AuthorCole Sayde, RUSCA Blog Committee As inflation hit a four-decade peak of 8.5% in March, compared to 12 months earlier, no consumer was spared from rising prices (Guilford); that is, unless you consume Arizona Iced Tea. Since 1992, the price for 23 fluid ounces of the beverage has been so consistent that it’s printed on the can—99 cents. Among the most important contributors to this accomplishment is Arizona’s use of 3PL warehousing. In their Edison, New Jersey warehouse, Arizona provides the list of ingredients to their mixture, but Bettaway Supply Chain Services’ on-site offices oversee the rest. Bettaway’s offerings range from consulting to providing a fleet of trucks to improve their customers’ performance. In the case of Arizona, Bettaway manages “inbound and outbound logistics, raw materials and packaging, carrier procurement, dock scheduling, and just-in-time trucking shuttle services to company [distribution centers],” (DC Velocity). In addition, the 3PL produces proprietary equipment for the iced-tea giant; To produce drink variety packs, Bettaway constructed a processing line to assemble, wrap, and label 15 of these packs in one minute. Bettaway’s president describes their services as being critical towards Arizona meeting demand. Simultaneously, these efficiencies have resulted in much leaner manufacturing processes, helping Arizona maintain its benchmark price. Arizona is not alone in its utilization of such services; in fact, 90% of Fortune 500 companies use 3PLs for some supply chain function (McKevitt). Bang & Olufsen, or B&O is among the many firms benefiting from such a partnership. Byproducts of the luxury audio brand’s growth included volume fluctuations and competitive pressure, which limited their ability to fulfill demand. B&O outsourced its logistics services to UPS to reduce such growing pains. The parcel service provides on-site support for audio products across their lifecycle, spanning from inventory management to export documentation. In fact, this partnership has been so effective that even with demand fluctuations as high as 76%, UPS has regularly maintained “99.9% inventory and shipping accuracy,” (UPS). DHL was the 3PL of choice for Baycrew—a Tokyo-based company in the fashion, furniture, restaurant, and fitness spaces. Baycrew’s unorganized operations spanned across several 3PLs, resulting in lost sales. To find a solution, DHL was brought into the fold and overhauled the company’s supply chain. The worldwide delivery service effectively consolidated Baycrew’s operations into one local logistics center, overseeing retail and e-commerce sales. As a result, online sales doubled, shipping was expedited, and order inspection accuracy improved (DHL). Outsourcing services allows businesses to focus on their core competencies while improving the efficiency of their operations. In each of these examples, the outsourcing of logistical operations to a 3PL has effectively improved process efficiency and accuracy while reducing costs. The pandemic has shown firms the importance of effectively responding to supply chain crises, and utilizing a 3PL may be the key to both responding to and avoiding these major disruptions. SOURCES: https://www.wsj.com/articles/us-inflation-consumer-price-index-march-2022-11649725215 https://www.dcvelocity.com/articles/52938-keeping-the-iced-tea-flowing https://www.supplychaindive.com/news/third-party-logistics-3pl-increase-large-companies-2017/443710/ https://www.ups.com/assets/resources/supplychain/media/UPS_Global_Logistics_Distribution_Case_Study.pdf https://www.dhl.com/content/dam/dhl/global/dhl-supply-chain/documents/pdf/SC_Warehousing_Case-Study_Building-the-no-1-logistics-infrastructure_EN.pdf AuthorBrian Gallic, RUSCA Blog Committee Due to the COVID-19 pandemic, many businesses suffered supply problems due to the failures of the global supply chain. One company that was greatly affected is Glo Pals. Glo Pals, owned and operated by Hagan Walker, is a toy company which operates out of Starkville, Mississippi. In the midst of the pandemic of 2020 and Christmas soon to arrive, Walker admitted he was “willing to pay pretty much whatever” for supplies from a warehouse somewhere in China (Goodman). Unfortunately, only a few manufacturers have the capability to create small toys for such a cheap price that could compete with China’s market. As a result, he was stuck with his current manufacturer or had to raise prices on his toys to make up for the extra cost of production. Larger companies suffered global supply chain problems similar to Glo Pals during the pandemic. However, unlike Glo Pals , their vast amounts of resources have allowed them to change their business strategy to create reliable supply chains independent from global problems. The first part of their solution comes from