AuthorManual Torres, RUSCA Blog Committee The supply chain industry constantly seeks implementations towards wanting to stay up-to-date and remain competitive. By doing so, there’s a huge focus on staying innovative, and a major usage for artificial intelligence has come to life. It’s beginning to be a norm for each company, and an essential that can do quite a hefty amount of work that wouldn’t have been imaginable decades ago. At first artificial intelligence had specific functions for companies such as coding. However, in today’s world there’s another level of importance and key role it plays in almost every company. If there’s a company that doesn’t have it then there has to be a strong consideration for it. The article, Companies Are Seeking Real-World Supply-Chain Gains in New AI Tools, goes in-depth with the implementation of artificial intelligence toward supply chains and companies overall. It reveals the current trend of the overall development of artificial intelligence throughout the years, and what its purpose was compared to now. Author, Liz Young, asserts that “-the development technology tool that can quickly sort through large amounts of information, make predictions and respond to questions in a humanlike voice” (Young, 2024). Furthermore, we can assume that some of the functions of artificial intelligence are groundbreaking for companies and can see the benefits behind this like cost savings. Is artificial intelligence implemented in everyday tasks for companies today? Yes, and relating to supply chain industries. There are many examples of companies already using artificial intelligence to their advantage, and their everyday uses. Diving into the impact it had on logistics is game-changing. The article, The True Role Of AI In Logistics, greatly explains the strong influence artificial intelligence has had in logistics. Industry thought leader, Bart De Muynck, mentioned that “One of the most significant contributions of AI in logistics is its powerful application in predictive analytics fueled by explosive growth in data” (Bart De Muynck, 2023). In addition, it goes on to reveal the strong ability artificial intelligence has in implementing the logistics field for the greater benefit of the future. The author dives into deeper detail about some of the fascinating abilities artificial intelligence provides. He affirms that “By analyzing historical data and real-time information, AI-powered systems can anticipate demand patterns, inventory fluctuations and potential disruptions which enables optimization of inventory levels, minimize stockouts and streamline supply chain operations” (Bart De Muynck, 2023). Moreover, it’s great to see artificial intelligence having a positive impact on many companies and fields. Providing greater accuracy overall is an amazing step forward for the supply chain industry. Another perspective to take into account is the efficiency that it provides for the future of companies. Mars, a multinational manufacturer, has begun using artificial intelligence to their advantage, and there has been implementation towards their daily strategies. Liz Young brings up the current changes Mars is going through, and it’s interesting. She asserted “German software firm Celonis is working with snack-food supplier Mars to use generative AI to combine truck loads, cutting shipping costs and speeding up delivery. Celonis Chief Executive Alex Rinke said Mars had manually evaluated factors such as the weather to determine which shipments could be combined and whether it needed to use refrigerated trucks for its freight” (Young, 2024). Furthermore, the implementation of improving forecasting is a major step forward for any company. The potential uses of artificial intelligence to greatly benefit the company are exciting to even consider from a different standpoint. Alex Rinke provides in detail the potential benefits of the implementation of AI, and it’s surprising for anybody to even imagine. He mentions “With AI, we can proactively tell them, ‘Here are all the truckloads that you have going out that you should consolidate, – That reduced manual touches by 80% and also made them more efficient as a company because they reduced shipping costs, reduced emissions and improved on-time shipments'' (Young, 2024). In other words, we can evaluate the great promise AI has on the industry, and it's in safe hands for the future. Providing efficiency, speedy deliveries, and cutting shipping costs are all beneficial for any company. Rinke also provided many other uses that AI has for the company. Removing those manual touches more and more, and sooner or later we can see a future without any manual touches. AI has a long road ahead towards being fully implemented for any company in the world, and not only for the supply chain industry. However, AI has begun taking some companies by storm in usage. The importance of adaptability for companies in the supply chain world specifically is significant, and having AI as a tool will provide one of the strongest alternatives you could have. The future will have AI involved and have a complete takeover for industries to come. It’ll only be time in which it does so, and those that aren’t innovative towards implementing it. Those companies would only fall behind and miss out on such a tool. Sources https://www.wsj.com/articles/companies-are-seeking-real-world-supply-chain-gains-in-new-ai-tools-023045e7?mod=logistics_more_article_pos4 https://www.forbes.com/sites/forbestechcouncil/2023/08/17/the-true-role-of-ai-in-logistics/?sh=2a62531251d3 https://gjia.georgetown.edu/2024/02/05/the-role-of-ai-in-developing-resilient-supply-chains/ AuthorAdam Seoudy, RUSCA Blog Committee The COVID-19 pandemic sent shockwaves through global supply chains, and few industries felt the impact as profoundly as the grocery sector. As shelves emptied and prices soared, consumers grappled with unprecedented challenges, prompting the Federal Trade Commission (FTC) to launch a series of investigations aimed at uncovering the root causes of these disruptions. Many have hailed the findings of these investigations as very valuable because companies can learn from their possible mistakes during this pandemic, and react better to future disruptions.
