Above the Fold: Supply Chain Logistics News (June 11, 2021)

I gave my kids a summer challenge: memorize your Social Security numbers.

My three older kids are all working this summer, and whenever they have to fill out a form that requires their SS number, they text me: What’s my SS number? As if I have them all memorized.

To be fair, I’ve given myself a summer challenge too: memorize all of my kids’ cell phone numbers. 

They’re all programmed into my cell phone, but I don’t have them memorized. Yet, I still remember my childhood telephone number from the 1970s when I was growing up in Brooklyn, NY.

Some numbers you just never forget.

Moving on, here’s the supply chain and logistics news that caught my attention this week:

Biden: Supply Chain Disruptions Task Force

Back in late February, President Biden issued the “Executive Order on America’s Supply Chains.” It required key industries to review potential vulnerabilities in their U.S. supply chains to prevent future shortages like we experienced during the coronavirus pandemic. This week the administration announced key findings from the reviews directed by that executive order. There’s a lot of information in the press release and the report, too much to cover here. But here are some excerpts and highlights:

To address vulnerabilities in the supply chains of the four critical products identified by E.O. 14017 [semiconductor manufacturing and advanced packaging; large capacity batteries, like those for electric vehicles; critical minerals and materials; and pharmaceuticals and active pharmaceutical ingredients], the Biden-Harris Administration will immediately:

— Support domestic production of critical medicines
— Secure an end-to-end domestic supply chain for advanced batteries
— Invest in sustainable domestic and international production and processing of critical minerals
— Partner with industry, allies, and partners to address semiconductor shortages

As the United States and the broader global economy emerge from the pandemic, we have seen signs of new pressures on supply chains due to changes in demand. While these short-term supply chain disruptions are temporary, the President has directed his Administration to closely monitor these developments and take actions to minimize the impacts on workers, consumers, and businesses in order to bolster a strong economic recovery. 

To address these challenges, the Administration will establish a new Supply Chain Disruptions Task Force to provide a whole-of-government response to address near-term supply chain challenges to the economic recovery. The Task Force will be led by the Secretaries of Commerce, Transportation, and Agriculture and will focus on areas where a mismatch between supply and demand has been evident: homebuilding and construction, semiconductors, transportation, and agriculture and food. The Task Force will bring the full capacity of the federal government to address near-term supply/demand mismatches. It will convene stakeholders to diagnose problems and surface solutions—large and small, public or private—that could help alleviate bottlenecks and supply constraints. 

Again, there is a lot to digest here. 

This is Supply Chain Design on steroids. And like all supply chain design efforts, there are many factors and trade-offs to consider: labor skills, availability, and costs; transportation infrastructure, lead times, and costs; import and export regulations; duties and taxes; availability and cost of raw materials; availability of local suppliers; energy reliability and costs; geopolitical risks and factors; and much more.

Nonetheless, although many companies regularly review their supply chain design and risks/tradeoffs, I believe that having a national-level discussion about supply chain resilience is important. At a minimum, it places a spotlight on big issues that have been ignored for a long time, such as the poor state of our country’s transportation infrastructure. As one of our Indago stated last November, “Transportation infrastructure is definitely the burning platform that is most likely to cause catastrophic failures in the supply chain.” [See “Supply Chain Election Issues (Insights From Indago Members)” for more comments].

Also, for related commentary on this topic, see the highlights of my recent conversation with Chris Jones from Descartes on “How Vulnerable Is Your Supply Chain?” and link through to watch the full episode.

Supply Chain Operating Network News: Transporeon and E2open 

The scope of Supply Chain Operating Networks continues to expand, both organically and via acquisitions.

Transporeon (a Talking Logistics sponsor) announced this week its acquisition of TNX Logistics, “an innovative start-up in the field of autonomous procurement.” Here are some details from the press release:

Founded in 2016, TNX offers a turn-key data science powered platform for road transport. The company’s software allows shippers and forwarders to autonomously procure up to 90% of spot volume. To do so TNX uses data and behavioral science to equally support shippers, forwarders and carriers to better match capacity in an increasingly dynamic market. 

A growing number of shippers, forwarders and carriers move away from long-term rigid assignment strategies and build competencies for more dynamic and fully automated approaches (spot-market, spot-tenders increasing etc.). Pricing in logistics is historically less mature than in other sectors due to fragmentation and low degree of digitalization. Over the last 18 months Transporeon has increasingly invested in this area, with products like price prediction, lane 360 and its smart transport allocation initiative. TNX’s autonomous procurement service will provide a logical enhancement of Transporeon’s Ticontract tendering offering as well as its spot assignment product Transporeon Best Carrier. It will also provide an entry service to connect onto its digital platform. 

Although the majority of freight still moves via contract carriers at negotiated rates, what happens when your primary carrier rejects your load tender and you exhaust your routing guide? What usually happens is that automated processes break down, leading shippers and carriers to engage in often manual and inefficient ways to match loads with capacity. The net result is typically higher costs, delayed shipments, and sub-optimized utilization of trucks and drivers.

However, there is a technology-driven transformation happening in the industry right now. You’re seeing it in how digital freight brokers are integrating with transportation management systems, and you’re seeing it with network-based providers like Transporeon and others who are enabling smarter, faster, and more automated ways of matching freight demand with capacity across their own connected networks of shippers and carriers. Stay tuned for more on this topic.

Meanwhile, E2open (a Talking Logistics sponsor) announced “the release of its second quarterly technology update of 2021, with added process automation and expanded artificial intelligence (AI) innovations to help clients and their partners make better, faster and more efficient decisions.” The press release covers many new capabilities, but here are the ones related to Transportation & Logistics:

  • Enhancements to ocean booking functionality now enable shippers to select additional service offerings from specific carriers when booking an ocean shipment. These new options, such as additional insurance or a shipment guarantee to prevent potential rollovers and delays,streamline business processes and help mitigate ocean shipping risks.
  • E2open’s transportation management system (TMS) now captures relevant trade compliance data for parcel shipments, streamlining customs clearance for international moves and mitigating potential fines.
  • A new capability enables non-vessel-operating common carriers (NVOCC) to respond quickly to requests for quotations for multi-lane ocean shipments reducing the need to input manually each request and simplifying the sell rate calculation process.

The second item relates to cross-border e-commerce, which remains a fast-growing segment of the market. For more on this topic, check out “The Future Of Cross-Border E-Commerce,” which presents some highlights from an E2open webcast I participated in earlier this year.

And with that, have a happy weekend!

Song of the Week: “Better” by Michingander