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2013

     As consumers continue to demand more technology in their cars, automakers and technology companies need to cooperate more closely to ensure the rapid and smooth development of cars that are fully connected to the Internet.

 

     That was the message at the Los Angeles Auto Show last week, when Ford global marketing chief Jim Farley said that the automotive and technology sectors are “at a tipping point,” where they need to work together better than they have to speed the roll-out of the services in cars that allow consumers to drive safely and interact with their favorite apps or other technologies, Reuters reports

 

     “The car companies have to change and the tech companies have to change,” Farley said.

 

    On the one hand, Ford’s push to offer seamless Internet “connected-car” features such as voice-activated commands, navigation software and entertainment features has had mixed results. While the carmaker is improving its in-car technology, Microsoft, Google and other software firms will ultimately determine how well web-connected features work, Farley said, an AutoNews article reports.

 

     “It’s important for us to acknowledge that the real value for customers with the connected car is outside of our auto industry,” Farley said. “For the car companies, it’s pretty clear the mobile digital economy is not in our hands.”

 

     Calling the car “the ultimate mobile device,” Farley said certain apps like navigation are endemic to the car experience and automakers will need to incorporate them really well. At Ford, they recognize the very large gap between customers’ experience on their phone, and how great that functions, and in-car traditional navigation experience, Farley said. So if the navigation system works so well on the phone, nobody would pay for it in the car, he said.

 

     “But it’s unsafe using phones in a car and that’s the reality,” Farley said.

 

     That means improvements on the part of Ford and other automakers include developing more “open architecture” for apps and smartphone integration. But tech companies have to change their approach as well, particularly by being more flexible in the interface they use, Farley said. They can no longer impose their interfaces on the car user, he also said.

 

     As an article in Detroit News notes, Ford bet years ago on its Sync infotainment system, which allows drivers to use devices such as smartphones to use apps and make phone calls through their car. Ford has sold 10 million vehicles with the Sync system. Be that as it may, Ford also is working to bring more built-in capabilities to its vehicles and beamed-in solutions that run applications through the cloud, Farley said.

 

     “For most customers, the mobile device that they already have is going to be perfectly sufficient to run a great number of apps that—with better integration with the car—will be intuitive and safer than today,” Farley said.

 

     The point that stands out the most to me was safety. As more cities and states ban the use of cellphones in various zones or entire cities, it will become a larger issue because people will still want to use their phones for various apps. Seamless connectivity between cellphones and vehicles would--hopefully--deliver a safer user experience.

     High-tech companies are making strategic shifts to their supply chain models to capture new growth opportunities, meet changing consumer demand patterns and enable greater customer-centricity, according to the results of a new survey.

 

     “Shifting market dynamics such as end consumer demand, emerging market growth and increased global competition are having significant implications for high-tech supply chains at every stage of the product lifecycle,” says Ken Rankin, high-tech marketing director at UPS. “It's critical for high-tech companies to align their supply chain strategies to broader business goals and build competencies around each stage of the product lifecycle to achieve greater customer centricity while also improving operational efficiencies and driving growth in new markets.”

 

     In looking through the results, I found several surprises in the fourth annual global “UPS Change in the (Supply) Chain” survey, conducted by IDC Manufacturing Insights and released by UPS. For instance, interest in near-shoring continues to grow. Globally, 27 percent of high-tech logistics executives are embracing near-shoring as one strategy to improve their customer service. When asked globally about the top drivers for near-shoring, 77 percent of the respondents said they wanted to improve service levels by bringing production closer to demand and almost 55 percent of them cited improving control over quality and intellectual property.

 

     Interestingly, many high-tech executives—including 82 percent of those in the U.S.—will continue to use their existing supply chain strategies. The two top reasons for not considering near-shoring, as cited by the survey respondents, are the cost benefits stemming from low-cost manufacturing countries and the location of key suppliers. Other key reasons for not considering near-shoring are that current sourcing footprint best supports expected global demand demographics, and that fixed infrastructure isn’t movable.

 

     It wasn’t surprising though to see that many high-tech companies have considerable plans for emerging markets. Indeed, growth for high-tech products in emerging markets is expected to be significant, and nearly two-thirds of the survey participants note that their companies have either already established a presence in emerging markets or expect to do so within a year. North American companies are the most aggressive when it comes to emerging market expansion, with 80 percent of them either in emerging markets today or planning to be there within a year.

