AuthorAnthony Partazana, RUSCA Blog Committee Picking out a fresh Christmas tree is usually a fun family activity to celebrate the holiday season. However, the sticker shock that comes along with the prices of trees this year can take consumers out of the holiday spirit. These higher prices can be traced back to many different supply chain related issues. Rising costs of fertilizer have helped increase the price of trees, along with the increased shipping prices due to the rise in diesel prices. Along with this, extreme weather across the US has only exacerbated the low supply of fresh cut trees. Hearing about supply chain issues and rising costs are nothing new to consumers over these past few years. Unfortunately, the fresh cut Christmas tree industry has been facing a variety of challenges even before COVID or rising inflation were prevalent. The most pressing of these issues is the ongoing climate crisis. Because of the extreme weather across the US, there has been a shortage of trees since 2016 (CBS News). Much of the United States faced unprecedented droughts over the summer, and some farms in North Carolina were even faced with a hurricane. This has made it exponentially harder to find the “perfect” tree. While there are still enough trees to meet the overall demand, consumers will have to make some sacrifices. Unfortunately, many will have to settle with “lesser grade” trees that may have some undesirable features such as a bald spot or two (NY Times). Another reason for the increase in tree prices that was not relevant last year, is the unprecedented rise in fertilizer costs. Due in part to the Russian invasion of Ukraine, ammonia (which is a key ingredient for nitrogen based fertilizers) production has been massively cut back, and fertilizer prices have tripled in some cases (NJ.com). Tree farmers have no choice but to pass these costs onto retailers and consumers. The lack of fertilizer coupled with the unprecedented drought has caused many trees to die this past summer, and one can only imagine what future summers will hold. Not having enough fertilizer also leads trees to grow at a slower rate, thus worsening the current tree shortage. One can only hope that increased fertilizer production will help alleviate some of the issues that are being faced from growers across the country. The last reason for Christmas tree price increases is something that Americans have been hearing about enough: Higher prices at the pump. While gasoline prices have come back to their March averages, the same cannot be said for diesel. Most retailers have their trees delivered via truck, so they have no choice but to pay the higher delivery price, and then pass the costs onto their customers (NJ.com). Optimistically, these issues will settle themselves over time, and diesel prices will fall, saving retailers and consumers some cash. All of these factors considered, the price of a fresh cut Christmas tree this year is expected to rise around 5 to 15 percent as compared to 2021 (CNN). For those looking to make the switch to an artificial tree, the prices of artificial trees have also risen 10 to 15 percent. However, unlike fresh cut trees, the supply of artificial trees heavily outweighs the demand, so one can expect promotions to come in the near future (NJ.com). Hopefully, the supply chain issues surrounding the Christmas tree market will not impact holiday traditions. SOURCES: https://www.nj.com/news/2022/12/christmas-tree-prices-climb-in-nj-as-farmers-face-skyrocketing-costs.html https://www.nytimes.com/2022/12/03/your-money/christmas-tree-cost-inflation.html https://www.cnn.com/2022/10/03/business/christmas-tree-prices-supply/index.html https://www.cbsnews.com/news/christmas-tree-prices-inflation-2022/ AuthorPriya Patel, RUSCA Blog Committee Business is booming, especially in the supply chain industry. Amazon Inc. is the world’s greatest online retailer, being that they sell products from toys to music to clothes, etc. They sell these products either directly or through a variety of retailers. Due to this, they are stuck in the middle of the growing supply chain business, adapting to drastic changes, and trying to meet the measures of customer needs as best as possible. Amazon received a significant boost from the COVID-19 global pandemic. During the pandemic, supply-chain technology rose in importance in company operations. After being caught off guard by interruptions during the epidemic, many businesses are pushing for more efficiency and visibility of their product movements. As a result, companies are increasingly depending on sophisticated supply-chain software as a larger percentage of sales turns away from delivering items in bulk to retailers and toward internet sales. AWS (Amazon Web Services) took an approach to combat this situation by creating an application, aiming to help customers understand the method of supply chain and make better decisions with purchasing. The Wall Street Journal states, “Amazon’s launch of its cloud application, AWS Supply Chain, adds Amazon to a growing list of software suppliers, such as Manhattan Associates and Blue Yonder, that help merchants juggle increasingly complex cargo flows and inventory demands” (Berger). The AWS Supply Chain automatically syncs with other apps and systems. As a result, the system intends to eliminate the difficulties that businesses have while managing disconnected supply networks. According to Amazon, the new AWS service may automatically produce insights about possible supply chain risks, such as overstock or stock-out scenarios. From the many options this software provides, one of them includes