AuthorKhush Parikh, RUSCA Blog Committee OPEC is a collection of 13 countries that control about 40% of the world's oil production. Their actions drastically affect the price of oil impacting all countries around the world. OPEC has also expanded their control over the oil production by creating a new organization in 2016, known as OPEC+, which includes an additional 10 countries that are able to contribute and share resources to maintain a larger grip on the price of oil. OPEC+ includes members such as Russia who is a large supplier of oil to European countries. Unfortunately, Russia’s war with Ukraine will dramatically affect the political landscape for the European countries as they would not want to buy from a country that is attacking one of their own. Another instance of OPEC and their ability to influence the price of oil is by the profits of Saudi Aramco; one of the largest oil companies in the world.They recently showed earnings of $42 billion dollars which is drastically higher than all of their competition. The influence OPEC has on the price of oil has allowed them to make even more profits by manipulating the supply of oil This is a result of OPEC+ and their ability to influence the price of oil. Due to the war in Ukraine, Russia would have been disadvantaged from selling their oil to European countries as some countries have stopped purchasing oil from Russia. However, as a part of OPEC+, Russia is able to manipulate the availability of oil from other countries. OPEC is able to decrease their oil production, significantly decreasing the amount of new oil being produced and up for sale. This drives up the price for oil as countries will have to outbid each other in an effort to get enough oil from the smaller supply. This puts pressure on European countries to continue to buy oil from Russia which in turn funds their war on Ukraine, damaging all of Europe in the long term. OPEC and Russia's alliance has played a key role in the rapid rise of oil prices which unfortunately only hurts the consumer. Their war has put European countries in a catch-22, as either they buy Russian oil and essentially support the war on Ukraine, or they simply won’t have enough oil to fulfill their needs. However, this doesn't only affect European countries. It will affect the American economy as well. The Biden administration is in the midst of the midterm elections and will want to lower the price of oil in order to win at the polls. The price of oil is a key political topic for American voters as gas prices are dramatically impacted by OPEC’s and Russia’s choices. At the very least, the Biden administration will most likely not fight back against OPEC, as any retaliation by them could lead to even more production cuts from OPEC, causing oil prices to soar and negatively affecting their chances at reelection. The availability of oil is one of the most important economic and political topics to date as it will impact nearly every country. The control that OPEC+ has on the oil markets is extremely dangerous for all countries and unfortunately, there is not much anyone can do about it. The transition away from oil into batteries is one of the most effective ways to loosen OPEC’s grip on the world but that is still many years away. Until then, the supply of oil will most likely be manipulated in order to fuel OPEC and Russia’s ambitions, whether or not other countries agree with them. SOURCES: https://www.wsj.com/articles/oil-market-faces-considerable-uncertainties-opec-warns-11668431211 https://www.nytimes.com/2022/11/01/business/saudi-aramco-oil-profit.html?smid=url-share https://www.nytimes.com/2022/10/24/opinion/saudi-arabia-opec-oil-cut.html?smid=url-share AuthorRyan Salamante, RUSCA Blog Committee Electric vehicles, commonly referred to as “EV’s”, are still new to the auto industry, yet have been revolutionary in developing the future of vehicle consumption across the globe. First mass-produced in 1996 by GM as a result of a California mandate that required automakers to have zero-emission vehicles available for sale, several other companies, particularly Tesla, have embraced the population’s growing progressive ideal of an environment with cleaner air (Davies). This growth in the production of electric vehicles as a result of public concern and interest has caused the electric vehicle industry to upswing over the last decade – with Bloomberg New Energy Finance (BNEF) projecting the total market share of electric vehicles in the car market to be 52% by the year 2030 (Loveday). However, with the demand for electric vehicles rapidly increasing, producers are starting to face the issue of obtaining resources in a safe and ethical manner. While all means in the production of electric vehicles are still relatively costly, EV batteries in particular are what is causing a crisis amongst manufacturers. Elements required to make the batteries, such as nickel, lithium, manganese, and cobalt, are scarce in the U.S. due to the country’s strict policies when it comes to mining. Therefore, aside from a handful of