April 2019 Observations in Supply Chain Management

As we enter a new fiscal quarter of 2019, here are a few Supply Chain Management updates to consider.

Ports stable.

While an increase in protectionist trade policies, shifts in centers of production, and the advent of disruptive technologies add further complexity in global seaport throughput levels, Fitch Ratings maintain that major ocean cargo gateways remain resilient. In a report released last month, Fitch analysts note that this trend has been evident over the past decade with throughput growth outpacing economic growth rates despite volatility through the last recession. “Containerization of cargo and increasing vessel sizes coupled with supporting infrastructure at ports have all contributed to these throughput trends,” says Senior Director, Emma Griffith. “However, growth rates are slowing relative to historical averages as these trends mature, and volume growth, while expected to continue, will likely more closely mirror that of global GDP.” Regarding U.S.-China trade relations, “Primary ports of call will be able to weather the storm despite elevated concentration in Chinese trade exposure in some cases,” adds Griffith.

Cheers to that.

Thirstie, an e-commerce logistics company specializing in alcohol brands, announced the closing of an oversubscribed $7 million Series A financing round. Thirstie will be allocating the funds toward its product roadmap, rolling out a new data sharing platform, and enhancements that will enable liquor brands to offer advanced payment methods, personalized products and customizable subscription plans. In addition to the funding, Thirstie announced its integration with Drinkworks, an e-commerce company. Users of Drinkworks.com can purchase alcohol directly from the website without needing to redirect to a third-party point of sale. This streamlined capability is critical for Drinkworks, as it sells both hardware and alcohol products. Historically, liquor brands have been far removed from their consumers because of strict federal and state rules and regulations. However, with today's emphasis on e-commerce and online sales far outpacing that of brick-and-mortar, brands are working to create direct relationships with consumers and provide them “with a superior user experience.”

Sino-Italia deal.

In a move that has raised red flags in Washington and Brussels, Italy will become the first G7 country to formally endorse and become part of China's Belt and Road global investment program, According the London-based think tank, Transport Intelligence, the Italian Prime Minister Giuseppe Conte signed the Memorandum of Understanding (MOU) with Chinese President, Xi Jinping on a visit to Italy late last month. The “Belt and Road Initiative” (BRI) aims to link China by sea and land with south-east and central Asia, the Middle East, Europe and Africa, through an infrastructure network. However, Chinese BRI investments have become increasingly contentious in the EU. Officials in Brussels are concerned the program favors Chinese companies, creates debt traps for recipient states and is being used to further China's strategic influence across the continent. Several central and eastern European countries have already signed bilateral memorandums supporting BRI, including Croatia, Czech Republic, Hungary, Greece, Malta, Poland and Portugal.

Scaling down.

Last month Navis acquired Octopi, a cloud-based TOS built for small container and mixed cargo terminals. According to spokesmen, the strategic acquisition of Octopi strengthens Navis' ability to provide software solutions for its terminal customers, regardless of size. With the addition of Octopi to its software portfolio, Navis is better positioned to support thousands of smaller terminals around the world that are eager to modernize operations, yet lack the technology infrastructure and technical expertise required to support a full-scale N4 deployment. Launched in 2015, Octopi is a modern and lightweight cloud-based TOS developed exclusively for container and mixed cargo terminals with throughputs around 100,000 twenty-foot equivalent units (TEUs) per year. Currently in use at 10 sites in seven countries, Octopi promises to deliver TOS solution that enables its shippers to better manage their operations in vessel planning and yard management, track cargo and communicate electronically in real-time with their commercial ocean shipping partners.

Rebranding the Cloud.

Infor, a global leader in business cloud software specialized by industry, announced that it has rebranded its GT Nexus supply chain network as Infor Nexus, as it “digitally reinvents” the way supply chains execute and use data and intelligence to be more “customer-centric.” Infor Nexus combines the power of GT Nexus, IoT and Infor Coleman AI to deliver an intelligent supply chain network with a path to the autonomous supply chain. According to spokesmen, Infor Nexus is the first solution of its kind to combine AI, IoT and advanced visualization through an end-to-end collaborative network, providing real-time visibility and predictive intelligence. “The new Infor Nexus brand culminates the past three years we've spent transforming GT Nexus – leveraging digital technologies such as IoT, in-memory processing, mobile, advanced visualization and AI,” Rod Johnson, EVP of Manufacturing & Supply Chain at Infor.

Procurement puzzle.

Digital transformation is making it easier for procurement organizations to “do more with less,” according to newly-released Procurement Key Issues research from The Hackett Group, Inc. But there is still significant need for procurement to address its critical development priorities for 2019, including: improving analytical capabilities, aligning skills and talent with business needs, leveraging supplier relationships, enhancing agility, and achieving true customer-centricity. Researchers found that procurement organizations are showing a renewed and expanded focus on strategic sourcing and spend management in response to concerns over economic uncertainty, increased competition, and global trade issues. The research found that procurement's 2019 actual transformation focus is poorly aligned with what should be its critical development priorities; i.e. areas identified as of critical importance, but with very limited ability to address. Among those, development of analytical capabilities is a transformation focus for about half of procurement organizations. Modernizing application platforms is another top area of focus.

Measuring risk.

Supply chain risk management company DHL Resilience360 released its first annual Risk Report, which outlines the Top 10 Supply Chain Risks for 2019— a summary of threats that deserve particular attention during 2019 and beyond. Researchers note that transportation delays, theft, natural disasters, inclement weather, cyber-attacks and unexpected quality issues can disrupt cargo flows, creating short term costs and delivery challenges. In addition to global risks, like international trade tensions and the growing impact of climate change, the Risk Report is designed to provide the intelligence needed to help organizations re-evaluate their specific risk strategies and adapt their networks accordingly. Among the findings was that trade wars drive manufacturing network restructuring. “Global trade tensions have led to the imposition of new import tariffs on a wide range of consumer products and industrial components,” said analysts. They also maintain that rising demand and fragile supply creates raw material shortages.

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