AuthorVaish Konda, RUSCA Blog Committee Fast fashion has become a global phenomenon in recent years, specifically in the fashion industry. The latest styles are available to consumers at affordable prices, making the appeal for mass-produced clothing grow over time. Yet, the environmental effects of this production and supply chain process can be detrimental.
The fast fashion supply chain has a quick turnaround time, putting clothing on shelves faster than the traditional, seasonal fashion industry (Jacobs). While this increases the accessibility to clothing, it also ushers in a culture of disposable fashion. The affordability of fast fashion garments often comes at the expense of lower quality, forcing consumers to transition to the next trendy item. Clothes are discarded much more, contributing to the 92 million metric tons of textile waste produced annually (Igini). Most of this waste ends up in landfills, raising the question of whether or not this culture of fast fashion is sustainable. Generally, the fast fashion industry relies on excessive resource consumption that contributes to greenhouse gas emissions. In 2018 alone, the industry contributed to 2.1 billion metric tons of emissions, often using finite resources such as water, energy, and raw materials (Wren). This includes all portions of the supply chain responsible for producing a finished product for consumers. Water consumption is also high, with around 20% of global wastewater being attributed to the industry (Igini). These alarming numbers represent the need for sustainable practices and consumer awareness to address the environmental impact of fast fashion. To reduce the industry's negative impact, the fast fashion supply chain must focus on sustainability to ensure fair practices. Using sustainable supply chain management, fashion brands that mass-produce clothing can commit to improving the environment by decarbonizing manufacturing processes and encouraging energy efficiency (Wren). Likewise, engaging in recycling initiatives enables companies to refurbish previously manufactured products, aligning them with their visions for current fashion trends. With proper communication among manufacturers, material producers, and retailers, an efficient supply chain for fast fashion can be implemented in the near future. Many fast fashion companies, such as H&M and Zara, are pledging their commitment to sustainable production. Consumers are more concerned about transparency from clothing brands, leading fashion retailers to ensure the ethical nature of their products (Jacobs). Engaging in recycling opportunities allows consumers to support their favorite brands better while striving for a clean environment. As the world progresses with a fast-paced, affordable clothing industry, there should not be an environmental or ethical compromise for its convenience. Sources https://www.sciencedirect.com/science/article/pii/S2772390922000051 https://itsupplychain.com/the-fast-fashion-supply-chain-a-strategy-of-speed/ https://earth.org/statistics-about-fast-fashion-waste/ AuthorShane-Anson Bootsma, RUSCA Blog Committee In recent history, online shopping and order fulfillment have become the norm for many consumers, and companies have adapted to fulfill this demand. Online shopping calls for massive fulfillment centers and warehouses, as well as the ability to deliver orders in a short amount of time. To get a competitive edge, many companies have opted to integrate their warehouses/fulfillment centers with machines in a transformative shift aimed at reducing delivery times and catering to the ever-growing demands of the modern consumer landscape. DHL Supply Chain, Amazon, and Walmart
In the face of fresh competition in the U.S., Amazon has sought to become faster in their product deliveries. Recently, Amazon has revamped its fulfillment centers with new AI-equipped sortation machines and robotic arms to increase worker efficiency and reduce the number of needed workers. This System, named Sequoia, is designed to speed up company operations, enabling the company to put items for sale faster and reduce delivery times, “reducing time to fulfill an order by 25%” (CITE). Amazon has only been one of many companies to realize that the workflow of warehouses has changed through the integration of AI and Robotics. Walmart has been eager to keep up with its competition, announcing last year in June 2022 that they would open four “next generation” fulfillment centers, with a fifth planned to open in 2026 in California. Like Amazon, they aim to create an automated, high-density storage and retrieval system made possible by robotics, reducing the 12-step fulfillment process to 5. Thanks to these fulfillment centers, Walmart has stated that they can provide 95% of the U.S. with the next or two-day shipping of millions of items. DHL Supply Chain, a third-party logistics provider, has also announced the opening of 4 fully automated warehouses thanks to the leveraging of a very similar system using robots and bins. By incorporating adopting the innovative AutoStore technology, DHL also plans to hop on the train of a revolutionized