companies, many U.S. EV producers must rely on production outsourcing and importation of lithium-ion batteries from countries rich in these resources, such as China (Mayoral). Apart from the scarcity of resources, there is also an issue concerning the humanitarian and ethical aspects of EV battery mining. This problem came to light in the mainstream media after 270 miners in Brazil were killed after a dam holding iron ore mining waste collapsed, burying hundreds of people in toxic waste and sediment. According to the lawsuit filed by the Securities and Exchange Commission, this was ultimately due to fraudulent certifications that assure “safety and environmental stewardship” (Halper). This highlights a serious consequence regarding the insufficient supply of materials to create electric vehicles in America. Companies that must match the demand and popularity of the EV market seem to be more willing to obtain the necessary resources in an illegal and unethical manner. A potential fix to combat the electric vehicle battery dilemma is for the U.S. to ease mining restrictions and open them up for domestic production. This would allow producers to expend less time on sourcing the necessary resources to create the batteries, and focus more on innovating new technologies that would make lithium batteries more efficient and less costly. Also, with production mainly occurring on American soil, supply chain visibility would be much clearer as it would be easier for the government to oversee the methods of production and judge its ethicality, rather than if production was totally occurring in foreign mines. Ultimately, the U.S. government must take action in order to help the U.S. match the rising global supplies of lithium-ion batteries and the ever-increasing production of electric vehicles. SOURCES: https://www.wired.com/2016/01/gm-electric-car-chevy-bolt-mary-barra/#:~:text=In%201996%2C%20in%20response%20to,vehicle%20of%20the%20modern%20era. https://insideevs.com/news/611738/over-half-us-car-sales-electrified-2030/ https://www.washingtonpost.com/business/2022/10/20/ev-supply-chain-battery-tracking/ https://www.industryweek.com/supply-chain/article/21244607/ev-has-a-problem-90-of-the-battery-supply-chain-does-not-exist AuthorPriya Patel, RUSCA Blog Committee The extraction of usable resources from the ground is known as mining. The mining sector sustains thousands of employees and supplies raw materials, minerals, and metals that are vital to our economy. The foundation of the sector is the mining value chain, which covers everything from material extraction through product delivery to clients. Through this, companies that effectively manage their value chain may create a large amount of value and gain a competitive edge. However, this has not been the case for these companies recently and has also been oddly tricky. Through the difficult times of the COVID-19 pandemic, heightened demand and trade restrictions have led the supply chain industry through global shortages and inflation. This has significantly impacted various companies, a large number of them coming from the mining industry. This problem started to occur when demand increased when vaccinations became available in the first half of 2021, but supply chains remained limited even then. Due to this, the demand for all materialistic items had exponentially increased, including mining tools and products. In the second half of 2021, the demand for commodities like iron ore and copper saw yet another change. Professionals even state that “These dramatic and ever-changing variations in demand, coupled with on-again-off-again availability of commodities, are expected to continue to challenge supply chains like never before” (Achi, Inciong). These burdened supply networks are unwilling to take on the customary time and cost-risk allocation required by undercapitalized project firms. They also obtain money to support the development of their projects but don’t use that advantage, which is another problem for mining companies. Due to these changes, companies are in a massive block with mining projects and being able to access the right resources. With the growing economic world, there will probably be a discrepancy between supply and demand, and miners will have to launch new initiatives and operations to meet the anticipated demand. For example, copper and lithium production is expected to double or more in the next decade to meet the growing demand. But despite the increased competition for battery materials, there has historically been little investment in these commodities, both in terms of exploration expenditures and investment from big miners, because there have yet to be any significant projects. For these companies to maximize profits at the lowest possible cost, they must be able to meet these demands while obtaining suitable material, which is concluded to be close to impossible. Supply chain issues have made pricing particularly difficult since suppliers are unwilling to reflect the present market volatility in their prices. COVID-19, the current