AuthorCary Wong, RUSCA Blog Committee As modern civilizations have progressed over the past couple of centuries through the Industrial Revolution and into the current day, it has become increasingly apparent that business production can greatly influence the well-being of the planet and its inhabitants. For a long time, corporations have either unknowingly or indifferently harmed the environment through their supply chains and systems of production. In addition, many of these companies have negatively impacted their workers through the use of detrimental practices such as child labor, and unfair pay wages. However, in recent years, world governments, especially in the European Union, have been working towards mitigating these harms and encouraging corporate responsibility.
In 2022, the European Commission drafted a framework for a new set of rules and guidelines for corporations called the Corporate Sustainability Due Diligence Directive (CSDDD). This directive, which was preliminarily agreed upon by the legion of European countries in December 2023, requires businesses to “identify and remedy in their supply chains cases of employing forced or child labour or environmental damage, such as deforestation” (Blenkinsop). The directive specifically targets European companies with more than 500 employees and a net turnover rate of more than 150 million Euros over the past year. As these standards include a great deal of companies in the EU, it shows promising potential to contribute positively to international sustainability goals. However, when the Union’s countries went to vote on the CSDDD on February 28th, its approval unexpectedly fell short of the necessary 65 percent mark. Although the directive was originally supported by almost every country in the EU, a group of countries including powerhouses like Germany, Italy and France ended up opposing it (Messenger). While these countries undoubtedly agreed with the message behind the directive, many of them felt that its regulations and restrictions would negatively affect businesses at the small and medium levels. At the vote meeting, France proposed to reduce the scope of the directive by increasing the minimum number of workers or amount of yearly revenue required for companies to adhere. Meanwhile, according to the German politician, Marco Buschmann, “there were too many objective reasons against the current proposal: too much bureaucracy, too many new liability risks, unmanageable due diligence requirements — and too few clearly visible benefits” (Hancock). The news of the directive being rejected has not sat well with activists and sustainability groups around the world. Many people feel that the leaders of the EU are overlooking the importance of sustainability and corporate social responsibility. However, fortunately, there have been recent talks of amendments and a new upcoming vote on the directive. Despite the looming decision on the CSDDD, it will certainly not be the last corporate responsibility initiative to make headlines, as sustainability becomes more relevant. Sources https://www.reuters.com/world/europe/eu-envoys-fail-back-supply-chain-checks-law-2024-02-28/#:~:text=BRUSSELS%2C%20Feb%2028%20(Reuters),damage%2C%20following%20vocal%20German%20opposition. https://www.gtreview.com/news/sustainability/eu-members-block-supply-chain-due-diligence-law/ https://www.ft.com/content/7db379e2-b2ef-41d9-bad5-367a84af5d6e https://www.esgtoday.com/eu-council-fails-to-approve-new-environmental-human-rights-sustainability-due-diligence-law/ AuthorShane-Anson Bootsma, RUSCA Blog Committee The warehousing industry boom is beginning to fade as companies shift away from the rapid expansion of warehouses and distribution centers and towards efficiency. Recently, companies have been beginning to slash safety inventory levels built up from the pandemic, and now companies have started cutting back on storage space within. Companies like Amazon and Walmart, which experienced a surge in demand during the pandemic, are now reassessing their warehousing strategies. Amazon, known for its vast network of fulfillment centers, is reportedly reducing its safety inventory levels built up during the pandemic. Similarly, Walmart, a retail giant, is cutting back on storage space as it tightens its supply chain operations.
