sent shock waves across the manufacturing industry, particularly in clothing and beyond. It was a historic failure of textile and garment manufacture, and people began to ask questions about the ethics of supply chain practices, not just in the textile and clothing industries, but in other industries too, where there are persistent human rights issues, corruption and environmental risks shifting the nature of the arrangements in those supply chains. 

As supply chains have become more complex and global, it has been more difficult to get a handle on not just the legal aspects of supply chains but on the moral and ethical judgments that organisations make when they enter into supply chain arrangements. Consumers also began to ask questions and began to think about their purchasing decisions. So, it wasn’t just organisational procurement that was at the heart of this, but it was also about choices that consumers make at the final steps in supply chains. Many people also believe that moral judgments are important but missing from management ethos, and they see management as simply rational decisions about the economics of business and not what is right or wrong in the process of doing business. And is that the missing ingredient when it comes to those firms that build better reputations, better brands and have better connexions with supply chain partners and indeed, with customers? Are the moral firms better at building relationships? 

Find out more about why ethical supply chains are necessary. You will hear about other examples and what the OECD and UN are doing to improve things.

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About Tony Hines and the Chain Reaction Podcast – All About Supply Chain Advantage

I have been researching and writing about supply chains for over 25 years. I wrote my first book on supply chain strategies in the early 2000s. Each week we have special episodes on particular topics relating to supply chains. We have a weekly news round up every Saturday at 12 noon. All things impacting global supply chains in that week, so come and join us on the Chain Reaction podcast. I look forward to seeing you there.

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March Ahead in 23

Preview of forthcoming episodes in March.

We have four episodes in March which cover different aspects of managing supply chains and their impact on business.

1. All Change asks if change is always a force for good.
2. Partnerships and Power asks the question what impact does power have in supply chain partnerships.
3. Five key strategic challenges for supply chain management are discussed here.
4. What impact has management consultancy had on supply chains, business and government is the final episode for March.

Chain Reaction is the podcast ‘All About Supply Chain Advantage’ containing regular audio snippets relevant to C suite executives, supply chain professionals, researchers, policy makers in government, students, media commentators and the wider public. New episodes each week discuss hot topics in the news and supply chain ideas relevant to everyone involved in supply chain management. There are special editions too.

Tony Hines presents the Chain Reaction Podcast – All About Supply Chain Advantage. He is a writer, broadcaster, business advisor and a leading international management educator. He regularly contributes to leading international conferences, workshops and to media coverage of business issues. He is author of the highly acclaimed ‘Supply Chain Strategies’ published by Routledge. You can follow and connect with Tony on LinkedIn

Peak Season Demand

This episode will be available from Wednesday 23rd November. You can use the QR code to access it directly or download it from your favourite podcast platform. Chain Reaction is avaliable on all major platforms.

It was my great pleasure to speak with Mario Paganini, VP Marketing at STORD this week about the peak season demand and we had a much wider ranging discussion about all things happening in supply chains. If you want some great tips on what you should be doing to make it work for you listen to what Stord are doing to make that customer centric supply chain of the future a reality.

“Stord untangles and centralizes your supply chain in a single dashboard, so you can focus on what matters.”

We talked about how changes in technology have enabled omnichannel supply as well as how important it is to develop systems and processes that work seamlessly to get the job done. Careful planning and timely execution are critical to building the customer centric supply chain. When it comes to peak season demand it is essential to have accurate forecasts based on current data but most of all it is necessary to be realistic and not overly optimistic. It is of course essential to have contingencies in place for when demand exceeds expectations because you certainly do not want to miss that all important sale.

We also talked about how important it is to have the right people working in your supply chain to be both effective and efficient. We also talked about the skills needed to work in contemporary supply chains right across the organization. If you want to find out more listen to the Chain Reaction Podcast.

ABOUT STORD

Stord was founded by Sean Henry CEO and Jacob Boudreau CTO who teamed up to develop some smart technology to improve supply chain performance in 2015. At the time they were both studying at Georgia Tech. STORD, are pioneers of the Cloud Supply Chain and a leader in end-to-end logistics services and technology. In 2018 Sean Henry was recognized as one of Forbes 30 under 30. The business grew rapidly. Today it is valued at over $1 billion.

News Round Up 12th November

The News Round Up is published weekly. It is a summary of business news impacting global supply chains. Each week millions of supply chains are impacted by decisions taken somewhere in the world and by events that disrupt or change market conditions. Stay informed and up to date by listening to the podcast airing every Saturday.

LISTEN ON SATURDAY TO FIND OUT MORE…

Compressing Cycle Times in Supply Chains

Cycle Time Compression in the Supply Chain can release resources and improve profitability. Identifying the cycles in your supply chain is the first step to improve performance. The second step is to measure the time it takes to complete each cycle. These simple steps have potential to bring benefits to the business, the network and to customers. Having data about each of the cycles moving from upstream to downstream enables firms to lower costs, improve throughput times and lower risk. Managing volumes, volatility and velocity to achieve value. It improves cash flows, profitability and return on investment and enables better asset utilization. Lowering cycle times improves supply chain flexibility and means that you can be more agile when it comes to implementing strategies for supply chain advantage.

