Automation is the tremendous opportunity that continues to give and give and give.
-Scott Luton
Episode Summary
The Buzz is Supply Chain Now’s regular Monday livestream, held at 12 noon ET each week. This show focuses on some of the leading stories from global supply chain and global business, always with special guests – the most important of which is the live audience!
Welcome to 2024! In this first Buzz of the new year, hosts Scott Luton and Greg White discuss some of the top news stories and trends in supply chain and industry today. Listen in and learn more about:
- The latest updates regarding the Red Sea, and the ramifications that continue to deepen due to attacks on vessels by Houthi rebels
- The latest Purchasing Manager’s Index from ISM, indicating contraction in manufacturing growth in December 2023
- Predictions for the start-up market in 2024
- How 2023 was a tough year for beer
- And more!
Episode Transcript
Intro/Outro (00:03):
Welcome to Supply Chain. Now the voice of global supply chain supply chain now focuses on the best in the business for our worldwide audience, the people, the technologies, the best practices, and today’s critical issues, the challenges and opportunities. Stay tuned to hear from those Making Global Business happen right here on supply chain now.
Scott Luton (00:32):
Hey, good morning, good afternoon, good evening. We’re interview are Scott Lutton and Greg White with you here on Supply Chain. Now welcome to today’s live stream, Greg, how are we doing?
Greg White (00:43):
I’m doing well, Scott. How are you doing? Happy New Year. I guess because it’s still just past a week, right?
Scott Luton (00:51):
It is, it is. And of course, as you know, it may not be everyone’s first buzz of the year, but is the first buzz of the year of 2024 our first buzz here.
Greg White (01:02):
Right.
Scott Luton (01:03):
Alright, Greg, let’s get into our first topic here today. Most folks may not be surprised where we’re going to start. We’re going to be starting with this update, what’s going on in the red seat as the ramifications continue to deepen due to attacks on vessels by hhy rebels. Now as reported here by supply chain dive, certain ocean shipping lanes, their rates have increased from 55% to 151% with the biggest increase being, as you might imagine, that Asia to Northern Europe route, right? But that doesn’t yet even include all the surcharges that’s going to be kicking in this month, ranging from either 500 bucks to 2,700 bucks per container. Now, some shipping companies, Greg, like our friends at Maersk, are announcing that they’re going to be extending the diversion of vessels from the Red Sea for a while. Of course, many vessels are being diverted all the way down south and around the Cape of Good Hope in South Africa, adding a week or more of shipping time and plenty of extra costs. And unfortunately there’s no end in sight with this situation right now. Greg, your thoughts on what we’re seeing here?
Greg White (02:05):
It’s a little bit of opportunism in terms of the cost increases, which is not uncommon. And of course the are deeply depressed. We’re deeply depressed now, so everybody’s trying to make their money back. So that’s in a way a shame to see, but I think it’s necessary to go around that area. You’re a target by going through that area. It started out with just shipments to Israel and it’s expanded to pretty much any ship that flies any flag is going to take fire going through there. That’s right. Yeah. Iran, up to Iran, things supporting terrorism. So I don’t know what you do about, well I don’t know what you do about that, but I have a feeling there’s somebody that knows what you do about
Scott Luton (02:43):
That, right?
Greg White (02:45):
Well above our pay grade, but in the meantime you just have to deal with it, right? Or route it the other way around depending on where it’s coming from, right? That’s
Scott Luton (02:52):
Right. So we’ll keep our finger on the pulse as things continue to unfold. Of course, we’re all seeing reports. Many of y’all probably have seen the same things that the war in the Middle East could expand with Israel and Lebanon. So as always, praying for cooler heads prevailing and finding a path to regain some of the peace that we had at least back in the summer months. Alright, Greg, moving right along. Let’s talk about the manufacturing industry. One of our favorites around here. If you hear us say resource once, I bet you you’re going to hear us say resource 17 times on the buzz because finding good, valuable, credible resources that can really help. Hey, that’s an ongoing quest of ours. So I want to share this. Y’all heard us talk about this before, but we say a lot of acronyms. I’m going to break it down for a minute here, Greg, the Institute for Supply Management, A-K-A-I-S-M.
