President Joe Biden signed an executive order Wednesday meant to address a global chip shortage impacting industries ranging from medical supplies to electric vehicles.

The order includes a 100-day review of key products including semiconductors and advanced batteries used in electric vehicles, followed by a broader, long-term review of six sectors of the economy. The long-term review will allow for policy recommendations to strengthen supply chains, with the goal of quickly implementing the suggestions, Biden said at a press event Wednesday before he signed the order.

The action follows calls from bipartisan members of Congress and industry leaders warning about the potential consequences of the shortage. Commonly known as chips, semiconductors are used to power electronics including phones, electric vehicles and even some medical supplies. Senate Majority Leader Chuck Schumer, D-N.Y., said that “semiconductor manufacturing is a dangerous weak spot in our economy and in our national security.”

Biden met with a bipartisan group of lawmakers Wednesday to discuss the shortage and said it was “very productive.” He praised the cooperative nature of the meeting, saying, “it’s like the old days, people actually were on the same page.”

The semiconductor supply chain had taken a hit early in the Covid pandemic since much of the world’s chips are manufactured in places like China and Taiwan. The health crisis has underscored issues with U.S. reliance on supply chains abroad in many areas, and the semiconductor industry is no different. According to the Semiconductor Industry Association, a coalition backed by several chipmakers, the U.S. only accounts for about 12.5% of semiconductor manufacturing.

The shortage has already impacted several companies. Ford said earlier this month that reduced estimates from suppliers could mean losing up to a 20% of its expected first-quarter production. General Motors said earlier this month that it would extend downtime at several production plants due to the shortage and would “reassess in mid-March.” On Wednesday, ahead of the executive order announcement, however, GM CFO Paul Jacobson said the worst of the chip shortage may actually be over already.

In a letter to Biden last week, several industry associations including SIA, the Advanced Medical Technology Association and the Motor & Equipment Manufacturers Association wrote that the U.S. should incentivize new semiconductor manufacturing plants to be established in the country to compete effectively with other nations that have invested in chip production

Experts believe that blockchain will play an important part in the manufacturing supply chain, reports Manufacturing Global. 

The world as we know it has changed significantly in the last decade. As Executive Chairman of the World Economic Forum, Klaus Schwab, said way back in 2015, we are currently living through what could be considered as the Fourth Industrial Revolution.

Read the article on Manufacturing Global

Quantum technology is being used in the supply chain, reports Material Handling & Logistics. 

Quantum Computing Inc. has introduced Qatalyst, a quantum application accelerator designed to execute complex computations to optimize supply chain, logistics, and other applications.

Read the article on Material Handling & Logistics

According to Trucking Info, a new partnership between Google and J.B. Hunt Transport will enhance supply chain visibility.

J.B. Hunt Transport Services is teaming up with Google to use artificial intelligence and cloud technology to better connect shipments and available capacity.

Read the article on Trucking Info

The supply chain was already fractured before Covid-19 – but the pandemic that has been plaguing the globe for over a year made it worse. At the start of the pandemic grocery stores could not stock their shelves fast enough which created a shortage of toilet paper, cleaning supplies, and food. One year later – shelves are stocked, but vaccine distribution is creating challenges for the industry causing disruption to vaccine deliveries.

When I previously wrote about this topic – the fracture was at the beginning of the chain. Pfizer was having difficulties sourcing the raw materials needed to create the vaccine itself. According to Pfizer’s spokeswoman Amy Rose, “We [Pfizerhttps://www.fox35orlando.com/news/thousands-of-wasted-vaccines-reported-in-florida">Fox News estimates Florida alone has wasted over 3,500 doses.

There’s not one main cause that is leading to these shortages. In some cases the refrigerators that have stored the vaccines have malfunctioned. In other cases people do not show up for their appointment leading to extra doses.  Furthermore, states are adhering to strict guidelines as to who is allowed to get the doses.

So how do we solve this problem? One of the issues is the amount of vaccines that each state receives. "We do need more vaccine. There's not enough of it in this country at this time to meet the demand," said Dr. Marjorie Bessel, Banner Health's chief clinical officer. Because there are not enough vaccines in the state, it makes it even more crucial to ensure that every vaccine gets used.