nearshoring. Nearshoring is a practice of moving production closer to the consumer. In fact, a recent study showed that “70% of CEOs have planned, are considering or expect to move manufacturing to Mexico” (O’Neal). With such a large move from manufacturing, Americans can expect a price increase in final products. Like with Glo Pals — who have to make a decision to pay higher prices or risk late products, large companies like Sirius Archery Products LLC in Burlington, KY recently told customers their arrows would increase over 40% in the upcoming years after their move of Manufacturing to Mexico(O’Neal). With nearshoring on the rise, coupled with the exponential rate of e-commerce companies have also started to grow their warehousing and sorting facilities, existing warehouses have raised rent or sold their operation for a premium. However, customers and companies are demanding more. Thus Amazon, FedEx, and other companies are building logistics centers everywhere — even in the middle of towns. Warehouses are now popping up in small towns with not enough existing infrastructure to support them. Residents of these towns believe themselves victims of mass traffic and noise due to the closer manufactures and warehouses (O’Neal). In recent days, residents have been reported to have started “launching lawsuits and GoFundMe campaigns to counter a warehouse construction wave that is changing the U.S. distribution landscape” (O’Neal). If residents continue to resist these warehouses, companies will find it increasingly difficult to build in communities with strict zoning laws. However, the residents of the towns, though angry about the construction of the warehouses, admit they still want door delivery services. This presents a real problem as everybody wants door delivery, but nobody wants to incur hardships of hosting warehouses or the like in their town. In addition to everyday residents of towns, farming groups have started to protest the mass increase of logistic type infrastructure. These groups have complained that industrial operations would affect “pristine’’ farmland (O’Neal). In the end, it's hard to tell if after the COVID-19 pandemic companies will return to a global supply chain model, but for now a logistical and manufacturing boom has changed the ways companies do work in the United States. SOURCES: https://www.wsj.com/articles/americans-are-pushing-back-on-the-warehouse-construction-boom-11649422800 https://www.wsj.com/articles/u-s-companies-face-hurdles-in-moving-production-closer-to-home-11650301164?mod=business_minor_pos23 https://www.wsj.com/articles/pandemic-delivery-boom-fuels-demand-for-last-mile-space-11638277201 https://www.nytimes.com/2022/03/31/business/supply-chain-small-business.html https://www.sbsun.com/2022/02/28/hundreds-oppose-ontarios-plan-for-warehouses-and-business-park/ https://glopals.com/pages/sesamestreet AuthorJames Nichnadowicz, RUSCA Blog Committee Since the revolution of ride sharing applications like Uber and Lyft, quick to follow were commodity delivery services via ride sharing platforms. The most notable and recognizable being UberEATS, which does much of its business delivering from chain restaurants or local grub spots but will even deliver staple goods from places like a supermarket or convenience store. UberEATS has fundamentally altered the marketplace of food dining and purchasing, however there is a new player to the game that is attempting an even further evolved business model: Wonder. Founded by former Walmart CEO Marc Lore, Wonder is a mobile food delivery service that not only delivers hot and ready food to eat, but also cooks the meal right outside the customer’s home. Wonder is a mobile food kitchen that specializes in fulfilling “on demand home dining” (Brustein Bloomberg). Wonder offers base entrees that can be paired with numerous different sides. The company even offers custom requests for specific food dishes, allowing customers to request world renowned food dishes from famous restaurants. Wonder also aims to create the atmosphere of fine dining, bringing in fine dishware and silk linen for customers to dine on, then returning later to collect the supplies. The startup is looking to expand across New Jersey and beyond and shake up the currently turbulent food delivery space. Wonder in 2021 filed and was approved for 49 trucks in Westfield, New Jersey, at a fee of $50 for each truck, and the company hopes to file in further municipalities in the northeast, aiming for a fleet of 1000 trucks by the end of 2022 (Lieberman and Kadosh TapInto). As the company expands, Wonder is aiming to be more than just a food delivery company. They are “a food and tech company” whose vision is “to give U.S. households access to fresh-cooked meals from top chefs in all parts of the country”(Thomas CNBC). Marc Lore has also