Supply Chain weekly wrap-up: 12/4/15 – 12/10/15

Tough year for Chipotle and its supply chain

Back in November, Chipotle Mexican Grill was linked to an E.coli outbreak that spread across several states in America. This week, a second health incident has rocked the company, resulting in the closure of its restaurant in Boston. This most recent instance has left at least 80 Boston College students sick with what is believed to be norovirus, including several members of the University’s basketball team. As a result, the fast-food restaurant chain has suffered significant financial losses, and also severe damage to its image.

Chipotle’s core competence that drove its initial success was the freshness of its ingredients. In essence, the restaurant’s supply chain served as its competitive advantage. With this year’s food safety concerns, Chipotle is going to have to get back to the supply chain drawing board. While big fast food players depend on a select amount of distributors and suppliers, Chipotle has created a much more complex network that includes over 1,900 partners, in order to ensure they meet the “fresh” standards they promise customers. Now that things have gone awry, tracing the source of the outbreak back to a specific supplier will be quite a challenge as several small independent sources have been used.

To read more on Chipotle’s supply chain concerns, click here.

Recent survey results suggest reshoring trend

For the fourth consecutive year, the Boston Consulting Group conducted a survey with top U.S.-based manufacturing executives from large corporations with at least $1 billion in revenue. The results suggest an upward trend for the reshoring of manufacturing for goods sold within the United States. This year, thirty-one percent of respondents claimed they plan on adding manufacturing capacity in the United States for goods sold inside the country’s borders within the next five years. Another 20% said they will likely add capacity in China. When comparing these numbers to 2013, 30% of respondents planned additional manufacturing in China while 26% had plans for additional capacity in the United States.

Overall, the amount of executives actively reshoring production processes increased by 9% compared to 2014, and by 250% when comparing this year’s results to the responses in 2012. Reasons for this upward trend include logistics and inventory costs, ease of doing business and the high level of risk associated with operating extended supply chains. Furthermore, through the use of robotics and other advanced manufacturing practices, manufacturing processes in the USA have become more efficient and attractive for many companies.

To read more on the survey results, click here.

DHL opens innovation center in Singapore

DHL’s first innovation center outside of Germany was officially opened this week in Singapore, a move that solidifies the company’s commitment to expansion in the Asia-Pacific region. DHL’s chief commercial officer, Bill Meahl, encouraged customers to explore and interact with the company and help them discover new ways to enhance supply chain performance. The innovation center includes a wide range of new technology such as 3D-printing, augmented reality, robotics and drones. Fun activities for customers include augmented reality driving and interaction with a robot designed to help move parcels.

DHL has stationed 10 employees at the innovation center and hopes to gain new insights into the optimization of various business processes. The company has already experienced success in their innovation center in Germany. For example, wearable technology experiments were conducted during which picking procedures were optimized through the display of directions on smart glasses.

Click here to read more on DHL’s new innovation center.

Have a nice weekend!