Listen to the full episode on this topic available now on all major podcast platforms.

You can simply use the QR Code in the image at the top of the page to listen on Apple Podcasts now.

Or Listen here right now if you just can’t wait.

The Circular Economy

Supply chains play a central role in the circular economy. In this episode Tony Hines examines change and how it can be harnessed to improve the way we do things that reduce waste and pollution that damages the planet, the people, animals and ecosystems. The degenerative take, make use and lose approach of the industrial age is being replaced by the regenerative design of dynamic systems to renew, reuse, repurpose and recycle resources. Ensuring sufficient resources remain for future generations to live on the planet. There is much we can do to manage these assets better. 
You can see a short videocast from the podcast where charts are referred to here

The Doughnut

Kate Raworth’s excellent book ‘Doughnut Economics’ sets out a clear path to achieving a circular economy. It demonstrates why the take, make, use and lose approach of the industrial age is no longer relevant if we want to preserve the planet for future generations. We need to think differently about how we set about the task to achieve the objective. It is argued that economic thinking that appeared relevant for the industrial age is now simply wrong-headed. We have to redefine the purpose and the goals we need to achieve to lower the impact of pollution, resource depletion and degradation of soil and water from those industrial activities. We appreciate industry is important but it is clear that we need to think differently about how we do it.

Energy, water and food are the fundamentals for human existence, as well as plant and animal life which are central to the food chain. The social foundation of Raworth’s Doughnut lays down the expectations for people to live fulfilled lives. Beyond this there is a safe and just space for humanity and beyond that there is an ecological ceiling which if we exceed it will have a detrimental impact on the planet, resources, people, animals and plant life.

Beyond Market Economics

Ronald Coase was a Nobel Prize Winning Economist and his work examined political, legal and social institutions. Coase was born in Willesden and after attending the London School of Economics he spent most of his working life in Chicago. A main focus for his work looked at transaction costs and inparticular social cost of transactions. His theorem proposed that the market was good at resolving issues when transaction costs were low but not so good when they were high. one consequence of this is that social costs are incurred by others not involved in the direct transaction. This was explained more thoroughly by Coase in his seminal work “The Nature of the Firm” published in 1937. You can see the crossover point here between economics, the law and social justice. Coase’s Theorem as it became known was used by economists to understand transaction costs and by lawyers to understand rights and responsibilities in market transactions that had a social cost. In essence the argument is that the market is not good under certain conditions in achieving just outcomes and intervention is needed under rule of law. So for example, if a firm is situated on a river where it uses water to drive machinery or to clean produce and after use it is discharged back into that same river with chemicals and pollutants the market has no way to deal with the social cost it might cause to human life, animal life, plant life or the ecosystem. Legal redress is necessary to achieve social justice. Coase proposed that those causing the problem should be taxed and the funds from the taxes used to pay for any clean up. Taxation policies to deal with similar problems can be identified in most modern economies. Indeed, carbon taxes are but one example. So that was the economist solution to the problem but is it enough?

Today many would argue that this may be necessary but not sufficient to deal with the climate change crisis and the many other problems identified in the Circular Economy diagram above. To deal with the realities rather than simply transactions it requires a rethink. This rethink is a philosphical rethink about the purpose of life which is not to get rich or simply achieve profit for capital investment. It is rather to live life and engage in industry to support life. Put simply, work to live not live to work might be one way to think about it. This said we then need to find ways to preserve or conserve resources for future generations rather than simply plunder the planet’s resources. In 1800 when there were just under one billion people on Earth that approach may not have been quite as bad as it now appears because the damage would not be on the same scale. Today with approaching 8 billion and soon to be 9 billion it isn’t going to work. We need better solutions to a much bigger set of problems.

The circular economy sets out to understand an interconnected world which is a complex dynamic system. Systems thinking helps us understand those interconnections. It might be argued that nothing is random. There is always cause and effect in a system but we do not always see the connections. They are not immediately visible. Once we have better tools to see those patterns – to make them visible we begin to understand the fractals, the patterns and we can begin to define the problem more clearly. Today we have been able to identify the problems more clearly and now it is time to set about solutions to resolve them by developing tools to achieve the circular economy.

Full Circle to Supply Chain Advantage

Supply chains are central to the ways in which consumers and businesses interact and trade globally. Supply chain processes from extraction, procurement, manufacture, transport, distribution and consumption cycles all require choices about how we organize them. These choices configure resource patterns, supply networks, processes and systems all of which have different cost structures and with different impact on the planet, people, profit as well as the long-term viability of all life and ultimately existence.

You can find out more about the circular economy, sustainability and supply chains by listening to the Chain Reaction Podcast – Special Edition on this topic.

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