teamed up with former Walmart Chief Revenue Officer Scott Hilton, who has also recently announced the company plans to expand into Westchester County, New York, parts of Connecticut, northern and central New Jersey, and a portion of New York City (Thomas CNBC). The company to date has raised $500 million dollars from numerous different venture capital firms, hoping to ultimately become a staple of dining options in America. A final component of Wonder’s business strategy, that Lore and Hilton call a play from the Netflix playbook, is to “lock up all the best proprietary content … [e]very chef that is well known — every restaurant that’s great — we want to basically lock it up and have it exclusively on Wonder” (Thomas CNBC). Preemptively acquiring culinary intellectual property, Lore believes so strongly in Wonder’s ability to shift the way Americans think about dining and eating, he wants to take a vice grip over the range of offerings competitors may have in the potential future market of mobile gourmet food delivery. Although a risky and capital intensive move, Lore’s foresight here could be the beginning of an empire. If Wonder’s popularity explodes and enough chefs and restaurants get on board, Wonder will have a significant grip on the mobile food kitchen services industry and could also make significant revenue from licensing and infringement lawsuits. Although Wonder has strong proof of concept, only time will tell if it will surmount the numerous obstacles of the dining industry and become a staple of eating-out options in America. SOURCES: https://www.tapinto.net/towns/westfield/sections/food-and-drink/articles/wonder-registers-49-food-trucks-with-westfield-may-get-special-rules https://www.bloomberg.com/news/articles/2021-12-07/food-truck-startup-wonder-has-raised-more-than-500-million-for-delivery-push https://www.cnbc.com/2021/12/07/marc-lore-plots-us-expansion-of-wonder-group-food-delivery-biz.html AuthorChristina Chen, RUSCA Blog Committee As climate change and sustainability become increasingly important issues, the Securities and Exchange Commission (SEC) has taken an unprecedented step. On March 21, the SEC proposed a controversial new rule change requiring publicly traded companies to disclose climate-related risks to investors. Gary Gensler, the SEC Chair, states that investors “support climate-related disclosures because they recognize that climate risks can pose significant financial risks to companies, and investors need reliable information about climate risks to make informed investment decisions” (U.S. Securities and Exchange Commission). However, the process of increasing transparency and quantifying climate risks will not be easy. According to the proposal, public companies would have to report climate-related risks such as the impact of extreme weather events caused by global warming and the costs of moving away from fossil fuels and towards clean energy. They must outline a transition plan on how they intend to meet climate goals and disclose information about direct (Scope 1) and indirect (Scope 2) greenhouse gas emissions. Companies would also be required to disclose emissions information from upstream and downstream supply chain partners (Scope 3) if that information is deemed to be relevant to investors or if they set goals related to those partners. Critics argue that these new requirements will dramatically increase costs for companies while not necessarily providing accurate information. While Scope 1 and Scope 2 emissions are relatively easy to track, reliable information about emissions farther along the supply chain is often very difficult to obtain, especially for overseas partners. Additionally, the proposal would require companies to include independent assurance from consulting or auditing firms to ensure the accuracy of their data, adding to compliance costs (Maurer and Broughton). As a result, groups such as the U.S. Chamber of Commerce and the American Petroleum Institute oppose the new regulations. The SEC’s proposal will likely benefit auditors and consulting firms, whose services will be in higher demand, as well as companies that already have low emissions or plan to reduce their carbon footprints. Reena Aggarwal, director of the Georgetown University Center for Financial Markets and Policy, explains that “there is historical precedent for clear information empowering investors to divest from companies that don’t meet certain ethical standards” (Clifford). In other words, having clear emissions data will allow investors to place financial pressure on companies to be more environmentally responsible. Standardized climate disclosures will also make it easier to compare companies’ environmental efforts with each other. These measures tie in with the Biden administration’s climate agenda, though the proposal