The consequences of these changes are becoming increasingly evident in the form of layoffs and job losses. As companies tighten the reins on their supply chains’ operating and inventory expenses, many are cutting back or closing distribution centers and warehouses, as well as laying off many of those employed there From warehouse workers to logistics professionals, the ripple effects of the industry's transformation are being felt across the workforce. As of December 2023, warehousing and storage employees have fallen to the lowest employment count since November of 2021, with more layoffs coming in 2024 from prominent companies like Saks, Newell Brands, and DHL Supply Chain. These companies are diversifying, shifting to store-based fulfillment or opening micro fulfillment centers rather than leaning on large, costly warehouses. Areas that have relied on warehousing for employment and income have been hit the most with companies such as Amazon downsizing distribution centers and cutting jobs. As a reflection of the trend toward JIT management practices, in San Joanquin, home to a significant portion of the region's warehousing activity, job growth has slowed considerably in recent months. However, according to Gutierrez, president of the San Joaquin Partnership, an economic development group, the warehousing industry as a whole is simply shrinking after a boom and is still “healthy”, albeit in a transition state. Sources https://www.wsj.com/articles/warehousing-demand-is-starting-to-shrink-19c5feaa https://www.wsj.com/business/logistics/warehouse-boom-fades-and-the-hopes-of-a-california-region-fade-with-it-ea03538e https://www.supplychaindive.com/news/warehouse-employment-decline-layoffs-2024/705635/ AuthorVaish Konda, RUSCA Blog Committee On Saturday, February 24, the Indo-Pacific Economic Framework for Prosperity was officially launched. The agreement, an initiative aimed at fortifying economic ties and fostering prosperity in the Indo-Pacific region, involves 14 nations, including Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Through the IDEF, involved nations move closer to creating a more fair and robust economy for families, workers, and businesses in the United States and Indo-Pacific region (FACT SHEET).
The IDEF partners have successfully negotiated agreements, including the IPEF Supply Chain Agreement, Clean Economy Agreement, and Fair Economy Agreement. Each agreement aims to enhance supply chain resiliency, prepare economic opportunities in clean sectors, and combat corruption, respectively (FACT SHEET). In terms of the supply chain, the framework will allow participating countries to collaborate closely in managing disruptions, particularly during pandemics (U.S.-led Indo-Pacific supply chain deal). The IDEF also prioritizes labor rights, including empowering workers to ensure improved economic competitiveness. New labor rights provisions have been incorporated into these agreements to protect labor rights, such as the establishment of a tripartite Labor Rights Advisory Board and the ability to report labor rights inconsistencies (FACT SHEET). The IDEF also seeks to help prevent the exploitation of migrant workers through strong labor law enforcement (FACT SHEET). Various other strategies have also been formed, such as the IPEF Investment Accelerator, which aims to strengthen investments in partner economies, and the IPEF Critical Minerals Dialogue, which supports the U.S. development of a full critical mineral supply chain (FACT SHEET). Similarly, the IPEF Networks initiative strives to expand ties between businesses, entrepreneurs, and overall societal groups to increase the diversity of stakeholder participation over time. The Indo-Pacific Economic Framework for Prosperity represents progress in fostering economic collaboration and addressing regional concerns. The commitment of the United States and its allies to creating a fair, inclusive, and resilient economic environment is demonstrated through IPEF agreements. As these agreements gain momentum, they are set to redefine economies in the Indo-Pacific, providing benefits for a variety of people. Sources: https://www.whitehouse.gov/briefing-room/statements-releases/2023/11/16/fact-sheet-in-san-francisco-president-biden-and-13-partners-announce-key-outcomes-to-fuel-inclusive-sustainable-growth-as-part-of-the-indo-pacific-economic-framework-for-prosperity/ https://asia.nikkei.com/Politics/International-relations/Indo-Pacific/U.S.-led-Indo-Pacific-supply-chain-deal-to-take-effect-Feb.-24 https://english.kyodonews.net/news/2024/02/c71d7989fdbc-us-led-indo-pacific-deal-on-supply-chain-resilience-takes-effect.html AuthorManuel Torres, RUSCA Blog Committee It’s no secret that retailers have begun trimming their inventories towards achieving a normalized supply chain. It would cater to a far more accurate consumer spending pattern in that instance. It’s increasingly becoming a trend for many companies to either close down existing warehouses or upgrade any existing facilities. According to the article, Warehousing Demand Is Starting To Shrink, Liz Young, asserts, “The amount of U.S. warehouse space listed for sublease reached a record high of more than 156 million square feet in the fourth quarter of 2021, according to real-estate services from Savills” (Liz Young, 2024). Furthermore, this goes into depth and summarizes the strong trend of companies wanting to leave behind pandemic automation and take it to the next level toward staying adaptive in the industry.
