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Supply Chain

Supply chain issues and bad weather behind soaring grocery prices, experts say

TORONTO — Bringing home the bacon is more expensive than ever in Canada, and it could become even more costly as time goes on. “It’s been going up about

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TORONTO —
Bringing home the bacon is more expensive than ever in Canada, and it could become even more costly as time goes on.

“It’s been going up about 15 to 20 per cent, I’d say, over the summer,” butcher and chef Peter Sanagan told CTV News.

Statistics Canada reported in August that a 500-gram package of bacon, on average, had crossed the $8 threshold for the first time.

But the increase in price is not restricted to bacon. Experts have noticed the cost of chicken, beef and pork have all gone up as well.

“Beef is up at least 12 per cent,” Sylvain Charlesbois, director of Dalhousie University’s Agri-Food Analytics Lab in Halifax, told CTV News. “Some cuts are up 30 per cent.”

Supply chain issues and bad weather are primarily responsible for the inflated prices, according to research by the Dalhousie food lab. The COVID-19 pandemic led to more robust safety measures and the closing of facilities and borders, which has affected every section of the chain from farm to fork.

In addition, higher transportation and fuel costs have increased prices. Fires and droughts across the Northern Hemisphere have also affected crops, resulting in increased prices in livestock feed.

“The biggest issue we’re working with right now is an increase in feed price for our chickens of about 20 per cent,” Melanie Boldt of Pine View Farms told CTV News. “That’s a cost we have to figure out how to absorb and what to do with.”

Canadians have already begun adapting by changing their shopping habits.

In a survey of over 10,000 Canadians conducted by the Dalhousie food lab, nearly half of respondents said they had reduced purchases of meat in the last six months because of higher prices.

Additionally, the survey found more Canadians are buying store-brand products and checking weekly flyers for deals.

“Also, Canadians are using coupons way more often,” Charlesbois said.

Four out of 10 people said that compared to last year, they’re now more often searching for food at reduced prices due to it being close to the expiry date.

Source: https://nypressnews.com/news/business/supply-chain-issues-and-bad-weather-behind-soaring-grocery-prices-experts-say/

Supply Chain

An artificial intelligence tool is helping retailers and manufacturers weather the holidays by simulating supply chain issues before they happen

Large companies are using digital twins, AI-powered simulations, to predict disruptions to their supply chains and how to best address them.

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  • Digital twins are used by businesses to run simulations and identify issues before they occur.
  • Companies are using digital twins to stress-test their supply chains, Technology Review reported.
  • Digital twins use data on social media, consumers, and global factors to run simulations.

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As supply chain disruptions pummel industries across the globe ahead of the holiday season, a simulation tool powered by artificial intelligence (AI) has the power to help businesses predict disruptions to their supply chains and minimize their effects, according to MIT Technology Review.

Digital twins are virtual representations of real-world objects or systems, such as global supply chains, that are used to run simulations and identify issues before they occur. MIT Data Science Lab Director David Simchi-Levi told Technology Review that an increasing number of companies are using this tool to stress-test their supply chains.

“What if there’s a drought in Taiwan and the water shortage shuts down microchip manufacturing? A digital twin could predict the risk of this happening, trace the impact it would have on your supply chain, and — using reinforcement learning — suggest what actions to take to minimize the harm,” Technology Review reported.

From consumer behavior to geopolitical implications and social media trends, digital twins use vast amounts of data on a variety of factors to run simulations, which trains their AIs to analyze the data and make predictions, according to Technology Review.

For example, British consumer goods manufacturer Unilever PLC owns over 400 brands and offers its products in more than 190 countries. The company teamed up with Microsoft in 2019 to create digital twins of its 300 global plants to optimize their operation, The Wall Street Journal reported.

A pilot digital twin was created for a Unilever facility in Valinhos, Brazil, that saved the company $2.8 million dollars by cutting down on energy use and driving productivity, the company told WSJ.

While it’s mostly large companies currently utilizing the technology, Simchi-Levi told Technology Review that with a million dollars and 18 months, a company could enjoy “many of the benefits” of digital twins.

As supply chain disruptions pummel industries across the globe ahead of the holiday season, a simulation tool powered by artificial intelligence (AI) has the power to help businesses predict disruptions to their supply chains and minimize their effects, according to MIT Technology Review.

Source: https://www.businessinsider.com/artificial-intelligence-digital-twin-retailers-manufacturers-supply-chain-disruption-prediction-2021-10?op=1

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Supply Chain

Report: Offshore wind supply chain worth $109B over 10 years

A group studying the economics of offshore wind energy in the U.S. says building and operating the nascent industry will be worth $109 billion to businesses in its supply chain over the next 10 years.

