OneRouge Community Check-In - Week 116
This conversation is a continuation of our ‘Economic & Workforce Development’ series. Today we discuss the continued supply chain challenges locally, statewide and globally. We will also focus on how current and future disruptions in the supply chain will impact impoverished communities in Louisiana with featured speakers:
Enlight, Unite, & Ignite!
Quick Links: Notes, Zoom Chat, Community Announcements
Dr. Ye-Sho Chen (Professor, Ourso College of Business at Louisiana State University)
Thank you for granting me the opportunity to share with you what I have been doing on global supply chain management since 1985 when I came to LSU. Specifically, I focus on cultivating student entrepreneurs, empowered by digital technologies, to address the local needs and add value to our community.
Regarding Supply Chain: only as strong as the weakest link, let me start with iPhone as an example. Apple works with suppliers in more than 40 countries to make its products for the global markets. Apple’s supply chain, like many others, has been managed under the strategy of just in time, i.e., goods are received from suppliers only when they are needed. As a result, there is little or no inventory, reducing the costs of storage.
The just-in-time supply chain is built of many globally connected links. The strategy worked for many years. However, with the persistent unpredictability of the global environment driven by factors such as Covid-19, Russia-Ukraine war, and climate change, weak links of supply chain are disrupted. As a result, consumers like you and me suffer.
So, we have three questions:
(1) how long will the existing supply chain shortages last?
(2)how our reliance upon global suppliers impacts the supply chain? and
(3) what we can do to protect ourselves from the impacts of these shortages?
For the 1st question on the length of shortages, the answer depends on what products you are looking for. For example, if you are preparing for back-to-school shopping, most retailers like Walmart and Target have ongoing back-to-school sale with good deals.
For the 2nd question on the impacts of global suppliers, many companies are working with their partners and governments to make their supply chains resilient. For example, the White House released a 250-page report in June 2021 on building resilient supply chains for 4 criticalproducts: pharmaceuticals, batteries, semiconductors, and rare earth. Louisiana Economic Development early this year came up a website LouisianaLifeSciences.com showing that we have an emerging healthcare cluster in the state with 26 BioScience Innovators. Ochsner Health now has a Supply Chain Concentration addressing labor shortages in healthcare supply chains.
Regarding the 3rd question on protection, one way we can do is to work with those supply chain leaders to cultivate student entrepreneurs in developing solutions to help make our supply chain links stronger. One example is Supplier Diversity and Inclusion. This is a subject I have been working for many years. A current project is the supplier diversity opportunity of the emerging Louisiana Healthcare Cluster for the region with zip code 70805. If you are interested in this project, please let me know.
In closing, Albert Einstein once said: "In the midst of every crisis, lies great opportunity.“ Ladies and gentlemen, let’s work together on this great opportunity to add value to our community.
Thank you very much!
Jake Polansky, MPA (Manager of Economic Policy, Baton Rouge Area Chamber)
What exactly is supply chain management? Think of Amazon and when you get that package on your doorstep. There are a thousand steps that go into that process. There’s a lot of labor that goes into that. In the context of a supply chain, if one of those links gets messed up, it messes the whole thing up. At the beginning of the pandemic there was a lot of money pumped into the economy in the form of stimulus checks. Also a lot of money was pumped into local governments. It happened at a time when consumer preferences were changing. A lot of things were shut down and a lot of experiences were not available. Instead of spending money on experiences, a lot of people started purchasing more goods. When a manufacturing facility in China slows its production down, it will impact us here.
Fran Harvey, GISP (Director, LA RS GIS Institute)
GIS (Geographic Information Systems) - explores fundamental principles of geography. We spend every day with students looking at the geography of where they live and how that reaches to a global level. It’s very easy to comprehend the global impact when thinking of COVID. When we looked at labor shortage, some topics we looked at was the opioid epidemic, transition timeline coming out of the pandemic, famine, and how so many people have been uprooted from their home. The data allows us to make better decisions in ways we haven’t been able to before. In making better decisions we can make a better future. For equipment, we looked at, for example, transportation. The students went out and surveyed the bus benches. US vessel traffic across the globe impacts our ports.
