Supply Chain Weekly Wrap-Up 02/03/2023-02/09/2023

Supply Chain Weekly Wrap-Up 02/03/2023-02/09/2023

Time Stamp: February 10, 2023 9:05 AM
Source Node: 1949979

Amazon to streamline operations after unprofitable year

After reporting a $2.7 billion loss in 2022, Amazon is now focusing on streamlining operations in an attempt to recover and boost productivity. The company has already set plans into motion to reach this target. Over 18,000 positions in human resources and within its stores and device businesses were terminated, the CEO Andrew Jassy stated this was to help “streamline our cost.”

A move to optimize their current practices in their supply chain would be the best solution. In their press release of their fourth quarter results, their domestic market is still flourishing. Same-Day Delivery is now faster in major metropolitan areas in the U.S., such as Los Angeles, San Francisco, Phoenix, Sacramento, and Portland, Oregon, where customers can now receive hundreds of thousands of items within hours. Amazon’s new Same-Day Delivery site in Sacramento is set to be the world’s first logistics facility certified as Zero Carbon by the International Living Future Institute.

Overall, the company will turn its attention from expansion toward productivity as it looks to control spiraling costs across its supply chain.

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GM signs deal with GlobalFoundries for Chip Supply

General Motors (GM) recently signed a deal with GlobalFoundries, a semiconductor manufacturing company, to exclusively produce microchips at its New York plant for future GM vehicles. This deal comes as GM foresees the incorporation of microchips in its products as an imperative. Doug Parks, GM’s executive vice president of global product development says as such in a statement made yesterday. “We see our semiconductor requirements more than doubling over the next several years as vehicles become technology platforms.”

GlobalFoundries will position itself to take advantage of attempts to remake the semiconductor supply chain. The U.S. are pushing through support packages and grants aimed at increasing local manufacturing of the devices to lessen the dependence on East Asia.

A deal of this manner where a U.S. car manufacturer is choosing to source microchips from a U.S. based chip company, is an example of re-shoring that I anticipate becoming more common. For decades Taiwan has held a monopoly on the manufacturing of microchips. However, with the recent events of the pandemic and political turmoil with the People’s Republic of China (PRC). It may be in the best interest of major U.S. tech and automotive companies to look for domestic chip suppliers. As this will stabilize their supply chain and production.

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Biden urges for supply chain resilience

President Joe Biden touted what he refers to as the rewritten script of U.S. manufacturing in his second State of the Union address on February 7th. What can be interpreted as a move to re-establish the U.S. history of manufacturing and industry that has seen a severe decline in the recent decades. China overtook and now leads the world in manufacturing, which has benefited their economy tremendously.

The president remarked, “Where is it written that America can’t lead the world in manufacturing again?” he said. “For too many decades, we imported products and exported jobs. Now, thanks to all we’ve done, we’re exporting U.S. products and creating American jobs.” As the U.S. economy recovers from the pandemic and its symptoms, like the current rate of inflation. Re-shoring manufacturing for American brands maybe the solution to boost the economy. The rustbelt states has the highest rate of unemployment. A return of domestic labor and resourcing can alleviate the pressures of a recession.

What has been done already? The CHIPS and Science Act and the Inflation Reduction Act are examples of a push to bolster U.S. manufacturing. The two laws have led to billions of dollars in funding for manufacturing projects in the country, as well as tax incentives for domestically made electric vehicles and components.

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