is unique in that it relies on financial regulation rather than legislation. The proposal will be open for public feedback for 60 days before finalization, though legal challenges could delay the effective date–SEC rules require the disclosure of material, or relevant, information to investors, but opponents argue that emissions data is not material for most businesses. However, if the rule goes through, it will certainly have a significant impact on supply chain sustainability. SOURCES: https://www.sec.gov/news/press-release/2022-46 https://www.wsj.com/articles/companies-brace-for-higher-compliance-costs-as-sec-proposes-climate-disclosures-11647941400?st=z3f3oyc2pz11r8a&reflink=desktopwebshare_permalink https://apnews.com/article/climate-business-environment-e55ae33115e6a9e1202673ab51745924 https://www.cnbc.com/2022/03/23/sec-climate-rule-winners-and-losers.html https://www.nytimes.com/2022/03/21/business/sec-climate-disclosure-rule.html AuthorJennifer Chen, RUSCA Blog Committee As disruptions continue to occur, more and more supply chain partners are using permissioned blockchain solutions to share trusted data. Blockchain driven supply chains will have better traceability, increased visibility and compliance from outsourced manufacturers, and lower losses from counterfeit. As one of many emerging technologies within supply chain management, blockchain is now being adopted by the gold industry to improve transparency and maintain authenticity. The London Bullion Market Association (LBMA) and the World Gold Council are currently working together to develop a digital system to track gold throughout the supply chain. Titled the Gold Bar Integrity Programme and gaining the support of trusted organizations such as Barrick Gold and Royal Canadian Mint, the ledger will record a gold bar’s place of origin and its chain of custody, including the names of its miners, transporters, exporters, processors, and manufacturers. It will also be used to register and track gold bars at each stage of the production and distribution cycles, including mining, vaulting, and purchasing by jewelry manufacturers. Gold bars are physically indistinguishable from one another, but the blockchain technology allows each bar to have their own unique code and information, allowing participants to certify the accuracy of information without a centralized authority. The gold industry has dealt with security issues in the past, such as illegal mining, laundered gold, fake bullion bars, and human rights violations, consequently gaining a reputation of violating environmental and social regulations. By implementing this new system, industry leaders hope to prevent more issues from occurring, such as gold mined by criminal gangs or in conflict zones ending up in bank vaults. There have also been instances of gold bars from illicit sources stamped with false logos making it into vaults. According to Ruth Crowell, the CEO of LBMA, “The international trade in wholesale, physical gold depends on confidence. This is a major advance in furthering transparency for the common good of the gold industry.” (Spence). Having increased transparency gives buyers the ability to prevent gold tied with connections to environmental destruction, human rights abuses, and other issues from entering the market. By strengthening confidence and trust through this new initiative, industry leaders believe that demand for gold will simultaneously increase. SOURCES: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/gold-industry-groups-aim-to-squeeze-out-nefarious-practices-with-tracking-tech-69702041 https://www2.deloitte.com/us/en/pages/operations/articles/blockchain-supply-chain-innovation.html https://www.bloomberg.com/news/articles/2022-03-28/gold-industry-embraces-blockchain-to-secure-its-supply-chain https://cointelegraph.com/news/gold-industry-taps-blockchain-for-supply-chain-management-and-fraud-prevention https://fortune.com/2022/03/29/gold-industry-blockchain-illicit-bullion-black-market-conflict-forced-labor/ https://www.gold.org/news-and-events/press-releases/gold-bar-integrity-programme AuthorShradha Rajgandhi, RUSCA Blog Committee General Mills has been facing material disruptions due to the nation-wide shortage of supplies. The war between Russia and Ukraine has also created complications that are forcing General Mills to react quickly and promptly. General Mills is a large manufacturer of a variety of branded consumer foods such as cereals and frozen meals that are sold in various grocery stores. Some of their most popular frozen products such as Pillsbury Dough and Totino’s Pizza have been reduced to a 70% production range, but General Mills is doing everything in its power to combat the situation. Lately, there have been more issues with actual ingredients being scarce as opposed to a lack of