Brands sever supply chain ties with Russia
A growing list of corporate giants in various industries have decided to cut ties with Russia due to its invasion of Ukraine. Airbus has joined its rival Boeing to halt their connections with Russia and to stop the supply of spare parts for the country’s aviation industry and oil giant ExxonMobil has said that it would end a multi-billion-dollar joint venture with Russian state-owned company Rosneft after similar moves by BP and Shell.
Russia is a major energy producer, and due to the conflict, the international benchmark for oil prices has recently hit $113 a barrel, making it the highest price on record for over seven years. As well as action from ExxonMobil, a company that hired 1,000 Russian employees last year, rival BP said it would offload its 19.75% stake in Rosneft and Shell announced it would cut all ties with Russian energy company Gazprom.
Many firms have spoken out about their attitude towards Russia, and the reasons why they have made changes to their supply chains. For example, ExxonMobil released a statement saying that “we deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people… and we are deeply saddened by the loss of innocent lives and support the strong international response.”
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Backlog of inventories clog supply chain in February
A report has shown that activity across supply chains was near record levels again in February, helped by the boom in e-commerce. A large amount of inventory in systems was met by a lack of capacity to either move or store it, a continuation of the trend that happened in January. The Logistics Managers’ Index came in at 75.2, 3.3 points higher than January. This was the 13th consecutive month the index stood above 70, a level noted as “significant expansion.”
An accumulation of inventory throughout the supply chain and not enough transportation capacity to turn it quickly drove the increase … with no obvious signs of a slowdown on the horizon,” the report stated. A combination of over-ordering to avoid shortages, late-arriving goods due to supply chain congestion and a “softening” of consumer spending has led to the backlog. As well as this, a jump in e-commerce fulfilment is responsible for the surge as lots of warehouse space is needed.
The numbers are very different to last year, with the report noting “a complete 180 from the fall of 2021”, when firms struggled to build up inventories during the pandemic. The report says “beyond the drop in sales and shipping delays, it is possible that recent supply chain challenges may have taught manufacturers, suppliers, retailers and customers that holding inventory provides an important element of resilience and are not as lean as they once were.”
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Toyota’s production halted after a cyberattack
The Japanese automaker Toyota announced on Wednesday (2nd March) that it would be restarting its production after a supplier had an issue with its computer system, prompting a temporary suspension to its operations. Despite the fact that the specific supplier or computer issue has not been determined, a report from the Japanese outlet Nikkei said the problem was due to a cyberattack against Kojima Industries.
In total, Toyota suspended 28 lines at 14 different plants, with subsidiaries Hino Motors and Daihatsu Motor also being affected. The shutdown of production includes a Daihatsu plant in Kyoto Prefecture, with the disruption expected to lower overall output by a few hundred vehicles. This comes at a time when its productive capacity is only just starting to return to normal due to the semiconductor shortage.
Japanese officials have announced that they will be investigating this case to prevent further disruption: “It is true that we have been hit by some kind of cyberattack. We are still confirming the damage, and we are hurrying to respond, with the top priority of resuming Toyota’s production system as soon as possible.” Law enforcement is also looking into the issue.
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