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April 21, 2023
Supply Chain Digest Flagship Newsletter


This Week in SCDigest

bullet A Look at the State of US Manufacturing bullet SCDigest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet New Stock Index

New Chain Cartoon Caption Contest!

bullet Trivia      bullet Feedback
bullet New Expert Column bullet On Demand Videocasts
first thought


Supply Chain Graphic
of the Week


The Top 5 US 3PLs


This Week's Supply Chain Numbers

Warehouse Jobs Now Shrinking
Retail Store Closures to Accelerate
Home Depot Touts Green Progress
Amazon Unionization in California a Ruse?



Show Us Your Supply Chain Wit! See Full Size Cartoon/Enter

Expert Insight

How can a WMS be used for your Micro-Fulfillment Center?


Its Purpose Consists of Bringing the Logistics arm of Your Operation Closer to the Customer and end Consumer


Victoria Cardenas
Strategic Account Executive


Read Now


The Importance of Pre-Shipment Inspections for Supply Chain Diversification



Pre-shipment Inspections can Mean the Difference Between Success and Failure in Today's Competitive Global Market


Viktor Haggstrom
Marketing Content Specialist


Read Now

 This Week's SCDigest OnTarget Newsletter

Cartoon, Top SCDigest Stories of the Week

What is the current US factory capacity utilization?
Answer Found at the
Bottom of the Page


How Global Supply Chains have Changed Post Pandemic

The COVID pandemic starting in early 2020 was an inflection point in the practice of supply chains.

It was an odd scenario. Many people - including me - expected the virus and related lockdowns of stores and factories to devastate the economy.

And it did to an extent. But the impact was uneven. Traffic at restaurants, for example, plummeted, and non-essential retailers such as apparel were largely closed, many surviving only thanks to the new "curbside pick-up."



There appears to besome real green shoots seem to be growing, even if many are being fertilized with government money.

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But the overall economy didn't feel that broken. Employment outside of some service sectors remained strong, with workers and companies adjusting to the new concept of working at home.

And while GDP did tank for a quarter or two, what developed soon after was not great surpluses of inventories due to tanking demand, but rather inventory shortages and supply disruptions. Those disruptions - meaning manufacturers and others could not get the components and other inputs they needed in a timely way - were the result of a combination of factors, including factory closures in China, worker shortages there and in other areas, cancelled sailings by ocean container carriers that reversed the supply-demand equation, and soaring demand in certain areas due to a change in consumer behavior.

Now, more than three years later, we are getting back to normal. Indeed, in February the Federal Reserve Bank of New York described its Global Supply Chain Pressure Index as "back to normal."

But it is a "new normal." That is an overused phrase, but it seems quite appropriate here. Things have changed or are continuing to change.

The Wall Street Journal's Paul Page recently wrote an article on this very topic, and I thought I would share some highlights, including quotes from various supply chain pundits.

That starts with diversifying away from China sourcing. Long talked about but far less often executed, companies do seem to be actually finding new supply sources outside China. Citing some examples of such moves by Apple, Mattel and others, Page writes that we are in the midst of enduring changes "that will more broadly affect how companies get their raw materials and parts, where they produce goods and how they ship finished products to consumers."

He adds that taken together, "the changes mark the biggest shift in how supply chains are managed since China's entry into the World Trade Organization in 2001 ushered in a new era of globalization."

Those important changes include the embrace of regional manufacturing strategies, where souring is spread across the globe to be closer to customers. Related to that are duel or even multi-vendor sourcing techniques. Both are designed to reduce the risk of the types of supply chain disruption seen over the last nearly three years.

"They have been moving away from a model built on scale, where everything is engineered to get the best financial impact from the greatest economies of scale, to a model where there is plenty of redundancy in the network," Patrick Van den Bossche, global analytics practice leader at consulting firm Kearney, told the Journal.

He further observed that ""The move away from China, to rewire supply chains to where you have multiple local supply chains, is really just starting. Companies are still trying to figure out how this works."

The key question of course is whether this time will companies really follow through on the strategy this time, where many have turned away from the plan in the end in recent years.

But leaving China and adopting multi-sourcing strategies almost surely increase supply chain costs - is it worth it?

The Journal quotes Rick Gabrielson, a former transportation executive at Target and Lowe's, as saying companies have to balance those costs against the potential for future disruptions.

"You have to ask yourself, which do you want?," Gabrielson adds. "Are we going to minimize risk for shareholders and customers or are we going to minimize costs? This is the conversation that is taking place, but the change doesn't happen overnight."

Government regulations around the environment are also changing supply chains. The SEC, for example, is advancing plans to require that companies disclose not only their own carbon emissions but those of their suppliers, and their suppliers' suppliers, known as Scope 3 emissions.

That would add further cost and complexity, but seems to be unstoppable.

But the biggest change, Page says, may be the pullback in Lean inventory practices. He notes companies such as Nissan and PepsiCo have said the focus on hyper-efficient supply chains may be ebbing, as more companies recognize the value in buffer stock.

While some firms may decide they don't need all the safety stock they have been adding, "You will not see the pendulum pull all the way back" to a just-in-time focus, Gabrielson told the Journal.

So net it all out: the Journal says after the experience of the past few years that companies are really focused on building supply chain resilience, and are doing so by reducing dependence on China, using multi-vendor sourcing strategies, and pulling back from strict Lean inventory practices.

They are also adding robots. Lots and lots of robots, Page notes.

That is the new normal for sure.

What is your reaction to these supply chain trends? Let us know your thought at the Feedback section below.


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On Demand Videocast:

Understanding Distributed Order Management

Highlights from the New "Little Book of Distributed Order Management"

In this outstanding Videocast, we'll discuss DOM, based on the new Little Book of Distributed Order Management, written by our two Videocast presenters.

Featuring Dan Gilmore, Editor along with Satish Kumar, VP Client Services, Softeon

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On Demand Videocast:

The Grain Drain: Large-Scale Grain Port Terminal Optimization

The Constraints and Challenges of Planning and Implementing Port Operations

This videocast will provide a walkthrough of two ways to formulate a MIP, present an example port, and discuss port operations.

Featuring Dan Gilmore, Editor along with Dr. Evan Shellshear, Head of Analytics, Biarri.

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On Demand Videocast:

A Blueprint for WMS Implementation Success

If You Want a Successful WMS Project, You will Find the Blueprint in this Excellent Broadcast

This videocast lays out the keys to ensuring your WMS implementation goes smoothly, involves minimal pain, and accelerates time to value.

Featuring Dan Gilmore, Editor along with Todd Kovi of Radix Consulting and Dinesh Dongre of Softeon.

Now Available On Demand


Feedback will return next week.

What is the current US factory capacity utilization?

A: 79.9% - a good number. The long range average is 78.2%.

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