How to make fragile global supply chains stronger and more sustainable In 2019, global supply chains moved more than US$19 trillion in exported gohttps://www.tc-inspection.com/how-to-make-fragile-global-supply-chains-stronger-and-more-sustainable_n29ods. The production and sale of many items we need and use — including toys, clothes, food, electronics, and home furniture — depend on global supply chains. For most of us, supply chains are no longer an abstract concept. The COVID-19 pandemic raised our awareness about the interdependence of our economic systems. We now understand the many ways these chains directly shape and impact our lives. The pandemic has also revealed the fragility of global supply chains as U.S. President Joe Biden and others warn of the impact on the world economy of continuing supply-chain bottlenecks. A supply chain is a set of organizations — like suppliers, manufacturers, distributors, and retailers — that work together to provide end customers with a specific product or service. The supply chain becomes global when the product or service crosses multiple international boundaries. Global supply chain organizations are directly and indirectly dependent on each other. Supply chain problems cascade Global supply chains have conventionally been focused on achieving financial efficiency above all else. The result is messy and fragile global supply chain systems. In practice, the decisions made and actions were taken by each organization affect the performance of the entire supply chain. A problem at any point feeds other problems at different stages of the chain. A product shortage at a retail store, for example, might be caused by unsuspected problems such as labor issues, raw material shortages, or clogged pores. Semiconductor shortages are disrupting the automobile industry. Meanwhile, the cost of moving a container from China to the west coast of North America is estimated to have increased by 650 percent since before the pandemic. Race to the bottom The pursuit of financial efficiency has shifted global production to low-cost regions, increased the flows of freights, caused port congestion, and eroded the resilience of supply chains. Cutting costs above all else became a race to the bottom. It resulted in global economies with limited redundancies, contingencies, and safeguards. Fragile global supply chains are exacerbated by the fragmentation of decision-making processes, limited collaboration between buyers and suppliers, and transactional management. There is no obvious centralized business or authority commanding and controlling these chains. Instead, several companies co-operate and compete for the value created. Global supply chains also account for large contributions to greenhouse gas emissions and have an impact on air, land, and water biodiversity and geological resources. A typical company’s supply chain is responsible for 80 percent of its greenhouse emissions and more than 90 percent of its contribution...

Sourcing from Asia, putting aside petty rivalries and long-held jealousies, India, Bangladesh, and Sri Lanka are beginning to realize a combined force could grow the apparel and textile business for all three countries. More than just politics and rhetoric, industry leaders are looking at the bigger picture and seeing how working together could yield greater success than going. India, Bangladesh, and Sri Lanka's government and apparel and textile leaders believe that they might be stronger than on their own. from sourcingjournal.com

IKEA to shift more production to Turkey to shorten the supply chain Sweden's flat-pack furniture giant IKEA is planning to move more production to Turkey to minimize problems with global supply chains and increased shipping costs, the company's chief financial officer for Turkey said. Products it expects to make and then export from Turkey, including armchairs, bookcases, wardrobes, and kitchen cabinets, are currently shipped thousands of miles from East Asia to the Middle East or European markets. "Due to shipment problems we faced during the (Covid) pandemic, we are attempting to have more manufacturing in Turkey," chief financial officer Kerim Nigel told Reuters, declining to estimate how much capacity might be moved. "We all saw in the pandemic that diversification is so important," Nigel said. "It might not be a good strategy to produce items in one country and then try to transport them all around the world". The company has seven stores in Turkey and already exports three times as much as it imports into Turkey, where it currently produces textile, glass, ceramic, and metal products for global export. Nigel said the cost of a container from east Asia had leaped to $12,000 from $2,000 before the COVID-19 outbreak last year. "It is more rational to have them manufactured closer where they are sold. That's why we want to have them manufactured in Turkey". IKEA's move follows similar steps by other European brands such as Benetton, which is bringing production closer to home by boosting manufacturing in Serbia, Croatia, Turkey, Tunisia, and Egypt to halve production in Asia. CURRENCY CHALLENGES Straddling Europe and the Middle East, Turkey says it is well placed to benefit from changes to global supply chains. "Turkey with its strategic location has posed a strong alternative to pre-Covid era's single-centered and Asian-based production network," Turkey's Vice President Fuat Oktay said on Monday. While Turkey's strategic location and strong manufacturing base may be a plus, Nigel said hedging against moves in the lira - which fell close to a record low on Wednesday - remained a major challenge for retailers, while high-interest rates pushed up financing costs for investors. "It is really difficult to hedge FX positions when interest rates are above 20%," he said, adding the company was using 3- to 6-month hedging contracts to offset currency volatility. Reporting by Ceyda Caglayan; Editing by Dominic Evans and Elaine Hardcastle from  reuters.com

Bangladesh has overtaken Vietnam to reclaim its position as the 2nd largest clothing exporter behind China. Bangladesh has come out ahead in the race for the world’s No. 2 clothing exporter after China—at least for the moment. After ceding ground to Vietnam in 2020, the South Asian nation clawed back its lead in the first seven months of 2021, dispatching $18.8 billion worth of apparel exports versus its rival’s $16.9 billion,… from sourcingjournal.com

The J.P.Morgan Global Manufacturing Producers Manufacturing Index, produced by IHS Markit in association with the Institute for Supply Management (ISM), was subdued by supply chain disruptions and material shortages in September. Although output growthttps://www.tc-inspection.com/supply-chain-disruptions-limited-global-production-growth-in-september_n25h accelerated for the first time in five months, it remained among the slowest during the current 15-month sequence of expansion…. from sourcingjournal.com

Apparel imports from Vietnam will not attract additional tariffs from the US American Apparel and Footwear Association has welcomed the recent announcement of Vietnam addressing US concerns in the Vietnam Timber Section 301 investigation. “We are pleased to see that US apparel, footwear, and accessories imports from Vietnam will not be subjected to additional tariffs,” he said. “At a time when we are focusing on getting more vaccines to this key trade partner and unlocking snarled supply chains, removal of this tariff threat is welcome indeed.  We are also pleased to see Vietnam and the US solidify their work to guard against illegal timber harvesting an important step for Vietnam’s sustainability journey,” he said in a statement. “All tariff relief and removal of tariff threats are good to trade policy, as taxing Americans to get dressed each day is never a good negotiating tactic,” he added. AAFA has continuously pressed the Biden administration for additional Section 301 tariff exclusions and retroactive renewal of all expired exclusions. Last week, AAFA penned a letter to the US trade representative Katherine Tai on this issue and the simultaneous shipping crisis causing out-of-control freight rates, historic logjams at US ports, delays, and costs that are wreaking havoc on supply chains and America’s economic recovery. FromFibre2Fashion News