 

     I was surprised to see how some companies plan to differentiate their products in today’s growing global competition. Executives from these companies say they are shifting from product quality as the primary focus to focusing on making their supply chains more customer-centric. In fact, 39 percent of those surveyed said their supply chains are built to be primarily customer-centric today, and that number is expected to grow to 44 percent of the represented high-tech companies over the next two years.

 

     There are, of course, “significant implications” to increasing customer centricity for the high-tech supply chain. For example, the biggest necessary change for those companies striving to improve customer service is to reduce lead times, which was cited by 71 percent of the respondents. Other key challenges are to improve planning, also cited by 71 percent of the respondents, and improve fulfillment, cited by 68 percent of the executives.

 

     If you are in the high-tech industry, does what you see in your company mirror the survey results? If you are in another industry, is your company adopting some of these same strategies?

     Shortages of drugs and biologics pose a significant public health threat, delaying, and in some cases even denying, critically needed care for patients. Preventing drug shortages remains a top priority for FDA.

 

     To further address that concern, The U.S. Food and Drug Administration released a strategic plan for preventing drug shortages and proposed a rule to require drug and biotechnology companies to promptly notify the agency of potential disruptions to the supply of medically important drugs last month, Reuters reports.

 

     The plan and proposal come in response to a 2011 order from President Barack Obama to solve the problem of drug shortages. In context, between 2005 and 2011, the number of new drug shortages quadrupled to 251. That figure declined to 117 in 2012 but there were still more than 300 ongoing shortages at the end of the year.

 

     The 2012 Food and Drug Administration Safety and Innovation Act called for the FDA to improve its response to imminent or existing drug shortages and to address the underlying causes of such shortages. The act also gave the FDA new authority to require drug manufacturers to notify it of potential supply disruptions.

 

     The proposed new rule, for which a comment period is open until Jan. 3, requires manufacturers of “medically necessary” drugs (those that are life-supporting, life-sustaining, intended for treatment of a debilitating disease or condition, or emergency medical care, among others) to notify FDA electronically at least six months before discontinuing production of the drug, an article on Pharmaceutical Commerce explains. Alternatively, in the case of unforeseen circumstances, the proposed rule calls for manufacturers to notify FDA as soon as possible and not later than five days after the interruption or discontinuance.

 

     Clearly, FDA cannot directly affect many of the business and economic decisions that contribute to drug shortages, but the agency can play a significant role as manufacturers work to restore lost production of life-saving medications. FDA can be most effective when there is time to plan, which makes it critical for manufacturers to notify FDA as soon as possible when manufacturing disruptions are expected.

 

    Indeed, early notification about possible shortages has enabled FDA to work with manufacturers to restore production of many lifesaving therapies. There has been a 6-fold increase in notifications to FDA since the Executive Order. These increased notifications, combined with allocation of additional FDA resources, have resulted in real progress in addressing shortages―FDA helped prevent close to 200 drug shortages in 2011 and more than 280 in 2012, the agency reports.

 

     That’s because when notified of a potential disruption in production, FDA can take a number of steps to help prevent or mitigate a shortage. Those steps may include to determine if other manufacturers are willing and able to increase production; expedite inspections and reviews of submissions; exercise temporary enforcement discretion for new sources of medically necessary drugs; and work with the manufacturer to ensure adequate investigation into the root cause of the shortage.

 

     All in all, FDA does seem to be expending significant resources to address the issue of drug shortages. The agency also seems to be preventing drug shortages. Nonetheless, it will be interesting to see if the new rule—if passed—will lead to better outcomes than have already resulted from the heightened awareness and voluntary response produced by President Obama’s 2011 Executive Order.

 

     What do you think?

     As companies face on-going talent shortages, it’s interesting to see different opinions about how to solve the problem. One possible solution, which certainly bears merit, is to increase wages.

 

     So, for example, a SupplyChainBrain link recently led me to a Commercial Carrier Journal article in which Kevin Jones notes that carriers are becoming increasingly anxious about finding good drivers. At the same time, good drivers want to know why, in a time of shortage, they aren’t being rewarded better. Then there are shippers, who hope trucks will continue to be readily available and affordable.

 

     There are a number of factors contributing to the on-going shortage of truck drivers. Chief among them is that a large number of long-time drivers are approaching retirement age. However, new regulations, notably the Compliance Safety Accountability program, have pushed many drivers out of the industry; productivity losses due to the new hours-of-service regulations will increase driver demand; and reluctance among fleets to add capacity in a sporadic economic recovery are all primary factors contributing to the shortage.