The major shift doesn’t come out of thin air, rather, it’s due to the companies returning to the known inventory management strategy known as just-in-time, which can account for the numerous warehouses available for subleasing in the market. As mentioned before, one of the main alternatives companies have sought regarding adding facilities is upgrading current facilities. Global head of industrial research at JLL, Mehtab Randhawa, asserted, “Many companies now are considering warehouses and upgrading to newer buildings that can accommodate more automation and require less labor” (Randhawa, 2024). In other words, it’ll give companies an advantage when it comes to being efficient and more logical than adding more facilities that aren’t efficient. Another strong trend that’s common in the industry at the moment is seeking the goal of “aligning their supply chains for more normal, pre-pandemic stocking and consumer spending patterns” (Liz Young, 2024). The trend is closing several facilities and reducing to make way for newer buildings that are more catered towards efficiency with upgrades. It’s two connections that can be made since companies want to avoid renewals of estates then they’d ultimately have to cut down on numerous facilities to make change for the future of their supply chains and to reach their goal. It’s the most logical decision-making a company can make and could foresee the benefits behind them. Diving to the past on the topic regarding companies upgrading facilities, closing warehouses, and building new facilities with the most up-to-date equipment. All these trends have been predicted by experts in 2022 to surround the specific idea behind warehouse demands. Author, Mike O’Brien, greatly summarizes the accurate prediction for warehouse demand but also mentions another scope companies would be chasing. In the article, Warehouse Space Demand Will Shrink in 2023, he claims “Demand for warehouse space will decrease in 2023, experts predicted, but companies will still be looking to fill in network gaps opportunistically while continuing to move sourcing and inventory closer to domestic customers to hedge against supply chain shocks” (Brien, 2022). Furthermore, it’s fair to say experts were nearly right on the dot with their prediction, and that also includes the strategy companies are pursuing for the most maximization of their supply chain. It’s evident companies have already committed to these practices today. A spokesman from online retailer, Fanatics, affirms “We will be shifting our fulfillment efforts to newer buildings in and around the region where we have access to updated technology and infrastructure to ensure a better fan experience” (Young, 2024). In addition, it can’t go unnoticed the efforts towards renovating norms that companies are used to and essentially reaching the mentioned goal of aligning their supply chains. That’s not to mention warehouse leasing still being popular in today’s market. It can be assumed that it’s still a process companies are going through. There’s still a suggestion that subleasing continues to grow as mentioned in the article from Liz Young. Therefore, as long as more companies are innovating their supply chains through these newer strategies. Leasing will remain pivotal for years to come. Works Cited Warehousing Demand Is Starting to Shrink, www.wsj.com/articles/warehousing-demand-is-starting-to-shrink-19c5feaa. Accessed 25 Feb. 2024. O’Brien, Mike. “Warehouse Space Demand Will Shrink in 2023.” Multichannel Merchant, 20 Dec. 2022, multichannelmerchant.com/operations/warehouse-space-demand-will-shrink-in-2023/. Why Warehouse Rents Keep Going up While Demand Is Dropping - WSJ, www.wsj.com/articles/why-warehouse-rents-keep-going-up-while-demand-is-dropping-4dc9a120. Accessed 25 Feb. 2024. AuthorAdam Seoudy, RUSCA Blog Committee Cargo theft is on the rise and in an unprecedented way. According to Andrea Miller in her article, Cargo theft spiked over 57% in 2023 vs. 2022, “Cargo theft incidents were up more than 57% in 2023 compared with the year prior [and] I think we’re at an all-time high. I haven’t seen cargo theft at this level” (Miller, 2024). This isn’t just a one-off incident as cargo theft has been steadily increasing yearly since the COVID lockdowns. Companies have been scrambling to find solutions to slow down the theft, but most cases have led to no avail. This is because the rise in theft has been so substantial and has occurred so rapidly. Experts have never seen anything like it and because of this, were not prepared for the historic spike in theft. Despite this, companies have begun to implement new technologies that are helping crack down on theft by tracking their inventory more effectively.