Another issue is relaxing the strict guidelines when it comes to doses that are about to expire. I am not suggesting that just anyone can sign up for a vaccine, but I am saying that if given the choice between throwing a vaccine out versus giving it to a healthy 28 year-old – why waste it? A few pharmacies around the country agree and have created waiting lists for any leftover doses.  “If there are people available at the end of the day to be vaccinated, then you should vaccinate them,” D.C. Health Director Dr. LaQuandra Nesbitt stated.

Is this the last of the issues when it comes to the vaccine supply chain? Probably not. But according to Jeff Macias, a professor at the W.P. Carey School of Business at Arizona State University – it will improve. "When we expand everything to allow everybody to go through the queue, you're going to see the same supply-demand issues that we're seeing today, and it might get a little bit worse than it gets better,” he says.

In today’s business environment, repeating the same strategy, over and over again- even if it has been working well- will no longer assure you success. There is always pressure to compete in a challenging environment. There is also a need to contain spiraling costs and produce results, regardless of the problems in the business environment. Rather than merely improving your operations, you must transform completely. You have to stay in touch with the ever-changing business landscape. As we embark on a new year, here are some approaches that you need to consider for your supply chain business.

• Establish a supply chain council

Every successful business needs proper leadership. This can only be achieved in supply chain business by engaging a group of people with knowledge in this area. An internal supply chain council will help lay out a strategy for the efficient running and functionality of your organization. Engage an internal team from each department depending on the size of your organization.  The membership of the council should include the executives, and departmental managers, and other influential figures. These individuals must hold regular strategy meetings to give direction and align the supply chain strategy to the organization's primary mission and vision.

• Ensure there is adequate staffing

Staffing is the most critical aspect of supply chain operations. It begins with obtaining the right people and training them in all aspects of the supply chain. Organize staff to supply chain functions in a manner that will maximize operational effectiveness and bring benefits to your company. Your company is best served by employing proficient supply chain professionals in different departments within your organization. Whether centralized or hybrid approach, correct staffing is crucial for success. Hire managers who are strong in communication and management of relationships, both internally and externally, and with the ability to think strategically to create value.

• Take advantage of technology

The rising customer demands in the world today require companies to take advantage of technology to enhance efficiency and structure workflow and processes. Review your organization’s processes and identify those that can be improved by technology. Implement a technological platform that best satisfies customer needs and builds efficiency in operations.

• Build alliances with suppliers

No supply chain company can succeed without building a good alliance with key suppliers. The alliance must be built to enable two-way communication where all parties work together to enhance the buyer/supplier relationship. This is often called alliance management. It provides a mechanism where the supply chain issues can be sorted out and continuous improvement goals established. Ensure that performance measurement objectives are met and the alliance management program is strong.

• Optimize your inventory

The current economic challenges mean that financial teams and managers must continuously look for a new way to improve their operations and reduce working capital. One way of doing so is to continually review the inventory quantities and keep them at a sustainable and optimal level. The best supply chain companies pay attention to inventory to ensure no item lies idle in the warehouse. Poor planning, lack of forecasting, and failing to monitor the inventory are the leading causes of lack of balance in the needs of a business. Accordingly, companies must emphasize demand planning and forecasting as a way of ensuring optimal inventory levels.

• Practice social responsibility

Like other organizations, the responsibility to society must always be on the table for a supply chain company. Be aware of the carbon footprint throughout the supply chain and consider the environmental impact of your operations and the suppliers you choose—work towards uplifting the less fortunate. Also, try to establish policies and procedures that seek to improve friendly workplace and employees.

Supply chain industry is no longer what it used to be back then. It is now more complex than ever and the ever-changing socio-economic and market factors have made it even more unpredictable. In the face of the world’s biggest pandemic arguably never witnessed before in human history, the supply chain has faced untold challenges made even worse by a more connected world where no country can survive alone. For a supply chain organization to respond to the changes in demand and the rising protectionism, one must devise new strategies and new variables. Here are some strategies that you may need to improve your supply chain:

• Adopt a demand-driven planning approach that is based in real-time demand

Prediction of demand is an important component of the modern supply chains. As such, there are many tools that have been brought forward just for this function. For example, the artificial intelligence (AI) technologies and the internet of things (IoT) allow supply chain management teams to assess the market and take action faster. It also enables them to automatically adjust based on historical data presented by big data and machine learning systems based on real-time insights. With the adoption of cloud computing, things look promising as big data is now becoming a useful way of assessing the markets and making decisions regarding planning based on available insights. Cloud allows unified data models to be created and augmented by external sources therefore enabling advanced predictive capability.

