As the year comes to a close, we take a look back at the news and events that have shaken the world of the supply chain, logistics, and procurement. At a time when the pace of innovation is advancing rapidly, supply chain managers are having a hard time adjusting to new technologies. However, the changes are here for good, with companies being able to realize a multi-fold increase in efficiency and gains with new technologies and strategies. Apart from such technological innovations, various other factors have had a significant
impact on the supply chain; some brought about by the people themselves such as the appointment of Donald Trump as the president of USA and others out of their control like hurricane Harvey.
Supply Chain, Logistics, and Procurement News Making the Headlines in 2017
Nike cuts Lead Time from 60 Days to 10
When it comes to improving supply chain efficiency, most notable changes that make the news report marginal gains or improvement of few percentage. But what Nike did with its logistics network by cutting down lead time from 60 days to 10 is just phenomenal. The sports goods manufacturer redesigned its logistics network, nearshored from more facilities, invested in automation, and invested in contract manufacturer relationships. Two years back Nike set up a 125,000 sq.ft. Innovation center which found a way to produce footwear uppers using 50% less labor and 30% fewer steps. They also made a strategic change to their sourcing model by adopting consumer on-demand model by digitizing their end-to-end supply chain. It enables the company to deliver exactly what consumers want with shorter lead times to deliver.
Policy Changes Under Trump Administration
The trump administration won the presidential election even after making conflicting claims and promises. However, it also promised increased employment opportunity, affordable healthcare, federal and corporate tax cuts, and decreasing dependency on China. The policy changes would widely affect the organization’s supply chain functions. For instance, in a bid to promote Made in USA, slapping a border adjustment tax (BAT) of 20% inevitably increases the cost of procuring goods from outside USA. Also, procurement and supply chain managers had to rethink their offshoring strategy, when Trump proposed a 20% reduction in the corporate tax rate.
Hurricane Harvey Sweeping Away the Ethylene Production
The Hurricane Harvey was the costliest tropical cyclone on record causing economic damages of about $200 billion and affecting 132 petrochemical sites located along the Houston Ship Channel. The hurricane resulted in chemical spills which released a large number of pollutants into the nearby ecosystem and also caused around half of the chemical facilities to go offline. The hurricane-induced chemical plant explosion caused an ethylene production setback of about 50,000 tons per day. Limitation in the ethylene supply also affected other industries along the supply chain such as plastics and natural gas. For instance, after the fall in ethylene supply, the majority of the polyethylene plastic manufacturing plant had to shut down.
The Brexit Referendum
Procurement management across the world could not have ignored the impact of Brexit on their procurement function keeping in mind the interconnectedness of the global trade. The effect was felt soon after the Brexit announcement as the value of pound sterling dropped by over 10% over the Euro, affecting the import and export of goods and services. Laws and regulations would impose increased tariff levels, and the UK would lose some of the free trade benefits they were enjoying. Additionally, it also impacted the labor market as it limited the availability of low-skilled migrant labor. Businesses across the UK will suddenly have a smaller pool of candidates to consider for filling their procurement positions.
China’s Greenest Supply Chain: Apple
The Chinese NGO Institute of Public and Environmental Affairs (IPE) named Apple the greenest supply chain in China after measuring environmental performance in the supply chain across 250 brands. Apple received a rating of 82.5 out of 100 with Dell following with a score of 81. The evaluation takes into consideration responsiveness and transparency, energy conservation and emissions reduction, and compliance and corrective actions of the companies.
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