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Supply Chain by the Numbers

- April 2, 2020 -

  Supply Chain by the Numbers for April 2, 2020

Shudders - Charmin Tissue Plant almost Burns Down; Oil Prices go below $0; US PMI for March not Surprisingly Shows Manufacturing Contraction; New UPS Drone can Really Fly               



That's how many hours it took to douse a fire that broke out in the middle of the night at a Procter & Gamble factory in California that makes - shudders - Charmin toilet tissue. Before rushing to the store to try with little success to find any TP given this supply chain disruption at the sprawling plant that makes tons of tissue and paper towels, be comforted that production was only partially impacted from the blaze, and was back to full operations Wednesday morning. P&G says the fire started at 2 AM March 30 before being put out at 4 AM by the more than 50 firefighters. P&G says the fire affected 10% of the factory. The company declined to disclose the cause of the fire or an estimate on the cost of damage to the 51-year-old manufacturing plant, according to the Cincinnati Business Courier in P&G's headquarters city. P&G also declined to specify what kind of equipment was affected. "We are still producing and shipping Charmin and Bounty products," a spokesperson for P&G said, adding "What is important is that Charmin is on the way."



That was the level of the March Purchasing Managers Index as released by the Institute for Supply Management this week. That is below the key 50 mark that separates US manufacturing sector expansion from contraction, but surprisingly not by much. That could be because responses to monthly ISM survey trickle during the month, not all at the last second, and therefore may not be reflective of what manufacturers are seeing right now. SCDigest expects the PMI for April will be much lower – maybe hitting record lows. And that view is supported by ISM's New Orders Index, which came in very low at 42.2, a decrease of 7.6 percentage points from the February. But not surprisingly, some sectors are up, notable food and beverage. "We are experiencing a record number of orders due to COVID-19," one food company told ISM.



That - rather amazingly to SCDigest – is how many miles per hour a delivery drone from German startup Wingcopter can fly, enabling very rapid deliveries. The company was in the news recently, as UPS' Flight Forward division last week announced it was partnering with Wingcopter to develop a series of delivery zones to meet specific applications, literally "take offs" of the company's current design, which has a range of 75 miles and can operate in environments with up to 45 mile-per-hour winds. Wingcopter's technical advantage is a design that allows it to switch from hovering and vertical lift to a low-noise forward flight mode, which is better suited to use over populated areas. It accomplishes this using a tilt-rotor design, which has the added benefit of making it more stable in difficult weather conditions. The Wingcopter drones also have the capacity to quickly accelerate for time-sensitive cargo for which more conventional drone designs might not be well suited.


Less than $0

That's where global oil prices per barrel could be in just a few weeks, meaning oil companies will have to pay companies to take their oil as production oddly continues on even as demand collapses due to the virus crisis. That crisis has created an unprecedented demand shock in energy markets, with storage space – both onshore and offshore – quickly running out. "Refineries in many places are now losing money for every barrel they process, or they have no place to store their output of oil products," Bjarne Schieldrop, chief commodities analyst at SEB, told CNBC this week. He pointed out that when refineries shut down, many oil producers have nowhere to send their crude if the refinery is also part of the logistical chain to the market. This crazy situation was caused in part by a bizarre price war between Russia and Saudi Arabia, which both continue to pump lots of oil even as demand for it shrinks. Good luck with that.

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