Analyzing Supply Chain Economics

I’ve received many requests regarding the magnitude of disruption if there is a UAW strike against Ford, GM, and Stellantis that could start once the current labor contract expires at 11:59 PM on 9/14. Below is my attempt to answer this in two charts. Thoughts: •Top chart shows industrial production of motor vehicles and parts in the event of a hypothetical strike. To calculate this, I’ve assumed August 2023’s seasonally adjusted industrial production was the average of April – July. I then extrapolated the impacts for September and October based on the fact this strike could be ~3x as large as the September – October 2019 GM strike (https://lnkd.in/gyT5PYRn; https://lnkd.in/geUfa4hm). •As can be seen, September 2019 saw a ~5% decline in output from that August, which doubled in October to ~11%. As such, I’ve estimated that a strike on all three automakers that starts this month results in a 15% drop and, if it lasts all through October, places October’s output at 30% below the guesstimate for August. The estimate for September places output about where it was at in the worst of the 2021 parts shortages, whereas the hypothetical October value is on par with March 2020, when automakers shut down towards the end of the month in response to COVID-19. •In terms of the cascading impacts, the bottom plot shows the domestic requirements for each $1 of motor vehicle and parts output to each industry from the Bureau of Economic Analysis (https://lnkd.in/eQdPji9). This chart indicates each $1 in lost motor vehicle and parts outputs will cause a $0.11 decrease in domestic primary metal manufacturing (e.g., steel, aluminum, foundries), $0.08 decrease in domestic fabricate metal output, $0.04 decrease in plastics and rubber products, $0.03 decrease in truck transportation, $0.03 decrease in chemicals excluding pharmaceuticals, etc. In total, each $1 of lost output will cause a $2.12 decrease due to the cascading effects across all industries This is a very large cascading effect (within manufacturing, only food, beverage, and tobacco manufacturing has a larger domestic multiplier at $2.29). Implication: if we see a prolonged strike by the UAW at the domestic US Big 3 automakers, we will undoubtedly see a deepening of the current freight recession. I’m hoping all sides can come to an amicable arrangement before a strike would happen. #supplychain #supplychainmanagement #shipsandshipping #manufacturing #freight #trucking    

I have spent years in the highs and lows of the consumer goods industry but never seen a pricing climate quite like this. Manufacturers are getting squeezed from every direction-tariffs, skyrocketing raw material costs, and relentless supply chain disruptions. The old playbook of raising prices to cover costs? That’s dead. Why? Because consumers are feeling the pressure too. A 2024 Nielsen report makes it clear: today’s shoppers are scrutinizing every dollar they spend, and brands that aren’t strategic about pricing risk losing market share fast. Here’s what I’m seeing from top CPG brands that get it: 1️⃣ Walmart is investing heavily in AI-driven pricing models to keep costs competitive-e-commerce now makes up 18% of total revenue. 2️⃣ PepsiCo is doubling down on pack-size innovation, offering smaller, affordable options to maintain volume without excessive discounting. 3️⃣ Luxury brands are using price elasticity models, testing demand thresholds before rolling out increases-avoiding consumer pushback. 4️⃣ Supply chain resilience is non-negotiable. Companies are shifting manufacturing away from China, despite short-term cost spikes, to avoid future geopolitical risks. The smartest brands aren’t just reacting. They’re rethinking. They’re moving toward Revenue Growth Management (RGM) frameworks that help them: ✅ Optimize pricing and promotions (because blanket price hikes are a losing game) ✅ Focus on margin-smart growth, not just revenue ✅ Leverage data analytics to make smarter, faster pricing decisions Brands that don’t evolve risk eroding profitability or pricing themselves out of the market. CPG leaders who master strategic pricing, operational efficiency, and consumer-driven value creation will own the future of this industry. Are you adjusting your strategy, or just reacting to rising costs? Because in 2025, only the most adaptable brands will win. #CPG #FMCG #PricingStrategy #RevenueGrowth #ConsumerGoods

