Trends—March 2012
Nissan Rides Waves of Sustainability
What could be more sustainable than a slow-steaming solar-powered ocean vessel transporting electric cars?
Japanese automaker Nissan recently debuted the Nichioh Maru, a roll-on/roll-off coastal transporter ship that replaces traditional diesel-powered electricity generators found on most vessels with 281 photovoltaic solar panels mounted above deck.
Global automotive manufacturers have been competing in a tight race to develop, produce, and sell next-generation hybrid and electric vehicle models while demand is hot. But Nissan’s new ship is sure to turn heads and idle engines in an industry that has a penchant for exploring innovative green solutions.
German manufacturer SkySails, for example, has already captured the market—and Mother Nature—with its fuel-saving wind propulsion system. Other steamship lines, notably Wallenius Wilhelmsen, are developing prototypes for zero-emission cargo ships completely powered by renewable energies such as solar, wind, and wave power, and hydrogen-powered fuel cell engines.
The Nichioh Maru is more akin to a LEED-certified marine vessel, if such a standard existed. Capable of meeting most of the ship’s electrical power requirements, the solar panels reduce the amount of diesel fuel burned to generate electricity for each trip. The vessel is also fitted with energy-saving LED lighting throughout its holds and living quarters, and low-friction paint on the hull allows it to slip through the water more easily. And though it is still powered by a huge diesel engine, that engine is controlled electronically to ensure it burns as little fuel as possible.
The new ship will lower Nissan’s fuel bill by 1,400 tons of diesel and reduce carbon emissions by 4,200 tons annually, the automaker reports. For the time being, the vessel will be used on domestic shipping routes to deliver the latest 2012 Nissan Leaf electric cars.
The Supply Chain World in 2050
Deutsche Post DHL recently released the findings of a study that projects possible future states of trade, business, society, and supply chains 40 years from now. The study, Delivering Tomorrow: Logistics 2050, gives supply and demand forecasting a whole new meaning.
The study examines five different scenarios of life that are based on a detailed analysis of critical factors—including trade and consumption patterns, technological and social trends, and climate change—and estimates their probable impact on people’s behavior and values in 2050.
Among the five scenarios:
1. Untamed economy, impending collapse. Unchecked materialism and mass consumption characterize the world in 2050. The relentless exploitation of resources feeds this non-sustainable way of life, a development that stokes climate change and causes natural disasters to mount.
Demand for logistics and transport services climbs sharply. A global transportation super-grid ensures rapid exchange of goods between centers of consumption. But as climate change advances, supply chains are increasingly disrupted, a development that presents additional challenges for logistics companies.
2. Customized lifestyles. This scenario describes a world where individualization and personalized consumption are pervasive. Consumers are empowered to create, design, and manufacture their own products. Newly developed 3D printers play a major role. This leads to a rise in regional trade streams, with only raw materials and data still flowing internationally.
Decentralized energy systems and infrastructure complement customization and regional production. The implications for logistics include a vastly reduced need for long-distance transportation of finished and semi-finished goods due to value chain localization.
Logistics providers organize the entire physical value chain. They also handle the encrypted data streams required to transmit construction and design blueprints for 3D printers. Decentralized production turns strong regional logistics capabilities and a high-quality last-mile network into important success factors.
3. Paralyzing protectionism. This is a world state triggered by economic hardship, excessive nationalism, and protectionist barriers. Globalization has been reversed. Technological development is lagging. High energy prices and dramatic supply scarcity lead to international conflicts over resource deposits. Implications for the logistics sector include challenges posed by the decline in world trade and the resulting regionalization of supply chains.
Governments view logistics as a strategic industry. As relations between some blocs and countries are extremely strained, logistics providers in bloc-free countries act as intermediaries in international trade brokerage.
4. Mega-efficiency in megacities. In 2050, megacities emerge as the world’s power centers and are the drivers and beneficiaries of a paradigm shift toward green growth.
To overcome the challenges of expanding urban structures such as congestion and emissions, megacities become champions of collaboration. Robotics revolutionize the world of production and services. Consumers change their habits: they usually rent products instead of purchase them. Highly efficient traffic concepts relieve congestion.
