Companies putting cash to work as competitive pressure grows M&A plans increase as companies look to cement leadership, add talent and strengthen technologies

Optimism regarding the direction of the domestic economy remained positive among U.S. industrial manufacturers during the second quarter of 2014, according to the Q2 2014 Manufacturing Barometer, released by PwC US. In addition to the positive sentiment, PwC’s report showed a rise in capital spending plans among industrial manufacturers as they focus on utilizing their cash positions to strengthen their products, add personnel and secure technology in a highly competitive market.

One of the largest known breaches, resulting in 110 million records lost and hundreds of millions of dollars in damages, started with a small, third-party supplier. We're talking about Target, where attackers compromised Fazio Mechanical Services, a provider of heating, ventilation, and air conditioning services, to gain access to the retail giant's network. The breach lasted 19 days and contributed to a 46% drop in year-over-year quarterly profits for the company, according to Target's filings with the Securities and Exchange Commission. Nearly 100 lawsuits have been filed so far, and Target's then CEO, Gregg Steinhafel, and its CIO, Beth Jacobs, have resigned.

"The Target breach is a watershed moment in third-party attacks," says Stephen Boyer, CEO of BitSight, a security intelligence firm. "No one wants to be the next one."

IT analyst firm IDC recently released its manufacturing predictions and it’s clear that omnichannel commerce is going to have a profound effect on the market for the foreseeable future.

IDC predicts manufacturers will move quickly to upgrade their IT systems and partnership strategies, both to be more competitive in their markets and expand into new ones. In fact, IDC is so certain of this prediction that it recently launched a new practice group, Manufacturing Commerce.

Supply chain visibility for many manufacturers has gotten worse, according to KPMG’s latest Global Manufacturing Outlook titled "Performance in the Crosshairs." Forty percent of respondents to the researchers’ survey admitted they lack visibility across their extended supply chain, with 33 percent saying it was due to either inadequate IT systems or a lack of skills. The report suggests that many of the gains in supply chain visibility have resulted from stronger relationships between manufacturers and their top-tier suppliers and the willingness to share more real-time.

That 40 percent is twice the number reporting poor visibility as the number reporting the same in 2013.

Recently, I wrote about the potential of drone use in transportation. Amazon is just one of the companies exploring the use of drones for delivery applications. Qimarox, a manufacturer based in Harderwijk, Netherlands, released a video showing its vision for drones in building pallets within the warehouse environment.

 

Now comes a report from global package delivery giant DHL on the use of augmented reality. The firm’s report suggests that augmented reality has the potential to change the way logistics are handled.

A growing number of companies see the service supply chain as a way to drive revenue rather than just a cost of doing business, according to PwC’s 17th Annual CEO survey, "Service supply chain as a source of competitive advantage."  This benchmark study found that 44% of respondents to its survey drive revenue from finding innovative ways to manage warranty costs, improve service supply chain operations, and remarket repaired units.

According to this survey, 71% of U.S. CEOs are planning to remake their fulfillment and service supply chains. Also, there is a significant cost gap between average and top performing OEMs in this regard. For example, in the high technology market, where every point of margin is important, the difference in service supply chain cost as a percent of product revenue is 2.9 points.

Supply chains are frighteningly fragile. They are becoming increasingly global and highly extended networks that are prone to natural disasters, climate change, civil conflict, and a variety of common risks. 

They account for approximately 50 percent of business expenses and 75 percent of greenhouse-gas emissions for most manufacturers. And half of their revenues can be easily spent on just raw materials and packaging.

For mid-market manufacturing companies, 3D printing is becoming a hot topic. The first prototypes rolled out thirty years ago, but only recently, because of technological improvements and falling costs, has 3D printing come into the mainstream. The technology has grown at a faster pace than many expected, with a market share of $2.2 billion in 2012, up 28.6 percent from the previous year according to the 2013 Wohler’s Report. 

In fact, McKinsey Global Institute research suggests that the market could grow as large as $550 billion by 2025. Hobbyists are exploring the limits of the process to create everything from action figures to parts for home appliance repairs, but the largest impact will be felt in the manufacturing sector.

When most of the nation was scrambling to recover from damage after Superstorm Sandy, UPS had, by taking steps to mitigate risk and loss, positioned itself to continue in stride after the storm.