How Can Sustainability Reshape Supply Chains? When you think about supply chains, do you see them as a system of endless transactions or a powerful avenue to drive sustainable impact? 🤔 I recently came across an insightful conversation with Steve Bernard, a CU Denver sustainability program alum with a decade of experience in supply chain management. His journey shows how sustainability isn’t a checkbox it’s a continuous path of collaboration, innovation, and improvement. Here’s a roadmap to integrating sustainability into supply chains, based on Steve’s reflections and my own experience as a sustainability professional: 🛠 The Five-Year Roadmap to Sustainability in Supply Chains 1️⃣ Set Clear Principles: -Publish sustainability principles and codes of ethics. -Share them with suppliers to set expectations early. 2️⃣ Assess and Align: -Conduct sustainability assessments for suppliers. -Use tools like CDP or collaborate with third-party evaluators. -Ensure alignment with your company’s mission and goals. 3️⃣ Build Relationships: -Foster open communication with suppliers. -Collaborate on goals rather than enforcing compliance-only approaches. 4️⃣ Integrate Sustainability into Contracts: -Include sustainability requirements in supplier agreements. -Recognize this as a long-term process—3 to 5 years for full integration. 5️⃣ Track and Improve: -Establish baselines to measure progress. -Use benchmarks and continuous improvement practices to evolve. 🌟 What Should You Ask of Suppliers? Here are key areas companies can address when working with suppliers: 🔵 Environmental Impact 🔵 Health and Safety 🔵 Stakeholder Engagement 🔵 Circular Economy Practices 💡 Why It Matters Sustainability isn’t just good for the planet—it’s good for business. Studies show: 🌱 88% of consumers are more loyal to companies that support environmental issues. 📈 Companies with strong ESG programs see higher employee retention and satisfaction. 💰 Businesses practicing sustainability often realize long-term cost savings through efficiencies and innovations. 🏆 A Balanced Approach: Carrots, Not Sticks If you’re starting this path, remember: 🌟 Progress takes time. 🌟 Collaboration drives success. 🌟 Transparency builds trust. What do you think? Have you faced challenges aligning sustainability with supply chain practices? #Sustainability #SupplyChain

Demand forecasting errors silently bleed profits and cash. This document shows 7 red flags in demand forecasting and how to fix them: 1️⃣ Over-reliance on historical data ↳ How to fix: incorporate external data like market trends, competitor activity, and consumer sentiment to enrich forecasts 2️⃣ Ignoring promotions and discounts ↳ How to fix: build a promotions-adjusted forecasting model, considering historical uplift from similar campaigns 3️⃣ Forgetting cannibalization effects ↳ How to fix: model cannibalization effects to adjust forecasts for existing products 4️⃣ One-size-fits-all forecasting method ↳ How to fix: use demand segmentation (for example, high variability vs. stable demand); do not treat all SKUs equally 5️⃣ Not monitoring forecast accuracy ↳ How to Fix: track metrics like MAPE, WMAPE, bias, to improve over time 6️⃣ High forecast error with no accountability ↳ How to fix: tie accountability to S&OP (sales and operations) meetings 7️⃣ Past sales (instead of demand) consideration ↳ How to fix: make the initial predictions based on the unconstrained demand; not on sales that are impacted by cuts and out of stock situations Any others to add?

In supply chains, we love to optimize. But before we optimize, we need to observe. And what we find is: supply chains don’t behave like machines. A machine has visible parts, measurable tolerances, and known failure points. Supply chains? Not so much. They’re invisible networks of decisions, dependencies, and delays. We can’t see them. But we can measure what they produce: shortages, delays, excess stock, or wild swings in delivery performance. And here’s the slap in the face: these problems don’t follow a bell curve. They follow power laws and long tails. A handful of SKUs will account for the majority of your revenue. A few supplier issues will cause most of your delays. A single port shutdown can cause million-dollar ripples. At Toyota, we saw this firsthand when planning accessories for regional dealerships. One factory change or trim-level shift could throw off the forecast for 20 different parts. And yet the solution isn’t more precision forecasting, it’s better policy design. Learning when to react, when to override, and when to smooth decisions over time. This is where decision intelligence steps in. You DON’T need perfect forecasts. You need ROBUST POLICIES. A normal distribution says “everything’s more or less average.” But anyone with experience says “plan for the extreme, because it’s coming.” That’s why we don’t just optimize inventory at one dealer. We design policies that allocate stock across the whole region, looking at risk, value, and time horizon. It’s why we don’t just tune parameters for fill rate. We must create tunable POLICIES that adapt as new data comes in. And we don’t build one-size-fits-all tools. We build layers: fast heuristics, batch MILPs, live overrides, each with their role. Supply chains aren’t broken machines. They’re living, learning systems. So stop hunting for the “right answer,” and start crafting better DECISION ARCHITECTURES!