and streamlined inventory management system. DHL now uses more than 1,000 robots through its warehouse network. Companies like these mark the continuation of a trend toward the leveraging of robotics, AI, and next-generation advanced fulfillment centers to keep up with growing demand in e-commerce, and other companies are all scrambling to follow in these companies’ footsteps. This race to enhance supply chain efficiency and reduce customer delivery times amidst fierce competition has been the catalyst for an evolving logistics landscape, where efficiency, speed, and adaptability have become a necessity. Sources https://www.retaildive.com/news/walmart-next-gen-fulfillment-center-stockton-california/696586/ https://www.wsj.com/tech/amazon-introducing-warehouse-overhaul-with-robotics-to-speed-deliveries-40e3e65?mod=ig_supplychainandlogisticsreport https://www.supplychaindive.com/news/DHL-Supply-Chain-AutoStore-warehouses-reinforces-robotics-and-automation-strategy/699805/ AuthorManuel Torres, RUSCA Blog Committee It hasn’t gone unnoticed that for decades, companies have been offshoring and it has subsequently become the norm for many industries. The underlying benefits that come with it, such as cheaper labor work, skilled workers, and material costs, are all too good of an opportunity to pass up. However, this is suddenly coming to a steady turning point with the transition of manufacturing coming back to the U.S. Of course this isn’t something that can happen overnight and could take years to come for certain companies. Overall great news for onshoring and for the U.S., but it has its particular challenges that’ll come with it.
Before diving into a worldwide known technological company, Apple Inc., let’s touch on the many key factors that would make a company want to target offshoring in the first place. Offshoring has numerous advantages: reduced operating expenses, higher productivity, shorter supply chains, and of course the establishment of newer markets. However, there are of course drawbacks that need to be addressed, including regulatory differences, quality control, communication challenges, geopolitical risks, etc. With all these factors considered, it’s certainly easier said than done to bring manufacturing back to the U.S. Apple has gone against several challenges that are making the transition from China to the U.S. or other countries difficult. For one, they have strong fortunes tied to China making it incredibly difficult to grow apart from them as they had shifted their production from domestic to overseas in China back in 2001. This surged the partnership between Apple and their largest/oldest supplier, Foxconn to meet the high demands for products like the iPhone. Once again, it is worth mentioning that the supplier had skilled workers that most companies value when it comes to offshoring. In a Financial Times article, it was reported that Apple CEO, Tim Cook, was once quoted stating to an audience explaining Apple’s reasoning behind not being able to manufacture at scale in the U.S., asserting, “If every tool and die maker in America were invited to the auditorium where he was speaking, they wouldn’t fill the room. In China, ‘you would need several cities to fill with tool and die makers’” (Patrick McGee, 2023). Furthermore, this goes to show the massive value China has that attracts companies from all over the world to tie themselves to them for decades. Apple’s solutions to disengaging their supply chains from China won’t happen overnight. Especially when reported by author, Patrick McGee, regarding the percentages Apple has committed to China. He stated that Apple earns 1/5th of its revenue from China ($74 billion in 2022). In addition, it’s a huge portion of their profits and shows reasonings for most of these companies wanting to diversify their supply chain. However, they either simply can’t or want to but it’ll take quite some time to do. Most companies in the US wanting to bring manufacturing back to their country can’t seem to do it with most of their products requiring specialization in specific skills to make those products, and the aftermath effect being a deep-tiered supply chain when it comes to those numerous suppliers around the world. In the article, Bring Manufacturing Back to the U.S. Is Easier Said Than Done, author, Willy C. Shih, reports the many challenges that come with current products that companies manufacture that require more specialization than ever before. He maintains that “Other key subsystems required similarly narrow skill sets. The memory chips are made predominantly by three global specialists in their multi-billion dollar fabs, and the hard drives by two firms with factories in Thailand, Malaysia, and China.”