The reason that companies are opting for new technologies is because the threat of theft is no longer just physical. According to the article, Cargo theft, led by food and beverage, is surging across the U.S., “Thieves are targeting their victims through cyber scams and identity theft, creating fictitious pickups, also referred to as “strategic theft.” (Larocco, 2023). In addition, “bigger companies are getting better at spotting fraudulent activity, but it's the smaller mom-and-pop operators that need to be more vigilant” (Keith, 2023). Thieves have become more creative and have begun to implement more advanced techniques to steal cargo. This strategic theft has wreaked havoc upon smaller companies that don’t have the resources to combat it. In most cases, however, larger companies such as those in the Fortune 500, have been much more effective in slowing down the shrinkage. In addition to this, the theft has started to target more key points in the supply chain, through cities such as Los Angeles, Houston, Miami, Savannah, Newark, New Jersey, Memphis, and Chicago. Next, after analyzing the past years, it is only logical to look to the future. According to many reports, “freight security experts don't expect the problem to slow down in 2024” (Keith, 2023). This means companies must continue to innovate in their security practices as the thieves innovate in their methods to keep up. For example, according to the article, "Experts warn fleets to prepare for record-breaking cargo theft in 2024, “this is not just happening in California and Texas' usual high-risk freight markets. The practice has spread across the heartland” (Keith, 2023). This indicates that thieves are no longer just targeting the major ports, but taking a holistic approach by targeting smaller key ports along the entire supply chain. Most of the time, these points will have significantly fewer security measures. So, companies that primarily worried only about their main ports must now divert resources to implement more security in their smaller ports. Finally, it is natural to ask the question, what does this mean for supply chains across the country and what is the solution going forward? One thing is certain, companies need to take initiative and innovate their supply chain practices. Experts on the matter have mixed opinions, but there is one common consensus; invest in cybersecurity. Investing in cybersecurity has never been more crucial for companies’ supply chains until now. And as seen through countless examples in business, it is always better to be ahead of the curve than behind it when it comes to innovation. In doing so, companies and their supply chains will be more resilient and protected. This will also unlock more visibility into their supply chains, as they will be able to monitor their products much more closely. Works Cited Larocco, L. (2023, March 25). Cargo theft, led by food and beverage, is surging across the U.S. CNBC. https://www.cnbc.com/2023/03/25/cargo-theft-led-by-food-and-beverage-is-surging-across-the-us.html Larocco, L. (2023, March 25). Cargo theft, led by food and beverage, is surging across the U.S. CNBC. https://www.cnbc.com/2023/03/25/cargo-theft-led-by-food-and-beverage-is-surging-across-the-us.html Keith, S. (2023, December 1). Experts WARN FLEETS TO PREPARE FOR RECORD-breaking cargo theft in 2024. FleetOwner. https://www.fleetowner.com/safety/article/21278332/experts-warn-fleets-to-prepare-for-record-breaking-cargo-theft-in-2024 AuthorLiam Ripberger, RUSCA Blog Committee There are millions of frontline workers in America, who work as a crucial part of the supply chain industry, and yet, we are just beginning to learn about the mental health challenges these workers face. New data has revealed that frontline workers are more likely to face severe, job-related mental health challenges than other workers. In early February of 2024, meQuilibrium released a study that measures these challenges faced by the workers. meQuilibrium is a credible platform that aims to help people with their mental health by providing companies or individuals with personalized digital coaching and advice.
According to a study performed by meQuilibrium, frontline workers are 61% more likely to suffer from depression, while another 33% are likely to suffer from anxiety (Kalser). Depression and anxiety are serious mental health illnesses that are highly likely to impede most aspects of people’s lives, including their workplace performance and satisfaction. On top of this, a survey conducted by the Business Group of Health in 2022 revealed that over 44% of frontline workers reported cases of depression, anxiety, or substance abuse throughout the past year (Kalser). The Business Group of Health also conducted the same survey in 2023, in which 75% of frontline workers reported facing these mental health challenges (Kalser). In just one recent year, the percentage of frontline workers who reported struggling with these conditions increased by over 30%. Although so many of these workers are negatively affected by depression, anxiety, and other mental ailments, they were also found to be less likely to reach out for help or support from others. According to the same study from meQuilibrium, frontline workers were reported to be 30% less likely to seek professional help when stressed than other workers (Brody). Frontline workers were also 15% less likely than non-frontline workers to know about the mental well-being benefits provided by their employers, with only about