Helped another customer #reshore these electrical components back to USA. Swiss lathes + lights out 24x7 + lean manufacturing for the win 🏆⚙️🇺🇸 Overall close to 20% of new customer business in 2024 was related to reshoring efforts. In recent years, reshoring supply chains has gained momentum, driven by several key advantage factors like risk reduction, sustainability, flexibility, quality control, and more. The uncertainties exposed by events like the COVID-19 pandemic have prompted companies worldwide to re-evaluate their supply chain vulnerabilities. Extended and complex overseas supply chains are susceptible to disruptions that can ripple globally. Sometimes it was the customer launching a new product with us instead of their existing foreign supplier. Then they would begin transitioning other legacy products over to us soon after. Then other times it was a direct move to bring all parts over for domestic local supply chain safety and reliability. For decades, low-cost labor has been a prime driver for offshoring manufacturing to regions like China and Southeast Asia. However, factors like rising wages and transportation costs have eroded some of these economic advantages. When combined with increased productivity and automation in developed countries, reshoring production is becoming cost-competitive with offshore outsourcing. Savvy companies are taking advantage of favorable domestic conditions, from tax incentives to grants, that make reshoring even more compelling from a cost perspective. For North America, the reshoring trend presents significant economic opportunities. Annualized manufacturing construction spending in the U.S. reached $237 billion in July 2024, from $128 billion two years prior, an increase of 86%. The creation of high-paying manufacturing jobs is boosting local economies and stimulating innovation. According to the Reshoring Initiative, the cumulative number of jobs brought back since 2010 is nearing two million, about 40% of what we lost to offshoring, with a record 343,304 jobs announced in 2022 and 287,299 in 2023. Conversely, Asia, particularly China, is seeing its dominance in global manufacturing decline. U.S. imports from China decreased by 20% ($109 billion) from 2022 to 2023, as companies shifted production closer to home. The reshoring trend shows no signs of slowing down. Are you seeing any customer opportunities related to reshoring too? #manufacturing #swisslathes #machining #cnc #machineshop #supplychain #reshoring

Supply chains are not just stretched. They are exposing the unprepared. What you may call a disruption, Resilient companies call a stress test. When tariffs spike and disruptions strike, companies that optimized only for cost are now paying the price in -> Delays -> Lost trust -> Broken promises A reactive supply chain is a liability. A proactive one is a competitive advantage. Here is how resilient organizations respond at every level: C-Suite: -> Shift your mindset. -> Supply chain is a strategic engine. Invest in diversified, localized, and tech-enabled ecosystems that can flex under pressure. Mid-Level Leaders -> Anticipate the breakpoints. -> Cross-functional coordination and early scenario planning are not optional, they are operational lifelines. Individual Contributors -> Your proximity to pain points is your power. -> Raise issues early. Escalate what others overlook. Supply chain visibility starts with you. Supply chains are no longer linear, they are living ecosystems. To compete, companies must evolve: ✅ Move from transactional to collaborative vendor partnerships ✅ Integrate AI and predictive analytics for real-time response ✅ Make agility a measurable KPI, not a buzzword ✅ Embed contingency planning into culture, not just crisis manuals The companies that win in this era will not be the cheapest or the fastest. They will be the most adaptable. How is your organization building supply chain resilience today? 👇🏻 ♻️ Share to help others shift their strategy 🔔 Follow Izabela for more insights

📦 2025 Predictions: Data and AI in Supply Chain Management 🚀 Over the years, I have emphasized the importance of data visibility and management in supply chain management (SCM) to unify upstream and downstream processes. I have focused on enhancing data integration and utilization through Machine Learning (ML) and Artificial Intelligence (AI). Although my teams and I have achieved remarkable results, we have just begun to tap into the vast potential of data and AI in SCM and operations. ✨ As we enter 2025, several key advancements and trends in AI agents will redefine user experiences, significantly enhance autonomy in SCM, and unlock essential efficiencies and competitive advantages. 🔮 These predictions reflect the evolving landscape of AI and its integration into our industry: 1. Increased Autonomy: AI agents will evolve to operate autonomously in complex environments, enhancing decision-making capabilities. Real-time analysis of large datasets will empower AI agents to make informed choices throughout the supply chain, minimizing the reliance on human intervention. 2. Natural Language Processing (NLP): Advancements in NLP will empower AI agents to engage in more sophisticated, human-like conversations. This will foster seamless communication among stakeholders, facilitate information sharing, and enhance collaboration across the supply chain. 3. Personalization: AI agents will utilize advanced algorithms to deliver highly personalized recommendations and interactions, tailoring services to align with user preferences and behaviors. 4. Enhanced Collaboration: AI agents will streamline data exchange among stakeholders, from suppliers to retailers. Enhancing visibility into inventory levels, order statuses, and supply and demand forecasts will allow for informed decision-making and reduce delays. 5. Integration Across Platforms: Seamless integration of AI agents across various platforms will become standard practice, ensuring a cohesive user experience. The proliferation of AI agents will bolster supply chain resilience, enabling swift responses to disruptions. 6. Ethical AI Development: There will be a greater emphasis on ethical considerations in AI development as customers adopt guidelines to ensure fairness, transparency, and accountability in the actions of AI agents. 7. Training and Development Customers will utilize AI agents to support new training programs to provide personalized learning paths based on employees’ data proficiency levels. 🤖 The deployment of AI agents will significantly enhance the autonomy of supply chains, leading to improved efficiency, reduced costs, and increased responsiveness to market changes. #Accenture #SupplyChain #AI #2025 #2025Predictions #Innovation #AIagents #ML #genai #SCM #EthicalAI #data