(03:40):
It’s purchasing managers index, AKA, the PMI, right? So it’s a report released each month that gauges a variety of things, especially as to what’s going on in the manufacturing industry. So here recently released in the last couple of days, the PMI for December came in at 47.4%. Now what does that mean? You ask? Well, Greg, for context, anything below a reading of 50% indicates contraction in the manufacturing industry and above a 50 means there’s economic growth in the same. So the December numbers indicate, put that logic overall contraction, but a little bit of good news, the number is a bit higher than the previous month. A couple observations from the data from this recent report, new orders were down in December. Input costs for manufacturers are up things like steel, aluminum, plastics, you name it. And employment in the manufacturing industry was almost flat when you look at December, 2022 to December, 2023. And we all know that finding talent is one of business leader’s top concerns, especially manufacturing. Right? One last thing, Greg, before I get you to comment here. Timothy Theore, I think is how we pronounce his last name. He’s been chair of the Institute for Supply Management, again, ISM Manufacturing Business Survey Committee for quite some time. He said that he sees the PMI showing growth starting in March, 2024. Now I might be a little more bearish than he, but Greg, what say you
Greg White (05:03):
That seems awfully quick for turnaround, doesn’t it, Scott? Yes. Yeah, possibly. Obviously consumers have been very resilient. That means we just keep on spending money. We don’t have, at least in America, that’s what it means is the credit card debt continues to reach a new record almost every week or month. But the employment is a challenge. But I really think that this lull, that little bit of this lull and the fact that employment has stayed steady is actually a good thing. They had a lot of open jobs. I think this will motivate manufacturers force, maybe manufacturers to start to look seriously at automation because these new generations, they’re not going to come in right into the, what do we call ’em? Dark, dirty, dangerous, and dull jobs. And manufacturer unfortunately is considered one of those. So people have been staying away in droves from the manufacturing industry for a couple of years, a few years now, and I think it’s a great opportunity to mechanize or automate or AI or autonomous or whatever you can do wherever you can do it, and create some of those efficiencies and frankly, just keep the lines running because there just aren’t a lot of people that want to get involved in that.
(06:16):
We’ve been defending jobs that should have been automated decades ago anyway in manufacturing in a lot of cases. So it’s probably time to go ahead and do that as that generation mainly baby boomers exits the workforce at about 10,000 a day.
Scott Luton (06:29):
Wow. Excellent points, Greg. And I agree with you. Automation and tremendous opportunity that continues to give and give and give. Especially one of the things that was in with that said over the weekend was a Wall Street Journal article that talked about examples where companies like Kimberly Clark and Newell are using warehouse robotics more and more. In fact, Kimberly Clark has back in 2019 if I got these numbers and y’all can check it out. And with that said, I think they were leveraging 30 warehouse robots and that has increased over 300 across its North American footprint to do, amongst other things to overcome the hard search for talent. So excellent point there, Greg.
Greg White (07:05):
I mean, I think in certain economies there’s still a place for labor. Labor is still less expensive and relatively available in the Far East, for example, but not in the states as much, right?
Scott Luton (07:16):
Yep. Alright. As Eno says before we move on to our next one, COVID-19 Ukraine, Russia War, red Sea attacks, seems disruption is now a constant in global supply chain. Greg. I think it’s been a constant for decades, you think?
Greg White (07:30):
Yeah. Yeah, it has. We hear about it 24 7 now, right?
Scott Luton (07:35):
Right.
Greg White (07:36):
We talk about the great toilet paper shortage of 2020, which finally has people had people. I don’t know if we still have those people interested in or at least aware of the supply chain and if not the intricate complexities, but that it is very complex and can be impacted by a lot of things. So yeah, I think that it’s true. I wouldn’t say these are more disruptive times, it’s just that now people give a damn about supply chain whereas they didn’t before
Scott Luton (08:05):
As
Greg White (08:05):
Evidenced by many conversations. Many very brief conversations at cocktail parties where someone says, what do you do? And you say you’re in supply chain and you can literally watch their eyes glaze over.
