When supply chains run smoothly, the economies they support do too.

But when even the smallest disruption occurs, supply chains can quickly turn into the equivalent of a daisy chain — where one event sets off a cascading impact down the entire logistics value chain.

Experts fear that this is what could happen up and down the East Coast as businesses and shippers try to manage the fallout from the March 26 collapse of Baltimore’s Francis Scott Key Bridge as a result of a cargo ship collision.

“The impacts to the local region will be significant for several months or years until the bridge is rebuilt,” Lisa Anderson, founder and president of LMA Consulting Group, told PYMNTS in an interview. “Even once the port is reopened, trucks will continue to be re-routed around Baltimore, adding time and cost to trips from the port and through the Baltimore area.”

The Port of Baltimore itself remains closed to ships moving in or out until further notice, and officials are now faced with the task of removing the thousands of tons of steel and concrete clogging Maryland’s Patapsco River, while at the same time navigating the logistics of rerouting Baltimore-bound ships to other ports up and down the eastern seaboard.

The U.S. Coast Guard opened a temporary alternate channel Monday (April 1) for vessels that are helping with the cleanup effort.

“The most critical timeframe is clearing the bay to reopen the port, which could take weeks,” Anderson said. “This will impact the ninth biggest port in the U.S. and 3,200 sites involved in logistics, distribution and warehousing nearby the port and bridge as well as local businesses.”

Read more at PYMNTS site.

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The collapse of the Francis Scott Key Bridge and the closure of the Port of Baltimore this week could have far-reaching implications all the way across the country for the ports of Los Angeles and Long Beach, according to several experts.

The bridge collapsed Tuesday about 1:30 a.m. when the Dali, a 985-foot-long cargo ship en route to Sri Lanka, crashed into one of the bridge’s support pillars shortly after losing power. It sent a majority of the bridge plummeting into the 50-foot-deep Patapsco River below, claiming the lives of at least two construction crew workers on the bridge; four others are missing and presumed dead.

In the short term, the closure of the Baltimore port will increase costs for businesses and consumers on the East Coast, said Lisa Anderson, founder of LMA Consulting Group, which specializes in supply chains and manufacturing. That’s because the container ships on their way to Baltimore will be diverted to nearby New Jersey, Pennsylvania and Virginia ports, and the products they’re carrying will have to change the arrangements previously made to be transported to wherever they need to go, Anderson said.

The closure will also affect warehouses and other logistics services, which will have to decide whether they want to switch to other facilities while officials work on reconstructing the bridge and reopening the port, Anderson said. Trucks will also have to be diverted from the Key bridge, meaning they’ll either have to go around the city or pass through tunnels, which have height, width and hazardous materials restrictions.

Longer term, ports in Los Angeles and Long Beach could see more activity, especially with drought conditions reducing the capacity of the Panama Canal, Anderson said. The shipping route from northeast Asia through the Suez Canal and to the East Coast of the U.S. has also become perilous because of the war in Gaza. The Iran-backed Houthis in Yemen have been attacking commercial ships going through the Suez Canal, resulting in shipping lines having to divert their vessels around the southern tip of Africa.

What that means is that the ports of Los Angeles and Long Beach will see an increase of volume, translating to more activity for trucking companies as well as for warehousing and rail systems, Anderson said.

“That’s a positive, but we also need to make sure it’s not gonna become a new bottleneck,” she said. “These folks are adding time to their orders so they have to find new routes and we wanna make sure we’re prepared to service this additional volume.”

The closure of the Baltimore port could also lead to a “nominal” uptick in costs for the products that typically arrive there, such as cars and light trucks, Anderson said. The costs of diverted transportation will eventually be passed on to customers, but it’s not expected to be significant across the U.S., she said.

Read more at the LA Times

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The Francis Scott Key Bridge, once the second-longest continuous truss bridge in the U.S., now lies partially submerged in the Patapsco River after a catastrophic cargo ship collision this week.

“Will this Baltimore situation add a bunch of cost to the global supply chain? Well, no,” said Lisa Anderson, president of LMA Consulting Group. But with additional global complications, costs could compound.

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The Francis Scott Key Bridge, once the second-longest continuous truss bridge in the U.S., now lies partially submerged in the Patapsco River after a catastrophic cargo ship collision this week.