. Furthermore, it can’t go unnoticed by the major key factors and importance that other countries have when it comes to specialization that’s greatly valued. This could also tie into another issue regarding why ramping up production for companies tied into offshoring has issues doing so due to it taking time. Another key issue when wanting to bring back manufacturing into the US is when manufacturers have to scale up their production and the bound issues with it. As previously mentioned, many companies from the United States can manufacture any products. The issue is that their sources are from offshoring producers which one could assume would be a lengthy process towards wanting companies to scale up. Author, Willy C. Shih mentions “Increasingly, the job has been to specify the product for an offshore original-design manufacturer or to transfer the work to a contract manufacturer. In an emergency, when a U.S. company suddenly needs to scale up, the skills are hard to find” (Willy C. Shih, 2020). In addition, the supply chain a company needs to set up for taking upon the task of scaling up would be too complex and complicated. That’s the common inconvenience companies have gone through. Manufacturing coming back to the U.S. is quite complex and will be a bumpy process for years to come. It would be great news for the United States since there would be positive factors such as faster response times, enhanced resilience, etc. Then there would be another side that needs to be considered as mentioned before such as cost considerations. Those considerations that every company has seen as a common issue till this day would be those high labor costs that drove them towards offshoring in the first place. Many sides to consider when a company makes these decisions and hopefully one day we’ll see the transition towards manufacturing returning to the U.S. for the greater future of the country. Sources www.npr.org/2023/04/16/1142356840/biden-industrial-policy. www.ft.com/content/d5a80891-b27d-4110-90c9-561b7836f11b. hbr.org/2020/04/bringing-manufacturing-back-to-the-u-s-is-easier-said-than-done. AuthorAdam Seoudy, RUSCA Blog Committee Many people confuse supply chain management for logistics and use the terms interchangeably. Although this is an inaccurate assumption, it goes to show just how crucial logistics is to the supply chain process. Due to major innovations that have occurred over the years in logistics, companies have become much more efficient and profitable in their operations and processes. There are five major logistics methods and each has its advantages. While some products can be transported using multiple methods, there is almost always a most efficient way or method for that product.
When choosing a method of transportation, three things must be taken into account. The first is the product, the second is location, and finally any special considerations. Analyzing the product “is critical for choosing a shipping method that can accommodate your products within budget” (Downes). In considering location, you need to consider where the shipment leaves from, and where it needs to arrive. In doing so, you will be able to greatly narrow down which method is most preferable. Finally, special considerations need to be factored in. These include; time, urgency, budget, and existing relationships. Now onto the methods and when they are most effective. The first method is trucking, which is the most common form of transportation for shipping (CWI). The best use case for trucking is when companies transport small regional shipments. This is because shipments can be delivered directly to their destination, streamlining the shipping process by getting the product to the consumer faster. Also, when you have temperature-sensitive products that need close climate control, dry and refrigerated trucks are a great option. Next is Marine transportation. Shipping by water is one of the oldest shipping methods in history and is also the most environmentally friendly logistics method. The main advantage of ocean logistics is worldwide travel. Since ships can carry significantly heavier cargo than air freight at a fraction of the cost, “Sea freight accounts for the vast majority of the world’s trade with more than 90% of all goods are transported by ships” (Sanders). Marine shipment is the ideal way to transport raw materials and other bulk products. However, a major disadvantage of ocean freight shipping is speed, so it may not be the right choice for all products. Rail transportation is also an effective method. The major advantage of rail transportation is that it is very safe and reliable. Similar to marine transportation, rail transportation is great for heavy bulk products, as trains can carry more products than air or truck freight. Also, “Trains run on a set timetable, making them a predictable and dependable mode of transportation” (Four Winds). The major disadvantage of railway logistics, like marine logistics, is speed. Finally, the remaining Logistics methods are air freight and pipeline transportation. Pipeline transportation is by far the most efficient method of transporting gas and liquids. However, there is a major risk of pipeline damage which can lead to oil spills and major pollution. In the case of air freight, it is the most expensive and regulated logistics method. However, there will be less handling of products when choosing air transport. And “less handling significantly reduces the risk of theft or damage to your products” (CWI). In addition, it is also the