Scott Luton (08:16):
Good stuff. I’ve been in some of those cocktail parties the last couple of years. Alright, this next story, Greg, I’m really looking forward to getting your take here. Talking startups and of course you’re the startup Whisperer is one of, I think the names I have coined for one. Greg White. Thank you. I’m going to share a couple of things here and then we’re going to get Greg’s take, right? So we’re talking about the 2024 startup market, and as y’all know, many of y’all may know startups are everywhere. Of course we saw a lot of them, especially a couple of years ago in the global supply chain space. So neat read from our friends here at Medium who they gathered a few leaders of comment on the startup environment for 2024. This new year here, I’m going to cherry pick from some of their predictions and then we’re going to get Greg White’s predictions.
(08:59):
So a lot of companies are going to die, startups are going back to the office. Chatbots aren’t the next big thing. Quick comment there. I just had my really first practical and successful exchange with a chatbot last week or so. I really missed it myself. Yeah, let’s see here. Bigger and badder cyber attacks are coming, no doubt there. Be prepared for more mergers and acquisitions and mega deals they say. And then I really do love this one. The human factor will only get more important. All that is from this medium article. So y’all check that out. But then Greg White as a fellow founder and entrepreneur, but also you’re a big investor in startups around the world, coast to coast, you name it. What’s your thoughts around what we’re going to see in the startup space in 2024
Greg White (09:38):
While it’s becoming news now, it’s been prominent in the industry for almost a year now. Remember about this time last year, we were talking about the banking meltdown. I dunno if everybody remembers that, but Silicon Valley Bank, the largest bank in venture capital, let’s just say in technology investment with Belly up and a number of other banks with ’em. So it’s really been over the course of the last, let’s say nine to 12 months, that investors are much, much more discerning the fomo, fear of missing out, where you give unsavory, unethical founders endless amounts of money and they burn it to the ground. Although we have heard about a few companies that have gone completely away after literally getting billions of dollars of investment, those days are gone and investors are expecting a line of sight to things like cashflow positive and profitability and things like that.
(10:30):
So it’s a different world and there’s no doubt, it’s funny when you said the mergers and acquisitions and mega deals, I think that should be number one because of what is number one, A lot of companies are going to tail off at very least are already are or die. And that’s a great opportunity to take somebody who has a good team or good product or a good market or any combination of those that’s just not working right now and recapitalize that and make good use of that technology to make business of the world work, consumer experience whatever better. So there are a lot of those opportunities because these companies that were high flyers during the Go-go days when everybody was spending other taxpayers’ money, they’ve sort of come back to earth now and yet they are still good companies. They just couldn’t meet the, or follow up on the expectations set during the Covid days, right?
(11:26):
So we’ll see a lot of that. And it’s interesting, I don’t think chatbots, I don’t think chat GPTI don’t think LLMs are a big thing. They’re very, very cool and there’s a lot of great uses for them, but they’re basically administrative tools as a friend of mine called ’em a parlor trick, but they’re in generative ai. There are some really good tools that can really make a, so it’s a good gateway to learning about generative AI and the value and possibilities of it and then turning it into really and truly valuable complex problem solving tools. Okay.
Scott Luton (12:04):
Alright,
Greg White (12:05):
There you go. There’s a dissertation for you.
Scott Luton (12:07):
Take that to the bank from the one and only Gregory S. White and we look forward to more updates on some of your exploits and ventures later this year. Greg. Alright, so folks, check out that link there. Amanda dropped it here. So Greg, we got one more story that we want to get to here today. Now we’re going to have a little fun with this. We’re talking beer, right? Or as my son Ben would say, when he was younger beard, he always liked adding a D at the end there. Interesting article from CNBC that says not only was 2023 a tough year for beer, but that beer drinking here in the US is at its lowest level in a generation, Greg. That’s right. For the first time since 1999, beer shipments are going to come in below 200 million barrels and Americans for the beer that they are buying, they’re doling out more money, buying more expensive beer. Did you know that the imported beer, I’m going to mispronounce this, but Greg, you’ll hook me up. Modelo Al, I say that right Greg,
Greg White (13:06):
Pretty close. Yeah.