Two people were injured, and six others presumed dead. The ship and mangled debris from the bridge have formed a wall in the water, indefinitely blocking access in and out of the Port of Baltimore, the top domestic port for cars and a major hub for other goods, such as forest products, farm equipment and sugar.

Among the questions around what happens now is what the accident means for shipping and the economy.

The port handled a record amount of cargo last year. While President Joe Biden has said he intends for the federal government to rebuild the bridge, and called on Congress to support that effort, the port is directly responsible for about 15,000 jobs and generated $4.7 billion in economic value to the state of Maryland.

The bridge’s collapse stranded at least 10 vessels in the water and ships outside the blockage have had to reroute to other East Coast ports, such as Norfolk and New Jersey. For global shipping, this comes at a time when companies are contending with route disruptions along the Suez and Panama canals.

Here’s how the Key Bridge collapse may affect the port’s operation, the local economy and international supply chains.

• What role does the Port of Baltimore play?
• How long will shipping be suspended?
• Will supply chains be interrupted?
• What are potential long-term effects?
• What about local and regional effects?

Read more at PBS News Hour site.

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The Baltimore disaster is expected to further compound the stress already placed on the global freight system. “Container shipping traffic has already been quite disrupted, because of the drought going on in the Panama Canal–ships from there [are] going through the Suez Canal to come to the east coast of the U.S. from Northeast Asia,” says Lisa Anderson, a supply chain expert and president of California-based LMA Consulting Group.

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Baltimore’s Business Community Grapples With Impact of Francis Scott Key Bridge Collapse

For founders in the city, the loss of a Baltimore landmark is about more than missed income.

Early Tuesday morning, a cargo ship collided with Francis Scott Key Bridge in Baltimore, immediately collapsing the structure and sending cars plunging into the Patapsco River.

The incident sparked waves of alarm throughout the country. In speeches, Transportation Secretary Pete Buttigieg and President Joe Biden pledged federal assistance in rebuilding efforts. There is no indication that foul play was the cause of the accident, according to the Baltimore’s FBI field office.

Rescue crews continued to search the area for six construction workers who were on the bridge when the Dali, a 948-foot cargo ship bound for Colombo, Sri Lanka, collided with a bridge pylon around 1:30am, according to multiple reports. Two additional construction workers had been rescued from the water, and one was taken to the hospital. No fatalities had been confirmed by Tuesday afternoon, officials said. The Dali, a Singapore-registered vessel, dropped anchor prior to impact after the ship lost propulsion, CNN reported. The Maritime Port Authority of Singapore, which confirmed the loss of propulsion to CNN, says it is in contact with the US Coast Guard and cooperating with investigations.

The National Transportation Safety Administration announced an investigation into the incident on Tuesday afternoon, noting it would probe whether the ship did in fact drop anchor prior to impact.

In addition to the psychological toll inflicted by a disaster, the bridge’s collapse has massive economic ramifications: Submerged in the river, the remnants of the bridge now block access to the Port of Baltimore, the ninth largest port in the United States. The detritus will cause a massive re-routing of all traffic heading to the Port of Baltimore to nearby ports on the northeastern seaboard, Lisa Anderson, a supply chain expert and founder of the LMA consulting group, explains to Inc.

Read the full article at Inc.

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Play audio.

Originally published on Patrick Daly Interlinks Podcast on 3/12/2024

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Lisa Anderson, a supply chain expert and president of California-based LMA Consulting Group, says that the Chips Act “has spurred on certainly quite a bit of investment” in the US electric car sector. And Mexico is also booming through ‘friend shoring’.

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Read the full article at the BBC website. 

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According to a study by Deloitte and The Manufacturing Institute, 2 million jobs could go unfilled in the sector by 2030. The cost in 2030 alone could potentially total $1 Trillion. Worse yet, the manufacturers surveyed said it is 36% harder to find the right talent than it was in 2018, and 77% of manufacturers expect to have ongoing difficulties attracting and retaining manufacturing employees.

As technology, automation, and artificial intelligence (AI) continues to gain steam, lower skilled jobs are automated, but higher-skilled jobs become critical. The gap is significant. Additionally, as reshoring gains momentum and manufacturing expansion becomes a priority with the rise of geopolitical risk and the rollout of government funded programs such as the CHIPS act, manufacturing will increase, and the skills gap will widen. Finally, by 2030, the youngest of the largest generation in history will be older than 65, further decreasing the workforce.   