• Fine-tune your company’s response plan

Challenging times calls for stringent measures that will help your organization move towards the recovery; that should always be the mantra. With the coronavirus pandemic that has left many organizations struggling, it is a perfect time to fine-tune your company’s response plan to meet the new challenges. Take the lessons that you have gained from the pandemic and use them to strengthen our organization’s action plan. Think critically on how you are going to ensure continuity of business and fulfillment when faced with certain challenges. Determine if you are in position to maintain the information flow and how employees’ health will be fostered.

• Optimize product design and supply management

A new era where different functions of an organization such as product development and supply chain management are run together is here. This enhances competitiveness and leads to the design of a product that meets the demand of the customer. With the success of the product hinging around the development of products that captivates customers, delivery of products at the right time and within the correct state cannot be overlooked because it also determines success. Such collaborative efforts as well as well-thought procurement practices such as supplier pre-qualification can help supply chain companies ensure product is in the right state from start of the manufacturing process to the end. Integrating all processes from design to supply chain planning can increase product revenue and reduce expenses.

• Know your suppliers

The COVID-19 pandemic has taught many companies lessons of their lifetime. One of the biggest lessons is on the importance of supplier diversification and why it is important to understand suppliers from all tiers. Many companies failed to deliver the products ordered by the customers due to overreliance on a single supplier. With the pandemic however, many have learned that relying on a single supplier is not good for the customer and the business. Know the suppliers and their resilience in an event of a disaster.

• Ensure supply chain visibility

A lot of talk on supply chain visibility has made headlines this year. With the right design and technology, visibility can be made possible. This eliminates data siloes and bottlenecks while building capabilities that allows tracing and insights into your business operations. How visibility is used counts as it enables identification of risks. Visibility is good for both customers and suppliers because it allows sensing of change and using it as a competitive edge. It is a source of resilience.

Supply chains are a lifeline to your businesses. Therefore, just like any other thing that people depend on, they are prone to changes. In supply chain, technological integration and digitization are some of the aspects that have been acquired substantially, leading to notable changes. More and more competitors benefit from the ever-increasing efficiencies that are enabled by the processes of automation. Since March, we have seen the impact of the coronavirus pandemic and how it has impacted the supply chain. As people started buying and hoarding essential goods in bulk, supply chains struggled to keep up with rapid changes. The pandemic is expected to change the supply chain industry for good, and some of these changes might be irreversible. The question is, are you ready? Here are some of the supply chain trends that you should expect from now going forward.

• Analytics and analysis

 Big data and analytics has become one of the leading areas of interest for supply chain today, and it will continue being so. The data that businesses receive from the customers and from daily transactions provide you with the ability to improve on products and services. It also enhances operations, hiring practices, building better marketing campaigns, and others. As a company in the supply chain sector, analytics will help you streamline your operations from purchasing of raw materials to the delivery of the final products to the customer.

• Apps will transform supply chain

Applications have enhanced many industries and how they do their work. The same is expected to be the case for supply chain industry. The use of apps is transforming business practices by providing business owners and users with the ability to access real-time information to prevent delays and losses. It enables transparency by allowing customers to view products from every level of the supply chain with regard to the status of the products from origin to destination.

• Artificial intelligence (AI)

AI has become one of the leading technologies being adopted in supply chain today. This is expected to be the case for foreseeable future as companies seek ways of optimizing supply chain. AI will help supply chain reduce or eliminate human error, create efficiency and reduce the cost of operation by automating tasks. AI has the ability to notice patterns and use them to eliminate redundancies, predict customer demands and optimize inventory management.

• Blockchain will play a critical role in supply chain

Blockchain is a game-changer in supply chain today. It has become one of the best methods of protecting data and information from manipulation or editing. This technology is protecting data from hackers and malicious individuals who might want to carry out espionage activities. Blockchain allows only those permitted in a network to access information, therefore adding another layer of protection. The adoption of blockchain technology allows companies to securely manage invoices and payments in one platform and can also ensure safety of products in transit.

