As the globalization and complexity of supply chains advance, so must its optimization, especially for companies that process freight shipments between the U.S. and Asia.

These companies are heavily scrutinizing transportation costs in East Coast and West Coast seaports—and inland cities with strong transportation links—locating facilities in markets best able to serve established and emerging "megapolitan" areas in a quick, cost-effective manner, according to the latest report from CBRE Group, Inc., Transportation Cost Equivalence Line: East Coast vs. West Coast Ports.

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.

President Obama on Friday signed a $10.8 billion measure that will fund highway and bridge repairs for the next ten months.

 

The short-term measure, approved by lawmakers last month, is paid for using a budgeting maneuver called pension smoothing, which allows corporations to reduce their contributions to employee retirement plans. By allowing companies to do so, the government can boost tax revenues since companies are no longer eligible for tax deductions.

The Highway Trust Fund risked running out of money this month had lawmakers not approved additional funding, endangering thousands of construction projects and jobs.

A Chicago man took home $276,000 this spring after he won the lottery three times in three weeks. In each case, it all boiled down to being in the right place at the right time.

 

This man’s good fortune was pure luck. There’s no way he could have predicted that the cards he randomly chose at that moment in time would make him hundreds of thousands of dollars.

 

But business does not happen by chance. Getting the right merchandise in the right stores at the right time in the hopes of a big payoff used to involve lots of manual work, combined with a bit of wishful thinking.   Sure, some aspects of stocking the shelves were obvious: loading up on winter coats in October and patio furniture in the spring, for example. 

Becoming a trusted advisor to the business, driving supplier innovation, and focusing on risk management are some of the ways that the top procurement organizations outperform their peers.

Research from the Hackett Group found that "world-class" procurement departments operate at almost 20 per cent lower cost as a percentage of spend than the average company. "They also have 27 per cent fewer employees," the report said. "But world-class procurement organizations may have reached the limit of their ability to reduce costs." 

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. 

There are many factors to take into consideration when opening a new warehouse facility. From location and build to storage requirements and labor force availability, making the right choices in regards to both warehousing and distribution methods could make all the difference for your company.  While the below are what we consider the most important, this list is certainly not all-inclusive. 

The U.S. Transportation Department’s Pipeline and Hazardous Materials Safety Administration has proposed revising hazardous materials regulations when it comes to return shipments of certain hazardous materials by motor vehicle. 

The proposal is for a definition for "reverse logistics'' for hazardous materials that are intended to be returned to or between a vendor, distributor, manufacturer, or other person for the purpose of returning for credit, product recall, replacement, or similar reason, for instance, from a retail or wholesale outlet. 

Chinese investment in the United States manufacturing sector is speeding up as the mainland's cost advantage has been eroded, given increasingly abundant energy resources from the shale oil boom in the US.

 

Sharp wage increases, lagging productivity growth, unfavourable currency swings and a dramatic rise in energy costs had shrunk China's cost edge over the US to 4 percent, said the Boston Consulting Group.

The Federal Aviation Administration says it is seeing an uptick nationally in close calls between planes and drones. Hobbyists must fly their drones below 400 feet and within line of sight.

 

Meanwhile, the FAA is reviewing commercial use of drones and testing commercial drones at six sites across the country.

 

A New York congressman recently got into trouble for using a drone to take photographs over his wedding. And a drone carrying cellphones, marijuana and tobacco was recently found outside the fence of a prison in South Carolina.

We're used to instant access over the web to information, communication, and purchases, all of which enhance the global supply chain. But we haven't yet achieved that kind of free movement for money, particularly when transacting business with someone who uses a different form of currency. The roadblocks to foreign currency transactions now have a solution in the form of digital currency.

The biggest name is digital currency is Bitcoin. As a direct peer-to-peer form of payment, Bitcoin allows money to move freely without any fees or delays imposed by a financial institution getting in the way of transactions. It's not quite instantaneous, as it does have to clear the blockchain, a public ledger of all transactions in the Bitcoin network, though that typically is a matter of 10 minutes rather than multiple business days.

The United States still has the largest manufacturing sector in the world, and its market share (around 20%) has held steady for 30 years.

In fact, recent research shows that every dollar of final sales of manufactured products contributes $1.33 to the overall economy—the single largest multiplier of any industry.

Yet there is one obstacle in the way: A significant shortage of skilled workers—both now and into the future. For example, in a research survey, 67% of respondents report a "moderate to severe" shortage of available, qualified workers. Worse, another 56% anticipate the shortage becoming worse in the next three to five years as baby boomer workers continue to retire.

Kellogg recently pledged to reduce its carbon footprint, move to sustainable sourcing, and push its supply chain to reduce carbon emissions.

Among the specifics promised by Kellogg: a move to responsible sourcing of its top 10 ingredients by 2020, and an additional 15% decrease in energy usage and greenhouse gas emissions.

The promise follows pressure from environmental groups (like Oxfam America) and consumers for Kellogg to be more environmentally friendly. Kellogg’s announcement comes just weeks after General Mills made a similar pledge.

Because a manufacturer needs to understand, prioritize and weigh all of these factors – along with a supplier’s capability, capacity and financial strength – sourcing decisions for direct materials are extremely complex. 

They require a data-driven approach and the same kind of strategic and analytic thinking as a good game of chess. Unfortunately, most companies we see today approach direct materials sourcing more like checkers, with an emphasis on "piece" price that is opportunistic rather than strategic.

Global supply chain risk reached an 18 month low in Q2 2014, decreasing for three consecutive quarters for the first time since the 2008 financial crisis, according to the Chartered Institute of Purchasing & Supply’s (CIPS) latest CIPS Risk Index (CRI). Yet with the Ebola outbreak in West Africa, wars in the Middle East and sanctions on Russia amid broader instability in Eastern Europe, there are concerns that world events will conspire to reverse the improvement in supply chain risk in Q3 and undermine the global economic recovery.