Simply hiring a recruiting firm will no longer be sufficient. There simply are not enough manufacturing resources to fulfill the needs. Proactive executives will put an increased emphasis on training and development. For example, an aerospace manufacturer needed far more machine operators than they could find, and so the company set up a training facility and hired trainers to put new hires through a comprehensive training and development program. They went from constantly struggling to creating a pipeline of qualified candidates. Another client sent employees to a technical training center in the region to gain manufacturing skills.

Relying on your planners, buyers, and analysts’ college education and prior work history is no longer sufficient. At least 80% of clients are struggling to hire resources with the appropriate education and training. For example, two power systems and electrical equipment manufacturers serving different industries went live with an upgraded ERP system. Although they brought on significant support, both struggled due to lack of production planning and inventory concept education and training for their resources. Proactive clients are arranging ERP and MRP (material requirements planning) education for their employees. For example, a significant beverage manufacturer has been coordinating with a local supply chain education partner to provide practical education.

Turn traditional thinking on its head. Supplement your employees with consultants to upgrade processes and improve efficiencies (refer to our guide for hiring consultants), hire temporary employees to fill gaps, and partner with specialist resources such as engineering firms to make quicker progress. Appreciate different pools of talent such as veterans and retired workers and reexamine your qualifications. For example, a building products manufacturer eliminated its requirement for a college degree and replaced it with practical experience and/or approved skills training. Not only did they find additional candidates, but the candidates were a better fit for the role.

Leadership and culture will be vital to closing the skills gap. People do not follow companies; people follow leaders. The best employees expect leaders to have high expectations, to address poor performers, to face reality with tough topics, and to appreciate and recognize progress. For example, an industrial equipment manufacturer was able to find and retain employees in a small town with limited resources and a key competitor because employees knew that the leader would expect high levels of performance, push for excellence, and cared.

Attracting and retaining talent will be key to success in the manufacturing industry in the next decade (refer to our article for strategies). Proactive executives are developing creative alternatives to traditional hiring, retention, training, and development strategies. The best remain committed to leadership and culture to retain top talent and attract scarce talent.  

Originally published in Brushware, March – April 2024

If you are interested in reading more on this topic:
Where the Talent Has Gone & Strategies for Success

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Companies should seize opportunities to increase packaging efficiencies, improving profitability and sustainability

Since packaging is typically 10-40% of the retail price of products, there is no doubt it adds up to a relevant factor in product cost and waste. Packaging encompasses product design, prototypes and trials, materials, production, labor, shipping, and recycling and/or disposal. The most proactive companies pay close attention to opportunities to increase packaging efficiencies throughout the end-to-end supply chain to improve their profitability and sustainability.

Product Design Collaboration

Product design is at the heart of improving packaging efficiency. Our best clients take a collaborative approach to R&D and packaging design encompassing the end-to-end supply chain. For example, in a healthcare products manufacturer, the packaging engineer worked with R&D, manufacturing technicians, procurement resources, and logistics resources with a specialty in warehousing and transportation. In addition, customers, packaging materials suppliers, equipment specialists, and other resources took part in the collaborative design.

By involving these cross-functional resources, the full life cycle could be incorporated into the product design. In this case, they wanted to ensure the design encompassed the optimal packaging design to meet the customer’s visual, strength, and storage specifications while minimizing the materials, labor, and logistics costs. For example, the objective was to minimize the packaging materials while meeting product specifications. However, the team had to review potentially conflicting factors. For example, doubling the number of units of product per package would make the way the package fit in the box less efficient, the box might not be best designed to optimize the pallet, the pallets might not be optimized to fit on the truck, or the customer might not like the visual design or be able to fit the product in the storage area.

In addition, the product’s performance had to remain intact. Reducing the quantity of materials must not negatively impact the way the product worked for the customer. Compressing the product into the package must not negatively impact the absorbency of the product. Using redesigned materials in the manufacturing process must not impact product quality. This healthcare manufacturer successfully redesigned the product and reduced the total cost by more than 20% inclusive of materials, packaging, warehousing, and transportation costs.