• Internet of Things (IoT)

When talking about blockchain technology and its use in supply chain, it is hard not to talk about the internet of things. IoT, just like blockchain is the future of information technology and supply chain in particular that cannot be ignored. This technology, altered it has not completely made its way in supply chain processes will be used in a variety of ways. Some of these ways include real-time tracking, demand management, and checking the state of products that are in transit. IoT can be used in manufacturing and logistics processes, managing demand, preventive maintenance and sourcing applications. This will minimize downtimes, ease management of customer behavior and managing demands of the customer.

The coronavirus pandemic has affected every industry in the world in ways never experienced before. It has forced governments and other authorities to take stringent measures to control the spread of the virus. Some of these measures include lockdowns and restriction of movement of people and goods. With these restrictions, the demand for goods and services has gone down, and the supply chain has been substantially affected. As the vaccine rollout gathers momentum, what remains to be seen is how the supply chain will perform after the pandemic.  

The trade restrictions are nothing new. There have been some restrictions before, such as the U.S-China trade war and trade sanctions that increased economic nationalism. However, those are minor compared with the one caused by COVID-19. These restrictions have led to shortages of pharmaceutical and medical supplies, which are in need now more than ever due to the persistence of the infections. As a result of this, manufacturers are under pressure to increase their domestic production while those overseas are looking for ways to ship their products to their customers in time despite the pandemic. Despite these challenges, there is one advantage that the pandemic has brought- it has exposed weaknesses in the current supply chain that needs to be corrected in the future.

The challenges during COVID-19 showed that the interdependence or global nature of supply chains is a weakness as much as it is a strength. They highlighted that most organizations are not wired to manage interconnectivity in case of disruptions and adverse impacts. In short, the pandemic has shown us that if companies are to be resilient in the future and thrive, they need to change.

Beyond the economic and operational challenges highlighted by the pandemic, no change has been experienced yet. However, we expect that the changes in our supply chains will happen faster than it would have been the case had the pandemic not occurred. As a starting point, companies must recognize the shifts in customers, business operations, workforce and technologies. Although we still do not know the pandemic's long-term effects, what is clear is that it has helped fast track the necessary shifts in customer value and requirements.

Post-pandemic, many companies will likely change their strategies regarding supply. As it has emerged, relying on one company to supply products leaves your network vulnerable. It is even worse when the supplier that produces a given item is in one country. A disruption in such a scenario will be disastrous. Stand by identifying where risks lie so that you can develop a plan to protect yourself from them. As we advance, you will need to map your supply chain. The process should entail distribution facilities and a transportation hub. The goal of mapping is to categorize suppliers as either high-risk or low-risk. Identifying these risks gives you the information needed to diversify sources or stockpiling, which is necessary to address potential disruption.

The easiest way to address the problem of dependence even after the pandemic will be to add more sources in locations that will not be vulnerable to risks, regardless of whether they are low or high-risk. This has proven successful in the past, mainly when the US-China trade war forced companies to adopt a “China Plus One” strategy of spreading production between countries in China and other Southeast Asian countries such as Vietnam, Indonesia and Thailand. From now on, reducing dependence on one country such as China will reduce the risk of completely failing to deliver in case of a pandemic or other disruptive events. Although it will be a good thing, reducing dependency on China will not be easy on some products.

In a nutshell, although the pandemic has damaged many things, it has exposed lots of vulnerabilities that must be fixed if we are to stand future risks and disasters. Although we should not depend so much on globalization, we should not completely back away from it as it has its strengths. However, we should never depend too much on some countries and routes for the supply of products.

Modern logistics is not only complicated but challenging as well. As such, shippers must be prepared at all times to identify the roadblocks that hamper their productivity and solve them in time.  With regard to outbound logistics management, logistics firms must navigate through hurdles raging from end-user demands to change in operational costs.

Below are some logistics roadblocks that affect smooth and effective logistics programs that must be avoided if delivery of service is to succeed:

• Failure to understand policies

Policies are always necessary for the effective running of operations in any organization. However, failure to understand your own policies and procedures concerning inbound freight and how needs can be solved can become a challenge. Most companies have inbound shipping policies that help reduce issues associated with safety, job accidents, and inventory controls. The biggest roadblock here is vendors who do not understand the policies and procedures. This can be solved by having access to strict, high-quality instructions on how shipments should be handled. Such can be handled by an effective logistics guide that details how specific scenarios can be approached.

