AuthorCole Sayde, RUSCA Blog Committee Formula 1 racing is the most elite level of single-seater international racing, and its athletes are pushed to their limits to win the Drivers’ Championship. Before drivers can even take these risks though, their managers must endure their own race against time to coordinate the movement of these race cars and teams to and from 23 different courses—spanning 5 continents—every season. It is the responsibility of a logistics coordinator to plan the movement of all race materials, including every team’s multimillion-dollar car, and their planning begins months before the first checkered flag. F1 follows a weekly race schedule, where competition begins with practices on Fridays and ends with a race on Sundays. For example, the Brazilian Grand Prix will end at 5:00 pm local time on Sunday November 13, and the next race is in Abu Dhabi—where cars must be on the track by 2:00pm on Friday November 18. So, 40-50 tons of freight per team must be packed and delivered within 4.5 days, including a loss of 7 hours between time zones (DHL). This shipment requires well synchronized intermodal transportation whose planning begins when the schedule is released in October—four months before the first race. F1 excels in intermodal transportation, and that begins with their trucks. In 2020, 315 trucks were used across ten teams and their suppliers to transport materials that include: cars, enough parts to rebuild each car, 40 sets of tires, and 50 tons of tools (Iyengar). Like the US has restrictions on truck driver hours, F1 teams prevent their drivers from being on the road for too long. Therefore, teams will often follow their trucks with a van of alternate drivers in an effort to stay on schedule (Hope). In addition, air travel is the fastest but most expensive mode of transportation in F1. According to DHL, 2018’s season saw over 131,995 km traveled by six planes carrying materials from all teams. Air is an inter-team option, meaning several teams will load a plane with their cargo and share the cost evenly. Shipping across the ocean is equally important, and the Scuderia Ferrari F1 team has partnered with a leader in the cargo industry—CMA CGM—as a result. Sea transport is an exceptionally slow option though, so teams will use this mode in the off season to move big parts more affordably. Ferrari benefits from this partnership because its sustainability goals are in line with CMA’s, and the shipping company offers “biofuel, LNG and biomethane in ocean cargo, sustainable aviation fuels for air cargo, and biofuels or even electric vehicles for ground transport” (Karamalegkos). This synergistic relationship stands to display the benefits of supplier relationship management, as both companies will be sharing technologies to meet their own goals. Supply chains are often associated with consumer goods; however, logistics coordinators in the sporting world embrace the planning and movement portions of the Supply Chain Operations Reference (SCOR) Model, and they offer a clear look at the importance of supply chain management across all industries. SOURCES: https://www.dhl.com/global-en/home/about-us/partnerships/motorsports/formula-1.html https://f1chronicle.com/how-are-f1-cars-shipped-between-countries/#Transportation-via-road-trucking https://medium.com/speedbox-is-typing/the-logistics-behind-f1-7537e445de20 https://container-news.com/cma-cgms-ceva-logistics-becomes-official-partner-of-ferrari/ AuthorBrian Gallic, RUSCA Blog Committee In recent years, electric vehicles have entered the automobile market and take up about 4% of all automobile sales in the United States. However, General Motors, prompted by the recent success of electric vehicles like Tesla’s Model 3, has announced they will become fully electric by 2035. Soon after, Audi then released a statement promising to sell only fully electric vehicles by 2033. However, experts have begun to raise concerns about these recent promises. Chief among the concerns is the lack of lithium. Lithium, a compound used in electric vehicle batteries, is limited in supply. Currently, China leads the world in mining of the compound because of their cheap labor, lack of labor laws, and lack of environmental concerns. With the scarcity of this resource in the domestic United States, companies continue to pay a premium for lithium. One estimate indicated that “global weighted average lithium carbonate price this month is $36,780, per Benchmark data shared with us, up from $9,000 a year ago” (Donnelly). Experts agreed that as of 2021 lithium has fallen into structural shortage — the commodity has too much demand for the limited supply. As a result, the lithium batteries in cars now cost about 30% of the entire vehicle. The United States has realized the automobile industry's lithium concerns and after the Department of Energy released a statement that said "the U.S. risks long-term dependence on foreign sources of batteries and critical materials,” the Biden administration promised to aid the crumbling supply chain. The Biden administration backed up their promise with newly allocated funds into development for more efficient lithium-ion batteries and research into recycling practices. First, the Department of Energy promised three billion dollars to encourage the domestic production of lithium batteries. Second, Congress passed the Infrastructure Investment and Jobs Act which promised over seven billion dollars to improve the domestic supply chain. Finally, the administration promised sixty million dollars to find secondary uses of these materials (Plautz). The last portion of the budget might have been the best allocation of funds compared to the other two as recycling of lithium ion batteries seems promising. Environmental scientists are warning the Biden administration about the risks nature