AuthorTrupti Valsangikar, RUSCA Blog Committee On February 24, 2021, President Biden signed an executive order calling for a review of United States supply chains after a year of unprecedented disruptions. Throughout the pandemic, the global semiconductor chip shortage has affected the U.S. by causing production standstills and delays in critical industries such as pharmaceuticals and critical minerals, and in advanced battery and automobile manufacturing.. From the absence of adequate personal protective equipment for hospitals and frontline workers, to the lack of rare earth minerals needed for defense products, American supply chains have been feeling the repercussions of this prolonged economic turmoil. However, President Biden’s executive order aims to help alleviate some of the effects of this instability. The President’s executive order seeks to mandate a government study about vulnerabilities in the United States’ supply chains for particular sectors, one of which is the semiconductor chip industry (Lynch). Because semiconductor chips are integral components of many electronics such as phones, electric vehicles, and some medical devices, the current shortage not only affects Americans’ abilities to obtain and use these electronics, but it also shines a light on the United States’ overreliance on foreign semiconductor manufacturers. Perhaps of greater concern during a pandemic is the overreliance on foreign manufacturing. This has also led to disruptions in the pharmaceutical supply chains. For example, the U.S. frequently obtains its active pharmaceutical ingredients, finished dosage forms, and raw materials from China (Bookwalter). However, in response to the COVID-19 crisis, approximately 37 pharmaceutical manufacturing factories in China were shut down, which has left the U.S. in a limbo to find alternative supply sources. As such, President Biden’s review hopes to identify possible avenues to shore up domestic supply chains to reduce dependence on foreign manufacturers (Lynch). Though the Biden administration is waiting until the study’s key findings are available to create specific policies and proposals, Biden’s overarching plan is to increase domestic production, strategize the stockpiling of goods and raw materials, and develop surge capacity and cooperation with allies. In addition, Biden has promised to use federal procurement spending to buy more goods produced in the U.S. to spur domestic manufacturing (Lynch, et al.). The COVID-19 crisis has illustrated the United States’ excessive reliance on foreign manufacturers and has underscored the need for the country to increase investment in domestic supply chains. Though the U.S. has a long way to go to achieve self-sufficiency in manufacturing, Biden’s review and his other efforts hope to provide guidance on how best to prevent future supply chain disruptions and provide stability for the American economy. Sources: https://www.washingtonpost.com/business/2021/02/24/biden-supply-chain/ https://www.washingtonpost.com/us-policy/2021/01/25/biden-buy-american-rules/ https://www.uspharmacist.com/article/drug-shortages-amid-the-covid19-pandemic AuthorNeha Avadhani, RUSCA Blog Committee Walmart announced plans in late February to spend close to $14 billion in capital expenditures in 2022, focused on increased automation and improved supply chains according to the retailer’s 2021 Investment Community Meeting and its earnings release. Executives are envisioning this expansion to drive traffic to Walmart+, a competitor to Amazon Prime. It will also help to expand the retailer’s fulfillment capabilities, with CEO Doug McMillon saying at the meeting, “We've got a limit on how much we can pick and deliver from stores. The automation that we're investing in will help change that” (Leonard). This automated e-commerce fulfillment plan is now ready to scale across the country, hopefully increasing productivity and long-term sales growth for the company. In a similar effort to compete with other prominent retail names like Target, Walmart has also begun fulfilling online orders through its stores directly, routing some Walmart.com orders to regional locations. Tom Ward, Senior Vice President of Customer Product, wrote in November (Ward). Using its brick-and-mortar locations and local delivery apparatuses allows for decreased wait-time for customers and reduced pressure placed on the major online fulfillment centers. These efforts are aided by Walmart’s network of local fulfillment centers (LFCs) currently being built. These LFCs are built inside existing stores or next to them, harnessing the supply chain capabilities already available through the previous brick-and-mortar networks. Automated robots are used to gather order items and bring them to workstations where orders can be packed quickly and efficiently. Another recent innovation has been made directly to the robot’s technological and physical capabilities. A significant issue with automated order picking has long been the varying durability of various products, with some able to withstand the pressure of a bot’s grip and others needing more delicate handling. Walmart’s solution, now a pending patent application, is to note which products require which kind of handling and then allow the bots to swap out their effectors to provide a lighter or firmer touch (Leonard). This would make it possible for warehouses or LFCs to handle a large variety of inventory without the complications of having different bots for different products. Walmart is currently making 1.5 million deliveries from its local stores weekly (Leonard). This equates to about seven times more than the company was capable of last year. According to the CEO, a primary goal for the retailer is to create a more interconnected supply chain, and they are on their way to doing so. Currently, Walmart’s LFCs are making possible direct customer pick-up, a unique option that Amazon does not currently offer from its fulfillment centers and one that also reduces the burden on local delivery services. All of these changes are efforts to become the primary online shopping destination for customers, with McMillon admitting, “We weren’t the first place you go when it’s time to buy products online. We’re trying to change that” (Garcia). With greater innovation in the automation space and more synergy between online orders and brick-and-mortar locations, integrated supply chains seem to be the future of retail. Sources: https://www.supplychaindive.com/news/walmart-automation-fulfillment-omnichannel-robotics-distribution/595355/ https://corporate.walmart.com/newsroom/2020/11/24/were-using-our-stores-to-help-online-orders-arrive-faster https://www.supplychaindive.com/news/walmarts-automated-order-picking-target-freight-port-inland/593437/ https://www.marketwatch.com/story/walmart-to-invest-nearly-14-billion-in-automation-and-other-business-areas-in-fiscal-2022-11613752795 AuthorEmily Hsiao, RUSCA Blog Committee Last year, Walmart raked in over $500 billion in retail sales - more than Amazon, Alibaba, Costco, and IKEA combined. As the world’s top retailer, they have one of the most effective existing supply chains (National Retail Federation). Much of Walmart's supply chain success can be attributed to their inventory tracking system, hub-and-spoke distribution model, big box store format, and constant push to modernize. Walmart has long used an electronically backed vendor managed inventory (VMI) system - a centralized database which gives vendors the ability to track and restock low inventory items. In 2016, they implemented the myProductivity app, which not only allows managers to track inventory from the floor in real time, but also eliminates the need for employees to spend hours tracking inventory (Rubin). With 4,700 locations spanning across 25 countries, Walmart has been consistently opening new stores. When tapping into a new market, company leaders choose areas where multiple stores can flourish - leaning into their hub-and-spoke model. A newly constructed distribution center becomes the "head"- and when "spoke" locations are built out around it, inventory can be distributed more effectively. To further cut down on transportation costs, the big-box-retailer also makes each location large enough that the store and warehouse are essentially combined. With higher sales volumes, Walmart can lower margins and pass savings along to consumers (Hugos). In their push to continue dominating the retail space and to compete with Amazon Prime, Walmart is investing $14 billion into scaling their supply chain automation and fulfillment capacity this year. More orders will be filled directly at stores, and at fulfillment centers, bots will bring items straight to workstations (Leonard). Finally they are working to expand their local fulfillment center network. CFO Brett Briggs stated that these new expansions should net Walmart at least 4% of growth in sales profit this year (Garcia). Sources: https://www.supplychaindigital.com/supply-chain-2/walmarts-dollar14b-supply-chain-moves https://www.supplychaindive.com/news/walmart-automation-fulfillment-omnichannel-robotics-distribution/595355/ https://www.scmglobe.com/key-supply-chain-practices-from-walmart/ https://www.skubana.com/blog/walmart-leading-way Top 50 Global Retailers 2020 |
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