Seven reasons the coronavirus has hobbled the supply chain for a pantry staple:
1) Sweet Corn Supplies Are Finite – corn for canning makes up the smallest portion of U.S. crop.
2) Land Is Limited – a relatively small number of farmers specialize in growing sweet corn.
3) Corn Is Only Harvested Once a Year – fresh corn is canned right after the harvest in late summer, and that yield is the entire supply for the year.
4) There Aren’t Enough Trucks – Trucking companies shrank their fleets last year to improve profitability.
5) Truckers Are Rejecting Contracts – The decrease in trucking capacity drove up prices, prompting some transportation companies to reject existing contracts in favor of last-minute orders at higher prices.
6) Corn Is Irreplaceable – there is no substitute
7) Hoard Mentality – hoarding has created shortages
Three Scenarios to Guide Your Global Supply Chain Recovery (SMR)
Even as the business climate remains deeply unpredictable, supply chain leaders should act now to plot their comebacks. These are five steps that supply chain executives should take to develop an effective recovery plan for their business:
Step 1: Identify suppliers in affected regions and estimate TTR by scenario.
Step 2: For each scenario, estimate demand and assess which products and assembly facilities will be affected by these suppliers and for how long.
Step 3: Use the insight from the previous step to determine when and for how long you should shut down, or significantly reduce, manufacturing activities.
Step 4: Determine how to ramp up capacity by focusing on sales and operational planning. Allocate the available capacity and inventory only to products that allow you to achieve your specific objectives during the recovery period.
Step 5: Book logistics capacity as soon as possible.
Japan is attempting a delicate balancing act as the pandemic has underlined the risks of the world’s economic reliance on Beijing. Despite growing concerns about doing business in China, the economic incentives to stay remain too great.
The race to distribute Covid-19 vaccines to hundreds of millions of Americans could come down to one question: Do we have enough freezers? Some of the shots now in late stages of testing must be stored at temperatures potentially as cold as minus 80 degrees Celsius, or minus 112 Fahrenheit, similar to conditions for transporting ice cream and steaks to supermarkets and eventually to people’s doorsteps.
Hospitals, pharmacies and physicians’ offices are expected to be vaccination sites, but they have few such specialized freezers. That is prompting a mad dash by logistics, public-health and drug-industry officials to cobble together a cold-storage supply chain that can deliver vaccines around the country without letting them become warm and ineffective.
Blame lean manufacturing. A decadeslong effort to eke out more profit by keeping inventory low left many manufacturers unprepared when Covid-19 struck. And production is unlikely to ramp up significantly any time soon.
At the beginning of the pandemic, it was nearly impossible to find toilet paper, cleaning supplies or canned soup. Five months later, supplies of those goods are recovering, according to data from market-research firm IRI. But shelves remain generally emptier than they were before the pandemic, and it could get worse before it gets better.
A new report on factories in Malaysia that create products for Brooks Brothers, Levi’s, LL Bean and others examines the high prices workers pay for their jobs.
Finding a vaccine that works effectively and ensuring that the vaccine is mass distributed are two different challenges. Rapid manufacturing and distribution of a COVID-19 vaccine will rank as one of the most challenging government initiatives ever undertaken. Lives—and a normal way of life—are at stake. But with aggressive planning, management, and funding, a strong and competent federal government has an opportunity to prove that it can be an extraordinary force for good in people’s lives.
Making a vaccine quickly is hard enough but distributing one worldwide offers a host of other variables, and conflicting forces may work against the effort: The infrastructure powering the global economy is scaling down for a protracted downturn just as pharmaceutical companies need to scale up for the biggest and most consequential product launch in modern history.
Japan is paying 87 companies to shift production back home or into Southeast Asia after the coronavirus pandemic disrupted supply chains and exposed an overreliance on Chinese manufacturing. While China’s economy is already recovering from the coronavirus shock, the pandemic threatens to dent its reputation as the “factory of the world” — at least in some industries.
It’s a moment of reckoning for global supply chains. But that doesn’t mean companies are flocking back to the United States.
There are good reasons for some companies to move out of China. Wages are rising, whittling away at one incentive to manufacture there. And deep fissures between the United States and China have opened in areas like security and technology, which could lead to more aggressive action by either side, regardless of who wins the presidential election in November. Still, more companies leaving China does not necessarily represent a win for American workers. Like La-Z-Boy, many companies that are moving some facilities out of China are relocating to countries where wages are even lower. While U.S. trade with China fell sharply last year, imports from Vietnam, Taiwan and Mexico swelled. For many companies, making their supply chains more resilient has actually meant spreading out production around the world, not concentrating it in the United States. Purveyors of consumer products, fast food and automobiles continue to expand in China, which is home to a rapidly growing consumer market and the world’s greatest concentration of factories. Some firms have struggled to find factory space or skilled workers outside of China.
David Simchi-Levi discusses some of the environmental, research, and packaging concerns in supplying populations with a COVID-19 vaccine.
The pandemic has exposed one of the major weaknesses of many supply chains: the inability to react to sudden, large-scale disruptions. This lack of resiliency has been especially notable in the supply chains of the life sciences, health care, and food industries. The resulting turmoil has generated calls for companies that had offshored production to Asia (and China, in particular) to bring it back home. But this approach is no panacea. For one thing, given the huge size of the Chinese market, most global companies will need to keep a presence there to serve it. For another, since China is now a dominant, if not sole, source, for thousands of items, reducing dependence on it in many cases will take considerable investment and time.
Drug manufacturers face supply-chain weaknesses and sourcing issues as they ramp up complex production processes to meet global demand.
“Over the past two decades, manufacturers in many different industries have been shifting to a ‘lean’ manufacturing model that reduces the amount of raw materials and finished product they keep in stock. “This was successful in terms of reducing costs,” Simchi-Levi says. “But it increased exposure to risk.”
The unsung star of 21st-century logistics is the global food system. From field to fork, it accounts for 10% of world gdp and employs perhaps 1.5bn people. The global supply of food has nearly tripled since 1970, as the population has doubled to 7.7bn. At the same time, the number of people who have too little to eat has fallen from 36% of the population to 11%, and a bushel of maize or cut of beef costs less today than 50 years ago in real terms. Food exports have grown sixfold over the past 30 years; four-fifths of people live in part on calories produced in another country. This happens in spite of governments, not because of them. Although their role has declined, they still sometimes fix prices and control distribution.
Creating and implementing a stress test for companies in critical industries is possible. It would go a long way toward ensuring that the kind of shortages that have been occurring in the last few months don’t happen again.
Medicine is a system for delivering care and support; it’s also a system of information, quality control, and lab science. All need fixing. I spoke to David Simchi-Levi, an M.I.T. professor who studies supply-chain economics and how enterprises respond to disasters. “Cost is easy to measure,” he told me. “But resilience is much harder.” Simchi-Levi is particularly interested in two variables that could serve as metrics for resilience. The first is the “time to survive”; that is, how long can an enterprise endure when there’s a sudden shortage of some critical good? The second is the “time to recover”: how much time will it take to restore adequate supplies of some critical good? By quantifying each variable under different scenarios, a business can model its ability to recover from a disaster. He told me about floods in Thailand that shut down factories responsible for critical computer and automotive parts. Afterward, some companies expanded their supply lines to other parts of Asia. Having seen the fragility of a tight chain, those companies had now established a network with some spring in it. In the future, their “time to survive” would exceed the suppliers’ “time to recover.”