 

     This shortage is also different than the driver shortage a decade ago because that situation was brought on largely by the demands of a thriving economy, with some “regulatory drag” chipping away at truck supply, Jones explains. This time around, however, the imbalance is largely a matter of supply—and a capacity crisis is just an economic uptick away, suggests economist Noël Perry, managing director and senior consultant at FTR Consulting Group, in the Commercial Carrier Journal article.

 

     The big puzzle over the last few years is why driver wages haven’t already gone up more, Perry says in the article, noting that rates and wages were making double-digit leaps each quarter during the previous recovery. One possible explanation is that the wage data doesn’t count extra payments such as hiring bonuses and increases in assessorial charges, Perry says.

 

     Indeed, nearly half of carriers are offering sign-on bonuses compared to only 12 percent two years ago, consultant Gordon Klemp told trucking fleet executives during a recent symposium, Jones reports in his article. Bonuses range from $250 to $5,000 for solo drivers and from $2,000 to as much as $15,000 for teams, says Klemp, principal with the National Transportation Institute. Klemp also notes that according to recruiters, bonuses are here for the foreseeable future.

 

     At the same time, there’s no disputing that manufacturing suffers from a problem with people’s perception. As Patricia Panchak, editor-in-chief at IndustryWeek, recently explained, too many people viewed manufacturing jobs as low-paying, “dumb, dirty, dangerous and disappearing.” The industry as a whole has done much to address those misperceptions.  We’ve targeted these efforts to parents and high-school guidance counselors, who’ve been steering kids to college and away from manufacturing, she wrote.

 

     Now there’s a movement to change people’s perception of manufacturing work by renaming it. For instance, some people have begun to use the term “smartforce” instead of “workforce” to emphasize the intellectually demanding nature of factory work, Panchak writes. Others advocate calling manufacturing skilled workers “professionals,” she continues.

 

     Interestingly, Panchak then explains that she fears these efforts may be directed at the wrong people and don’t explicitly go far enough. Instead, she believes the manufacturing industry needs to challenge manufacturing leaders’ perceptions of production work, and to convince them not only to use a new term, but to change how they lead. The real and lasting solution to our skilled workforce challenge—and society’s perceptions about factory work—will come about when the majority of manufacturing leaders lead production professionals with the respect of professionals, Panchak writes.

 

     At the end of the day, money talks. So I have to believe increased wages may go a long way to improving perceptions about manufacturing and the supply chain. However, I also agree with Patricia Panchak that in many companies, it doesn’t seem manufacturing workers get the respect they deserve.

 

     What do you think? Would higher wages and more respect help solve a talented workforce  shortage?

     It’s always troubling to see news about counterfeit medicines—especially when the medicine is highly sought after and may prevent death. So I took it as good news this morning when I saw a Wall Street Journal article explaining that U.S. investigators are leading a probe into the widespread organized theft and black-market resale of malaria drugs donated to Africa by the U.S. government.

 

     Theft of malaria medicine is one of several challenges threatening to undermine years of progress in battling one of Africa’s deadliest diseases, which kills about 600,000 people annually. The U.S., along with other nations, has spent billions of dollars on a relief effort in the past decade.

 

     Indeed, Washington allocated close to $2.5 billion between 2006 and 2012 to the President’s Malaria Initiative (PMI), a program launched by George W. Bush in 2005 and led by the U.S. Agency for International Development, the WSJ article explains. Between 2002 and 2012, the U.S. also donated $7.3 billion to the Global Fund to Fight AIDS, Tuberculosis and Malaria—an initiative set up by the United Nations and Western governments that spends one-third of its budget on malaria control.

 

     Both programs spend a sizable percentage of their funds on distribution of Coartem, a malaria drug provided on a nonprofit basis by its manufacturer, Swiss pharmaceutical company Novartis. Coartem is one of the most widely used malaria drugs in Africa, with cure rates exceeding 90 percent in many clinical trials.

 

     But the effort has been partly hijacked by organized networks which steal large quantities of donated malaria drugs and ship them from East to West Africa, where they end up for sale at street markets. According to a person familiar with the U.S. investigation, more than 20 percent of donor-funded Coartem in Africa may be diverted each year—with a street value of about $60 million, the WSJ reports.

 

     One of the many problems is that traffickers of the stolen drugs often transport the drugs over land in trucks lacking air conditioning, which jeopardizes the drug’s efficacy in temperatures that can easily top 100 degrees Fahrenheit. Secondly, if people take these stolen pills that have been compromised—or fake pills, for that matter—the parasite continues to live and the people remain sick. Even more troubling is that if the drugs contain half-strength of partial active ingredients, the parasite may potentially become resistant to legitimate treatment, therefore making malaria tougher to treat even with authentic medicines.