economy, and the high levels of production costs make it entirely difficult for the industry as a whole to succeed Miners will need to seek other investors and funding sources to fill the gap if it remains difficult for them to obtain money on the public markets in order to move on with their projects. Although the current mining industry is not very profitable, in the future, the economic climate will present excellent opportunities for businesses to strengthen their core competencies so they can adapt to supply chain exceptions and develop resilient supply chain models to be in a stronger position than ever. SOURCES: https://www.nortonrosefulbright.com/en/knowledge/publications/8c508ab3/global-supply-chain-challenges-and-energy-shortages-and-their-impact-on-pf-mining-projects https://www.accenture.com/us-en/blogs/chemicals-and-natural-resources-blog/how-to-overcome-demand-swings-in-mining-metals https://www.ey.com/en_us/mining-metals/critical-minerals-supply-and-demand-issues https://www.mckinsey.com/industries/metals-and-mining/our-insights/the-mine-to-market-value-chain-a-hidden-gem AuthorAnthony Partazana, RUSCA Blog Committee With the announcement of Taylor Swift’s ‘Eras’ Tour that is scheduled to take place in 2023, many are disappointed that there are not as many dates as anticipated. While that is a fair complaint, many of these people don’t understand how much of a logistical miracle a concert tour of that scale is. Whether it be moving the massive sets with trucks, getting the artists and their crew from city to city, or getting all of the instruments and electronics to each city intact, the logistical challenges that go into creating a successful show are something to be appreciated, as there would be no live shows without the entourage of people that work behind the scenes. Anyone who has been to a concert has most likely seen the large black boxes that are rolled on stage right after the show is over. These boxes are known as “work boxes”, and are used to move anything from instruments to electronics. Many of these boxes are custom made to ensure that whatever equipment will not be damaged in transit (SCCG). Once everything is packed into the boxes, they are loaded into trucks, and then potentially onto a plane. It is vital to ensure that nothing is damaged in the transportation process, as each piece of equipment is not only very expensive, but also hard to replace in a short amount of time. So, if one piece of equipment were to be damaged in transit, it could have a damaging effect on the show. Because of these logistical challenges, a few entertainment logistics companies have arisen to meet the demands of the everchanging concert industry. Companies such as Sound Moves, Rock-it Cargo and X-Freighted provide services ranging from sourcing and warehousing, to inventory management and transportation (SCCG). These companies use different methods of transportation such as local trucking, cross-country trucking, air freight, and ocean freight to ensure the safe and timely delivery of equipment (Inbound Logistics). Each tour is unique in the sense that they require a certain amount of equipment depending on the size of the act. This factors into transportation costs, which are steadily increasing due to rising diesel prices, among other factors. However, perhaps the biggest logistical challenges of a concert tour come during a world tour. When traveling between countries, transporting equipment and personnel becomes exponentially harder due to the dreaded customs. Not even the world’s most popular artists are exempt from the horrors of customs. The Australian band Tame Impala once had to cancel a show in Germany due to customs delays (Inbound Logistics). Along with customs, COVID restrictions have made touring even harder, as each country has different regulations on vaccines, testing, etc. While there are unforeseen circumstances like weather that could derail the schedule of a concert tour, it is very clear that having companies such as Rock-It-Cargo to manage the logistics is a valuable investment for artists, as their experience in the industry can help avoid and manage any situations that may derail a show or even a whole tour. Now, when the lights come on after a show and you are sad that the show you came to see is over, you can appreciate that a whole new show has begun. In this show after the show, hundreds of workers perform a delicate dance to ensure that each piece of equipment is where it needs to be, so that others can enjoy their favorite artists, but in a totally different corner of the world. SOURCES: https://www.sccgltd.com/archive/logistics-consultants-rock/ https://www.inboundlogistics.com/articles/taking-the-show-on-the-road/ https://desis.osu.edu/seniorthesis/index.php/2021/09/30/the-logistics-behind-concert-tours/ AuthorKerry Ann Hohenshilt, RUSCA Blog Committee Adderall is a common nervous system stimulant medication used to treat ADHD. It does this by increasing the levels of dopamine and norepinephrine in the brain. There is currently a shortage of IR (immediate release) Adderall, announced by the FDA on October 12th of 2022, and expected to continue into 2023. This can have a significant impact on the lives of individuals and families, as about “3 million children and 11 million adults in the United States are prescribed stimulant medications” (Larson). The first major cause of the Adderall shortage is manufacturing delays, with the primary manufacturer of IR Adderall being Teva. Since Teva is the major producer of IR Adderall, delays in their supply chain, in particular backorders and labor shortages, led to shortages throughout pharmacies in the United States. Next, tight regulations by the FDA limit the amount of Adderall that can be manufactured. Adderall and other stimulant medications are Schedule II controlled substances meaning there is a high probability of abuse, and, therefore, there are strict regulations on how much can be manufactured and prescribed. Finally, an increase in ADHD diagnoses has caused issues from the demand side for individuals prescribed Adderall. As most people are personally aware, COVID can lead to a significant decline in the average mental health of individuals. In particular, there was a 16% increase in Adderall fills during the pandemic. This trend will likely continue into the present day, as individuals struggle to adjust to in person work. When it comes to distribution, pharmaceutical companies are struggling to determine which pharmacies to send Adderall to due to an increase in the diagnoses. Teva reported that they would be set up to meet, if not exceed, demand at this time last year. Unfortunately, this does not take into account the unexpected increase in prescriptions this year. COVID also, notably, increased telehealth services being utilized by patients seeking an ADHD diagnosis. Starting in 2020, the Health and Human Services (HHS) department of the federal government reduced the restrictions on prescriptions for stimulant medication. This will continue until the Secretary of HHS declares that there is no longer a public health emergency due to COVID. In fact, the Secretary of HHS has just renewed his declaration that the United States is in a public state of emergency. In the past a one-on-one diagnostic session and in person appointments every month were required to acquire a prescription for a stimulant medication. Now all diagnoses of ADHD and prescriptions can be made virtually utilizing telehealth. This can lead to challenges, as in person interactions allow practitioners to observe behaviors not visible in an online appointment which help to support or negate an ADHD diagnosis. These loosened restrictions are clearly problematic, with increased regulations on the production of Adderall reducing supply and increased prescriptions increasing demand. The increase in diagnoses and prescriptions of Adderall raise questions about overdiagnosis of ADHD and the high addictive and misuse potential of a medication commonly used to treat it. ADHD medications contribute large profits to a multi-billion dollar industry that is only growing. However, there are a variety of factors that go into this increase, such as an increase of awareness surrounding ADHD, its symptoms and how it affects the livelihood of individuals, specifically females. Could the use of stimulant medications be encouraged by their profitability? Perhaps, but that does not necessarily negate the life-changing effects Adderall can have on someone's life who truly suffers from ADHD. SOURCES: https://www.youtube.com/watch?v=7U6m0GCIZqo https://www.singlecare.com/blog/news/adderall-shortage-2022/ https://www.washingtonpost.com/wellness/2022/10/21/adderall-shortage-adhd-alternatives/ https://www.in.gov/health/overdose-prevention/general-information/drug-schedules-1-5/#:~:text=Schedule%20II%20Drugs%3A%20Examples%20include,Dexedrine%2C%20Adderall%2C%20and%20Ritalin https://www.singlecare.com/blog/news/prescription-drug-statistics/ https://www.drugwatch.com/news/2022/10/20/adderall-shortage-manufacturing-delays/ https://www.wired.com/2015/12/adhd-drugs-are-big-business/ https://www.deadiversion.usdoj.gov/faq/coronavirus_faq.htm#TELE_FAQ https://aspr.hhs.gov/legal/PHE/Pages/covid19-13Oct2022.aspx AuthorNick Leung, RUSCA Blog Committee Many may be unfamiliar with the idea of supply chains when it is brought up and entertained. However, they play a big role in many areas such as many healthcare departments and hospitals. Ever since the COVID-19 pandemic, weaknesses in healthcare supply chains have been exposed. Recently, healthcare departments have been moving in an upward direction in tackling rising supply chain costs and trying to improve profitability. Improving supply chain management in healthcare departments takes the stress off worrying about increased expenses, allowing hospitals and pharmaceutical companies to build resilience in fighting against obstacles that prevent them from working to the best of their ability. Healthcare departments aiming to improve in supply chain issues can gather insightful analytics by partnering with nursing