Packaging Efficiencies in Bottling

There are vast opportunities to improve packaging efficiencies in the bottling industry. For example, Niagara has accomplished several key objectives in eliminating waste through packaging and innovation. They designed new packaging that eliminates the need for a cardboard tray in their cases and reduced the amount of plastic in their bottles by 60%. Thus, this packaging requires less materials and uses up less pallet space, allowing the company to reduce carbon emissions and ship more water per order.

Since 2009, Niagara improved its carbon footprint by 59% through innovations in design, lightweighting, and packaging. It has also increased its recycled content usage, which reduced greenhouse gas impact by bottle by 12%. Gaining these results requires a full lifecycle view of supply chain from product design through recycling.

Packaging Efficiencies at Amazon

According to Amazon, it continually works to reinvent and simplify packaging options. The company combines lab testing, machine learning, materials science, and manufacturing partnerships to accomplish this goal. Amazon notes that it avoided more than 2 million tons of packaging materials and reduced per-shipment packaging weight by 41% since 2015. The bottom line is that a significant reduction in packaging will reduce costs and improve sustainability.

Improving packaging efficiency can produce dramatic results. The healthcare products manufacturer, Niagara, and Amazon prove that by focusing on packaging design and innovation, tremendous savings in materials, labor, and freight will flow to the bottom line. In addition, carbon emissions are reduced and sustainability objectives are achieved.

Originally posted in Adhesives & Sealants, March 2024

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Enterprise resource planning systems, CRMs and other tech such as RFID, barcoding, customer and supplier portals, blockchain, IoT, and GPS tracking all support this goal.

Modern ERP systems are no longer just about transactional processes and standard business processes. They are now pivotal in meeting customer requirements, supporting automation, and integrating other essential technologies like AI, IoT, CRM and e-commerce.

Companies must stand out from the crowd with a superior customer experience to sustain profitable growth during these turbulent times; however, service alone will no longer suffice. Companies must contain cost and mitigate risk. ERP and related technologies are key to achieving these objectives.

During these turbulent times of supply chain disruptions, geopolitical risk, and stubborn inflation, companies must take bold action to mitigate risk, stabilize the supply chain, provide a customer service edge, and contain costs. As wars rage across the world, geopolitical risk has skyrocketed. If there is a disruption at one node in the end-to-end supply chain, the disruption can ripple throughout the entire chain. Executives realize that the risk is simply too high to count on the supply chain remaining stable without securing and gaining visibility to their full supply chain.

Similarly, as the world struggles with limited resources, high inflation and interest rates, there is an intense focus on cash flow and cost containment. Only those companies that automate, digitize, and utilize advanced technologies across their supply chains will be able to support customer requirements while maintaining and increasing profitability, productivity, and working capital. This will become even more critical as those companies that do not invest in their future will not be able to meet customers’ needs, leaving a vast opportunity for those ready to scale and meet customer requests.

Not enough to use your old ERP in new ways

Better utilizing an old ERP system will no longer suffice. To stand out from the crowd, you must go beyond these fundamentals and offer a differentiated or personalized customer experience.

For example, your ERP system must allow for progressive e-commerce capabilities that support not only B2C consumer expectations but also provides advantages for B2B customer ordering and status visibility with ease and effectiveness. Your ERP system should support customer personalization as well as product and service customization.

Similarly, a customer relationship management (CRM) system should be robust in tracking your pipeline, building relationships, and providing relevant insights and statistics of where to focus. Our most successful clients focus on analyzing CRM data, forecasting future customer needs, and utilizing these insights to build customer relationships.

The best clients combine CRM with a powerful business intelligence system to create predictive analytics and assess what if scenarios. The best companies connect directly with their customers’ data and provide proactive insights and differentiated value to their customers.

In addition to gaining sales, companies should utilize ERPs to take customer service to the next level with collaborative customer ordering programs and vendor managed inventory programs. By utilizing demand planning and sales forecasting including the use of AI and predictive analytics as well as replenishment planning and advanced planning functionality, clients can solidify their preferred partner status.