Scott Luton (13:07):
Okay. Really close. Became the most popular beer in the US in 2023, and that stuff’s not cheap. So Greg, your thoughts on what we’re seeing across not only the beer industry, but maybe the greater beverage industry?
Greg White (13:18):
Well, this is all spawned by Bud Light. The downturn in Bud Light can’t be taken up by any accumulation of beers. Modelo, which is also owned by Budweiser, except in the States where it’s licensed to another company, I think it’s Constellation Brands or somebody like that. Modelo is the most popular beer. What happened was the top beer fell off and Modelo went up some, but it still doesn’t even closely approach what Bud Light was selling. So this is funny. Met a guy in Vegas who worked for Anheuser-Busch. And the impact of it is not just on on the beer industry in general, because I’m guessing that some of those people must have just quit drinking beer. I mean, I think that’s not necessarily a bad thing, but I think that’s really what has happened here. And it has to be, I mean, I’m sure lots of other beers have seen a downturn, but really the only one that could impact the industry singularly is Bud Light because it was so far in away the most popular beer, at least in America, which I’ve never understood, stood
Scott Luton (14:22):
At least not since college, right?
Greg White (14:23):
Never a huge fan of the flavor of Bud Light. Really? Yeah,
Scott Luton (14:27):
If we’re talking about college days, if it was cheap and cold, it had me, right? But
Greg White (14:33):
Yeah, well, I mean I could tolerate the flavor if it was really cheap beer like Wheatman or Black Label or something, some of those really awful ones.
Scott Luton (14:43):
Bush Light and the Walkie’s Best or something that come to mind from back in the day, folks.
Greg White (14:47):
Yeah, back when a premium beer was Mic
Scott Luton (14:50):
Light, right? Isn’t that crazy?
Greg White (14:52):
The Globe, right?
Scott Luton (14:53):
It’s crazy. Folks check out the article. One of the points that this read from CNBC shares is that Sugar, I think they called it Sugar First. Alcoholic Beverages have grown dramatically and are cutting into more of the beer types of beverages.
Greg White (15:07):
So those are the seltzers, things like that.
Scott Luton (15:09):
Yeah, I’ve seen countless commercials maybe when I’m watching either the NBA or the NFL, and it’s this tea flavored, I’ll call it beverages, t and t, it’s got the old track from Oh, the band as the backdrop. See? Yeah. Yeah. And I grew up drinking and I love Sweet Tea. I’d had drink Sweet Tea in decades, but I guess I’m a purist. I’m not sure how I can wrap my head around Alcoholic Sweet Tea, Greg. I don’t know. Does that sound good to you?
Greg White (15:36):
Yeah, I mean I think it’s possible to do, Scott. It is possible to
Scott Luton (15:39):
Do
Greg White (15:40):
So. I love Arnold Palmer and Arnold Palmer, which is Sweet Tea and Lemonade mixed together. And it’s funny, I would order those at lunch and people would be like, you drink at lunch, just tea folks
Scott Luton (15:55):
Pop
Greg White (15:56):
Caffeine. But they have renamed this drink, either a dirty Arnie for ar Arnold Palmer or a John Daly, and it’s basically, it is an Arnold Palmer with vodka in it. And on a warm day, one might be tempted
Scott Luton (16:13):
Again, if it’s cheap and cold, we could be tempted. I know I could be tempted.
Greg White (16:17):
There is nothing cheap right now. Oh my gosh. It is incredible what you pay for everything.
Scott Luton (16:23):
You’re so right. You’re so right. Whether it’s grocery store or getting a bite to eat or you name it.
Greg White (16:28):
I’m surprised the beer consumption has gone down with, I saw an article today, I think it was in Forbes, maybe insider, I’m not sure, but how much it has gone up to raise a child. So in 2021 or 2022, it went up 41% because the cost of Staples is what’s really up of basic items. And then it went up again over 20% the following year. So it was already, if you include college, pretty costly to raise a child. Yeah, I don’t know what the number is these days, but it would be
Scott Luton (17:00):
About 7 billion I think.