 

Dave Zamsky, vice president of UPS Capital, explains how UPS was able to prepare for the storm and mitigate supply chain risk: "Superstorm Sandy was a case study in mitigating supply chain risk," he says. "With a hurricane, you at least have some advance warning. Anticipating the storm would be severe, we worked with our clients to move critical freight ahead of the storm and to identify alternate locations/suppliers to divert shipments, where feasible. For one of our home improvement retail customers, we repositioned inventory and shipped 90 truckloads of fast selling hurricane supplies (e.g., bottled water, gas cans, etc.) on the Friday before the storm. For a major automotive manufacturer, we worked to identify the most critical inventory and began to pull ahead material from suppliers in the path of the storm."

Egypt said on Tuesday it plans to build a new Suez Canal alongside the existing 145-year-old historic waterway in a multi-billion dollar project to expand trade along the fastest shipping route between Europe and Asia.

The project, to be run by the army, is a major step by new President Abdel Fattah al-Sisi to stimulate Egypt's struggling economy and recalled some of the grand national programs of one of Sisi's predecessors, army strongman Gamal Abdel Nasser.

Blame it on the aging baby boomers or millennials with six-figure earning expectations. Blame it on an improving national economy and employee turnover rates that rival those at fast food joints. Or blame it on the job description, which includes long hours behind the wheel and long days away from family and the comforts of home. Whatever the reasons – and there are many – the fact is that the U.S. is in desperate need of well-qualified truck drivers.

Despite a national unemployment rate that is still above six percent, the transportation industry is having a hard time finding, hiring and retaining truck drivers. More than 30,000 job openings for truck drivers are currently unfilled, according to the American Trucking Associations (ATA), and that’s just the tip of the iceberg.

Lean manufacturing principles have been around for decades. The need to eliminate waste in an operation and reduce manufacturing costs has been a fundamental goal for many.

Simply put, lean is the reduction of waste. The seven common "waste" practices consist of: transport (excess travel), inventory (excess materials), motion (excess movements), waiting (excess idle time), overprocessing (excess steps), overproduction (making too many), defects (poor quality). In the traditional manufacturing or assembly processes, these wastes are identifiable in direct labor or materials, while in the indirect labor and manufacturing supply chain, it is more difficult to recognize. In order to evaluate potential opportunities, the organization must take a step back and look at the big picture and understand where they can find these opportunities in the manufacturing supply chain.

It's fair to say that some mouths dropped in some quarters when word got out that the vice president of supply chain for McDonald's in the UK said he had handshakes rather than formal contracts with key suppliers. In dispensing with the written word, the fast-food chain formed long-term relationships with its partners in food, packaging and distribution, and included them in planning – even helping to set prices and volumes. Said Warren Anderson, "We don’t have contracts, but we do have our very assured supply partnerships with our food and paper suppliers," he said. "A gentleman’s handshake is just as powerful here."

In today's litigious society, Anderson's comments are astounding, and no doubt strike some as naïve and unnecessarily risky. But if nothing else, they speak to an ideal that most of us would love to see: not just a partnership in which a person's word is his or her bond but one where everyone is genuinely committed to the success of the venture and all of its participants.

Global supply chains by definition are very large and include a number of vendors, distribution centers, suppliers, buyers, manufacturing plants, logistics service providers, etc. If social media is embedded in the supply chain, the supply chain can gather information from a broad base of different sources. This collective intelligence can be used to uncover evolving trends or for better-informed decision-making. One such tool to gather and disseminate information throughout the supply chain is social media.

Studies show that 1.5 billion use social media on a global basis with seventy percent of businesses using it. Of Fortune 500 companies, seventy-seven percent use Twitter, 70 percent have an active Facebook page, and 69 percent utilize YouTube. Companies are not using social media to socialize; rather they are using it to grow their business and bring value to their company and their customers. It is estimated that the potential value of social media across the value chain is more than $1 trillion annually.

Jobs in UK supply chain & logistics are increasing sharply, according to new research from one of the UK’s leading professional specialist recruiters.

Q2 data from the Robert Walters UK Jobs Index, which charts vacancy numbers posted to online platforms, shows year-on-year openings for supply chain & logistics professionals rising by 45 percent.

Added to data from the first quarter where year-on-year vacancies grew 38 percent in volume, the figures point to a strong upward trend in supply chain & logistics recruitment.