It’s the beginning of June, almost the halfway mark of 2021. How did we get here so fast?
As we begin the sixth month of this year, may the days and weeks ahead, through hard work and the courage to change and innovate, lead us to a better future.
That’s what I wrote a year ago this week. My wish for the days and weeks ahead remains the same.
Moving on, here’s the supply chain and logistics news that caught my attention this week:
- Chinese Factories Delay New Orders as Costs Rise, Risking Global Supply Shortages (WSJ – sub. req’d)
- China ousts Taiwan as Apple’s biggest source of suppliers (Nikkei Asia)
- Vietnam coronavirus outbreak threatens to disrupt tech supply chain (Reuters)
- Coronavirus surge in India hits raw materials, manufacturing across multiple industries (Supply Chain Dive)
- Transatlantic shippers get a taste of the Pacific as container rates rocket (The Loadstar)
- Truckers are getting big pay hikes, but there’s still a shortage of drivers (CNN)
- Oil prices settle at highest in over 2 years as OPEC+ keeps its output plan in place (MarketWatch)
- Descartes Announces Fiscal 2022 First Quarter Financial Results
- SAP Expanding World’s Largest Business Network
- project44 closes $202 million Series E Round, surpassing $1 billion in valuation
- Locus raises $50 million for its logistics management business (TechCrunch)
- Shippo Raises $50 Million in New Funding
- Freight forwarder sennder raises $80M at a $1B+ valuation (TechCrunch)
- DHL will deploy 2,000 Locus Robotics units by 2022 (TechCrunch)
- Instacart has a plan to use robots instead of shoppers (NY Post)
- Weary Seafarers Come Ashore in U.S. for J&J One-Dose Shots (Bloomberg)
- For DoorDash and Uber Eats, the Future Is Everything in About an Hour (WSJ – sub. req’d)
Global Supply Chains: Ongoing Risks and Uncertainties
Although the COVID-19 pandemic renewed discussions about diversifying manufacturing and supplier bases beyond China, it remains an “easier said than done” proposition.
In Apple’s case, for example, 51 of its top 200 suppliers in 2020 were based in China, “including Hong Kong, according to a Nikkei Asia analysis of the Apple Supplier List released last week, up from 42 in 2018 and knocking Taiwan out of the top spot for the first time.” The article notes, however, that “Chinese suppliers have also helped Apple build production capacity in other Asian countries as part of the company’s strategy to diversify its supply chain.”
Meanwhile, Stella Yifan Xie at the Wall Street Journal reports that “Buffeted by rising costs, some Chinese manufacturers are refusing to accept new orders or are even considering shutting down operations temporarily—moves that could put more strain on global supply chains and cause more inflation.” The article highlights surging raw material prices and difficulty finding workers as contributing factors. Here’s one example from the article:
Foshan Modern Copper & Aluminum Extrusion Co., an aluminum processing firm with around 700 factory workers in Guangdong province, said the factory is still short 70 workers even after it raised salaries by 10% this year, compared with the usual 3% annual increase before the pandemic.
“Obviously that’s still not attractive enough for many young people,” said Huang Ruifeng, a representative at the company. “Covid likely prompted more workers to stay in their hometowns instead of looking for jobs.”
Speaking of Covid, while the situation here in the United States has improved significantly, it continues to impact other countries.
For example, as reported by Reuters, “A rapidly spreading COVID-19 outbreak has left factories operating below capacity in Vietnam’s industrial northern provinces, where suppliers for Apple, Samsung and other global tech firms are located, industry sources said.”
And as Matt Leonard reports in Supply Chain Dive, “A wave of coronavirus cases in India has impacted manufacturing and production across multiple industries and regions, according to comments from executives and analysts. Williams-Sonoma CEO Laura Alber called the situation ‘heartbreaking,’ while noting the company’s production in the region has been impacted.”
Of course, as we have highlighted in recent posts, congestion at ocean ports and an imbalance of container availability (plus tight trucking capacity) add another layer of risks and uncertainties that supply chain and logistics professionals must deal with.
Overall, the global economy might be recovering from the pandemic, but it’s a very bumpy and painful recovery.
Unicorns and Networks
All of these supply chain challenges, along with the surge in both B2C and B2B e-commerce, have increased the value of supply chain technology, especially for investors.
In April, for example, Panasonic announced it is acquiring Blue Yonder for $8.5 billion. E2open announced last week that it is acquiring BluJay Solutions for $1.7 billion. And this week, project44 announced that it raised $202 million in a Series E funding round, valuing the company at $1.2 billion — which makes project44 a Unicorn, a term used by venture capitalists that simply means a startup valued at more than $1 billion.
In a blog post about the news, project44 CEO Jett McCandless writes, “I wanted to share some gratitude, first to our customers. We have more than 550 of the world’s largest retailers, e-commerce, manufacturing, chemical, pharmaceutical, food and beverage, CPG, forwarders, carriers and digital platforms on our network [emphasis mine].”
On our network.
Network. Network. Network.
I’ve been writing and talking about the Rise of Supply Chain Operating Networks for almost two decades. It seems like the market finally gets it.
In last week’s E2open announcement, for example, the company highlights the power of networks:
E2open operates a leading trade network with over 220k network participants. BluJay augments E2open’s network to include over-the-road trucking and complementary air transportation, enabling complete visibility from truckloads to intermodal shipments. Further, BluJay’s global transportation network adds 50k network participants, $40 billion in annual commerce spend and 1.9 billion annual transactions to E2open’s existing network.
And even SAP announced this week that it is taking “the first step toward creating the world’s largest business network with SAP Business Network, which will bring together Ariba Network, SAP Logistics Business Network and SAP Asset Intelligence Network. Over 5.5 million organizations will benefit from being members of this connected community.”
(SAP had a great opportunity to be a leader in this area when it first acquired Ariba, but it failed to follow through at the time; see “Ariba: At The Intersection Of Social And Business Networks.” But better late than never.)
As I wrote in April 2014, it is at the intersection of Software, B2B Connectivity, and Social Networking that companies will ultimately find opportunities for supply chain innovation.
And it is why I believe, as I wrote in January 2016, that supply chain executives need to step into a new leadership role, that of Chief Network Effects Officer (CNEO).
I’ll write more on this topic soon, but I’ll just repeat what I said last week: The scale and scope of trading partner networks, coupled with technology platforms and the “network effects” they enable, are becoming a greater differentiator in the market today.
And with that, have a great weekend!
Song of the Week: “Right Here Right Now” by Jesus Jones