For example, a health care products manufacturer grew the business by outperforming their key customer’s resources in determining what to stock where. Not only did they increase their customer’s fill rate and shorten lead times, but they also reduced their customer’s inventory levels. The customer responded by expanding business and suggesting additional opportunities. In addition, the manufacturer reduced inventory levels and improved their production, warehousing, and transportation efficiencies. Profitability and cash flow increased.

Manufacturer technology that supports supply chain visibility

End-to-end supply chain visibility is essential to responding quickly to changing conditions and in providing Amazon-like status updates to your customers. Several technologies support this type of visibility, including RFID, barcoding, customer and supplier portals, blockchain, IoT, GPS tracking, and more. Smart companies are collaborating with supply chain partners to gain access to status information and to connect, plan, and optimize efficiencies across their supply chain.

For example, if you know the status of key materials, you can better plan production to minimize costs while meeting customer expectations. If you know the status of incoming goods, you can optimize truckloads and modes of transportation to mitigate costs while improving delivery performance.

The metaverse can bring together what customers ask for with what customers need. In essence it can accelerate your SIOP (Sales Inventory Operations Planning) process. In a metaverse collaborative room, any set of customers, consumers, and suppliers can meet virtually to review sales forecasts, projected production plans, and possible supplier/capacity limitations that could affect manufacturing volume. They also can visualize an immersive supply chain network map, see where inventory is, identify issues, and model possible solutions. These types of proactive solutions will upgrade your ability to secure your supply chain, enhance margins, and provide end-to-end visibility.

The ever-increasing importance of automation

In addition to automating repetitive tasks, ERP systems and related technologies can keep facilities running at night without people. Since most clients have consciously prioritized which customers to serve due to limited resources, taking advantage of lights out capabilities is quite appealing.

For example, an aerospace manufacturer had a bottleneck in a critical area of the shop that required high-skilled resources to function which created significant past due and unhappy customers. This client purchased a robot and invested in high-skilled talent to modify the robot to work for their needs and connect it to their systems. They were able to program the robot during the day and run lights out on second and third shift, quickly resurrecting their customer service and supporting future growth.

As companies expand and upgrade the use of ERP and related technologies, they can create unique value for customers and in their supply chain. Taking it a step further, to thrive during these turbulent and inflationary times, it is important to automate, digitize, reduce repetitive labor requirements, increase efficiencies, and standardize so that more can be achieved with fewer resources. The best companies engage their people and connect with customers and suppliers to upgrade the end-to-end customer experience.

Originally published on Smartindustry.com on November 17, 2023.

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Given the succession of unforeseen events in recent years, from the blockage of the Suez Canal by the Ever Given ship to the supply crisis during the pandemic, Lisa Anderson, president of supply chain consultancy LMA Consulting Group, believes that companies must be more proactive and take the initiative instead of simply reacting when something happens and it’s too late. “That means establishing alliances and regional supply sources, better planning inventories and being at the forefront of technological advances.”

Lisa Anderson was quoted in EL PAÍS.

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This is how companies deal with the Red Sea crisis: planes, storage, and closest suppliers

The impact on inflation still seems limited, and major stock outages are not expected, but experts and those affected agree that the key will be the duration of the conflict.

The rain of drones loaded with explosives and Houthi missiles on merchant ships in the Red Sea has turned the once boring and reliable maritime industry into a focus of uncertainty and negative surprises , with unexpected delays due to route changes, cost overruns due to the increase in the cost of freight, and sky-high insurance against the possibility that the cargo never reaches its destination. It is exactly the opposite of what companies intend in this way, which place their orders months in advance so that they can be delivered on time by heavy container ships, slower but cheaper and with more cargo capacity than airplanes.

As the crisis becomes more chronic, the list of those affected continues to grow. The sources consulted point out that despite the magnitude of the detour of the ships, forced to avoid the Suez Canal and make a detour around the Cape of Good Hope that implies at least nine more days of travel, the impact is not yet dramatic or for global economic growth or inflation. “The first estimates suggest for now that the impact of the Red Sea crisis on inflation will be moderate, with an additional rise of a few tenths this year and an impact mainly focused on imported goods,” explains Ángel Talavera, chief economist for Europe at Oxford Economics. The Bank of Spain also lowers the volume of the shock: it believes that fragile global demand and the absence of congestion in the logistics industry will prevent the traffic jams of yesteryear.