One glaring takeaway from the FTC's probe is the fragility of consolidated supply chains. Traditionally reliant on just-in-time stocking models, retailers found themselves unprepared to cope with the disruptions brought on by the pandemic. According to Supply Chain Dive, "The study showcased the overall dependence of the industry on a small pool of suppliers, as firms began strategizing supplier alternatives in a bid to protect themselves from overly concentrated markets and take firmer control of their product supply" (Stroh). The report highlights the risks inherent in overreliance on a limited pool of suppliers, urging industry stakeholders to diversify their sourcing strategies to mitigate future shocks. By doing so stakeholders will be much better prepared for shortages regardless of how rarely they occur and how unprecedented they are. Additionally, the FTC's findings shed light on the shifting dynamics of trade promotion during the crisis. With manufacturers struggling to meet demand during supply chain disruptions, promotional spending diminished, posing challenges for retailers who relied on these incentives to drive sales. As reported by the FTC, "Some companies, most often larger ones, re-imposed strict delivery requirements on their upstream suppliers during the height of the pandemic and threatened fines for noncompliance, pressuring suppliers to favor them over rivals" (FTC). In contrast, retailers embracing an "Everyday Low Price" strategy fared better, underscoring the importance of adaptability in times of crisis. The reasoning behind this is in part due to their ability to appeal to consumers who were very price-sensitive in the face of troubling inflation levels. Perhaps most concerning are the implications of the pandemic for market competition. The FTC report suggests that larger players in the industry leveraged their size and influence to gain a competitive advantage, pressuring suppliers and imposing stringent delivery requirements to secure preferential treatment. According to The Wall Street Journal, "Federal regulators said large grocery chains used their size and scale to keep shelves stocked during the pandemic, edging out smaller rivals when most stores struggled with product shortages and distribution bottlenecks" (Young). This consolidation of power not only threatens to eat up the market share of smaller competitors but also raises concerns about market fairness and consumer choice. As consumers continue to grapple with the aftermath of the pandemic, including persistent price hikes and product shortages, there is an urgent need for regulatory action to ensure a level playing field in the grocery industry. By addressing the underlying vulnerabilities exposed by the crisis and implementing rugged surveillance measures, policymakers can pave the way for a more resilient and equitable future for all stakeholders. In conclusion, the FTC's investigations into grocery supply chain disruptions offer valuable insights into the challenges facing the industry in the wake of the pandemic. By learning from these findings and taking proactive steps to strengthen supply chains and promote fair competition, stakeholders can chart a course toward a more resilient and sustainable grocery industry. References Stroh, Kelly. “3 Takeaways from the FTC’s Probe into Grocery Supply Chains.” Supply Chain Dive, 11 Apr. 2024, www.supplychaindive.com/news/ftc-investigation-grocery-supply-chains/712963/. Technology, FTC’s Office of. “FTC Releases Report on Grocery Supply Chain Disruptions.” Federal Trade Commission, 21 Mar. 2024, www.ftc.gov/news-events/news/press-releases/2024/03/ftc-releases-report-grocery-supply-chain-disruptions. Young, Liz. “FTC Finds Large Grocers Used Size to Stock Shelves ...” FTC Finds Large Grocers Used Size to Stock Shelves During Pandemic, 21 Mar. 2024, www.wsj.com/articles/ftc-finds-large-grocers-used-size-to-stock-shelves-during-pandemic-1db4c870. AuthorLiam Ripberger, RUSCA Blog Committee A supply chain is like a real chain; every link is connected to the next, and when something happens in one link, it sends a ripple effect that is felt throughout the entire supply chain. On Wednesday, April 3rd, 2024, an earthquake in Taiwan had a major ripple effect that was felt throughout the entire chip industry. This 7.4 magnitude earthquake was the strongest magnitude earthquake Taiwan has seen in 25 years. Taiwan is used to having many minor earthquakes, and much of the country’s infrastructure is built to withstand earthquakes to a certain degree because of that. Even with these built in defenses, the sheer magnitude of the earthquake caused major damage to the east coast of the country, injuring over 1,000 citizens and destroying buildings in the process.