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FILE - Wind turbines spin to generate electrical <a class=power in Atlantic City, N.J., on Wednesday, Feb. 17, 2021. A report released Tuesday, Oct. 12 by a group studying the economics of the offshore wind industry predicts that the industrys supply chain will be worth $109 billion over the next decade. (AP Photo/Ted Shaffrey, File)”>

FILE – Wind turbines spin to generate electrical power in Atlantic City, N.J., on Wednesday, Feb. 17, 2021. A report released Tuesday, Oct. 12 by a group studying the economics of the offshore wind industry predicts that the industrys supply chain will be worth $109 billion over the next decade. (AP Photo/Ted Shaffrey, File) (Copyright 2021 The Associated Press. All rights reserved.)

ATLANTIC CITY, N.J. – A group studying the economics of offshore wind energy in the U.S. says building and operating the nascent industry will be worth $109 billion to businesses in its supply chain over the next 10 years.

The report by the Special Initiative on Offshore Wind comes as states on both coasts and the Gulf of Mexico are moving to enter or expand their role in the industry, and are making crucial decisions on what to spend and where to spend it.

Multiple states, including New Jersey, want to become the hub of the supply chain that will support offshore wind energy in the U.S., planning and building onshore support sites for manufacturing turbine blades and other components of wind power.

The group, affiliated with the University of Delaware, estimated the market at $70 billion just two years ago, but updated its estimates as the industry continues to grow quickly.

One caveat: the report notes that most of the initial components to be used for U.S. offshore wind projects will come from Europe. It does not attempt to predict when or where a shift might occur.

The U.S. has set a goal of generating 30 gigawatts of power from offshore wind by 2030 — enough to power over 10 million homes.

Supply chain spending is already happening.

On Friday, Orsted and Eversource signed an $86 million supply chain contract with Riggs Distler & Company, Inc. to build foundation components for wind turbines for New York’s Sunrise Wind project off Montauk Point on Long Island that will be able to power 600,000 homes.

In August, those two companies also signed a deal with Kiewit Offshore Services for the first American-built offshore wind substation, which will be a part of the same Long Island project. The substation will be constructed in Ingleside, Texas, near Corpus Christi.

“These investments have been a vision for a long time, but they are becoming a reality today,” said Tory Mazzola, an Orsted spokesman.

New Jersey has often said it wants to be the east coast hub for offshore wind, and is building onshore manufacturing and assembly facilities it hopes will be used by many projects.

“We believe the offshore wind industry is going to bring billions of dollars into New Jersey,” said Joseph Fiordaliso, president of the state Board of Public Utilities. “It’s a lot of money, to be sure.”

The expenditures forecast in the report include nearly $44 billion on 2,057 offshore wind turbines and towers; $17 billion on 2,110 offshore turbine and substation foundations; nearly $13 billion on nearly 5,000 miles (8,000 kilometers) of cables; $10.3 billion on 53 on-and-offshore substations; as well as other construction and operational costs.

It also projects the amount of power states will generate from offshore wind by 2030. New York is forecast to have 9,314 megawatts; New Jersey to have 7,558; Massachusetts to have 5,604; Virginia to have 5,200; Connecticut to have 2,108; Maryland to have 1,568; and Rhode Island to have 1,000.

Currently, 8,000 megawatts worth of power are under contract in those states.

“Collectively, these state commitments are equivalent to the electrical capacity of 32 large nuclear power plants, an extraordinary (capital expenditure) that requires many suppliers,” the report read.

The initiative describes itself as an independent project at the University of Delaware’s College of Earth, Ocean and Environment that supports the advancement of offshore wind. It receives funding from organizations including the Rockefeller Brothers Fund.

Offshore wind energy is viewed as a way to combat climate change by providing the globe with cleaner energy. At a forum in Atlantic City last week on offshore wind, New Jersey’s environmental protection commissioner said the industry will come with adverse impacts as well as benefits, and said much more study is needed about its impact on the ocean and sea life.

___

Follow Wayne Parry at http://twitter.com/WayneParryAC

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

The group, affiliated with the University of Delaware, estimated the market at $70 billion just two years ago, but updated its estimates as the industry continues to grow quickly.

Source: https://www.news4jax.com/business/2021/10/12/report-offshore-wind-supply-chain-worth-109b-over-10-years/

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Supply Chain

Viewpoint: 4 steps to make your supply chain climate-resilient

To ride out all these supply chain disruptions while preserving customers and profits, shippers should consider four major factors: inventory positions, risk tolerance for specific commodities, transit times and associated costs.

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This commentary was written by Glenn Koepke, senior vice president of customer success for FourKites. The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.

By Glenn Koepke

The summer of 2021 will be remembered for shattered records. Not to be outdone by pole vaulters in Tokyo or new variants of an unending pandemic, our climate is going above and beyond in asserting its dominance over human life — and the global economy.

Hurricane Ida’s devastation from New Orleans to New York and the Caldor fire’s carnage in California have made July’s Pacific typhoons and German floods seem like ancient history. All the while, a question nags at us: “What on earth is coming next?”

It’s become increasingly clear these past months that extreme weather is on the rise — and in order to survive, businesses have no choice but to adapt. For the shipping industry, this means accepting extreme weather events as the status quo and integrating them into strategic planning from end to end.

