Posts tagged "supply chain disruptions"

Update: The Potential Impact of El Niño on Industry Supply Chains

July 14, 2015 Posted by Supply Chain Disruptions, Supply Chain Resiliency 0 thoughts on “Update: The Potential Impact of El Niño on Industry Supply Chains”

Author: Charlotte Hicks

Peru-landslideIn January, Resilinc reported on the potential El Niño and its impacts on the global supply chain. In the last few months, we’ve started to see weather reports, possibly El Niño related events, that can have significant impacts to industry supply chains such as electronics and life sciences. As you will see, impacts in one industry can impact industries not typically viewed as related or interdependent. Below is an analysis of potential supply chain impacts to electronics, automotive, and life sciences industries, as well as upstream mining and agriculture industries.

Electronics

One of the supply chain risk impacts of an El Niño is a fluctuation in precipitation, specifically areas that normally have a high rain fall experience droughts. In these high precipitation areas, water is often used to generate electricity, which is often rationed during the weather phenomenon. A recent example or rationing and impact on the supply chain is the 2014 drought that impacted glove manufacturing in Southeast Asia (Choong, 2014). In the last couple of months, Resilinc has reported on the two troublesome drought situations in Taiwan and Brazil, which is creating water and electricity rationing that is ultimately impacting electronic component production and associated high-purity chemicals that are processed in the effected regions.

In addition, some electronics components and plating chemicals which depend on raw materials mined in Peru (see Mining below) are at higher disruption risk due to increased probability of landslides in areas that can expect higher than normal precipitation.

Finally, potential El Niño –related decreases in harvests of corn (which is used to produce chemicals used in the electronics industry such as citric acid, phosphoric acid, nitric acid, and potassium hydroxide), may impact electronic industry component supplies and prices (see Agriculture below).

Automotive

Automotive components produced in Taiwan and Brazil may also be impacted by the aforementioned potential water and electricity issues resulting from the higher probability of drought conditions. Also, some components sourced in Peru (see Mining below), are at higher risk due to increased probability of landslides in areas that can expect higher than normal precipitation.

Life Science

Similarly, biologic buffers, sucrose, and other high purity chemicals used in pharmaceuticals may be effected by drought-related water and electricity rationing. Further, El Niño impacts to the agriculture industry (see Agriculture below) which provides many of the raw materials used to create ingredients contained in pharmaceuticals, may create supply chain shortages and price pressures. Potentially impacted raw materials range from seaweed (and downstream agar production) to fish meal (and its substitutes soy, corn, and lysine).

Mining

Peru is a major global supplier of precious metals, specifically copper, silver, and gold. During years of El Niño, Peru receives more rain than normal, which makes mining areas susceptible to landslides (Taj, 2015). This could impact the availability of some key metals used in electronic components and plating chemicals and automotive components.

Agriculture

Many chemicals and raw materials are derived from agricultural products. This year, corn prices are rising due to less acreage being planted, which ultimately impacts downstream products (USDA, 2015), including even electronics. It often surprises many to learn that citric acid is produced by fermenting corn, rather than from citrus. However, in years of low corn harvests, such as those potentially impacted by an El Niño event, citric acid is one of the first materials impacted by price increases. Further, corn crops consumes approximately half of all the fertilizers produced globally. With less corn being planted, upstream materials to fertilizers like phosphoric acid and potassium hydroxide should have a stable supply.

When it comes to media, whether cell culture or plated, the life sciences supply chain is tightly dependent upon good harvests. For example, there are current concerns that El Niño is causing the water temperatures to rise in the Philippines, which could impact the seaweed harvests. While this may seem unrelated to life science, carrageenan seaweed, the primary seaweed grown in the Philippines, is used in the production of agar. If the seaweed harvests are impacted, then downstream agar supplies are also at risk. (Lowe, 2015).

Another life sciences impact from agricultural supply chain impacts is potential media components tightness. One of the best documented impacts of El Niño is with the Peruvian fisheries, which is a global leader in supplying fish meal for animal feed (Taj, 2015). While at first glance, tightness in fishmeal and animal feed may have little connection to life sciences, the impact will be in the materials high in protein that are substituted for fishmeal, specifically soy, corn, and lysine. During El Niño years, fish-based animal feeds switch to corn or soy for a protein source. If the switch is to corn based feeds, then lysine will also tighten since lysine is added to corn feed to make a complete protein. Below are the impacts:

  • Soy-based media components such as peptones
  • Citric acid
  • Gluconates
  • Polysorbates
  • Citric Acid
  • Carbohydates
    • Dextrose
    • Fructose
    • Sucrose
    • Trehalose
  • Amino acids
    • Alanine
    • Arginine
    • Glutamic Acid
    • Glutamine
    • Histidine
    • Isoleuine
    • Leucine
    • Lysine
    • Phenylalanine
    • Proline
    • Serine
    • Tryptophan
    • Tyrosine
    • Valine

Finally, life sciences industry products that use Potassium, Phosphate, and Nitrogen-based materials could also be impacted by corn production. Corn crops consumes approximately half of all the fertilizers produced globally. With less corn being planted, upstream materials to fertilizers like phosphoric acid, potassium hydroxide, and urea should have a stable supply.