The Taiwan Semiconductor Manufacturing Company, who is the world's largest manufacturer of advanced microchips, was not able to avoid being damaged. The manufacturer was forced to pause production and evacuate during the seismic incident, and experienced damage to some of their facilities. Against all odds, TSMC told reporters that 80% of tools used by the company were recovered by April 4th, the day after the earthquake (Revell). Furthermore, employees were able to return to work within 24 hours of the earthquake to resume production. In total, this production delay and damages to their facilities cost the company an estimated $62 million dollars in damage (Tyson). Although the production delay was relatively minimal for such a catastrophic event, Taiwan is responsible for approximately 92% of the most advanced chip production in the world (Magill), and supplies major technology companies like Apple and Nvidia. In fact, Chris Miller, author of Chip War: The Fight for the World’s Most Critical Technology, stated that, “the effects of a catastrophic event knocking out TSMC would be akin to the Great Depression” (Bennett). Therefore, even a single, smaller delay in manufacturing is being felt across major companies’ supply chains throughout the world. This situation has also shed light on the possible risks of Taiwan’s current dominance in the microchip industry. This almost monopolistic control over such a crucial global industry is worrying many businesses and nations alike due to the possible risks. Nazak Nikakhtar, who works in national security, summarized the impact of such market control, telling Fox News, “this should be a stark reminder to the rest of the world that we need redundancies in our supply chains. Looking to one company, one country, or one region for output is a recipe for disaster” (Revell). Knowing of the damage and delays that the earthquake had on the well-prepared Taiwanese manufacturer, it makes major investors in the industry uneasy about relying so heavily on one entity, and one country for that sake. Diversification of manufacturing in the microchip industry is a potential solution that can be considered in order to combat this risk. In recent years, countries like the United States have begun to invest in local manufacturing of the highly demanded technology. For example, The Biden Administration has begun to fund Intel Corporation, a manufacturer in the US, with billions of dollars for research and expansion. According to Drake Bennett from Bloomberg, the White House claims that by 2030, they will go from accounting for less than 10% of global microchip production, to producing about 20% of the world’s most advanced chips (Bennett). Even with such major efforts, Taiwan has held a competitive advantage in the industry since the 1970s, when the United States began offshore production in Taiwan, and will still continue to have dominance in the market for the foreseeable future. Due to the global significance of the Taiwan Semiconductor Manufacturing Company, the ripple effects of Taiwan’s strongest earthquake in 25 years were felt all over the world. Although actual damages to TSMC and delays in production were small, their monopolistic dominance in the microchip market was enough to make major companies and other nations uneasy. Overall, this occurrence was an example to us all of the importance of supplier diversification, and sheds light on how fragile supply chains can be. Sources: “Taiwan earthquake’s impact on chip industry likely to be ‘moderate,’ experts say” https://www.supplychaindive.com/news/taiwan-earthquake-impact-semiconductor-supply-chain-tsmc-micron/712388/ “Taiwan quake to hit some chip output, disrupt supply chain, analysts say” https://www.reuters.com/markets/asia/taiwan-quake-hit-some-chip-output-cause-asia-supply-chain-disruptions-analysts-2024-04-03/ “Apple and Nvidia may see supply chain disruptions from Taiwan earthquake” https://www.foxbusiness.com/technology/apple-nvidia-may-see-supply-chain-disruptions-taiwan-earthquake “Taiwan Earthquake Raises Stakes for Solution to Chip Dominance” https://www.bloomberg.com/news/newsletters/2024-04-05/taiwan-earthquake-raises-stakes-on-effort-to-build-chips-in-us-europe “Taiwan earthquake causes estimated $62 million in damage and disruptions for TSMC” https://www.tomshardware.com/tech-industry/semiconductors/taiwan-earthquake-causes-estimated-dollar62-million-damage-and-disruption-for-tsmc-euv-equipment-reported-to-be-safe-and-sound-report#:~:text=The%20quake%20and%20its%20aftershocks,cost%20TSMC%20approximately%20%2462%20million. AuthorNathan Perez, RUSCA Blog Committee Intel has just received 8.5 Billion dollars in funding from the federal government due to Joe Biden's plan to bring semiconductor production back to the United States from Asia. President Biden plans to bring this back and produce 20% of the world’s leading-edge logic chips. This was passed in the CHIPS and Science Act and has awarded the largest amount of money given under the law.