Dr. Donald R. Andrews (Dean, College of Business at Southern University)
There’s nothing new about supply chains. The thing that’s new today is that we have a global supply chain. The world is flat. We can trade on a global basis without fear or risk, but we’re finding out that things are not as smooth as we thought they were. Putin wants to reinstitute the Russian empire, so they invaded the Ukraine. We see the issue with climate in terms of fires and floods and impact on agriculture production. The benefits of globalization is that the world as a whole is better off. We have 800 million people who have moved out of poverty. Some have lost. We have seen income redistribution. We’re seeing income inequality in the US. There is a decrease in manufacturing jobs in the US, so we have to invest more in education for those who are being left behind from changes in the supply chain. Louisiana benefits from being an export state, but we have to change in terms of human capital development. We’re concerned about recession. We’re concerned about inflation. Things are being reevaluated regarding the risk/reward of the global supply chain.
QUESTIONS AND COMMENTS
What does it mean to diversify the supply chain?
Dr. Chen - Since the Nixon administration, allowing the underserved population to be the suppliers of major corporations. It has been implemented for years and now has a global reach, so they have a lot of categories. IF you want to get the federal funding, you need a certain percentage of the population. It’s an opportunity to allow the disadvantaged population to participate in the global economy.
Andrews - the road out of poverty goes out of the schoolhouse door. These communities being left behind, it’s going to be a major investment needed to get them in the global economy. We’ve got to do more to help people get the skill sets they need to move forward. Technology doesn’t sit still. Human capital is what is needed to make this community more competitive.
How complicated are the relationships between the small companies that use the Amazon Marketplace and Amazon?
Polansky - I can’t speak tot he relationship to Amazon itself, but I have read about the Walmart relationship. Walmart does a good job at sourcing local suppliers for their stores, but what they don’t do a good job at is making sure they can expand responsibly. Walmart will typically squeeze these smaller suppliers for cheaper products without giving them what they need.
Chen - Amazon - If you are a member, you can access their warehouses. Amazon is a rich platform to scale your business. Walmart is another. Alibaba is another one.
A lot of people are feeling the pinch at grocery stores. How much of our food is internationally shipped in?
Andrews - The US has always been a major exporter of agricultural products. In terms of certain specialty products, we import a lot from other areas. There’s a lot of trade, but the US is a main exporter.
Chen - Louisiana is a big agricultural state and we have a lot of exports to places like China. The high prices is because farmers have been challenged. The energy cost is high. Now fertilizer and equipment cost more. In terms of export contracts, they go for a long time, sometimes 10 years. Now you have this time when the need, but there are also constraints.
Help me understand how technology is impacting certain products?
Harvey - Climate change is one of the topics that we have been talking about with students. This summer we had high school students who didn’t understand how climate change was impacting them. The relationship we have with industry partners, if you can welcome a recently graduated student into your industry and help them experience it, these are all areas that are critically important.
Chen - https://www.lsu.edu/business/sei/community-engagement/adversity-initiative/yea.php
I once worked in a general motors assembly plant. There were a lot of jobs there. A lot of people were black and brown. If you go into one of those plants today, there is a lot of robotics, and you need people to operate those robotics. I think we have a crisis in terms of education. We’re importing a lot of people into the US due to the skill shortage. Engineers and programmers. I know the Futures Fund has done a lot in terms of coding. We can’t afford to discriminate. You have to adapt to the technology. People are moving to where they find better schools for their children. We’re in a global competition as far as human education development is concerned. Those who are being left behind, that’s a real tragedy.
Chen - In terms of global competition, we do have a competitive advantage. There’s a global company in China that decided to come to Tennessee. US is higher than other countries in terms of human cost. We have our opportunities. Data is new oil.
American Factory - https://www.newyorker.com/business/currency/american-factory-a-new-film-from-the-obamas-explores-the-challenges-of-a-globalized-economy
What are we doing to include women?
Polansky - Labor force participation rates going back to WW2, men participated more than women and if you fast forward to today, it’s about equal. There are more women than men enrolled in college right now. Some changes will accelerate over the next decade or two.
