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By Michael Lev Writer and editor, former business editor and Asia correspondent for the Chicago Tribune
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By Michael Lev Writer and editor, former business editor and Asia correspondent for the Chicago Tribune
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Shetland wool, British rock, and package delivery
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Shetland wool, British rock, and package delivery
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1. Shetland 2. Aberdeen 3. London 4. Leipzig 5. Cincinnati 6. Los Angeles 7. Newport Beach
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December 22 was suspenseful. It was two days until Christmas Eve when holiday deliveries would conclude and, as far as I knew, my newly ordered Shetland wool sweater was no closer to arriving at my California home than a DHL Express sorting facility at London’s Heathrow Airport. The timeframe seemed especially tight because I expected the package would need to pass through two DHL freight hubs before reaching me.
Could the global supply chain, doubly stressed by COVID and the Christmas rush, possibly come through? I downloaded DHL’s tracking app and sighed. DHL promised my package by Dec. 29. I wanted to wear my sweater to Christmas Eve dinner.
The sweater — a Christmas gift to myself — was offered by a London menswear store called John Simons. The retailer had collaborated with British rock musician Paul Weller on a line of Shetland wool sweaters using the traditional Fair Isle pattern. I’m a huge Weller fan from his days with the Jam and saw his sweaters referenced on Twitter. I ordered one online on Dec. 18. The store charged 15£ ($20.51) for shipping and hinted delivery by Christmas was possible, at least within the U.K. I called the store and learned my sweater would go out the door with DHL on the afternoon of Dec. 22. That was cutting it awfully close.
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DHL is less visible than FedEx and UPS in the United States because it only does international delivery, but it’s a powerhouse in that business. The shipper has 320 aircraft in its global aviation network, having added 40 in 2021. It has major air freight hubs in Leipzig, Germany, and Cincinnati plus others in Asia.
Greg Hewitt, CEO of DHL Express USA, told me he ramped up to deal with COVID and Christmas by both adding and limiting service. With the oceangoing cargo business jammed by the pandemic, he protected air customers by allowing them to increase business by 15% but no more.
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“If you outsource to a manufacturer overseas, you run the risk of decisions being made on your behalf and often mistakes can be made which could have been avoided.”
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“We started very early to cap what we could move because we did have some issues (in mid-2020) in our Cincinnati hub,” Hewitt said. The big difference between air cargo and ocean shipping is the length of time and complexity of the journey. Because ships are at sea for weeks and then must navigate massive port operations, logjams have become impossible to untangle. Air freight, a day-to-day business, can address gridlock almost instantly. “Even in a really bad situation over the course of a week, we can clean it out, limit it, and move through all our stuff,” he said. “It’s just a different model.”
Hewitt said he expected DHL Express’ business in the U.S. would show growth of 20% to 30% for 2021, slowing to the 10% growth range in 2022. For Christmas 2021, Hewitt said DHL increased airlift capacity 12% into the U.S. by adding flights and buying cargo space on other carriers. “I don’t think most people recognize just how much freight moves in the bellies of those passenger aircraft we travel on,” he said.
My sweater started life as wool keeping a sheep warm on the Shetland Islands, a remote Scottish archipelago in the North Atlantic. The John Simons shop, which works with London manufacturers to make much of its in-house brand clothing, teamed up with Weller to design the line of Scottish sweaters, and they used a Shetland apparel-maker.
Paul Simons, the shop’s owner, explained on his website that he relied on local manufacturers to keep better control of the product: “If you outsource to a manufacturer overseas, you run the risk of decisions being made on your behalf and often mistakes can be made which could have been avoided.”
When I called to learn more, Simons told me the store worked quickly to order 500 of the sweaters for the holidays. The schedule was nearly upended by bad Shetland weather: The sweaters were shipped via ferry from Lerwick to Aberdeen, a 12-hour journey, and then by truck to London. But storms delayed departure. “That does happen with our supply from the Shetlands,” Simons said. “It very much depends on fair weather for the ship to make the crossing.”
It was 4:28 a.m. on Dec. 23 in California when the app showed my package had departed DHL’s Heathrow facility, but where was it headed? To Germany and then Cincinnati? The clock was ticking.
Hewitt said if the sweater had been sent direct from Scotland it would have departed the U.K. via the East Midlands Airport near Nottingham, then transited at Leipzig for Cincinnati before L.A. No way would I have gotten it for Christmas. But there’s enough demand between London and major U.S. cities, including Los Angeles, for DHL to fly its own planes on those routes and supplement that service via other carriers. “The more product we can move direct into those markets, it puts them closer to their delivery destination and takes pressure off Cincinnati,” Hewitt said.
That’s how my sweater made it as far as LAX by 1:16 a.m. PST Friday Dec. 24, via a Boeing 777 operated by AeroLogic, a joint venture of DHL and Lufthansa.
I woke up Christmas Eve morning to see more progress on the app. My package had departed the DHL facility at LAX at 6:48 a.m., made a stop at the Santa Ana, Calif., delivery depot, and by 9:06 a.m. was in the hands of a DHL courier on his way to my door in Newport Beach.
I received my package on Dec. 24 at 12:40 p.m., 52 hours after it left John Simons, with six hours to spare before Christmas Eve dinner.
DHL had done it. In the time of COVID, this was, if not a Christmas miracle, an impressive show of resilience and planning by the global supply chain.
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C-SUITE DISRUPTION Sweet time for chief supply chain officers
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Sweet time for chief supply chain officers
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Scan the list of top executives at a manufacturing or service industry company and you’ll see all the regular titles, from CEO and CFO to CTO (chief technology officer). C-this, C-that, which is why top management is often referred to as “the C-suite.”