workers. General Mills is well off in terms of gathering enough personnel and staff in their distribution centers, but their efforts are futile because they don’t have much to package and send out. The increased labor, transportation, and packaging material costs are expected to collectively increase by 8% (Johnson). Hence, General Mills is juggling inflating prices and increasing demand in a highly volatile environment, and consumers will have to deal with higher prices for their grocery items. As General Mills enters their fourth fiscal quarter, they are being mindful of the fact that inflation is not going to disappear right away. They are also being considerate of the crisis going on between Russia and Ukraine. Russia and Ukraine are two of the biggest grain exporters so commodity markets will be affected in other countries. However, despite these unanticipated price increases, General Mills is successful in keeping their commodity costs stable and their customers intact with their pricing (Crawford). In order to adapt to these shortages, General Mills has had to reformulate some of its products over 20 times this past year and they have had to continue tinkering with their recipes to make sure people will still enjoy the taste (Fox 9 Staff). Sourcing from different suppliers or changing the product recipes is a viable option for them in this current state, but it can cause them to change a product line completely, and that may not be as appealing to their loyal customers in the long run. Ingredients such as oil, wheat, and starch are the key components of a lot of these foods so their product teams will have to work vigorously to make it all work. This is such a big issue because consumers are buying more food products than before the pandemic started, so empty shelves and out-of-stock items are causing these prices to surge. Another response from General Mills is by having their teams communicate with one another to tackle their issues on a more day-to-day basis. They are implementing daily control towers among all team levels and their senior management is meeting weekly to discuss constrained platforms for their products by getting on the phone with suppliers (Crawford). These control towers are essentially task forces of executives that rely on computer systems and processes to help them understand their issues and bring the right information in at the right time. It is difficult to address our problems in the US when people in Ukraine are deprived of food security and shelter. General Mills is supporting the ongoing refugee crisis by halting all of its advertising and cereal business investments in Russia (Johnson). They do not want to have any employee or distributor ties to Russia because they feel sympathetic towards Ukraine and want to join the long list of companies in the US that are also supporting them. Despite this all, General Mills is slowly rebuilding itself and they are doing better than expected. They had a $660 million profit at the end of their third quarter in February which was an 11% increase from the previous year, and they announced that they have plans to increase the capacity of high-performing product lines that will hopefully boost their revenue for the fiscal year of 2023 (Crawford). SOURCES: https://www.startribune.com/general-mills-profit-up-11-beating-estimates/600158581/ https://www.foodnavigator-usa.com/Article/2022/03/23/general-mills-slowly-rebuilds-pillsbury-dough-totino-s-supplies-but-service-levels-are-still-low https://www.fox9.com/news/general-mills-forced-to-alter-recipes-to-combat-supply-chain-struggles AuthorTrupti Valsangikar, RUSCA Blog Committee In March, President Biden’s Supply Chain Disruptions Task Force unveiled plans to launch a supply chain data sharing portal. After the past 2 years of supply chain disruptions from the COVID-19 pandemic and congestion at multiple American ports, the creation of this portal hopes to ease pressure on supply chains while speeding up distribution and reducing prices for consumers. The Freight Logistics Optimization Works (FLOW) system aims to “ensure that companies at different points in the process have information that can quicken deliveries.” (Harwood). According to a White House press release on the FLOW initiative, the portal will require cooperation from businesses, warehouses, logistics companies, and ports. Some of the major players who have already agreed to participate include the ports of Los Angeles and Long Beach, and companies such as Land O’Lakes, Target, FedEx, and UPS (Campbell). A major takeaway from the recent logistics disruptions was the need for supply chain visibility. While most companies have taken steps to ensure visibility within their organizations, most are hesitant to share that information externally. To combat this hesitancy, officials