Resilinc will continue to monitor this situation closely. For early notification and analysis of supply chain events, consider subscribing to our EventWatch services.

Cold Weather Supply Chain Risks

December 12, 2014 Posted by Supply Chain Disruptions, Supply Chain Visibility 0 thoughts on “Cold Weather Supply Chain Risks”

Author: Charlotte Hicks

snow-truck-stuckWatching the news recently, I heard the weatherman say that the first major blizzard of the season dumped a year’s worth of snow on the Buffalo area alone. Then, the Thanksgiving nor’easter brought a sloppy mess of rain and snow to several parts of the U.S.

Images of the supply chain disruptions from last February and March popped to mind. During that "Snowmageddon," icy roads and damaged railways caused transportation delays, and we saw shortages for some materials that double as deicers.

Regardless of where it happens, bad weather tests the agility and resiliency of even the best supply chains.  However, companies that manage weather-related disruptions as part of their event-monitoring best practices and supply chain risk management strategies tend to fare better than those that don’t take preventative measures, Resilinc’s work with customers shows.

Using Supply Chain Visibility to Fight the Winter Blues

As winter approaches in the northern hemisphere, companies should consider the unique supply chain risks that often crop up during this part of the year and take steps now to avoid or lessen the threat of a potential disruption.

Anticipating transportation delays and mapping suppliers that could be affected by big storms are good first steps.

Resilinc has also compiled a list of common raw materials that could be impacted during the coming winter months. Increasing visibility and tracking these products may help companies side-step possible problems as well. While we don’t know if these commodities will be as severely impacted as last year, we recommend that companies closely monitor their supply chains and watch back orders or delays of these products:

Cold-sensitive materials, which could pose transportation risks:

  • Acetic acid
  • Photoresists
  • Slurries
  • WFI water and water based solutions

Winter deicers and antifreeze products that may cause supply and demand risks:

  • Calcium chloride
  • Ethanol
  • Ethylene glycol
  • Glycerol
  • Isopropyl alcohol
  • Magnesium chloride
  • Methanol
  • Potassium chloride
  • Propylene glycol
  • Sodium chloride
  • Urea

Since we can’t control the weather, the next best thing we can do is to prepare for it.


To learn more about supply chain resiliency solutions, click here.

Could Apple Watch Team Have Benefited from Pro-active Supply Chain Planning and Supply Chain Visibility?

November 7, 2014 Posted by Supply Chain Disruptions 0 thoughts on “Could Apple Watch Team Have Benefited from Pro-active Supply Chain Planning and Supply Chain Visibility?”

Author: Dipti Gupta

Apple products are also susceptible to supply chain disruptions

“Being proactive is not a mysterious quality that we have, or don’t have. It is a way of dealing with things that we can develop and strengthen.”

--Unknown

There was a recent news article about Apple delaying the release of their new Apple Watch from November 2014 to the Spring of 2015. The Chapter 11 bankruptcy filing of GT Advanced Technologies, a supplier to Apple of scratch-resistant sapphire goods, appears to have caught Apple by surprise potentially causing this delay. Obviously this push means a huge loss to Apple, especially since it was targeting its launch to coincide with  the holiday shopping season. Apart from the direct impact to Apple watch deliveries, this also means that Apple will now have to abort their plans to replace the gorilla glass with sapphire in their upcoming iPhones.

Could this have been prevented? Could Apple have known that it was using a high financial risk supplier? Could an alternate supplier have been developed as GT Advanced Technologies’ finances were taking a nosedive?

Leading-edge supply chain risk management tools integrate a customer’s n-tier supply chain map with 24X7 global event monitoring services to give customers a jump-start in developing and mobilizing risk mitigation action plans. This can take the form of developing alternate sources, identifying alternate parts or securing short supply from the broker market, which if not done pro-actively could sometimes be at a premium of up to 300%.

With these types of capabilities supply chain risk management can be turned into a source of competitive advantage.  Beginning with advanced supply chain mapping, companies have better visibility into their suppliers’ global footprint, sub-tier supplier dependencies and possible points of risk or failure. With robust analytics, companies can quickly zero in on critical failure points which need to be protected on a high priority basis.  By harnessing best in breed capabilities of cloud platforms as well as applying social networking concepts to the supply chain event monitoring and information sharing, the cost of proactive preparedness and proactive risk management can be brought down.

