We are proud to be partnering with Masks for NHS Heroes, a grassroots campaign set up by a group of doctors to source Personal Protective Equipment (PPE) for those who need it most.

“Like going to war without armour and protection”
As is the case in many countries, the UK is suffering a critical shortage of PPE. PPE includes face masks, visors, surgical gowns and gloves and is essential for limiting the risk of contracting COVID-19 while working in close contact with infected patients.

While the British government is doing everything it can, healthcare workers on the frontline are risking themselves daily without adequate protection to care for sick patients. In the words of the Masks for NHS Heroes, “Healthcare workers on the frontline without PPE is the equivalent of going to war without armour and protection.”

Making a difference for doctors
Masks for NHS Heroes is raising money to purchase large quantities of essential equipment for donation to NHS trusts dealing with COVID-19. The response so far has been incredibly inspiring, raising nearly £1.5m. This has included notable celebrity donations, including £275,000 from actor James MacAvoy, who has been sharing video updates on the campaign across his social media.

Zencargo is supporting Masks for NHS Heroes to enable the international procurement and movement of quality assured PPE out of China to the UK. This mission is made more complicated by increased scrutiny of PPE by the Chinese government and the scarcity of air freight capacity.

Working directly with teams on the ground in China, including the British Consulate, we’ve rapidly arranged key customs clearances and quality control assurances, in addition to securing exemptions from duties, in order to ensure the fastest UK delivery possible.

We’re proud to say that the first deliveries will soon be arriving in the UK where they will be distributed by DHL Supply Chain directly to the trusts that need them most.

How you can help
While this campaign has made huge progress, there is much more that we can do to expand the range of equipment and hospitals that we’re helping.

You can be a part of this international effort to support those who are risking their lives to keep others safe at this time. Donate to the Masks for NHS Heroes fundraiser here and make a difference today.

The post We’re moving Masks for NHS Heroes and we need your support appeared first on Ekowell.

From massive declines in available air freight, to empty supermarket shelves, to closed factories – the supply chain is in massive flux right now, so we’ve put together a critical list of the capacity crunches and what you can do to mitigate them and keep your own products moving.

Air Freight

With passenger air demand collapsing massively across most key routes in the space of a month and more flight restrictions being announced than re-openings, air freight capacity has been slashed.

Major airlines, such as easyjet, have grounded their entire fleet and China continues to restrict international flights, fearing a second wave of infections, leaving just one flight per airline, per week to a single given country, meaning hundreds of flights each week, not thousands, which is equivalent to a 90% drop in air capacity. Globally, the final week of March saw 55% less commercial flights in the sky than in the same period in 2019.

This has pushed rates up for air transportation massively since the start of the crisis, particularly into and out of Asia.

According to the price monitoring undertaken by TAC Index, prices per kilo from Shanghai to North America and Europe in late March reached $6.59 per kg and $5.15 per kg, respectively, representing increases of 15% and 25.9% on the prior week. There have also been big jumps on North American-European routes.

The solution: If you can hang on just a little longer, it might be prudent to do so. The rate of inflation appears to be turning as demand cools off and airlines put some passenger aircraft back to work hauling air freight only. Both IAG and American announced additional capacity in the last few days. If that isn’t possible, then express capacity is available on some ocean and rail routes, which we can help you identify and utilise. You should also examine alternative suppliers who are very near to your key facilities.

You can check on the status of numerous air cargo operations through IATA here.

Trucking Capacity

Trucking rates have been soaring in the US, while Europe has been impacted by driver shortages, reluctance by many truckers to enter areas with major infections and border delays as different countries adopt different shutdown policies. In particular, Austrian, Eastern Europe and Swiss borders have been experiencing significant delays recently. The opening of new ‘green lanes’ in the EU that offer express movement should help to ease this but there are still numerous routes where there isn’t enough return cargo and this is creating high rates in some areas, such as into the UK.

In the US, Freightwaves’ Outbound Tender Volume Index, which approximates truck freight traffic, reached a record high in March and its outbound tender reject index moved up to a point higher than at any point in 2019 and to-date in 2020 in the last week of March. This has put carriers in the driving seat when it comes to pricing. However, this likely the peak, with shutdowns becoming more
widespread and the peak of consumers and businesses stocking up behind us.

The solution: In Europe, intermodal rail freight is a potential alternative means of transportation. Passenger rail movements have been reduced, so there is added space for cargo, which also helps reduce the border delays. In the US, prices and availability should be about to turn as the durable goods market falls off and 75% of Americans are now in lockdown. Furthermore trucks are now able to move more efficiently in many affected areas due to reduced congestion.

The Container Shortage

Blank sailings have shot up at an incredible rate as carriers try to anticipate changing demand patterns. In the last week, ship owners have announced more than 45 blank sailings as a result of the pandemic, according to Sea-Intelligence Consulting. The result of this and changing patterns of transportation is that much of the world’s usually finely tuned system is out of whack and containers are not where they normally are. In particular, there is a shortage of containers in Europe, due to the cuts in sailings from Asia-Pacific.

The solution: You need to be monitoring the situation and be agile enough to respond through the right business intelligence. Contact us to find alternatives if you have been caught out and sign up to our regular briefing to be immediately informed of the latest trends.

Manufacturing Meltdown

Massive uncertainty and lockdowns are causing production to go offline in an unforeseeable way prior to this crisis. This is causing seizures in manufacturing as component manufacturers are forced to shutdown or pare down production. This has been most notable in China, given its huge manufacturing base and its integration into global supply chains, but can now be seen in a variety of global locations.