 

     Detecting counterfeit medicine continues to become more difficult because the fake packaging looks extremely authentic. It’s only on closer exam that well-trained inspectors may notice a missing watermark or that the edges of a tablet are crumbling. What’s more, even doctors have been fooled, as an article that ran in The Guardian last winter noted.

 

     The good news, however, is that in addition to the current U.S. investigation into the situation, the U.S. Food and Drug Administration announced last spring that it had begun a public-private partnership to address the threat of drug resistance, limited availability of medication, and increased distribution of counterfeit or substandard anti-malarial medicines. So, to help identify those counterfeit or substandard anti-malarial medicines, including falsified products, the FDA is testing its Counterfeit Detection Device, called CD-3. The handheld, battery-operated device illuminates a product using a variety of wavelengths of light to provide a visual comparison of an unverified product with an authentic sample. This allows inspectors to identify suspect products and remove them from the supply chain, according to FDA.

 

     There are many issues to address, such as who would actually conduct the tests. Also, the tests need to determine how effectively the device can distinguish between legitimate medications and substandard versions. If the devices are found effective, and can be mass-produced inexpensively, their use could limit what has unfortunately become a profitable worldwide business in counterfeit drugs.

 

     What do you think—either about the U.S. investigation into stolen malaria pills or the use of new technology which may be used to identify counterfeit or substandard medicines?

     In an era when it seems people and companies alike have access to constant data feeds and real-time updates, the challenge then becomes to manage and make sense of all that data to competitive advantage. That sounds far easier than it actually is to achieve, of course.

 

     In a ChainLink Research article, Chief Research Officer Bill McBeath points out that there is tremendous potential to this continuous intelligence when it’s used in operational decision-making because no matter how good an organization is at planning and executing, the truth is, “stuff happens.” When that does take place, it’s an opportunity for real-time decision-making leveraging continuous intelligence.

 

     Making the right moment-by-moment decisions requires continuous situational awareness, which McBeath calls a clear, accurate, current, and full understanding of what is going on and what is most important so you can figure out the best course of action. The problem is that traditional enterprise systems aren’t designed to deliver continuous real-time situational awareness. Furthermore, such systems lack the ability to escalate those data points that are truly important for real-time decisions.

 

     Instead, McBeath explains a system providing continuous real-time situational awareness requires precision/granularity so there is sufficient precision of information, relevance/escalation to identify and escalate critical events or pieces of information, synthesis to create a coherent picture from different data streams, timeliness to enable real-time decisions and the ability to predict to deliver as much advanced warning as possible of impending events.

 

     While this range of capabilities doesn’t exist in traditional enterprise systems, there are alternatives. An emerging class of systems are optimized to integrate massive flows of geospatial and temporal data with all varieties of other types of data, incorporating rules engines that can pick out the needle in the haystack, as well as provide predictive analytics, in split-second time-frames required for real-time decision making, McBeath notes. By doing this non-stop, they are able to provide what he calls “Continuous Decision Intelligence.”

 

     There are many possibilities of how these types of situational awareness capabilities may be useful in operations, but I was most interested in two of McBeath’s examples. The first is real-time transportation management, which may include factors such as awareness of traffic, weather, congestion at a port or transloading facility, impactful events on the intended routes, a truck that has deviated from the prescribed route, temperature excursions in a temperature-sensitive load or real-time changes in demand. Having situational awareness can, for instance, call attention to a potential cargo theft in progress, allow re-routing of vehicles, offer the earliest possible warning of late shipments, and generally allow for agility in execution not possible without it.

 

     The second example is storm management so organizations are prepared when a storm is approaching, during the storm, and in the aftermath. Predictive intelligence that adapts with current data enables smarter prepositioning of assets, based on latest available storm information—whether its repair crews and equipment, or supplies that consumers will use before and after the storm, McBeath writes. It also enables smarter dispatching of crews and equipment during and after the storm.

 

     While there’s obvious significance to being aware of events, the real value is in being able to respond quickly and—more importantly—appropriately. So after receiving an alert that an event is likely, it’s necessary to be able to accurately model the event. The simulation must be backed by analytics that allow personnel to accurately model the event and the possible resolutions in real time. While simulating the event and the resolutions, they also must be able to collaborate with other people and other teams to ensure that the resolutions take all factors into consideration and will have the best chance of succeeding.

 

     Finally, it’s important to then compare different possible resolution options to determine which resolution will best resolve the situation while best meeting company objectives.

 

     What do you think? Does your company have clear visibility to real-time events? If so, are employees able to quickly determine what the best response is?