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.

Biden orders a review of US supply chains for vital goods

President Joe Biden signed an executive order Wednesday intended to boost manufacturing jobs by strengthening U.S. supply chains for advanced batteries, pharmaceuticals, critical minerals and semiconductors. “It’s about resilience, identifying possible points of vulnerabilities in our supply chains and making sure we have the backup alternatives or workarounds in place.”

Consumer Demand Snaps Back. Factories Can’t Keep Up. (WSJ)

Supply chains typically get beaten up during recessions. As sales decline, companies draw down inventories to conserve cash instead of purchasing more parts and materials. Entire pipelines of supplies get cleaned out. When demand improves, even modestly, suppliers respond with an outsize increase in production to restock empty warehouses and assembly plants. The so-called bullwhip effect ripples all along supply chains, generating unusually large orders for suppliers that are far from end customers. This time, the bullwhip effect is even more pronounced because demand for consumer products has been extraordinarily high. At the same time, companies are placing supersize orders to compensate for the extra time it takes to procure supplies from factories and freight operators constrained by global efforts to contain the coronavirus. That’s exacerbating the strain on supply chains.

Apple Is the $2.3 Trillion Fortress That Tim Cook Built (Bloomberg)

Cook’s global supply chain greatly improved upon the fabrication approaches that Dell and Compaq had developed. The big PC brands often outsourced both manufacturing and significant design decisions, resulting in computers that were cheap but not distinctive. Cook’s innovation was to force Foxconn and others to adapt to the extravagant aesthetic and quality specifications demanded by Jobs and industrial design head Jony Ive. Apple engineers crafted specialized manufacturing equipment and traveled frequently to China, spending long hours not in conference rooms as their PC counterparts did but on production floors hunting for hardware refinements and bottlenecks on the line.

Contract manufacturers worked with all the big electronics companies, but Cook set Apple apart by spending big to buy up next-generation parts years in advance and striking exclusivity deals on key components to ensure Apple would get them ahead of rivals. At the same time he was obsessed with controlling Apple’s costs.

Why vaccine production is taking so long (Axios)

COVID-19 vaccine makers are under intense pressure to rev up production, but the scale of the challenge is unprecedented — and the speed of production is limited.

Behind AstraZeneca’s Covid-19 Vaccine Stumble (WSJ)

A production problem at a single factory in Belgium has delayed tens of millions of doses destined for Europe, endangering the continent’s already-slow inoculation drive and representing the greatest threat so far to Dr. Soriot’s extraordinary pledge last year to vaccinate the world—and do so for no profit. After disclosing the European problem, the drugmaker now says it has been troubleshooting similar production issues in recent weeks as far away as the U.S. and Australia.

Lack of Tiny Parts Disrupts Auto Factories Worldwide (NYT)

Strong demand for gaming systems, personal computers and other electronics by a world stuck indoors has sucked up supplies of semiconductors, forcing carmakers around the world to scramble for the chips that have become as essential to mobility as gasoline or steel.

Firms Want to Adjust Supply Chains Post-Pandemic, but Changes Take Time (WSJ)

The coronavirus pandemic snarled the world’s sprawling supply chains for months, shutting factories, disrupting shipping and making it difficult for companies to get products from factories to consumers. Now, many companies are considering changing the model to avoid future product shortages and transportation delays, even if it might increase costs. Some are looking at moving production closer to home. Others are considering spreading small factories around the world instead of putting all their manufacturing in one place. There is little evidence of a big shift so far, given the costs and the uncertainty. But surveys and interviews with corporate executives show some have started to make changes and many are seriously considering them, though consultants say the moves could take several years to roll out.

The Future of the U.S. National Stockpile Isn’t a Bigger Stockpile (Bloomberg)

The Strategic National Stockpile doesn’t have enough supplies to meet the federal government’s own targets. But in the long run, health officials don’t want to make it bigger. The future of the stockpile is about having better visibility into the supply chain to know what’s out there and what is available, and how do we respond in a way that is timely and effective. Entering into contracts with key distributors that it would pay to share information on their supply chain, manage some of the national stockpile’s supplies, and agree to assist in future emergencies.

The Race to Make Vials for Coronavirus Vaccines (NewYorker)

The development of Valor Glass began in 2011, when Corning’s researchers were working to reinvent medical vials, which had not changed substantially for a century. Using platinum-lined ceramic crucibles, heated to more than a thousand degrees, they spent hundreds of hours combining silica with new ingredients. They found that, by adding alumina and removing boron, they could make the glass far more resistant to degradation, and therefore less likely to leach contaminants into the contents. Other innovations came later, and the vials went on the market in 2017. This June, the federal government granted Corning more than two hundred million dollars to produce them for COVID vaccines.

If One Leading Coronavirus Vaccine Works, Thank This Tiny Firm in Rural Austria (WSJ)

A key ingredient in what could be the first U.S.-approved Covid-19 vaccine comes from a family-owned company with 90 employees in the Austrian countryside, underscoring the fragility of the potential treatment’s supply chain.

How the Virus Slowed the Booming Wind Energy Business (NYT)

Renewable energy developers have struggled to finish projects as the pandemic disrupts construction and global supply chains. EDF Renewables executives were hopeful they would finish installing 99 wind turbines in southern Nebraska before a year-end deadline but pandemic related setbacks have hampered EDF’s efforts to finish the $374 million project by the end of the year.

Why It’s Still Hard to Find a Can of Corn (WSJ)

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

Japan Is Paying Firms to Make Things at Home. But China’s Pull Is Still Strong. (NYT)

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.

Covid-19 Vaccine Race Turns Deep Freezers Into a Hot Commodity (WSJ)

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.

Why Are There Still Not Enough Paper Towels? (WSJ)

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.

Why Are Some Groceries Still So Hard to Find During Covid? (WSJ)

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.