the fact that inventory managers and demand planners may construct their own "insight watchlists" by selecting the area and type of risk they wish to screen for. During its annual Las Vegas conference, the cloud firm also demonstrated AWS Clean Rooms, which allows businesses to customize adverts to clients while retaining their privacy, among other applications. Amazon has grown its own significant advertising business in recent years. These services are presented by Amazon as part of their long-term goals of creating a more extensive e-commerce presence and reaching out to other companies. With one of their biggest competitors being Microsoft's Cloud Platform, they hope to extend their platform to new and developing companies like never before. With more software such as this one, Amazon is planning to take matters into their hands and solve the market’s most complex supply chain problems. SOURCES: https://www.supplychaindive.com/news/aws-supply-chain-pools-data-creating-supply-chain-visibility/637807/ https://www.wsj.com/articles/amazon-launches-supply-chain-software-service-11669756856?mod=business_minor_pos23 https://techcrunch.com/2022/11/29/amazon-introduces-aws-supply-chain-to-help-bring-order-to-supply-chain-chaos/ https://www.dcvelocity.com/articles/56080-amazon-launches-cloud-based-software-for-supply-chain-visibility https://www.reuters.com/technology/amazon-touts-new-data-security-services-win-cloud-business-2022-11-29/ AuthorKerry Ann Hohenshilt, RUSCA Blog Committee There is currently a turkey shortage in the United States. Many people have still been able to obtain turkeys for Thanksgiving this year, but many of them may have been smaller than the 20 pound standard and they were significantly more expensive. There are two major reasons for this, the first of which being the avian flu outbreak which happens periodically every few years. The second reason is the rising price for the food necessary to raise the turkeys. In February of 2022, the USDA announced an outbreak of the avian flu. As of October 26th, 6 million turkeys, about 3% of the turkey population, were killed due to the virus. The strain currently causing issues within the turkeys is a highly contagious form of the virus that has a 90-100% mortality rate in birds. Approximately 85% of the infections from this strain of the avian flu can be traced back to wild birds, which introduce the virus to captive livestock while flying over farms during their winter migration. Turkeys seem to be particularly vulnerable for a variety of reasons, including being pasture raised, which gives them a greater probability of coming into contact with wild birds. Birds, particularly wild ones, can be asymptomatic, though the majority of poultry will show symptoms such as tremors, difficulty breathing, and diarrhea followed by a quick death after only 48 hours. However, the first signs that a turkey might be sick are dead or dying birds on the farm. A sample is then sent to the USDA National Veterinary Services Laboratory, where, if the tests come back positive, workers will kill the remainder of the flock in contact with the sick birds within 48 hours. Another reason for the turkey shortage is the rising inflation rates leading the price of food to increase, with the costs of some inputs almost doubling. For this reason, even farmers who were not affected by the avian flu chose to raise less turkeys due to the increased input costs. Michael Miarchand, president of Whitehurst farm explains how heritage birds in particular are difficult to feed as they live around 6 months compared to the 4 of other turkeys. Heritage birds tend to be more profitable due to the more nutritious meat which they produce. Therefore the rising prices can reduce the number of larger birds which can be reasonably raised. Now, what can be done to aid the farmers who are struggling due to their dying flocks? The price of turkey has increased by almost 28%. In May Agriculture Secretary Tom Vilsak allowed for $400 million to help in the response to the avian flu. This will cover costs such as clean up, loss from catastrophic losses. Unfortunately, this will not completely solve the problem and only time will tell what the lasting impacts of this outbreak of the avian flu, coupled with high inflation and food prices, will be. SOURCES: https://www.axios.com/local/houston/2022/11/18/national-turkey-shortage-increased-prices https://www.washingtonpost.com/us-policy/2022/10/26/avian-flu-turkey-prices-holidays/ https://www.cdc.gov/flu/avianflu/poultry.htm https://www.cdc.gov/flu/avianflu/avian-in-birds.htm AuthorNick Leung, RUSCA Blog Committee The holidays are coming up, and many families are stocking up on their alcoholic beverages to celebrate with one another. As the holidays are around the corner, more people tend to buy their beverages at a rapid pace. Drinks such as spirits and beer have had a high sales number of 17 billion. The net sales of well-known brands such as Guinness, Smirnoff, and Julio were more than 20% in the last year. Diageo, a multinational alcoholic beverage company, offers scotch, whiskey, gin, vodka, ready to drink products, and many more products. Recently the company has been facing some challenges, such as the COVID-19 pandemic and the length of the alcohol production process, but they have plans on how to solve these supply issues for the future. They have identified four strategies to help the firm respond to the business’ future supply chain and logistic challenges. A question to keep in mind for this well-known company is how do they invest in their supply chain to fully maintain a market-leading