Weekly Roundup - Back to JIT, Supply Chain Law Concerns and Carbon Border Adjustment

Retailers are shifting back to a "just-in-time" inventory management strategy after struggling to balance holding enough merchandise and avoiding excess inventory. This move is a return to pre-pandemic inventory management practices, focusing on replenishing items rather than stockpiling goods. The ratio of inventories to sales at general-merchandise retailers fell, indicating a return to pre-pandemic levels. IKEA and Walmart are employing a just-in-time approach to inventory, aiming for smaller, more accurate shipments based on consumer demand. Walmart has successfully cut its inventory while boosting sales with leaner inventories, indicating better prediction of lead times and execution of review cycles. However, new supply-chain disruptions could prompt retailers to take a different approach and bring in more excess stock.

Germany's support for an EU law requiring firms to address human rights violations in their supply chains is uncertain following opposition from the pro-business Free Democrats, who have criticized the law for creating bureaucracy and legal uncertainties. This opposition could disrupt the anticipated approval of the law and lead to further conflict within Chancellor Olaf Scholz's coalition. Leading business associations have urged Scholz to veto the law, expressing concerns about its practicality and proportionality. A survey by the Federation of German Industries (BDI) revealed that a less strict national supply chain law caused many companies to shrink their supplier networks and consider leaving certain countries. The government stated that discussions within the coalition on the proposed EU law are ongoing, with Germany's stance in EU bodies dependent on internal assessments. This development mirrors a previous instance where the Free Democrats' opposition impeded an EU vote on a law concerning the cessation of sales of new CO2-emitting cars in 2035.

The EU's Carbon Border Adjustment Mechanism (CBAM) is set to have a profound impact on international supply chains. By requiring traceability of embedded emissions in imported goods, the CBAM mirrors broader trends in cross-border trade, potentially increasing administrative burdens while also offering an opportunity to optimize supply chains. Businesses with international supply chains can gain an advantage by promptly assessing the implications of the CBAM for their activities, ensuring compliance, and guarding against the risks of non-compliance. The mechanism presents a significant challenge for EU importers, who will need to obtain emissions data from their non-EU suppliers to fulfill reporting obligations. As the CBAM evolves before full implementation, it may expand to cover additional sectors and the embedded emissions associated with the transportation of CBAM goods, further impacting global supply chains.

Read more on recent highlights

• Red Sea supply chain crisis takes toll on German chemicals sector
• Red Sea attacks already bigger issue for supply chain than pandemic, maritime advisory warns
• New Boeing inspections raise supply chain worries
• EU investors establish C$733M battery metals fund to mend gaps in supply chain
• Apple must clean up its polluting supply chain – starting with Foxconn
• The Middle East crisis is starting to weigh on the economy

Dive deep into research

"Artificial Neural Networks in Supply Chain Management, A Review" by Mohsen Soori, Behrooz Arezoo, Roza Dastres (2023)

"Data-driven review of additive manufacturing on supply chains: Regionalization, key research themes and future directions" by Mohammadreza Akbari (2023)

Events

embedded world

When: 9. - 11. April 2024

Where: Nürnberg, Germany

What: The embedded world Exhibition&Conference provides a global platform and a place to meet for the entire embedded community, including leading experts, key players and industry associations. It offers unprecedented insight into the world of embedded systems, from components and modules to operating systems, hardware and software design, M2M communication, services, and various issues related to complex system design.

Its expertise and sharp focus on technologies, processes and future-oriented products make it unparalleled in international comparisons

Hannover Messe

When: 22. - 26. April 2024

Where: Hannover, Germany

What: Digitalization and sustainability - these are the key themes of HANNOVER MESSE. World's leading companies from the mechanical engineering, electrical engineering, logistics and energy industries, as well as from the software and IT sectors, will be showing how the transformation to digitalized, resource-efficient and climate-neutral production can succeed.

Control

When: 23. - 26. April 2024

Where: Stuttgart, Germany

What: The Control – International Trade Fair for Quality Assurance at Landesmesse Stuttgart, offers suppliers and users a strictly topic-focused and globally recognized trade event. It sheds light on all aspects in theory and presents in practice the current global range of usable technologies, processes, products and system solutions for industrial quality assurance. The nearly 900 manufacturers and suppliers of QA equipment represented at Control thus help the manufacturing companies and their suppliers to become more competitive. With a top-class supporting programme as well as an extensive exhibition and information portfolio, Stuttgart is once again becoming the business mecca of the QA industry.