• Lack of effective TMS solutions

According to Peerless Research Group, almost half of supply chain companies have no plans to use or even pursue transport management systems (TMS). This means that these companies have challenges when it comes to the management of inbound and outbound cargo. On the other hand, while approximately 54% of logistics firms run metrics regarding inbound cargo, these metrics may be lacking. While there are many systems that can manage inbound logistics, some stakeholders see no value in them or lack proper metrics and TMS.

• Overdependence on metrics

Although metrics are critical in developing a strong inbound logistics management, the truth is that they should not be seen as a solution to everything. A major problem that several shipping companies face is that once they have these platforms, they depend too much on them in determining the effectiveness of their logistics programs. It is important to seek education from other sources such as your employees and vendors when trying to develop policies and procedures that impact the safety and effectiveness of your operations.

• Communication breakdown

Any successful logistics program or even company must have open and transparent communication throughout the supply chain. Sadly, communication breakdown is real, and some of the logistics firms often lack proper and clear communication in their internal environment- where departments fail to communicate with clarity. Most organizations still use outdated traditional platforms to communicate. These communication gaps causes missed deliveries, issues with inventory control, accounting problems, and lost businesses.

• Lack of collaboration between departments

Collaboration between departments is crucial in the management of outbound products. However, there is often a disconnect between departments, which leads to a loss of cost-saving opportunities. This leads to the rise in inventory levels or failure to meet the customer's demands and loss of profits. Shippers can maneuver this by removing the silos, which causes inefficiency. Doing so enables a better flow of procurement products and orders.

A final word

As a logistics firm, ensure that customer service is key. Any strategy that fails to solve customer problems would crumble. Saying “the customer comes first” does not solve anything. Instead, logistics companies must identify the needs of every customer and roadblocks that can affect service delivery. Since every customer has different needs, logistics companies cannot use a blanket solution to meet the demands of all the customers. Take advantage of TMS and ensure there are no silos that may hamper communication and decision making in the organization.

The United States Department of Transportation recently issued two new rules regarding drones, aimed at keeping the public safe. The Federal Aviation Administration released a press release on December 28^th  that outlined the newest rules regarding Unmanned Aircraft (UA) or drones.

Under the new rules, all drones must have remote identification ensuring that law enforcement and national security the ability to identify the drone. The remote identification will act as a type of “digital license plate.” The guidelines state that operators are expected to carry their remote pilot certificate and identification when deploying their drone ready to present it if asked.

The second rule would allow small drones to fly over people and moving vehicles as well as at night under certain circumstances. 

"These final rules carefully address safety, security, and privacy concerns while advancing opportunities for innovation and utilization of drone technology," Secretary of Transportation Elaine L. Chao stated.

The Association for Unmanned Vehicle Systems International applauded the FAA’s new rules and regulations. The President and CEO Brian Wynne explained that the new regulations “will have additional untold benefits for American society."

Those who use drones recreational are not too keen on the new FAA guidelines. Some called them confusing while others complained that the cost would prohibit some people to fly drones recreationally. “This was done to benefit companies like Amazon while making it harder for small operators,” complained @AltFawkes on Twitter.

According to the press release, unarmed aircrafts are becoming the “fastest-growing segment in the entire transportation sector.” With 1.7 million registered drones and 203,000 FAA-certified remote pilots,  these rules offer drone operators flexibility that has been sorely needed. 

If the end goal is to use drones to solve the “last-mile delivery” problem – the FAA guidelines are one step closer. FAA Administrator Steve Dickson explained, “The new rules make way for the further integration of drones into our airspace by addressing safety and security concerns.” He added the rules, “…get us closer to the day when we will more routinely see drone operations such as the delivery of packages.”

Drone technology has been lucrative as it’s seen as the future of the supply chain industry. Supply chain giants like Amazon, UPS and Walmart have been scrambling to test the latest technology so they are ready when drones become widely used.

In November of 2019, UPS Flight Forward successfully delivered their first prescription delivery from a CVS pharmacy in North Carolina to a patient’s home nearby. “This drone delivery, the first of its kind in the industry, demonstrates what’s possible for our customers who can’t easily make it into our stores,” former CVS president Kevin Hourican said at the time.

The new FAA drone regulations will take effect 60 days after they are published in the Federal Register next month. From there, manufacturers will have 18 months to start producing drones with remote identification. Operators, have an additional year after publication to start using these drones with remote identification.