So, with today’s technological advances, do we have the tools to peer into the future to anticipate and simulate upcoming events and take appropriate preventative measures?

Yes! The supply chain industry has advanced dramatically with the help of creative strategies and technological advances. The flow of goods is followed by an even bigger flow of data that can be leveraged to create meaningful plans of action to prevent future disruptions. Link that to the social events, and one can understand how happenings around the world impact their supply chain. As a result, one can not only get end-to-end supply chain visibility today, but also a peep-hole into the future state of your supply chain network performance.

So yes, Apple could have been more proactive. Leveraging supply chain risk management technology, they could have been able to proactively identify loose links in their multi-tier supply chain and take actions in advance.

And, Santa would have delivered my Apple watch just in time for Christmas!

“Being proactive means being reactive - ahead of time.”  

--- Unknown


Increased supply chain visibility means a more resilient supply chain. Click here to read more about the ROI of resiliency.

Ebola Outbreak Poses Supply Chain Risks with Some Commodities

October 9, 2014 Posted by Supply Chain Disruptions, Supply Chain Resiliency, Supply Chain Risk Mitigation 0 thoughts on “Ebola Outbreak Poses Supply Chain Risks with Some Commodities”

Author: Charlotte Hicks

ebola-virusThe current Ebola outbreak is becoming more than just a worldwide emergency health issue. It is becoming a supply chain concern. While our thoughts are with those impacted by the awful disease, the potential supply chain risk is also creeping into the minds of business leaders.

Resilinc’s monitoring shows some signs of a ripple effect on supply chain sourcing, pricing and availability of key raw materials. These events, indicated by an increasing number of news reports, raise flags about the impact the disease has on mining activities (particularly with alumina, iron ore and gold), palm oil and palm kernel oil supplies, and potential crude oil disruptions.

Protecting Your Supply Chain

To avoid possible supply chain disruptions, companies can take a few steps now to secure their supply chains and mitigate risks associated with the contagion.

Here are Resilinc’s recommendations:

  • Improve communication with partners. Actively engage suppliers in information-sharing notifications and, when possible, stay flexible when making sourcing, procurement and logistics decisions.
  • Map and identify tier-one and sub-tier suppliers operating in and nearby countries affected by Ebola. Resilinc subscribers can use the “What if” tab in your dashboard for instant supply chain analytics. However, if you do not subscribe to Resilinc’s service, here’s some guidance:
    • Locate where your raw materials are sourced and how these materials move across multiple tiers of suppliers globally
    • Analyze where and how key suppliers are likely to be impacted
    • Determine which products are at risk for a disruption and calculate the potential negative effect on your revenue and profits
  • Analyze current inventory levels for critical components, commodities and raw minerals. Understand which raw materials could most likely affect your production and delivery targets. Resilinc’s supply chain analysis, for example, shows that one of the largest exports from Liberia, a country hard hit by the Ebola outbreak, is palm oil and palm kernel oil, a key building block in many raw materials. Luckily, 80 to 90 percent of these global supplies come from Malaysia and Indonesia, therefore the impact should be minimal. While global pricing is stable at this point, Resilinc is closely monitoring the situation. Below are materials that are downstream of palm oil and palm kernel oil.
    • Ascorbyl palmitate (antioxidant)
    • Calcium stearate (tablet mold release agent and lubricant)
    • Caprylic acid (treatment for some fungal and bacterial infections; surfactant, and cleaning agent)
    • Cetyl palmitate (emollient ingredient)
    • Isopropyl myristate (solvent for topical therapeutics)
    • Sodium dodecyl sulfate (also known as SDS; surfactant)
    • Magnesium stearate (tablet mold release agent and lubricant)
    • Myristic acid (solvent for therapeutics)
    • Palmitic acid (palmitoylation of proteins)
    • Polysorbate 20 (surfactant and emulsifier)
    • Polysorbate 80 (surfactant and emulsifier)
    • Sodium caprylate (treatment for some fungal infections; surfactant, and cleaning agent)
    • Sodium stearate (tablet mold release agent and lubricant)
    • Vitamin A palmitate (antioxidant)
    • Vitamin C ester (antioxidant)

In the midst of a crisis, knowledge brings peace of mind. Some manufacturers will spend hours and weeks monitoring and analyzing the potential impact Ebola could have on their supply chain. With Resilinc’s pro-active supply chain mapping and monitoring, attaining that peace is just a click away.


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