Intel will invest this money in their projects in Arizona, New Mexico, Ohio, and Oregon. In Ohio, Intel had to delay their 20 billion dollar semiconductor project which is now expected to be completed in late 2026. Intel states, “The funds will support their ongoing work in Ohio and their projects in Arizona, New Mexico, and Oregon.” This is a huge step in the right direction and awards the supply chain with a vast amount of confidence. Intel plans to invest $100 billion in chip production in the US over the next five years. Those plans include five semiconductor process nodes where its most advanced is called 18A. Microsoft plans to produce a chip the software maker designed in-house. These advanced chips will help develop technologies like artificial intelligence and even can be used in military capabilities. Intel CEO Pat Gelsinger says the US will stay at the forefront of the artificial intelligence era as Intel hopes to build a resilient and sustainable semiconductor supply chain. This investment will create over 10,000 manufacturing jobs, 20,000 construction jobs, and 50,000 indirect jobs. All these jobs will help fuel the chip maker's supply chain. This includes 50 million to focus on developing the semiconductor while adding to the workforce. Intel has already spent 250 million on workforce development and building relationships with different communities. Intel will have to face competition as SK Hynix has agreed to invest 4 billion dollars into chip packaging located at Purdue University. Intel going forward will have to wait until these sites are complete but once they are it is “Smooth Sailing.” Intel wants their supply chain to grow, the US has helped them, now all that is left is to see how Intel can produce 20% of the leading chips by the end of the decade. Sources: https://www.manufacturingdive.com/news/sk-hynix-to-build-4-billion-advancing-packaging-fab-purdue-university/712256/ https://www.supplychainbrain.com/articles/39438-south-korea-company-invests-39b-in-new-indiana-chip-packaging-facility https://www.manufacturingdive.com/news/intel-awarded-8-5-billion-chips-and-science-act-funding/710792/ https://www.supplychaindive.com/news/intel-chips-funding-impact-us-semiconductor-supply-chain/711268/ AuthorCary Wong, RUSCA Blog Committee Over the past few months, the world has dealt with more than a handful of major supply chain crises. Many of these conflicts stem from issues affecting important logistics routes on land and in water. Since the beginning of this past fall season, the attacks on shipping containers by the Houthi rebels in the Red Sea have severely altered international supply chains. Meanwhile, the latest logistics crisis has taken place in Baltimore, Maryland. Early in the morning on March 26nd, 2024, the Francis Scott Key Bridge collapsed into the Patapsco River after being struck by a Singaporean container ship called MV Dali. The collapse tragically took the lives of six construction workers who were filling potholes on the bridge. The incident had the potential to be much worse than this, but the ship was fortunately able to send a signal to the authorities, who closed down the bridge just seconds before the crash. As a result, the Baltimore area has been left to deal with a world of logistics problems. The government and businesses must work to navigate these problems for the foreseeable future.