fastest and most reliable method in terms of departures and arrivals. So the trade-off between speed and price may be worth it to some companies. In logistics, each method has its advantages and disadvantages. The best course of action is always to consider all the factors and choose the method that makes the most sense for your product. Sources https://www.purolatorinternational.com/types-of-transportation-in-logistics/ https://wearedg.com/news/article/modes-of-transport-logistics https://cwi-logistics.com/uncategorized/mode-of-transportation-pros-cons/ AuthorLiam Ripberger, RUSCA Blog Committee For many companies moving products from Northeast Asia to America, the Panama Canal is a critical route used to move goods in their supply chain. However, a shortage of rainfall in Panama resulted in a drought for the Panama Canal, posing a major roadblock for many companies that frequently use the canal. The canal is heavily reliant on fresh water from nearby lakes, which are experiencing lower water levels than usual. This means that larger ships cannot pass through as efficiently as before, creating a large-scale bottleneck of cargo carriers. To ensure the safety of all ships in the lower water levels and reduce the effects of the bottleneck in the supply chain, the Panama Canal placed restrictions on canal usage. These restrictions began in August, and as of early November, ship booking slots have been reduced by at least 30%, with 25 ships being allotted space each day (Salgado). Analysts predict that this number will continue to drop going into 2024, with the Panama Canal announcing their estimate of 18 ships a day to be allotted space by early February of next year. Earlier this summer, the canal had a peak number of 49 ships being allotted space on a single day, which would now take at least two days to accomplish with the drought (Salgado). Due to these restrictions, some companies have gone to lengthy measures to skip the line at the Panama Canal. Eneos Group, a Japanese petroleum company, spent about four million dollars in early November to have priority over other shipping companies for transportation through the Panama Canal. The company came to this price after placing a winning bid on November 8th at an auction that would allow a ship to skip to the front of the line. Moving ships through the Panama Canal already cost hundreds of thousands of dollars, so this is not a small expense whatsoever for the Eneos Group. This winning bid of four million dollars is a new record high price for how much it costs for a single ship to pass through the Panama Canal (Liao, Shiryaevskaya). Although the canal is reducing around half of its overall capacity and certain companies are spending millions of dollars to skip the lines, the effects of the drought on product transportation may not be as dire as they seem. This is because these restrictions were not active until after the peak canal usage season and bank sailings. In America, peak market consumption typically occurs around the holiday season. To fulfill the demand of this season, most retailers typically ship the bulk of their products overseas during August and September. This means that peak season was already coming to an end when the drought began to affect overseas transportation. On top of this, blank sailings, which are generally defined as sailing that is canceled by the carrier, were used at a higher rate to skip one or more ports on the Panama Canal (Salgado). Blank sailings are often used in response to supply chain disruptions in ocean carriers and result in rerouting the transportation of goods. Furthermore, the effects of the drought on the supply chain are also being mitigated by companies who have previously or are actively optimizing their supply chains. As we all know, the COVID-19 pandemic took a massive toll on company supply chains globally, however, it also caused many companies to rethink and optimize their systems. Due to the changes put in place following the pandemic such as moving from using just-in-time to just-in-case inventory, the drought has had minimal effects on many companies' stock (Anderson). Other ways companies have reduced the effects of natural disasters include finding alternate routes and modes of transportation, reshoring, nearshoring, forward positioning of WIP inventory, and rethinking distribution network designs (Anderson). In all, the drought in the Panama Canal has highlighted the unpredictability of ocean transportation and forced supply chain optimization on dozens of affected companies. Sources “Panama Canal restrictions to stretch into 2024 as low water levels persist” https://www.supplychaindive.com/news/panama-canal-restrictions-continue-until-2024/698812/ “The Panama Canal is so congested that one ship owner just paid a record $4 million to skip to the front of the line” https://fortune.com/2023/11/08/panama-canal-congestion-record-4-million-skip-line/ “Panama Canal Drought Accelerating Supply Chain Optimization” https://www.lma-consultinggroup.com/panama-canal-drought-accelerating-supply-chain-optimization/ |
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