A global super-grid with mega transporters, including trucks, ships and aircraft, as well as space transporters, opens important trade connections among the world’s megacities. Logistics service providers are entrusted to run city logistics, utilities, and system services for airports, hospitals, and shopping malls.
5. Global resilience—local adaptation. This scenario describes a world initially characterized by a high level of consumption thanks to inexpensive, automated production. Due to accelerated climate change, however, frequent catastrophes disrupt supply chains and lean production structures, resulting in repeated supply failures.
The new economic paradigm is distinguished by a shift away from maximizing efficiency to mitigating vulnerability. This radical move toward redundant production systems and a change from global to regionalized supply chains allow the global economy to better weather troubling times.
Deutsche Post DHL’s resilient world of 2050, comprised of regionalized trade, relies on a logistics sector that ensures supply security as a top priority, with backup infrastructure to guarantee reliable transport in unstable and hazardous times. Instead of complex just-in-time delivery processes, huge warehouse structures located close to the manufacturer are seen as indispensable buffers.
Risky Business
With so much volatility and change in today’s market, and companies stringing together new global sourcing and selling locations—sometimes as a consequence of such volatility—retailers and manufacturers are increasingly focusing on risk in their supply chains, according to KPMG’s latest global CFO Consumer Markets survey.
The auditing firm’s report, Turning Global Risk into an Opportunity, surveys 350 senior finance executives in the retail, food, drink, and consumer goods manufacturing industries.
Forty-four percent of respondents cite economic uncertainty as the biggest risk global consumer companies face, followed by political instability (27 percent)—highlighted by recent clashes in China and the Far East over large-scale job cuts—and ongoing concerns in the Middle East and North Africa.
Consumer companies also cite supply chain issues as one of their greatest operating risks in emerging markets, especially given the circumstances of the past year: the explosion of Japan’s Fukushima nuclear plant, political upheaval in Asia, floods in Thailand, and the earthquake in New Zealand.
Companies are moving toward risk reviews as finance leaders and their boards meet more frequently to discuss key concerns. Weekly risk reviews more than doubled according to respondents, from slightly more than seven percent two years ago to 19 percent today, with less than six percent now conducting reviews annually.
Supply Chain CSI
The Defense Logistics Agency (DLA), which provides the U.S. military and other federal agencies with logistics, acquisition, and technical services, is taking a script out of the CSI television franchise as it looks to combat counterfeit parts in its supply chain.
Counterfeiting is a major concern for the DLA, especially within its microelectronics sourcing and distribution activities. These components are used in mission-critical systems where quality, security, and cost considerations are extreme.
The agency is currently working with Altera Corporation, a microcircuit manufacturer, and Applied DNA Sciences (APDN) to explore the feasibility of using botanical DNA to authenticate microcircuit chips.
The process embeds botanical DNA in the ink used on products, and a handheld laser reader can detect that mark. The item can be swabbed and the sample sent to an APDN facility to forensically determine the unique DNA characteristics applied to a specific product. DLA is conducting further pilots to explore the viability of using this technology throughout its supply chain.
Quadropoly Takes Over Piedmont Triad
One hallmark of logistics and supply chain’s mainstream progression is its growing presence in education curriculum, from post-graduate programs at leading research universities to survey courses in high schools and vocational schools. Now some institutions are going one step further by making logistics a core area of research. The latest example is the collaboration among four community colleges to manage the North Carolina Global Logistics Center in the state’s Piedmont Triad region.
The 80,000-square-foot center is being built at Guilford Tech Community College’s northwest campus. Forsyth Technical Community College, Davidson County Community College, and Randolph County Community College will partner to run the facility and work with local companies to help them move their global shipments. Funding will be provided through a mix of revenue generated by course offerings, and self-supporting activities such as consulting, membership dues, and grants.
The Piedmont Triad is a hot market for economic growth as industry looks to expand the surrounding region into an Aerotropolis. FedEx’s decision to locate its Mid-Atlantic hub at Piedmont Triad International Airport in 2009 precipitated a great deal of investment interest from fast-moving industries—a complement to the area’s well-established textile and furniture trades.