The key word, however, is that still : if the US and EU military missions do not achieve their objective of returning security to the area, the consequences could be very costly. At the moment, they already involve uncomfortable surcharges and hasty adaptations. This is the case of automobile companies, with a supply chain based on the just-in-time model , and less accustomed to storage. “Some automotive suppliers installed in Spain are being affected by delays in the components or raw materials necessary to manufacture them, as well as an increase in costs by having to resort to air transport instead,” the employers say Sernauto.

The crisis cabinets have not stopped meeting to minimize the blow. “Being a tremendously flexible and resilient industry, they are already adopting measures such as increasing stocks , readjusting transit times, advancing orders to suppliers and contingency plans,” adds Sernauto. Companies such as Tesla, Volvo and Michelin have already announced temporary stoppages in some of their production plants in Europe due to not having the materials they need on time. This will translate into thousands of fewer cars manufactured, between 5,000 and 7,000 in the case of Tesla and the pause of one of its factories in Germany.

“Non-urgent orders are being postponed, the key variable is the duration,” say sources from the business association CEOE. Talavera agrees. “The precedent of 2021-22 tells us that there are risks of an exponentially higher impact if the crisis is sustained over time and the blockade begins to create disruptions in supply chains. “Europe imports liquefied gas from Qatar, which crosses through the Suez Canal, and a significant part of oil traffic could also be affected.”

More expensive freight and insurance

The large consumer association Aecoc warns that the impact is already significant in sectors such as food, textiles and fashion, hardware and DIY or technological consumer goods, with freight rates that in some cases have become “300%” more expensive. which adds to the higher premiums requested by insurers, who sometimes even refuse to cover the risk of shipments.

Even so, the employers assure that for now there will be no shortage of stocks , that is, that shortages will be avoided. “In recent weeks, companies have focused their efforts on anticipating purchases of raw materials, looking for new suppliers in closer geographic areas and managing their supply through new routes and other means of transportation as an alternative to maritime transportation,” they point out.

From the Spanish Federation of Food and Beverage Industries (FIAB), they detect that warnings are growing for companies that import to increase their safety stock due to expected delays, and they perceive that the merchandise in warehouse is expanding due to the greater transit times. As more time is spent at sea and less available, the difficulties in obtaining space also increase, despite the fact that the number of new boats sailing has grown in recent months. “The direct impact is on the routes with Asia and the Middle East, but there is also an indirect impact on the route between Europe and America due to the shortage of containers and ships,” FIAB sources say.

The perfect storm is completed by the celebration of the Chinese New Year in February, a period that historically involves a slowdown in production, limited transportation operations and supply chain disruptions. And with the problems in another key artery, the Panama Canal, which has limited the passage of ships due to a severe drought. “Container ships are also diverting to the ports of Los Angeles and Long Beach, and transporting those shipments across the US to the East Coast. Air freight is increasing for urgent shipments and manufacturers are experiencing delays,” explains Lisa Anderson, president of supply chain consultancy LMA Consulting Group.

Given the succession of unforeseen events in recent years, from the blockage of the Suez Canal by the Ever Given ship to the supply crisis during the pandemic, Anderson believes that companies must be more proactive and take the initiative instead of simply reacting when something happens and it’s too late. “That means establishing alliances and regional supply sources, better planning inventories and being at the forefront of technological advances.”

Minor impact to the pandemic

The investment manager Federated Hermes expects that the economic impact of the interruptions will be accentuated in the first two months of the year because cheaper trips contracted before the attacks in Israel are replaced by current ones at higher rates. In context, the cost overruns are even lower than those of the supply crisis closest in time. “The recent increases in container shipping rates are significant, but do not come close to the sharp increases in 2020 and 2021 during the covid-19 pandemic.”

Then, as now, shipping companies were the big beneficiaries , multiplying their income and reaping increases in profits accompanied by strong increases in the stock market. On the losing side of the Red Sea crisis, the insurer Crédito y Caución places European manufacturers in first place. “They import a wide range of intermediate goods from Asia-Pacific, such as electrical equipment, high-tech goods, rubber and plastics, chemicals and machinery. If the crisis continues, waiting times, prices and congestion at ports are likely to increase. This may accelerate the return to a greater willingness to maintain higher inventory levels out of an abundance of caution,” they note.

See the original article here.

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