say that “information-sharing in their voluntary initiative would be "anonymized" to protect proprietary information involving competitors.” (Harwood). This project is following in the footsteps of other governing bodies like the Federal Aviation Administration which require shared information on aircraft safety and the Department of Health and Human Services which set up a centralized database during COVID-19 for information sharing about medical supplies. The FLOW program is building on the previous efforts by the Supply Chain Disruptions Task Force to establish a smooth delivery of products to shelves. In November 2021, the Administration supported efforts to charge ocean carriers that spent over 8 days sitting at the docks, leading to a reduction in the number of containers being left at the docks. The President also called for a move to 24/7 operations to increase the volume and speed of products moving through the supply chain. While the initial rollout of FLOW will be a limited pilot program, the U.S. Department of Transportation is interested in gauging the desire for more participation among businesses and ports to hopefully create a long-term data-sharing portal. SOURCES: https://www.supplychaindive.com/news/white-house-supply-chain-data-sharing-flow-initiative/620427/ https://www.cnn.com/2022/03/15/politics/supply-chain-crunch-new-white-house-initiative/index.html https://www.whitehouse.gov/briefing-room/statements-releases/2022/03/15/fact-sheet-biden-harris-administration-announces-new-initiative-to-improve-supply-chain-data-flow/ AuthorDane Kuehnrich, RUSCA Blog Committee, The rapid spike in oil prices across the globe is heavily threatening global supply chains, posing threats to suppliers and consumers alike. While large natural gas companies are facing a direct impact from these increases, it is smaller businesses that are put at risk the most, many of which are being forced to tap into their cash reserves in order to merely keep up with larger rivals. A recent survey by Vistage Worldwide Inc. has found that nearly fifty-two percent of small businesses are facing challenges due to high energy costs (Simon). These challenges are especially dangerous as they come at a time where small businesses have already been struggling with high inflation rates, and labor shortages. It is the rapid sequence of these price increases which is causing problems for most small businesses. Of these victims, one owner of a small-town local swim club has been enduring a long period of labor shortages and cost increases, and now the rise in gas prices may finally put his business to an end. “Mr. Hastings expects to spend as much as $110,000 on gasoline this year, up from $50,000 in 2021. Pay for lifeguards employed by the company has climbed to as much as $17 an hour, up from $11 in May 2021. The cost of pool chemicals has increased by an average of 20% since November and is continuing to rise almost weekly” (Simon). The extremely sudden, exponential increase in the costs of operations for Hastings local business could mean its end. Although prices were already beginning to increase for labor and supplies, the expected gasoline expense more than doubled– dealing a blow which not many mom-and-pop businesses could withstand. As for now, small businesses will continue to suffer the consequences of these high prices. There is a common saying between economists: the best cure for high oil prices is high oil prices. In usual context we have seen high oil prices self-regulate after periods of time once oil companies believe they can lower their prices without seeing harsh results. However, with the volatility of the oil market being at an all time high due to exterior determinants, the nearby future of oil prices is exceptionally foggy. This uncertainty is causing many problems for people like Shigeru Aoki, an executive at Tamashima Hoso, a company which supplies the plastic containers used for pre-made meals to grocery stores. Aoki has recently negotiated price increases with customers, raising his prices nearly 7-8% (Hufford). However, in only the past few weeks, more severe cost increases have been created due to the Russia-Ukraine conflict, causing petroleum prices to rise even more. He now wishes he asked his customers for a 15% greater price increase, but now it would be unprofessional and quite ridiculous for him to raise the price again in such a short amount of time. While the global economy has faced high oil prices before, this current surge may seem intimidating due to the amount of economic forces and variables that are affecting it. Forces such as COVID-19 barriers, the Russia-Ukraine conflict, remaining sanctions on Iran, and recent COVID shutdowns in China, are contributing to the increasing volatility of the oil market. This volatility is