advantage? Kandiyoti Konak joined the company as the head of planning and logistics in 2020, which may have been the most stressful time to take on the vital role, as this was a peak time of the COVID-19 pandemic. The industry’s customers–bars, restaurants, sporting events, hotels, and more–began to slip away in a matter of weeks. Lead time is also a challenge; since alcoholic beverages are based on agricultural products such as grain, generating more 12-year old Scotch overnight is impossible. As Konak explains, “It takes multiple years to grow agave and mature the anejo. You have to be able to plan for the short term and strategic long-term.” But through the company’s four steps, “Diageo is now striving for a balance in sufficiency, efficiency, agility, resilience, and sustainability.” The first plan discussed was to work hand in hand with commercial teams to further come up with decisions for short, mid, and long-term horizons. Their second plan involves the supply chain team working with strategic suppliers and developing alternative sources when necessary. Next, the logistics network would be brought together in order to be efficient as they built an ecosystem of ports and carriers. Lastly, the company would invest in digital capabilities through the supply chain to consistently monitor any issues and to be able to make the most accurate predictions possible. These four stages that Diageo plans to use going forward will aid in managing their supply chain issues to the best of their ability. The last point she makes an emphasis on is the digital tools that will also be used, from basic visualization tools to more predictive ones that gives the company a better understanding of the next drift. Included are simple bots, AI tools, and digital twins which are important for keeping data that customers are constantly informed of. Ultimately, Konak’s primary goal for the company is to make a positive impact as well as communities, societies, and wherever the company sells to. SOURCES: www.thedrinksbusiness.com/2022/11/diageo-undergoes-digital-supply-chain-transformation/ https://www.mmh.com/article/diageo_is_undergoing_a_digital_supply_chain_transformation AuthorAsad Mohammed, RUSCA Blog Committee What is a semiconductor? The production shortage of semiconductors has been a constant concern throughout COVID and continues into the present day. Semiconductors are chips used in every electronic device, from phones to cars. Because of the crucial role technology plays in our society, the shortage of semiconductors has made national news. There are many factors that have led to the semiconductor shortage, such as the industry’s vulnerability to disruption, but new domestic investments may change that for the future. Americans created the first semiconductors, and much of the production of semiconductors was happening in America in the 1970s. However, by the 1990s, the production of semiconductors began to take place overseas. By 2021, according to CNBC, “Taiwan is home to more than 90 percent of the manufacturing capacity for the world's most advanced semiconductors” (Cheng). This led to the first major issue of how the shortage of semiconductors happened; most semiconductors were produced in Taiwan and China, and when COVID happened, these areas were hit the hardest. Strict lockdowns in both areas meant that there was a shortage of labor at the beginning of the pandemic, causing major delays in the production of semiconductors. The semiconductor industry is primarily based on efficiency and is not tailored to handle disruptions of any magnitude. A study conducted by HBR “found that a short disruption of a semiconductor fabrication facility, or “fab,” in Taiwan for ten days, could cause a flurry of additional disruptions across the entire supply chain that would last almost a year” (Levi). Many disruptions occur because of major effects on countries like Taiwan and China, which produce most of the world's semiconductors, coupled with the fact that we had major consumer spending in electronics as a result of stimulus checks being given to a major population of the US population. This only exacerbated the situation as there was already a shortage, so the increase in demand only worsened things. To combat the shortage of semiconductors, the government and the private sector came together to diversify and build a better infrastructure to stop shortages. The US government passed the CHIPS Act of 2022, first proposed in 2020, which offered $52 billion in direct subsidies and over $24 billion in tax credits to companies planning to manufacture their semiconductors in America. As a result of these incentives by the US government, many companies in the private sector have responded with massive investments, with a projected $80 billion in projects happening through 2025, with Samsung and Intel pledging $17 and $20 billion, respectively, to build factories in Texas and Arizona. Although the supply chain isn’t projected to be fixed entirely until 2024, COVID being addressed for the most part, the passing of the CHIPS Act, and investments from the private sector should help alleviate reliance on Taiwan and China and avoid any future disruptions in the supply chain for semiconductors. SOURCES: https://www.cnbc.com/2022/08/17/china-needs-taiwans-biggest-chipmaker-more-than-the-other-way-around.html https://www.jabil.com/blog/global-chip-shortages.html https://hbr.org/2022/10/fixing-the-u-s-semiconductor-supply-chain https://www.americanactionforum.org/insight/hold-the-chips-the-private-sector-is-fixing-the-semiconductor-shortage/ |
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