The first area of concern for supply chains resulting from the accident is that the Port of Baltimore has been forced to close. As the fallen debris from the structure is stuck in the river, no ships can enter or leave the port until the cranes clear the water. This clearly presents a conflict to businesses, as they must reroute both incoming and outgoing shipments to other ports. Some of these other port options include nearby East Coast cities such as New York, Charleston, and Savannah. Although Baltimore is not home to one of the largest overall ports compared to others in the nation, it is the number one port for roll-on and roll-off shipments, including cars, trucks, and farm equipment. According to the Alliance for Automotive Innovation, in 2022, more than 750,000 vehicles were imported and exported to and from Baltimore (Lerman). This means that car companies such as Mazda and Mercedes-Benz, as well as equipment manufacturers like John Deere and Caterpillar, will experience increased costs and delays with their shipments. Meanwhile, the other area of concern for supply chains centers around the city’s roads. The bridge was a part of Interstate Highway 695, and it was crossed by more than 11 million vehicles yearly (O’Marah). As the bridge will not be rebuilt for many years, if ever, trucks and their shipments must seek alternative routes in the future. This will add to the delays and will undoubtedly put pressure on local businesses. So far, this decade, and ever since the Covid-19 pandemic, the world has experienced many conflicts that have led to havoc for supply chains. Although the Baltimore Bridge collapse did not have major implications globally, there is no doubt that worldwide challenges will continue to occur into the future, and companies must coordinate with governments in order to minimize the effects. Sources https://www.washingtonpost.com/business/2024/03/27/baltimore-port-economy-disruption-bridge-collapse/ https://www.forbes.com/sites/kevinomarah/2024/03/27/overhyping-the-baltimore-bridge-collapse-impact-on-supply-chains/?sh=33128e5340ca https://www.pbs.org/newshour/nation/how-baltimores-key-bridge-collapse-will-affect-supply-chains-and-the-economy AuthorVaish Konda, RUSCA Blog Committee The Aviation Supply Chain Integrity Coalition was recently formed by aerospace industry giants, mainly focusing on preventing unapproved parts from entering the aviation supply chain. Founding coalition members include Boeing, Airbus, GE Aerospace, Delta Air Lines, American Airlines, Safran, StandardAero, and United Airlines (Stroh). Co-chaired by John Porcari and former NTSB Chair Robert Sumwalt, the coalition is focused on developing actionable recommendations to prevent incidents like the AOG Technics scandal, where thousands of engine parts were sold with forged regulatory approvals.
Last year, the European Aviation Safety Authority found that AOG Technics, a U.K.-based company, had used around 50 counterfeit parts in CFM56 engines installed in aircraft like the Boeing 737NG, accompanied by forged paperwork (Walsh). The industry responded quickly, with the U.K. Serious Fraud Office investigating and raiding AOG Technics offices in London (Broderick). With such a response, the expanse of unauthorized parts impacted only about 1% of CGM engines and provided an opportunity to create an initiative to prevent future incidents (Stroh). The coalition co-chairs emphasize the importance of thoroughly understanding the aircraft supply chain before taking steps toward maintaining ethical boundaries. By the end of 2024, Sumwalt mentioned that ASCIC plans to publish a report (Broderick). In February, the coalition launched a 90-day review, which will “form the basis of a comprehensive report with recommendations to ensure compliance with safety standards” while preventing unauthorized parts (Aerospace Industry). The Aviation Supply Chain Integrity Coalition brings together prominent players in the aerospace sector to reinforce the integrity of the aviation supply chain against fraudulent practices. The coalition is dedicated to maintaining the highest standards of safety and trustworthiness within the aerospace industry, focusing on collaborating with leaders dedicated to ethicality (Aerospace Industry). As the coalition progresses, it stands ready to play a pivotal role in shaping industry norms and regulations, ensuring the reliability and safety of aviation operations worldwide. By identifying issues and concurrently implementing proactive measures, the coalition preserves public confidence in air travel, safeguarding passengers and industry stakeholders. Sources: https://aviationweek.com/mro/supply-chain/coalition-begins-supply-chain-safeguarding-work https://www.supplychaindive.com/news/aerospace-coalition-aviation-supply-chain-boeing-airbus-aog/708412/ https://www.geaerospace.com/news/press-releases/other-news-information/aerospace-industry-leaders-form-coalition-strengthen-aviation https://www.avweb.com/aviation-news/coalition-formed-to-tighten-aviation-supply/ |
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