mining lithium creates. As a result, recycling these batteries in a cost-efficient way will help quell concerns about harming the earth while also aiding the growing demand for batteries. Initially, companies skeptical of recycled batteries pushed the government towards means to mine new material rather than recycle. However, a new study in which the lithium ions batteries’ cathode was refined allowed the recycled battery to last longer and charge faster. About 20 years ago many doubted the useful application of recycling batteries but now only two decades later “the Department of Energy estimates the battery market may grow 10-fold over the next decade” (Wilkerson). Though the United States reacted slowly to the lithium-ion mining market, they can still make up for lost time with new recycling practices. Flooding money in research and development will likely be a key tactic used for the current and future administration to cut into China’s global lithium battery market dominance, while at the same proving that innovation and the electric vehicles movement will not threaten current environmental standards. SOURCES:https://www.bbc.com/future/article/20220105-lithium-batteries-big-unanswered-question https://www.morningbrew.com/emerging-tech/stories/2022/02/09/lithium-soars-to-record-high-prices-amid-global-ev-push https://www.wsj.com/articles/lithium-prices-soar-turbocharged-by-electric-vehicle-demand-and-scant-supply-11639334956 https://www.scientificamerican.com/article/recycled-lithium-ion-batteries-can-perform-better-than-new-ones/ https://www.utilitydive.com/news/doe-to-offer-3-billion-to-boost-battery-production-recycling/618839/ AuthorJames Nichnadowicz, RUSCA Blog Committee As climate change concerns soar across the globe and the urgency to lower carbon emissions heightens, the demand for electric vehicles has cataclysmically exploded. However, a supply shortage of one key input threatens to halt the entire electric vehicle industry: lithium. Mined as lithium ore from the ground, sometimes called spodumene, lithium has become one of the most sought-after materials in the world because of its importance in battery production. Once procured as an ore, the material can be further synthesized into compounds such as lithium hydroxide or lithium carbonate. These compounds are critical components in battery manufacturing, however there are numerous bottlenecks in the conversion process needed to synthesize the appropriate chemical compounds (Wilmot). This has prevented a major up-scaling of lithium conversion capabilities. Many of the chemical manufacturing processes will take years to have the necessary infrastructure built to create sufficiently more capacity. Worsening the supply constriction of lithium is an uneven market share of lithium processing capabilities. China holds capacity of more than sixty percent of mineral and chemical refining processes for battery production (Wong). In response to the massive market control of lithium refining China possesses, the United States and many other developed nations have sought to establish their own lithium procurement and chemical refining infrastructure. Scrambles have begun globally for mining prospects, ultimately in the pursuit of fulfilling electric vehicle battery demand and decreasing reliance on China for lithium carbonate and lithium hydroxide. Aside from lithium, the current manufacturing of many batteries also involves cobalt, nickel, copper, and aluminum. However these metals have seen skyrocketing prices, with nickel in particular seeing the highest price in decades. The current Presidential administration has felt this supply pricing issue is critical and ,in June of 2021, the Biden Administration published the “National Blueprint for Lithium Batteries” which called for cobalt and nickel to be substituted out of the supply chain (Wilmot). Canada has also had great interest in investing in lithium mining capabilities as “it offers proximity to the big U.S. market, favorable geopolitics and good environmental, social and governance credentials” (Wilmot). Manufacturers and auto companies must persevere as the demand for electric vehicles will only continue to surge, and sales cannot be missed forever. Furthermore, despite growing desires to decrease import demand, the United States electric vehicle industry will likely have to cooperate with China to meet demand in the coming months. SOURCES: https://www.wsj.com/articles/ev-makers-next-headache-scarce-battery-chemicals-made-in-china-11642768194 https://www.wsj.com/articles/the-scramble-for-ev-battery-metals-is-just-beginning-11638443405?mod=article_inline https://www.wsj.com/articles/lithium-booms-in-the-battle-for-electric-vehicle-batteries-11630585070?mod=article_inline AuthorJennifer Chen, RUSCA Blog Committee Nestle, The world’s largest food company in the world, with over 2,000 brands such as Nesquik, Cheerios, and Toll House, has announced plans to increase funding towards their cocoa supply chain sustainability initiatives by 1.3 billion Swiss francs (1.41 billion USD) (George). This increase in funds will be directed towards Nestle’s “income accelerator program”, which aims to prevent child labor risks and forced labor within cocoa production and improve the livelihoods of cocoa farming communities. In addition, the funding will also be directed towards improving cocoa traceability and reducing the environmental impacts of cocoa farms (i.e. deforestation). Many cocoa farming communities do not have access to basic infrastructures such as clean water, health care, and education due to impoverished conditions, which further leads to increased child labor. The income accelerator program allows cocoa farmers to apply for additional payments under the condition they continue sending their children (ages 6 to 16) to school. Farmers