half of employees being aware of these benefits (Brody). Many workers in any position are encouraged to take time off when they are struggling with mental health issues. However, frontline workers are reluctant to take days off because it would result in less pay. This could lead workers to only reach out for professional help when their conditions are peaking in severity. This issue could also be related to stigma about seeking help. For many years now mental health issues as a whole have been surrounded by stigma, which to this day still affects millions of people who do not want to be judged or stereotyped because of what they go through. The stigma around mental health issues can be especially prevalent in the workforce. This is because workers are scared that their conditions may, “hurt their reputation, compromise work relationships, or even jeopardize their job,” (Mordecai). However, this silence surrounding mental health has quite the opposite effect on companies whose employees remain silent. According to Dr. Don Mordecai, this effect can be quantified monetarily, and it can cost companies, “$9,450 per employee, per year in absenteeism and lost productivity,” (Mordecai). These numbers illustrate how the mental health crisis does not just affect the individual, but also entire companies as a whole, especially those with a large portion of frontline employees. Many of the mental health challenges that arise from frontline work can be attributed to the tendency for workers to work higher-stress jobs. Another portion of the worker well-being study done by meQuilibrium touched on employee stress perception. This highlighted how frontline workers were likelier than non-frontline workers to deny that they had any issues with stress. However, at the same time, the percentage of frontline workers who recognized that they had an issue with stress but did not reach out for any help was almost twice as high (Brody). The reason this line of work is more stress-inducing is for a number of reasons. According to Smith, it can be attributed to a number of reasons ranging from their minimal autonomy and lack of paid time off to their difficult shift hours and demanding customers (Kalser). Non-frontline workers do not deal with as many difficult and frustrating people day to day and are more likely to work regular hours with paid time off. The growing number of workers on the frontline who battle mental health issues is a call for companies to take action. The stigma surrounding the issue could be subdued with a greater emphasis on employee mental health benefits and more awareness. This stigma comes at the cost of many individuals’ mental health, as well as the productivity of the company affected. Tackling this issue would benefit all parties involved, and create a positive ripple effect throughout the supply chain of numerous companies. Sources: “Front-line workers are more likely to be anxious and depressed, survey finds” https://www.supplychaindive.com/news/frontline-workers-more-anxious-depressed/707676/ “Frontline Workers Have Greater Mental Health Needs, Yet Are Less Likely to Seek Help, Study Finds” https://www.prnewswire.com/news-releases/frontline-workers-have-greater-mental-health-needs-yet-are-less-likely-to-seek-help-study-finds-302056812.html “Mental Health in the Workplace - and the Cost of Staying Silent” https://business.kaiserpermanente.org/insights/mental-health-workplace/mental-health-stigma-costs#:~:text=The%20majority%20of%20employers%20and%20employees%20report%20workplace%20stigma%20around%20mental%20health.&text=Even%20in%20the%20most%20progressive,or%20even%20jeopardize%20their%20job. AuthorNathan Perez, RUSCA Blog Committee Recently, Electric Vehicles (EVs) have taken the world by storm. The rise of EVs have been a major hit in global markets. Even major car company General Motors has stated that they plan to produce fully EV by 2035. This growth has ultimately led several companies to create new strategies to maximize on this opportunity in the market.
Tesla, only until the last quarter of 2023, has been the leading producer of EVs worldwide and has just recently created a new parts distribution center in Greenville, South Carolina. The announcement comes just a few months after their first expansion into Newburgh, New York. They also plan to invest in Nevada for two sites. There will be one for batteries and the other for their new Semi-trucks. LG Chem, a supplier of cathode materials, and General Motors have signed a $19 billion deal together – only four months after their deal with Toyota. LG Chem’s plant will be located in Tennessee, where they will produce 60,000 metric tons of cathode material starting in 2026. The market is unprofitable as of now, however, many companies are introducing plug-in hybrids to try to bring even more popularity. The Chinese government has tried to bring even more focus to the EV industry. As of Q4 of 2023, Chinese Company BYD overtook Tesla as the leading producer of electric vehicles worldwide. This was enabled as the Chinese government provides subsidies, which encourages their automakers to invest in warehousing and logistics in foreign markets. However, the current decline of the Chinese economy has many worried as the price of automobiles has dropped. Despite this, BYD has not shown signs of stagnating growth as they still have plans in creating a plant in Mexico. The plant comes as a way to bypass U.S. tariffs on Chinese-manufactured EVs that are set at 27.5%. The Biden