For general inquiries on these new regulations and other UAS inquiries, please call 844-FLY-MY-UA or email the FAA.

Supply chains make up an important part of businesses today. According to industry professionals, supply chain and logistics were key to better customer service in 2020. As the new year begins, there are exciting trends that will shape the logistics sector and supply chain in general. For this reason, this article highlights changes that are expected in 2021 in the retail sector and their potential impacts.

1. Logistics will be driven by e-commerce.

Industrial logistics has been one of the most resilient sectors amid the coronavirus pandemic, that led to the rise in eCommerce demand. With the pandemic, the eCommerce grew to 44% in Q2 of 2020 from just 14% in Q1. With this rising demand, pressure has been on the retailers, wholesalers, and logistics companies to find ways to fulfill the customers' demand while ensuring the cost of operations is as low as possible. Heading toward 2021, this will continue being the trend because many transactions are going online. According to CBRE Research, there will be a high demand for warehouse space in the next year, something that is already at record levels. 

• Inventory control to be a major concern

As the demand increase, inventory control will be the main focus for logistics companies as it would be for store owners, wholesalers, and retailers. The inventories will be increased from the current 15 days to as high as 60 days to avoid disruption similar to those experienced this year. Companies might be forced to have stores near the customers to make fulfillment faster as they will be under pressure from the consumers to deliver items as fast as possible. The competition will also be increasing, and demand will mainly be based on the delivery of items. 

• Blockchain will be a game-changer

Security and transparency in logistics have always been the areas of concern for many organizations and customers. This is where blockchain comes into play. This decentralized technology eases the supply chain management by cutting out intermediaries, allowing the logistics companies to reach customers directly without using a third party. Blockchain also helps in the distribution of digital data with the utmost transparency. With this technology, vendors, shipping companies, logistics operators, and customers can collaborate using one platform. All data or information that they exchange is stored in one location in the form of blocks. The data is kept secure with encryption and timestamps, that link new information to the existing ones in an existing chain. Besides the security offered and reduction of fraud, blockchain also offers speed of transactions and transparency. It also reduces paperwork, that is a characteristic of logistics currently. From now on, the supply chain will be based on modern tech platforms such as blockchain to enhance transparency, cost, security, and speed of transactions. 

• AI and Machine learning will be critical.

Artificial intelligence and machine learning have brought various new processes to the supply chain and logistics. For instance, large scale automation is becoming implemented more than before in many areas to enhance efficiency and reduce operations costs. With machine learning, things such as reading, identifying, and replicating complex content that emerge in daily operations can be automated. Rather than having hundreds of employees doing repetitive tasks, automation will be embraced by supply chain and logistics companies to minimize time spent, enhance efficiency, and cut the general cost of operations. By using AI, there is the likelihood of increased productivity, easy supplier selection process, and improved customer experience. With 2021 coming, businesses will require AI and machine learning platforms to automate processes such as customer support through things such as chatbots and assistants.

Transacting business in the supply chain generally means communicating orders via EDI formatted files or some other equally rigid set of rules. The reasons are easy to understand; order times are critical and specifications for orders are complex so their formats need to adhere to formats that can be instantly read by computerized systems.

EDI requirements may be rigid but they change frequently so there’s some reason to believe that there is in fact, flexibility within the order process. But getting the details wrong causes errors and costs money. How will this tight connection fare in the age of what’s called ‘Industry 4.0’ as new technologies are brought into the mix? Is it possible that the long-standing EDI format will be replaced by directly connected machines (IoT) that avoid the details of creating and processing orders? Or will the deeply embedded format keep business at a slower pace than might be possible if things changed?

Industry 4.0

Internet of Things (IoT) is impacting manufacturing, shipping, warehousing, delivery, and even customer support by adding smart devices to things that have traditionally been, well… dumb. Dumb in the sense that they don’t communicate or have any way to sense their surroundings. That’s changing rapidly as we approach the widely touted 50 billion IoT devices expected to populate the earth by 2020. Whether any particular company wants to move toward these automated pipelines is as moot as those who declared they were not abiding by Walmart’s demand to implement EDI years ago.

Manufacturing facilities around the globe are adding smarts to their machinery or replacing old machines with newer and smarter ones that can go beyond the basics of their intended functions. They are attached wirelessly directly to their company’s management and ERP systems and communicate their current status. They take instructions about manufacturing conditions to adjust their speed and can even sense variations in the materials they work with and adjust their actions to create products that meet required specifications.