can also claim extra payment for participating in agriculturally beneficial actions such as pruning cocoa trees, which improves productivity, and planting shade trees, which can strengthen climate resilience. Farmers are also being incentivized to diversify their incomes by growing other crops or farming livestock. Examples of this diversification include farming chickens or producing honey through beekeeping. In an effort to increase transparency within their cocoa supply chains, Nestle will introduce a range of products with cocoa sourced from this new program, starting with a selection of KitKat products next year. This will offer consumers the opportunity to support the improvement of the families’ livelihoods and the protection of children. According to Mark Schneider, CEO of Nestle, “Nestle’s new initiative focuses on the root causes for child labour and the living income gap farmers and their families face,” but “acknowledged the path to a living income for cocoa households would be long and winding.” (Koltrowitz and Angel). Major chocolate makers aside from Nestle, such as Mars and Mondelez, have been under mounting pressure from investors, consumers, and governments to ensure their cocoa beans are being sourced sustainably and ethically. Although companies have made verbal commitments to social and environmental sustainability in the past, studies show there is a lack of impactful action. It is the responsibility of suppliers to create policies and monitor their supply chain practices in order to protect those who are vulnerable. SOURCES: https://www.reuters.com/business/sustainable-business/nestle-pay-cocoa-growers-keep-children-school-2022-01-27/ https://www.edie.net/news/7/Nestle-to-triple-cocoa-supply-chain-sustainability-funding--with-focus-on-human-rights/ AuthorChristina Chen, RUSCA Blog Committee Vaccine mandates have become an increasingly polarized topic of debate across the country, especially with tighter restrictions in many states, surging COVID cases, and the recent controversy over their impact on the workforce and supply chains. Recent news of a federal judge blocking President Biden’s attempt to mandate vaccination for all federal workers has brought this issue once again to the forefront. Blocked on January 21, the mandate would have affected all federal employees, with exemptions only for religious or medical reasons. Judge Jeffrey V. Brown determined that the order was an overreach of presidential authority, as it would have forced millions of workers to either undergo a medical procedure or lose their jobs. Similarly, an earlier Supreme Court decision blocked the Occupational Safety and Health Administration’s vaccination and testing requirements for large businesses with 100 or more employees (Stark). OSHA has since withdrawn the rule but continues to encourage worker vaccination for public health and safety reasons. Beyond public health, another major concern regarding vaccine mandates is their effects on the labor force and the resulting impact on supply chains. Many have blamed labor shortages, especially in the trucking industry, on mandates. When Canada mandated on January 15 that foreign truckers must be fully vaccinated to cross the border, transportation costs increased up to 50% due to lower capacity. The US-based Transportation Intermediaries Association also stated that “the shortage of drivers able to cross the border is causing delays in freight movement of 7 to 14 days… [and increasing] the rates of moving goods from 30% to as much as 100% in certain lanes” (Vieira). These increased delays and costs have made many wary of vaccine mandates. However, logistics experts blame other factors for the current supply chain backups. Modern, lean supply chains are not resilient to disruptions, and the pandemic is arguably the most significant disruption yet. Overwhelmed systems, production constraints in manufacturing countries, and labor shortages that were already present have a much greater impact on supply chain delays, according to experts (Funke). In fact, in the Canadian border case, the overall volume of border crossings by trucks has actually remained roughly the same as before the mandate. Companies also worked with the requirement by relocating drivers, allowing the unvaccinated to keep their jobs while still complying. Ultimately, the link between vaccine mandates and supply chain issues is weak, and public health concerns will likely continue to inform proposed mandatory vaccination requirements. Sources: https://www.wsj.com/articles/judge-blocks-biden-covid-19-vaccine-mandate-for-federal-workers-11642790097?st=vkxr3cvymcs5qmv&reflink=desktopwebshare_permalink https://www.cnn.com/2022/01/25/politics/vaccine-mandate-osha-withdrawn/index.html https://www.wsj.com/articles/canada-says-trucker-vaccine-mandate-hasnt-dented-border-crossings-11643668223?st=onmhgs74udlnqvh&reflink=desktopwebshare_permalink https://www.usatoday.com/story/news/factcheck/2021/10/25/fact-check-covid-19-vaccine-mandates-unrelated-supply-chain-delays/6116776001/ AuthorTrupti Valsangikar, RUSCA Blog Committee In early January 2022, shelves in grocery stores were almost, if not completely, empty. This time though, the blame wasn’t entirely on a global pandemic. Cities across the country were facing multiple inches of snow leading to highway closures and delivery disruptions. Particularly in supermarkets where inventory restocks happen virtually every day, customers were finding the lack of inventory shocking. Some even thought that the barren shelves meant that their local grocery stores were closing down (Kavilanz). But as Colin Campbell, a reporter for Supply Chain Dive, pointed out, the real culprit was the snow which led to “nearly 1 million power outages, stranded drivers for more than 24 hours on I-95 in Virginia and disrupted food