Administration is concerned for local car makers as BYD automobiles are affordable and have already gained popularity in Asian and European countries. The electric vehicles manufactured in Mexico will enjoy a 2.5% tariff, rather than the hefty 27.5%. Chinese electric vehicle manufacturers could use this opportunity to grow in the American market. The electric vehicle car market is ever-growing and changing. The rise of new competitors and the continued success of seasoned producers, proves that while currently unprofitable, the industry has a lot of promise for the future. The demand will only grow as the price of the EVs continues to drop. Sources: https://www.wsj.com/business/autos/china-offers-support-to-accelerate-ev-makers-global-push-9ae498ff?mod=autos_news_article_pos4 https://www.wsj.com/business/lg-chem-gm-sign-19-billion-deal-on-cathode-materials-b7888ccb?mod=Searchresults_pos2&page=1 https://www.supplychaindive.com/news/tesla-plans-parts-distribution-center-south-carolina/705351/ https://www.nytimes.com/2024/02/08/business/china-deflation.html?searchResultPosition=1 https://www.wsj.com/business/autos/chinese-ev-maker-byd-exploring-mexico-factory-as-entry-to-u-s-market-411360fa?mod=WTRN_pos2&cx_testId=3&cx_testVariant=cx_166&cx_artPos=1 AuthorCary Wong, RUSCA Blog Committee On January 5th, 2024, Boeing once again cracked national headlines in an unfortunate manner. During the ascend of an Alaska Airlines flight, a side door of the Boeing 737 MAX 9 plane was blown out, putting passengers in a very dangerous situation. It was a miracle that no lives were lost as the plane was still at a mid-level altitude, and no passengers were seated next to the door. This crisis was only one of several catastrophic events for Boeing over recent years. It has become clear that Boeing has many internal issues relating to their supply chain and quality control systems, which are in turn damaging their brand’s image. As a result, Boeing is reevaluating their supply chains in an attempt to develop solutions.
After the incident, the Federal Aviation Administration temporarily grounded all Boeing 737 planes before a cause of the issue could be found. Investigations from the National Transportation Safety Board revealed that the plane was missing 4 bolts vital to the door's stability. Boeing’s records from September 2023 revealed that in order to make repairs, the bolts were removed at the Boeing facility in Renton, Washington (Samora). However, Boeing employees forgot to reinstall these bolts, leading to the crisis. One of Boeing’s first moves in response to the investigation was to implement a “control plan to ensure all 737-9 mid-exit door plugs are installed according to specifications and added new inspections of the door plug assembly and similar structures” (Forecast International). The company added new protocols to fully document when the door plug is opened or removed at Boeing’s factory, ensuring it is reinstalled and inspected prior to delivery. These were much-needed moves by Boeing as they must prove and validate their stability and reliability. In addition to these new changes regarding the door plug, Boeing also pledged to incorporate new verification measures throughout their supply chain, such as additional inspections and collaboration with suppliers on product enhancements. While these new measures and protocols seem to be productive, some people believe that more should be done. Richard Aboulafia, managing director of the aerospace consultant firm, AeroDyanmic Advisory, called these changes “meaningless and superficial” (Fawkes). Aboulafia believes that until Boeing undergoes a cultural adjustment, not much will change. Cultural changes are not easy, but according to Aboulafia, it can start with Boeing bringing more people with technical knowledge into the higher ranks, rather than prioritizing investor returns. Regardless of how Boeing decides to go about it, it is clear that changes need to be made. Since the beginning of the year, Boeing’s stock price has dropped by more than fifteen percent. Without changes, the company and its image will continue to fall. Sources https://www.supplychaindive.com/news/ntsb-initial-report-4-bolts-missing-alaska-airlines-spirit-aerosystems-boeing-737-9-max-aircraft/707012/ https://flightplan.forecastinternational.com/2024/02/07/boeing-responds-to-initial-ntsb-report-on-max-9-door-plug-blowout/ https://www.ragan.com/boeing-comms-measurement/ https://www.pbs.org/newshour/show/boeing-under-pressure-amid-string-of-safety-and-quality-control-issues https://www.aljazeera.com/economy/2024/1/23/poor-quality-control-race-for-profits-behind-boeings-troubles https://www.nytimes.com/interactive/2024/01/23/business/boeing-alaska-airlines-door-plug.html AuthorShane-Anson Bootsma, RUSCA Blog Committee In recent years, supply chains have faced unprecedented strain, marked by disruptions ranging from raw material shortages to transportation bottlenecks due to the COVID-19 pandemic. Immediately post-pandemic, JIT practices were replaced with “just-in-case” practices, where retailers would hold onto excess inventory in the event of potential supply chain interruptions. However, actions taken in recent years have instilled a sense of confidence in the reliability and adaptability of supply chain infrastructures. This newfound assurance is driving businesses to embrace Just-In-Time (JIT) inventory management practices once again, which involve maintaining minimal inventory levels and replenishing stock only as needed.
