Companies around the globe are accelerating their efforts to diversify and localize their supply networks, as the topics of risk and resilience still dominate the supply chain agenda four years on from the start of the pandemic, according to a report from consulting firm McKinsey & Co.
Under those pressures, supply chains are seeing a profound revolution, with a dramatic increase in the adoption of advanced techniques for planning, execution, and risk management, McKinsey said in its “2023 Supply Chain Pulse Survey.” Data for this year’s survey were collected from 101 respondents, who represented a range of industry sectors on six continents. Collected from the middle of April to the middle of May 2023, the survey included questions on four major areas of supply chain management: network design, planning, digitization, and risk management.
The problems those organizations are trying to solve are clear: almost every supply chain manager in the survey said they had experienced significant issues over the previous 12 months. Some 44% reported major challenges arising from their supply chain footprint that required them to make changes during the year. And almost half (49%) said that supply chain disruptions had caused major planning challenges.
Two approaches have quickly emerged as the most common solutions in the past two years. Companies say they have improved resilience through physical changes to their supply chains by increasing their inventory buffers (78%) and by pursuing dual-sourcing strategies for critical raw materials (78%).
But this year’s adds a third option, with twice as many companies reporting using “nearshoring” strategies as last year, McKinsey found. In all, two-thirds of respondents said they were obtaining more inputs from suppliers located closer to their production sites over the past 12 months (led by the automotive and consumer goods industries). Likewise, almost two-thirds (64%) of respondents said they are transitioning from global to regional supply chains, up from 44% last year. Regionalization takes time, however. Once an organization commits to a new footprint strategy, it can be two years or longer before changes happen on the ground, especially if the strategy requires implementation of new manufacturing sites.
Looking into 2024, one major question will be what happens to the world’s bulging buffer stocks. Companies originally began to ramp up their inventories in response to pandemic-era supply chain disruptions, leading some observers to declare a transition from just-in-time supply chains to a just-in-case model. But that future is unclear, with survey results showing that inventories still remain high, and respondents are divided about their future direction. Roughly equal numbers of respondents believe that stocks will continue to rise, remain at today’s levels, or fall back to precrisis levels.
Answers to those questions could come from the digital-planning revolution that has been brewing in the supply chain field since well before 2020. The pandemic dramatically accelerated the adoption of those new technologies, including three main ingredients: end-to-end visibility, high-quality master data, and effective scenario planning. Companies are also continuing to use cross-functional integrated business planning (IBP) processes, and increasing their use of advanced planning and scheduling (APS) systems that match supply and demand in complex networks.
However, one hurdle that could slow supply chain technology adoption is the long-standing barrier of access to talent. Repeating the results of last year’s survey, only 8% of respondents say they have enough in-house talent to support their digitization ambitions. And yet to fill the gap, companies are backing away from running internal reskilling programs in the supply chain function and turning increasingly to external hiring instead.
All that turmoil has gotten the attention of executives in the board room. McKinsey said. After the large-scale disruptions of recent years, supply chain risk has moved from being a niche topic to a top three item on the senior-management agenda. With the ongoing war in Europe and heightened geopolitical tensions around the world, supply chain risks remain real in many industries. Yet structural and organizational issues may be hampering companies’ ability to make effective decisions based on their growing understanding of supply chain risks. Responsibility for risk management remains fragmented, with many companies operating multiple risk teams within the supply chain function or bundling risk management into the portfolios of teams that are already busy with other topics.
Facing all those challenges, a key task in the coming year for supply chain leaders will be maintaining their hard-won seat at the top table and continually educating the board on the importance of risk and resilience. That’s because in the absence of an immediate supply chain crisis, top-management focus tends to shift onto other issues. Yet supply chains remain vulnerable to a wide range of disruptions, from geopolitical tensions to natural disasters and climate change.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”