Your supply chain is more fragile than you think. And it’s not just because of: • Labor shortages • Transportation issues • Geopolitical tensions It’s because the ecosystems that power your business are collapsing. • 75% of food crops rely on pollinators • 23% decline in global agricultural yields • $540B in yearly pest control losses • Species extinction 1000x faster than the natural rate In other words? Your costs are about to skyrocket. Big brands are already feeling the heat: • Unilever: Supply disruptions from pollinator loss • Coca-Cola: Plant closures due to water scarcity • Coffee Industry: Shrinking growing regions • Pharma: Losing new drug sources But there’s an opportunity here… Smart businesses are turning this crisis into an advantage: 1. Supply Chain Revolution • Map biodiversity dependencies • Embrace regenerative sourcing • Diversify ecosystem suppliers 2. Risk Management • Run impact assessments • Launch restoration programs • Partner with conservation experts 3. Innovation • Develop nature-based solutions • Create eco-positive products • Leverage biomimicry Leading companies making it work: • Nestlé: 40% less crop failure • Patagonia: 2x supplier resilience • L’Oréal: Secured rare ingredients • Interface: 20% material cost reduction Your Next Steps: 1. Map ecosystem dependencies 2. Set biodiversity goals 3. Measure impact 4. Engage suppliers 5. Join industry initiatives The companies that understand this will dominate. The rest? They’ll be left behind. With purpose and impact, Mario

There is no resolution in sight: negotiations between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) have stalled, making a strike by 45,000 dockworkers look inevitable. The strike, which is set to commence at midnight, poses a critical threat to U.S. supply chains, with widespread port closures expected across the East and Gulf coasts. What’s at Stake: This disruption could grind operations to a halt at 36 key ports—responsible for handling nearly 50% of all U.S. trade. The ripple effect on businesses could be significant, leading to: Severe supply chain delays and halted operations at crucial container ports. Extended transit times and the need for costly rerouting. Higher shipping rates and additional fees due to cargo congestion and storage. Surcharges from carriers already announced, including declarations of Force Majeure by some. Global shipping slowdowns as bottlenecks intensify. Key Impacts for Your Business: Port Closures: Expect major disruptions at East and Gulf Coast entry points. Shipping Delays: Prolonged transit times could lead to increased costs for businesses and consumers. Costly Storage Fees: Stranded cargo may result in significant detention and demurrage charges. Industry-Wide Ripples: Retailers and importers will feel the effects, especially during peak season. Global Congestion: Heightened demand for alternative routes and services will drive freight rates higher. Proactive Recommendations to Minimize Disruption: Prepare for West Coast Congestion: As cargo reroutes to the West Coast, anticipate delays and increased fees due to congestion. Expect Docking Delays: Cargo destined for East and Gulf Coast ports will experience prolonged wait times, even post-strike. Consider Air Freight: For urgent shipments, air freight remains the quickest option. JAS offers a variety of air cargo solutions, though high demand will likely push rates up. Plan for Increased Costs: Rising demand and delays will lead to higher shipping rates, along with elevated storage, detention, and demurrage fees. Review Incoterms: Ensure that all parties are clear on financial responsibilities for additional costs caused by delays or rerouting. JAS is Here to Support You: To help navigate these challenges, JAS has developed contingency plans. We recommend exploring alternative solutions like air freight for time-sensitive shipments or strategic rerouting to minimize delays. Our team is ready to tailor logistics strategies to keep your supply chain moving. Contact your JAS representative today to discuss how we can support your business during this critical time.