The data passed between those machines and the systems that control them amount to magnitudes of data that never existed meaning that traditional manufacturing facilities that operated manually and on a completely analog basis are becoming digital factories. The data itself presents both issues and opportunities for every point along the supply chain because it’s now possible for the end customer to be aware of the status of the product they expect to purchase, and for the manufacturing machine to know how many units it needs to build to meet demand.

Flexibility stretched

Every participant in the supply chain is being armed with more data than they have ever encountered. Their first challenge is to collect and store it; in itself a mundane IT task of managing storage and connectivity. But what is done with that accumulated data as it passes along the chain is what will define the next generation manufacturer, transport company, retailer, and even the end customer. Those that devote the time and resources to understanding, then imagining how Supply Chain 4.0 will look.

It’s been a while since Walmart first insisted that its suppliers moved to its digital order process. Back then the prospect of using EDI rather than fax or phone to place orders seemed like a technological hurdle. And in fact it was a significant hurdle that plenty of suppliers bucked against. But today Walmart’s tactics have become accepted and electronic order processing is no longer the pariah it once was. Now the retailer is making another mandate to its suppliers. But this time it’s not about what but where.

Amazon’s Web Services (AWS) has been the go-to supplier of cloud based software deployments and an overwhelming number of companies have put their online software there. It’s easy, reliable, and competitively priced. But now that Amazon is competing directly with Walmart for retail business Walmart doesn’t want the digital guts of its business hosted on a competitor’s site. That’s understandable, and in fact in 2014 the company moved its entire ecommerce presence to the cloud - and not Amazon’s cloud.

Our colleague Steven J. Vaughan-Nichols explains the move and strategy here. 

So where’s the mandate?

It isn’t enough that Walmart hosts its own data away from AWS. The retailer doesn’t want its suppliers hosting its data and the transactions they process on its competitor’s cloud either. The most recent mandate instructs suppliers to move their systems off AWS. They’re apparently fine with alternate cloud vendors like Microsoft Azure who are not direct competitors, but Amazon is a no-no. 

To be clear, the mandate (for now) is directed at tech providers. So product suppliers who host their own systems on AWS may not be affected. But the move may turn out to indirectly impact product suppliers if their EDI service providers host their applications and data on AWS.

The ripple effect

Amazon has done a great job of delivering cloud computing facilities that make it easy for companies to deploy their software services. In fact it may be the default choice for smaller EDI service providers because they can concentrate on developing their systems and delivering high quality customer support while leaving the heavy lifting of server farms and data centers to Amazon.

If your EDI provider has received a mandate letter from Walmart to shift its cloud hosting services you can bet they are scrambling to meet whatever deadlines are being required. Their revenue is reliant on delivering their customers’ transactions (your transactions) to and from Walmart and every other trading partner you deal with. And because of the depth and breadth of Walmart’s vendor base nearly every EDI service provider has connections to Walmart.

Be proactive

Don’t know if you will be affected? Ask your EDI service provider where their applications are hosted and how they are responding to Walmart’s mandate. Either your provider will need to change or you will need to change your provider if you want to keep your business relationship with Walmart.

 

Moving EDI data around the globe is old hat to most of the folks reading this ec-bp newsletter. Managing the connections and translations can get complex and picky when it comes to the details of the files and the changes that need to be incorporated into translators to make processes flow properly. For most EDI practitioners, their roles are fairly well defined and fit well with established concepts. But as mobile devices take over I think the line between what is EDI and what is associated with end user interaction is changing.

 

EDI is a significant source of big data. Of course that's no shock to anyone dealing with data storage or a VAN bill, but when you consider the volume of transactions and the number or companies involved, it would seem that there is a wealth of data in those transactions. The data now covers (depending on the trading partners) every aspect of the order process, from initial P.O. to final payment, with plenty of status updates along the way. So, what can be learned from all the data? It turns out that when looked at as an aggregate and put through the right analytical processes, there's plenty to be learned - and predicted.

Being able to use the data created by both the supplier and customer to understand the sales cycle can be a great advantage to both companies who are looking to make the most of their resources in an increasingly competitive environment. The addition of CPFR (Cooperative Planning, Forecasting, and Replenishment) can go a long way to maximizing margins and minimizing mistakes.