The solution: Evaluate at-risk SKUs and research prioritise SKUs according to the likelihood of stocking out and the potential revenue loss this would cause. Look for alternative manufacturers, preferably nearer to the destination market and think about diversifying even if you don’t feel at risk at this stage.

Warehousing

The way this disease is moving across borders and the different ways it is being countered means that there are now stockpiles building up as export bans, blank sailings and changing demand patterns put movements on ice.

As demand is beginning to fade with panic buying subsiding and both business and consumers hunkering down both in the immediate term from lockdowns and longer due to the economic shock, warehouse space is set to be at a premium.

The solution: Start by thoroughly checking inventory and matching it to needs now, both in-transit and in-stock. Aim to hold stock at origin for now where possible rather than shipping it in the very near future and prioritise shipping speed based on meeting real demand and needs.

Download our COVID-19 Supply Chain Disruption Strategy: The Retailers Guide to Navigating a Global Pandemic to learn more about how to effectively plan inventory understand priorities.

The Gluts

It is not all shortages, in some places there are surfeits. Oil and the downstream supply chain are the site of the biggest global glut right now. Upped production from both within and outside OPEC have created more supply just as demand craters. This is good news for most operators in the supply chain due to lower costs for petrochemical derivative products and, principally, from lowered fuel costs. Although workforces in several key oil production areas may find themselves cut down soon, the fall in demand is set to be unprecedented and it doesn’t seem like this will reverse any time soon.

The post Combatting Coronavirus Chaos appeared first on Ekowell.

Redesign with Secondary Macro-Sources

What this crisis has really made clear is that companies cannot be over-reliant on a supply chain that puts all its eggs into one basket, whether that be producing all of its key components in a single foreign country, or by placing all its faith into one supplier.

Although many companies have benefitted massively from a cheaper Chinese labour force that is well-connected into the global economy, many have now found that they have been cut off from key components as the country went into lockdown, and even beyond, as ports became congested. With just-in-time supply systems now commonplace, few had much inventory going spare either.

This has been seen in multiple industries, including pharma, car manufacturing, electronics, apparel and solar, where China is frequently the most critical production piece. For example, Hubei, where the virus began is a major source of car components, meaning it has been particularly hard hit, and for consumer goods, it is estimated that Chinese producers are operating at 10% to 20% of pre-outbreak levels. More than 80% of the US’ active pharmaceutical ingredients are produced abroad, the majority in China and India, according to a congressional report.

It is therefore critical to consider diversifying away from any single supplier and looking at dispersing sources of goods, so that an outage as a result of worker shortages or sudden events doesn’t create chaos within just a few weeks of an issue arising.

Look to create flexibility in your contacts and contracts by establishing Service Level Agreements (SLAs) with multiple different suppliers based around your minimum requirements at first, so that these can be ramped up as necessary.

It is all too tempting to rely on a strong relationship with a single supplier for the familiarity and ease it brings most of the time. However, it is important to remember that resilience can also be business critical and a single supplier leaves you brittle.

There are also the added advantages of being in a better position to leverage pricing competition between suppliers and being able to respond better to sudden surges in demand when normality returns to the market.

Redesign to Source Locally

The extremity of some of the shutdowns in the current environment and the reactions of some authorities to totally bar transportation from some countries demonstrates that localising production can have advantages in situations such as these.

Consider the world’s workshop, China. Wages have been rising strongly in China for some time, lowering its competitive advantage, especially when considered in conjunction with other factors, such as a frequent lack of transparency and a governmental system that means sudden policy changes that have major effects can be enacted on Beijing’s whim.

With the closing in wage gaps to your own or neighbouring countries it may be worth switching over, even if initial costs seem higher, as there could be additional advantages that diminish this, such as lower lead times, more flexibility and ease of enforcing quality control or returning products, as well as a better ability to cope when international restrictions arise.

Japanese companies have led the way in just-in-time production systems, but they may also now be leading the way here. Companies such as construction equipment maker Komatsu, Daikin Industries and Meiko Electronics were all recently reported to be looking at moving production out of China and at least some of it to domestic suppliers in the Nikkei Asian Review, spurred on by the current crisis.

Now, therefore, might be the perfect time to take stock and re-evaluate where you are sourcing elements from and whether it is worth switching to a supplier closer to market. Look beyond just the headline unit cost of producing the item in a low wage centre and try to add in considerations around lost sales from disruptions and long lead times, shipping costs, administration costs currency costs, quality control costs and so on when evaluating. Check inventories and trade bodies to find lists of manufacturers, wholesalers and distributors.

If you do not have existing alternatives in place, you can consult a local trading company who may be able to recommend similar manufacturers within their target industry, but expect that it will take 4 – 10 weeks to onboard a new supplier.

Focus on Alternative Products & Revenue

In the most extreme of cases, it may simply not be possibly to continue to produce some product lines due to disruption, especially for complex goods with multiple tiers of suppliers across different countries. In these instances, a hard evaluation will be required with a focus on the absolute bottom line.

If you can no longer source or produce a product, or are running very low on inventory, then you need to switch tack quickly. Identify substitute products or near equivalents that are available and transportable (think when you’re online grocery shop sends a substitute) and immediately ramp up acquisition to cater for expected demand and to replenish inventory.

At the same time, make sure to evaluate your marketing and product placement, to make sure alternatives are easy for customers to find and buy, rather than continuing to promote at-risk lines.

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