and clinical engineering. Furthermore, a managed equipped service provider bridges the gap of lacking such analytics and tweaks equipment production problems. Another way is to have a full understanding of the price of equipment. Any piece of medical equipment that a hospital owns must be constantly repaired and kept up to date, which is vital when thinking about the costs. An end-to-end equipment management company could create a partnership with the supply chain, which would be beneficial in terms of long-lasting equipment and better resource utilization. Likewise, it is crucial for hospitals to always have the resources they need especially with the pandemic in hand still to this day. One way to plan ahead is to ponder short-term demand. Healthcare organizations should have an idea of when systems may be overloaded which would result in the resources of the hospital being depleted. Even though predictions may not always be correct, it is good to keep them in mind to plan the flow of patients throughout the organization. Another important factor when dealing with supply shortages is how well employees can acclimate to sudden changes. For example, how well they could learn certain systems was key to battling the pandemic. Hospitals that can learn the fastest on how to deal with supply chain shortages are the best in dealing with different issues that come in their direction. Ultimately, it is important to realize how well healthcare organizations, especially hospitals, have been able to adapt to changing conditions. The pandemic has brought more people into intensive care units, impacting how many patients they could possibly accommodate. In addition to the challenges brought about by supply shortages, it has not been easy for employees to adjust. More appreciation needs to be given to those who have worked through the stressful moments of the pandemic, as healthcare professionals continue to ensure that patients receive the best treatment possible regardless of supply chain challenges. SOURCES: https://www.agilitihealth.com/resources/tip-sheets/elevate-hospital-supply-chain-tip-sheet/ https://www.tracelink.com/agile-supply-chain/healthcare-supply-chain-management AuthorKhush Parikh, RUSCA Blog Committee Abbott Laboratories is one of the largest companies in the United States that is dominating the baby formula industry. With a 49.5% market share in 2020, Abbott is responsible for the availability of much of the supply of baby formula and any problems that they may face can affect large numbers of people. The COVID-19 pandemic hindered supply chains all over the world and as companies start to restart production and factors, they need to be careful and do so properly. Abbott’s responsibility as the largest United States baby formula manufacturer requires them to be even more cautious than their competitors because of the incredible volume of baby formula the company produces. However, the shortage of baby formula is still very prevalent today, as they face many difficulties such as mismanagement at the Sturgis plant and investigation by the FDA. The Sturgis plant is Abbott’s largest baby formula plant and has faced many issues throughout the past year. They have only recently restarted the plant after the COVID-19 pandemic problems started to ease. However, this was short lived as just 2 weeks later, the factory flooded, requiring Abbott to shut down and restart the factory at a limited capacity. They slowly restarted production and have only just begun production of Similac, the company's most popular baby formula. Along with higher costs for Abbott, raging inflation also worsens the situation for everybody as Abbott will most likely pass along costs to the consumer, driving up the price of the product. Despite these financial struggles, Abbott continued to increase their profits throughout the pandemic and are only now starting to see an decrease in their revenues as a result of their factory not being able to operate at full capacity. Abbott is also dealing with multiple recalls for some of their products. They have had issues with products not being packaged and sealed properly. This comes as 4 infants suffered infections, of which 2 of them unfortunately died. The FDA decided to investigate the Sturgis plant, which led to them closing down the plant again after finding evidence of a deadly bacteria in the factory. However, the FDA disclosed that they can neither rule in nor rule out the factory as the source of the deadly bacteria in the first place. Abbott was allowed to restart production after this incident but is still operating at a decreased capacity. To fix this problem, Abbott also recently announced plans to build a new factory that will cost them an approximate $500 million dollars. According to the CEO they are finalizing the location of this new factory, as announced on their recent earnings call. The upgrades that Abbott has done to their plant along with spending for a new factory will help to ease the baby formula shortages and hopefully lead to price decreases and increased