While most companies will develop new strategic plans and review their supplier networks every three to five years, the reality of our current environment means that, regardless of when plans were last made, companies should be having these conversations today — and they should be having them often.

To ride out all these supply chain disruptions while preserving customers and profits, shippers should consider four major factors: inventory positions, risk tolerance for specific commodities, transit times and associated costs.

Taking stock

In recent years, many companies have edged out the competition by engaging data science and automation to better anticipate customer demand, thereby reducing the amount of inventory sitting idle in a warehouse. This delicate balance of supply and demand depends on precise transit time estimates so customers aren’t left waiting past their expected delivery date.

Unfortunately, a single storm can throw these estimates to the wind. We know that even a minor disruption at one end of the supply chain can result in extreme delays at the other end, in a phenomenon known as the Bullwhip Effect.

When you tie in the freight capacity market, think of a giant Slinky that is pulled in different ways. As capacity shifts from one area to another, rates, availability and dependability all vary. When you tie in larger events, these are more impactful to the capacity market.

In the wake of Hurricane Ida, the number of loads delivered in Louisiana declined by 28% in the week of Aug. 30. After Typhoon In-Fa thrashed coastal China, the Port of Shanghai’s container intake dropped by 52%, and those containers took twice as long to reach unloading.

And the last mile is no better off.

During the Caldor fire in California, officials evacuated cities and shut down 50 miles of highway traffic for a month, resulting in gas and grocery shortages in the Tahoe basin. Note that these statistics were collected during those specific periods of disruption; but given this is an asset-driven capacity model with constrained capacity, it takes time to recover once an event has occurred, and the impacts are felt well beyond the event’s initial geographic scope.

In the face of this new reality, companies must consider the inventory tradeoff, i.e., the value of holding more safety stock in anticipation of weather-related delays. For example, a customer who sees that Company A’s product will arrive too late may choose a similar product from Company B, just for the quicker delivery window – even if Company B’s product is more expensive or lower quality. Next time, Company A might be willing to lose the inventory battle — keeping more items in stock, ready to ship, at a higher cost — in order to win the war for customers.

Considering commodities

While it’s impossible to predict exactly when and where the next Ida will hit, we do know there are seasons for everything. Hurricanes form in the Atlantic between July and November — just as we know that wildfires sweep the West every summer and snowstorms bury the Midwest every winter. We also know that these regions are known for certain products and commodities — oil and gas in the Gulf of Mexico, for example.

Knowing that these events are likely to occur with greater strength and frequency, companies should weigh their sourcing options for the commodities specific to those regions during the above seasons. Companies might be able to source critical products from more stable regions at different points of the year. Some lower-value products might not be worth sourcing at all during some of these extreme events. While complicated and potentially costly, this kind of product-specific evaluation is essential to strategic planning in today’s environment.

Weighing cost vs. time

We know that extreme weather events can slow down or cut off the supply chain, from production to distribution to the “last mile” of delivery. Hurricane Ida slowed shipments for a thousand miles, with on-time shipments declining 14% in Louisiana and 10% in New Jersey, and dwell time increasing 14% in Delaware.

With this knowledge, forward-looking companies would be wise to calculate their tolerance for longer transit times if it means getting their products to their final destination safely and predictably.

While longer routes and lead times sometimes equal higher costs, they may be the answer to protecting profits. After all, that same customer who chose faster shipping could very well return to reliable Company A if the shipment from Company B was delayed in transit by an airplane-grounding blizzard, a traffic-stopping wildfire or other factors that could have been avoided by climate-centric planning.

Companies should be reevaluating their networks, as well as their locations of sourcing, manufacturing and shipping, all with climate events in mind. Alternate seaports might be considered for import or export — for example, avoiding Shanghai during typhoon season or favoring Long Beach over Houston when hurricanes are in the forecast.

Whatever the business decisions, companies should reach them by weighing the cost impacts of shifting sources and routes against the predicted savings realized by customer satisfaction and retention.

Looking forward

As the sun sets on a record-breaking summer, the holiday season looms — accompanied this year by shipping delays, capacity shortages and sky-high freight costs. Throw in a few extreme weather events, and we’re looking at a season for the record books.

Companies that hope to ride out the storm are already ramping up their holiday production. But companies that want to thrive must go far beyond that, taking a hard look at their inventories, sources and routes not only for this year, but for a predictably unpredictable future.

Glenn Koepke has a proven track record of aligning solutions to customer supply chain strategies and objectives for global organizations. Prior to joining FourKites, Koepka served in a variety of roles within the logistics services industry and worked extensively in EMEA and North America. At FourKites, he leads the Network Enablement strategy, which is focused on scaling its industry-leading visibility solution to capture end-to-end supply chain visibility.

It’s become increasingly clear these past months that extreme weather is on the rise — and in order to survive, businesses have no choice but to adapt. For the shipping industry, this means accepting extreme weather events as the status quo and integrating them into strategic planning from end to end.

Source: https://www.freightwaves.com/news/viewpoint-4-steps-to-make-your-supply-chain-climate-resilient

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