causing many oil companies to rethink their operations for this year, as many will not take the risk of increasing their number of rigs, manpower, and drilling more oil wells in order to increase supply if they do not see a reasonable belief that they will reach a comfortable rate of return (Buckley). In addition, there will be a reasonable lag between the time of which oil prices decrease and when natural gas consumers feel an effect. Suppliers must first sell their gasoline which they bought at higher rates before they can start increasing their inventory of cheaper gasoline and charge consumers appropriately. SOURCES: https://www.wsj.com/articles/gas-prices-upend-small-businessits-keeping-me-awake-11647768602?mod=hp_lista_pos5 https://www.wsj.com/articles/worried-inflation-suppy-chains-small-business-11645463508?mod=article_inline https://www.wsj.com/articles/oil-price-rise-trickles-down-to-everything-even-your-potato-salad-to-go-11648033200?mod=article_relatedinline https://www.houstonpublicmedia.org/articles/news/energy-environment/2022/03/21/421470/experts-say-oil-prices-and-consequently-gasoline-prices-could-be-volatile-through-2022/ AuthorCole Sayde, RUSCA Blog Committee From Ford’s Model T development in 1910, to Amazon’s complex network of warehouses, supply chains have always worked towards meeting demand in the most efficient manner. Over the last ten years, a new tool has been introduced to improve this efficiency: Artificial intelligence (AI). AI is a computer-based tool which can quickly interpret massive data sets in an effort to make the best decision for a given problem. This definition is intentionally vague because of how vast the applications of such technology can be. Rolls-Royce, known for their luxury cars, produces equipment for one in four shipping vessels in the world’s fleet (Intel). In addition, “dangerous ocean conditions resulted in 1,129 total shipping losses over the past 10 years,” and were mainly caused by human error (Intel). To optimize shipping, the company is collaborating with Intel to implement AI in the international shipping industry. Using Intel servers and processors, Rolls Royce is able to process data from “lidar, radar, thermal cameras, HD cameras, satellite data and weather forecasts” (Intel). The ‘Intelligence Awareness System’ makes ships aware of their surroundings in the dark, bad weather, and highly congested ports, therefore reducing risk. Currently, the system is centered around a human operator, but the initiative’s goal is to scale up to autonomous shipping. UPS is also using AI to develop the logistics industry, but in its own distinct manner. The shipping giant’s original On-Road Integrated Optimization and Navigation (ORION) system provided drivers with the most efficient delivery routes, resulting in an average of eight less miles driven per driver. ORION has since been updated to be updated throughout the day–for inclement weather or pick-up changes–resulting in an average reduction of almost 2 additional miles (Leonard). These mileage savings result in lower fuel expenses and a reduced carbon footprint, which are precious in today’s age of e-commerce. But not all applications are as expansive. Take Costco, for example; The wholesaler uses AI in a very simple manner–to determine its bakeries’ daily production. Using SAP, Costco compiled seven years of consumer data and individual bakery waste numbers to generate a forecasting algorithm (Bickley). The bakery is simultaneously Costco’s most profitable and riskiest unit because of spoilage; the company’s CIO described increased revenue and reduced waste as a benefit of the implementation. These results are echoed in Mckinsey’s 2019 AI report; 63% of those surveyed described increased revenues from implementing the technology. In fact, one of the largest shares of AI-related savings were in the supply chain industry, whose savings stemmed from “spend analytics and logistics-network optimization.” Even with these savings, businesses are hesitant to implement AI due to job losses, but industries are more likely to report job increases of three percent, than losses of the same amount. Adaptability is essential to maintaining a competitive advantage, and it is clear that AI will be the key differentiator in the coming decades. SOURCES: https://www.infotech.com/software-reviews/research/sap-infuses-ai-into-costco-s-baked-goods-business https://newsroom.intel.com/news/intel-artificial-intelligence-rolls-royce-push-full-steam-autonomous-shipping/?spredfast-trk-id=sf200063583#gs.vgbnkhhttps://www.mckinsey.com/featured-insights/artificial-intelligence/global-ai-survey-ai-proves-its-worth-but-few-scale-impact https://www.supplychaindive.com/news/ups-orion-route-planning-analytics-data-logistics/601673/ |
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