Oct. 26 - Priorities shift when supply is tight

A supply crunch has companies picking their battles. When is it appropriate to substitute a product or deprioritize a customer? View online | Sign up | Forward

Weekly edition | Oct.​ 26,​ 2021 Your Guide to Operations By Edwin Lopez   BROUGHT TO YOU BY — Prologis Join Us For Breaking Ground Industry leaders explore current and future solutions and trends in supply chain - UPS CEO Carol Tome, Prologis CEO Hamid Moghadam, “Moneyball” author Michael Lewis and more. Join us.   A supply crunch has companies picking their battles. When is it appropriate to substitute a product or deprioritize a customer? (Was this email forwarded to you? Sign up here.) Pick your customers? Philip Morris may be known for its Marlboro-brand cigarettes, but high demand for another product is putting the company in a bind this year. You see, Philip Morris' IQOS device, which heats rather than burns tobacco, requires semiconductors.  Since the company does not expect the supply crunch to get any better until 2022, the company is taking another approach: prioritizing existing customers over new ones. Read more. P&G's strategy for short supply During a recent earnings call, Procter & Gamble CFO Andre Schulten revealed two things the company is doing to continuously adapt to low-supply situations: 1) rely on its supplier network to "run products for other regions," and 2) reformulate some products. Schulten said the moves have helped build flexibility into its supply chain and "optimize costs to a degree." Read the details. Stat of the Week Saks taps GXO to fulfill DTC orders 70% The amount of space in a 400,000 square-foot GXO facility that will be dedicated to Saks' direct-to-consumer inventory. Get the details. It's a market: Amazon offers last mile, pickup services The fulfillment space is already crowded, but that didn’t stop Amazon from announcing a play of its own last week through a new service: Amazon Local Selling. The service will provide sellers on Amazon the ability to offer customers same-day pickup or delivery to specific zip codes. Sellers can also opt to offer other services, like product assembly or installation. It's a different spin on the race to be an omnichannel provider of choice. Read more. Opinion Poll             What steps has your company taken in the face of shortages? Reformulate or redesign products Shift marketing or sales plans Expand the base of suppliers All of the above Other — hit reply and tell us! Have a poll question you’d like to suggest? Let us know!   Last week's results are in! We asked: How many of your company's warehouses have staff available to receive shipments at night?                     33% said none; 20% said some, but less than half; 17% said more than half; 16% said all warehouses; and 13% said other. (Figures do not add to 100% due to rounding.)             Quick Hits Retail Dive Retail acquisitions often target a robust supply chain, new customers and a wider distribution network. But they're not without risk. Supply Chain Dive School meal program directors are switching up menus on a daily basis due to supply shortages. Supply Chain Dive Suppliers in Vietnam are facing a worker shortage, leading to canceled orders despite the economy's reopening. Supply Chain Dive A UPS facility that can handle 70 containers is receiving only 50 as a result of port congestion. Supply Chain Dive Panera plans to implement 100% recyclable, reusable and compostable packaging by 2025. Parting thought Earnings reports are beginning to come out, and it's interesting to hear various executives' projections for when supply chain issues will subside. It's product specific, of course, but in general I've heard companies float everything from early 2022 to 2023. What's your guess? Email me, I'd love to hear it. Edwin Lopez Senior Editor, Supply Chain Dive Twitter | Email

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