shipments to some East Coast grocery stores.” This weather event is only one of many that can cause a similar product shortage. While most businesses are aware of and prepare accordingly for severe weather struggles that ramp up in the winter months, this most recent storm may have longer-lasting repercussions. According to Campbell, “the average recovery time for affected facilities will be 23 weeks, and one site expects the effects to last more than three years.” Since severe weather events are expected to continue in the future and could be worse than what we already experienced, companies need to understand the effect climate can have on their supply chain. For example, if a company has a supplier in an area prone to severe weather, they could consider dual sourcing to avoid over-reliance on a single source. The snowstorms only aggravated the pre-existing supply chain issues facing companies. From new variants of COVID-19 keeping employees out of work to a shortage of delivery truck drivers, the storm then caused trucks to be stuck on highways for hours potentially causing a loss of inventory. Businesses were already feeling the strain from inefficient supply chains due to the pandemic, but the weather likely threw a wrench into the continuity plans. With the rest of the winter season ahead of us and more extreme weather conditions likely to occur, Weather Channel reporter Jan Childs recommends that shoppers check both large and small grocery stores for products as they are more likely to have a better relationship with their producers. Childs also says to avoid stockpiling and make sure to only take what you need and leave the rest for another person. Events like these may be hard to avoid in the future, but both suppliers and customers can take steps to try and curb the effects of inventory shortages. SOURCES: https://www.supplychaindive.com/news/snow-severe-weather-suppliers-manufacturing-disruption-resilinc/616958/ https://weather.com/news/news/2022-01-18-supply-chain-winter-storms-shortages https://www.cnn.com/2022/01/15/business/winter-storm-grocery-shortages/index.html AuthorShradha Rajgandhi, RUSCA Blog Committee Ever since the start of COVID-19, companies haven’t been able to keep up with the constant financial and economic challenges they have been faced with. Nike finds that consumers are shifting their shopping to more digital platforms and companies have been forced to accommodate that. Nike struggled during their first quarter in September of 2021, because there were simply not enough people to produce the products. Based on their manufacturing sources, “Nike’s manufacturing is done in Vietnam, where factories have struggled to stay open and recruit enough workers due to coronavirus waves” (Hensel). The demand for labor continues to grow, but there aren’t enough people to satisfy the demand. Due to this issue, stores in China were closing and they were forced to stop the production of over 130 million items (Riley). However, Nike is not the only company that is impacted by supply chain disruptions. Many companies in various industries have faced downfalls, it just depends on how well the company responds to a time of chaos. Nike is leveraging the importance of technology to get ahead in the supply chain game and it seems to be working fairly well for them. To start, they acquired a brand known as RTFKT which is a digital NFT studio that creates virtual sneaker designs and collectibles using blockchain technology. These NFTs, or non-fungible tokens, are digital sneaker designs that’re tied to the physical items themselves and are sold or traded through their blockchain database. This database then stores data on their digital sales and helps track digital payments. As a result of this acquisition, Nike’s revenue grew to $11.4 billion during their second quarter and their sneakers continued to remain in high demand (Hensel). Things were looking up for Nike as they navigated their way to the hearts and minds of their customers. Their new profound use of NFTs has given them a leg up in sales and other retail competitors are following in their footsteps. Specifically, retailers such as Adidas and Macy’s have “dabbled in releasing their own NFTs, however, Nike is the first major retailer to acquire a company in the NFT space” (Hensel). Aside from NFTs, an official press release from the company itself states a few other ways that they are transforming their supply chain. Nike is deciding to adopt regionalization by creating various regional service centers to serve different cities within the US. The purpose of increased regional centers is to utilize inventory optimization platforms to help tackle consumer demand. They are slowly expanding their network in North America, Europe, the Middle East, and Africa (“How Nike is Transforming its Supply Chain”). Artificial intelligence and machine learning are also becoming embedded into their systems and they are using cobots, or collaborative robots, to process orders and deliver faster. Lastly, Nike is refurbishing their packaging by leveraging pop-up cartons that’re made of 65% recycled content and 35% virgin material (“How Nike is Transforming its Supply Chain”). Nike believes in producing long-term benefits for their customers and the environment as well. They prioritize their workers’ health as COVID-19 continues to worsen and introduce new variants. Overall, Nike has found several ways to stabilize its supply chain in turn helping Nike remain resilient, creative, and strong for the long run. SOURCES: https://news.nike.com/news/nike-supply-chain-innovation https://www.glossy.co/fashion/nike-is-leaning-on-digital-goods-as-supply-chain-challenges-slow-growth/ https://www.cnn.com/2021/12/21/investing/premarket-stocks-trading/index.html |
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