Less common but coming on strong is CSCO, chief supply chain officer, a position whose value and prominence have increased substantially due to the disruptions caused by COVID-19. This is a big change reflecting overdue recognition of the integral role supply chain plays in all aspects of business, including growth and profitability.
Beyond Meat created the new position of chief supply chain officer and in December hired an executive from Tyson Foods to fill it. Also last year, restaurant chains Little Caesars and Zaxby’s promoted executives to newly created CSCO roles, while in late 2020, Nordstrom elevated its chief supply chain officer to the company’s leadership team. Nordstrom’s top executive ranks already had a chief brand officer. Now the retailer says supply chain is also “a core enabler of its market strategy.”
Fortune recently anointed chief supply chain officer the “superhero” of the C-suite. The magazine said 85 S&P 500 companies now have a CSCO or something similar.
“The field of supply chain has really come into its own and certainly come out of the shadows during the pandemic,” Shay Scott, executive director of the Global Supply Chain Institute at the University of Tennessee, Knoxville, told me. “It’s getting more recognition not only by the public but certainly by C-suites and boards.”
What’s happening is a shift in thinking about supply chain responsibilities from operations to strategy. Where companies once viewed supply chain management as just another siloed department (“the people that kick the boxes around,” Scott said), it’s now seen increasingly as an essential function with high status.
Dennis Mullahy, who became Macy’s first chief supply chain officer in 2019, told Fortune that corporate supply chain managers previously saw their jobs as moving inventory from point to point as cheaply as possible. Now the focus is on broad productivity: “How do we get inventory into locations where we think it is going to generate the highest sales for us and the best profitability?”
More companies need to see the light and create CSCOs. The chief supply chain officer is in the best position to visualize the entire product pipeline from R&D to sales, and the one most likely to anticipate bottlenecks and identify potential efficiency gains.
Imagine, especially after COVID, corporate boards deciding whether to open a new overseas factory or bring a product to market without full participation by the executive who lives and breathes sourcing, distribution, and inventory management. An unnecessary risk.
“C-suites have figured it out,” said Scott. “‘Hey, maybe we need those people at the table, helping us plot strategy and then execute it.’”
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END-TO-END SUPPLY CHAIN VISIBILITY
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END-TO-END SUPPLY CHAIN VISIBILITY
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In order to reduce the impacts of supply chain issues by increasing visibility across the end-to-end supply chain, companies are investing in digital and analytics. The goal is to be able to look across the end-to-end and more reliably predict the effects of change, disruption, or increased demand. This enables companies to be more responsive and agile to meet the ultimate goal, which is to fulfill commitments to their customers.
EY Business Consulting Leader Regenia Sanders breaks it down in an interview with Del Irani of Real Time Business.
This content was brought to you by MxD member EY.
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QUIPS AND QUOTES about COVID and the supply chain
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about COVID and the supply chain
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“It’s interesting to consider, re. supply-chain shortages, that COVID doesn’t infect machinery or transport; just people. So every time you can’t find something, that’s a sick person. Every missing item, that’s a sick person.”
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@miriamkp
Miriam Posner
UCLA Information Studies Assistant Professor
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“Asian production networks, hitherto impressively resilient, may be thrown into a funk as Omicron grips the region … and all at a time when, faintly, faintly, supply chain issues appear to be easing in the West. The risk, then, is that over the coming months we’ll experience the ‘mother of all supply chain’ stumbles: an Omicron-driven stall in factory Asia.”
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“Let’s say they normally sell 10 million pounds of chicken. They figured if they raise the price 10 or 20 cents some people will buy less chicken and the people that really want to buy the chicken – it will be there for them to buy.”
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John Catsimatidis
Gristedes Supermarket Chain Owner, on pandemic-related food inflation
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MUST READ News you can use
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Cargo containers aboard freight trains in Los Angeles are being ransacked by thieves as the rail cars approach Union Pacific’s intermodal facility near downtown. Local TV coverage and social media posts showed thousands of looted packages littering the rails. Union Pacific said it increased the number of special agents on patrol.
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Yes, that was a driverless truck seen cruising an Arizona highway. TuSimple, the San Diego technology company, said it successfully completed the first test run of a semitruck on open highway with no human intervention, the Associated Press reported. Lead and scout vehicles kept watch but did not intervene.
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Lego plans to expand its global footprint and shore up its supply chain in Asia by spending $1 billion to build a factory in Vietnam. Lego wants to be close to its markets and Asia has seen double-digit growth since 2019, according to Techwire Asia. The new plant is designed to be carbon-neutral. Lego is also expanding its plant in Jiaxing, China.
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Cargo containers aboard freight trains in Los Angeles are being ransacked by thieves as the rail cars approach Union Pacific’s intermodal facility near downtown. Local TV coverage and social media posts showed thousands of looted packages littering the rails. Union Pacific said it increased the number of special agents on patrol.
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Yes, that was a driverless truck seen cruising an Arizona highway. TuSimple, the San Diego technology company, said it successfully completed the first test run of a semitruck on open highway with no human intervention, the Associated Press reported. Lead and scout vehicles kept watch but did not intervene.
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Lego plans to expand its global footprint and shore up its supply chain in Asia by spending $1 billion to build a factory in Vietnam. Lego wants to be close to its markets and Asia has seen double-digit growth since 2019, according to Techwire Asia. The new plant is designed to be carbon-neutral. Lego is also expanding its plant in Jiaxing, China.
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MxD 1415 N. Cherry Ave. Chicago, IL 60642 312.281.6900
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