availability of their products. The situation Abbott faces currently gives their competitors a chance to gain large market share, especially since the FDA is being more lenient on baby formula imports as the Biden administration used the Defense Production Act to help stop the constant stock outs of baby formula. As Abbott restarts production of their plants, they will have to do their best to prove that their products do not have quality control issues if they seek to regain their dominance and lost market share in the baby formula industry. SOURCES: https://my-ibisworld-com.proxy.libraries.rutgers.edu/us/en/industry-specialized/od4287/major-companies https://www.wsj.com/market-data/quotes/ABT/financials/quarter/income-statement https://www.wsj.com/articles/abbott-names-new-leadership-at-troubled-baby-formula-plant-11666189527?mod=Searchresults_pos1&page=1 https://www.wsj.com/podcasts/google-news-update/why-baby-formula-is-still-in-short-supply/e9ce2e8a-5022-452d-8efe-da64ae100aa7?mod=Searchresults_pos2&page=1 AuthorRyan Salamante, RUSCA Blog Committee The Mississippi River is a nearly 2,400-mile waterway that originates out of Lake Itasca in Minnesota and empties out into the Gulf of Mexico. Once referred to as the Body of the Nation, the Mississippi River earned its moniker having provided the United States with great utility, ranging from its role in exploring new territories to being a tactical method in naval warfare (Kavanagh, Ojalvo, and Schulten). However, one of the most prevalent and principal utilizations of the Mississippi River that significantly aided the development of America was its means of commercial transportation. To this day, the river is vital to America’s agricultural, oil, and materials supply chains. However, recent climatic changes and trends may impact and alter our usage of the Mississippi going forward. To put it simply, the Mississippi River has recently been experiencing record-setting low water levels as a result of a lack of rainfall in the Ohio River Valley and Upper Mississippi. This is a result of the ongoing effects of global warming that have been causing changes in numerous worldwide ecosystems. These changes have caused several major port sites south of Illinois, such as Memphis–which encountered a record-low water level of -10.81 feet on Saturday, October 22–to experience disruptions in their everyday business and operations (Masters and Henson). Without sufficient water levels, parts of the Mississippi River heavily affected by the lack of rainfall will not be able to support the boats and barges that are responsible for transporting commercial goods and resources. The Mississippi River is vital to the agricultural industry as it is responsible for around 60% of all U.S. grain exports. This was due to the fact that river transport had always been a cheaper method of transportation in comparison to truck and train freights. However, due to the water level conditions, the U.S. Coast Guard reported a backup of over 2,000 barges, which led to an increase in Mississippi River transportation costs as the supply of boats drastically plummeted (Bown). As a result, prices for goods in these industries have also been inflated by extreme amounts, as companies and farmers need to compensate for the increases in shipment costs. The price of corn and soybeans from St. Louis to southern Louisiana increased from $28.45 on October 5, 2021, to $105.85 on October 11, 2022–a nearly 273% increase (McWhirter). This comes at an untimely moment as fall sparks the peaks of harvest season for farmers. On the bright side, recent rainfall brought by Hurricane Roslyn has provided some temporary relief. Though only a short-term solution, 1 to 3 inches, with the potential of totaling 5 inches has given companies time for future plans with the river (Masters and Henson). The long-term forecast, however, is bleak in comparison. Though climate change awareness is prevalent in the practices of many firms in the modern day, the production of harmful emissions is still ravaging the environment now, and for the foreseeable future. Therefore, the only solution for companies would be for the government to dredge each site on the Mississippi–which would be unlikely due to the sheer cost–switch to an alternate, more expensive freight method, or just simply hope for an increase in rainfall. Ultimately, the natural question for all producers and consumers is: how much longer will the Mississippi River be a viable option for commercial transportation? SOURCES: https://www.wsj.com/articles/mississippi-river-approaching-record-low-water-levels-threatening-commercial-traffic-11665748981 https://www.deseret.com/2022/10/15/23404374/mississippi-river-drought-economy-agriculture https://archive.nytimes.com/learning.blogs.nytimes.com/2011/05/17/body-of-a-nation-examining-the-role-of-the-mississippi-river-in-american-history/ https://yaleclimateconnections.org/2022/10/mississippi-river-record-low-water-levels-ease-some-but-long-term-forecast-is-dry/ |
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