Greg White (17:02):
Feels like it. Yeah, I know you could buy a Ferrari for it. I do know that.
Scott Luton (17:08):
Well, good stuff, Greg. Before we wrap here, and I’ll tell you, this is an express version. So folks, hopefully you’ll have a great rest of your Monday, but I do want to mention Greg today, I think today, and Catherine correct me if I’m wrong, and please drop the link there in the chat if you would. We published a great episode, Greg, do you remember when we sat down with Sean Olsson from Supply Pike and of course Supply Pike is working with suppliers of the big retail behemoths to be able to get what’s their line, Greg, get paid, get Better, I think, and Sean Olsson is an ex Amazon team member and bring some really interesting views and expertise to the table. So y’all check out that podcast we just released. We’ll drop it in the chat and make it easier for you. But Greg, that was a great episode and Sean was, man, I could have spent three, four hours talking supply chain retail and maybe music with Sean Olsson, if you remember that. Yeah,
Greg White (17:56):
Well I love the lesson, right? I mean, which is lots of people are getting into, they want to drop ship, or by the way, don’t drop ship, create a product, drop shipping is not very long lived. I can give you hundreds of examples of that. But they want to get into that Amazon marketplace and Amazon is because it’s a high volume and a very efficient organization. They’re very unforgiving when it comes to your ability to perform. And they have every right to be, and that is precisely what Supply Pike does, is they act as intermediary to make sure you are ready to go when you flip the switch and start selling on, let’s just say Amazon for argument’s sake,
Scott Luton (18:34):
Right? Well, really good stuff. We dropped a link there. Y’all take a list and let us know what you think. Sean is a bright and enjoyable chat. Great episode. We enjoyed creating here for y’all. Alright, Greg, what a great start to the year. Really, the year didn’t just start. We’ve been cranking it out. I don’t think we did stop, but this is the first buzz of the 2024 New Year. Looking forward to big, big things coming. Greg, always a pleasure to knock out these episodes with you.
Greg White (19:00):
Likewise,
Scott Luton (19:01):
We’ve got a big, I’ll tell you, I think our live schedule really starts to kick in folks. You’re going to have to bring a seatbelt to keep up with us in about two or three weeks. We got a lot of stuff to get to you. A lot of exciting businesses, dynamic and expert business leaders that are going to be bringing it. And so get ready for not just best practices, but new innovative practices, right Greg? Yeah.
Greg White (19:24):
Here’s something. Learn something, do something.
Scott Luton (19:28):
Ooh, I like it,
Greg White (19:29):
Huh?
Scott Luton (19:30):
Here’s something. Learn something, do something. Or am
Greg White (19:33):
I, it sounds much cooler when you say it like that.
Scott Luton (19:37):
Well folks, whatever it is, y’all know it’s on the do, right? Yeah. Don’t just listen, whether it’s us or anyone else out there, don’t just watch. Take something from these conversations here today and do something with it, right Greg?
Greg White (19:52):
Yeah, no doubt. Deeds not words. Scott, can I say that? I know that’s your thing.
Scott Luton (19:56):
Please. Deeds not words folks. It’s about action. The new year needs a lot more and new action, right? Alright folks, thanks for being here. Thanks for an outstanding 2023. Thank you for an exciting 2024. We appreciate all the feedback, all the comments, whether it’s on live shows or some emails or social messages, we get, keep the feedback coming, right? We really are grateful for our global community, global ambassadors, global practitioners out there doing big things and sharing it with us. So with all that said, on behalf of our team here, Scott Luton challenging you to do good, give forward and be the change that’s needed. And we’ll see next time right back here at Supply Chain now. Thanks everybody.
Intro/Outro (20:40):
Thanks for being a part of our supply chain now, community. Check out all of our programming@supplychainnow.com and make sure you subscribe to Supply Chain now, anywhere you listen to podcasts. And follow us on Facebook, LinkedIn, Twitter, and Instagram. See you next time on Supply Chain. Now.
Would you rather watch the show in action?
Check Out Our Sponsors