JIT practices, characterized by minimal inventory levels and replenishment based on real-time demand, offer retailers a path to streamline operations, reduce holding costs, and enhance overall efficiency. This strategic shift reflects a broader industry sentiment favoring leaner, more agile inventory management approaches in response to evolving market dynamics. Industry analysts point to a confluence of factors driving this transition, including a stabilized supply chain environment and a return to comparatively stable demand patterns. Since companies, such as IKEA and Walmart, can accurately predict demand and satisfy said demand through supply chains, they are swapping back to JIT. Walmart has created new technology that aims to fix broken forecasting tools during the pandemic. This, in combination with the fact that “consumer spending has moderated”, has allowed merchants to “have smaller, more accurate shipments than [companies] have had in the past.” (Young) Since the re-implementation of JIT, Walmart has cut its inventory by 4.8% and has boosted sales with leaner inventories. David Guggina, executive vice president of the supply chain for Walmart, has stated that they are “not seeing the same level of disruptions upstream in the supply chain”, leading to JIT practices being more practical than in the past (Young) The return to JIT inventory management signifies a strategic pivot towards efficiency and responsiveness in a post-pandemic recovery landscape. Retailers aim to enhance operational resilience and adaptability while navigating uncertain market conditions by aligning inventory levels with real-time demand signals and minimizing excess stock. Sources https://www.wsj.com/articles/retailers-return-to-bringing-in-inventory-just-in-time-4613e3ee?mod=logistics_more_article_pos4 https://www.marketplace.org/2023/04/04/supply-chain-shortages-return-to-just-in-time-inventory/ https://medium.com/@thomasarnosander/retailers-shift-back-to-just-in-time-inventory-management-b712b456ba8b AuthorVaish Konda, RUSCA Blog Committee In recent years, the European Union has been pursuing the formation of a supply chain law to combat violations of environmental and child labor laws by companies operating within its states. However, the initiative faces resistance from Germany, citing concerns that such regulations could potentially harm businesses in their country (Kippenberg). Beyond Germany's worry about potential harm to businesses, other EU member states share similar reservations, highlighting the challenge of finding a common approach. This ongoing discussion emphasizes the necessity for a collaborative effort to balance ethical considerations with the economic interests of each country.
The German government believes that the EU supply chain law may lead to legal problems that would hinder the productivity of their companies. The current ruling political party, FDP, believes in the freedom to practice business without significant government intervention. Under this law, employees working at any part of a supply chain in Germany would be able to go to court while holding the company liable for previously unprotected categories, increasing the chances of businesses succumbing to legal troubles (Kippenberg). On the other hand, the ethical dimensions of the debate cannot be overlooked. Companies operating within the EU must be held accountable for their impact on the environment and their labor practices, especially concerning child labor. The proposed supply chain law seeks to address these concerns, urging respect for the environment by maintaining sustainable initiatives while also complying with important child labor laws. The right balance with regulatory government behavior is necessary for safe production in a supply chain. Multiple companies support the EU law and look forward to adopting it once it is instated. For instance, German retailer Vaude recently reacted to the FDP’s opposition by citing their support for a strong law that raises the importance of taking responsibility for supply chains while simultaneously maintaining a successful business (“VAUDE”). As more companies express support for such regulations, it becomes evident that the business community is aligning itself with the principles of ethical and sustainable business practices. In the era of globalization, the German government's actions encourage others who are unhappy with the law to oppose it, making it difficult for the union to address global challenges in supply chains. Currently, the European Union has postponed its decision about the supply chain law due to opposition from Germany, as it needs a “qualified majority of 15 EU countries representing 65% of the European Union population” to proceed forward (Blenkinsop). Sources: https://www.hrw.org/news/2024/01/29/germany-throws-spanner-works-eu-supply-chain-law https://www.reuters.com/markets/europe/eu-postpones-decision-proposed-supply-chain-due-diligince-law-2024-02-09/ https://www.linkedin.com/pulse/vaude-positionspapier-zum-fdp-beschluss-stopp-der-eu-lieferkettenrichtlinie-gux2f/?utm_source=share&utm_medium=member_ios&utm_campaign=share_via |
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