Andrews - More progress needs to be made. The whole family structure of how we raise our children needs to change.
As we talk about supply chain, is COVID an indicator of a break in the global supply chain or is the post COVID world an indicator that we have not valued our workers?
Andrews - When I was growing up, we had our own garden. I could go outside and pick a tomato. Today, that tomato is coming from California. The benefit is that no one person can be self sufficient and advanced as far as their income. The problem is that there are risks associated with that. Political issues come into play. I could go back to raising my own tomatoes, but it would take away from the proficiency in what I’m doing. As a result of the bringing down of the Berlin wall, that story is still evolving.
Chen - Cost efficiency is another result of the global economy. We can have a regional supply chain - three regions. It’s evolving.
How do we move from less fossil-based fuels and that’s the issue we have to really think hard about. How do we get there?
Rev. Anderson - Typically when we talk about these global supply chains it’s at the expense of low or no wealth communities.
Andrews - In a capitalist economy we’re always looking for a lower cost of production as an advantage, but we have to look at quality of life. We have to work at and do better at guaranteeing that there’s some equity and redistribution of resources for those who are being left behind. What is a just society? We have too many children in poverty and we have to be willing to make the investment.
Chen - paying close attention to Microsoft, they have been doing their business in China. When you make money you have to help the poor. They have models to make sure of that. They cultivate young people from the bottom of the pyramid to put them at the top.
Polansky - We have to be more conscious about where we are purchasing things from. If you’re just looking for the cheapest thing, then that might not fit with your morals.
08:30:41 From One Rouge to Everyone:
08:31:09 From One Rouge to Everyone:
08:31:24 From Fran Harvey to Everyone:
Fran Harvey ready for a mic check
08:35:44 From One Rouge to Everyone:
Just In Time supply chain - goods received from suppliers only when they are needed.
08:36:17 From One Rouge to Everyone:
how long will the existing supply chain shortages last?
08:36:57 From One Rouge to Everyone:
what is the impact of weak links and global supliers?
08:40:04 From SK Groll to Everyone:
Thanks Dr. Chen! What does it mean to diversify the supply chain? (Particularly in regards to health, the Louisiana health cluster, and particular zip codes. I heard 70805 discussed).
08:40:21 From Casey Phillips to Everyone:
Thank you Dr. Chen...and great to see you Dean Lllorens!
08:40:22 From Jen T. (she/her) to Everyone:
Thanks Dr. Chen
08:43:54 From Patrick Tuck to Everyone:
Question: how complicated are the relationships between the small companies that use the Amazon marketplace and Amazon?
08:45:49 From Rev. Alexis Anderson to Everyone:
In many countries there is a point person on manufacturing as a part of national security. Can any of the speakers address the lack of a point person at either the local, state or national level to identify critical manufacturing supply chain risks and plans to address those risks?
08:45:52 From Helena Williams to Everyone:
How does the supply chain affect food? How much of our food is internationally shipped in? That is where I am feeling the biggest sting is my grocery bill.
08:48:18 From Samantha Morgan to Everyone:
Or lack of benches
08:48:49 From Rev. Alexis Anderson to Everyone:
One of the challenges of a global marketplace is the ethical considerations such as using child or slave labor to produce raw products, partnerships with countries and leaders that have problematic human rights records. Can any of the speakers talk about this topic?
08:49:26 From Flitcher R. Bell to Everyone:
GREAT question Rev. Anderson!!
08:50:48 From Ye-Sho Chen to Everyone:
I hope that this helps: https://www.usda.gov/coronavirus/food-supply-chain
08:51:11 From Shayne L Figueroa (she/her) to Everyone:
Oh Thomas Friedman ;-)
08:52:51 From Shayne L Figueroa (she/her) to Everyone:
@Rev Anderson, all depends on if we, as Americans, want to pay the full cost of goods/services (see Oil, technology, etc) that includes social costs (wages) and environmental costs (regulations).
08:56:07 From Rev. Alexis Anderson to Everyone:
As we know we have many competing interests and most of the time low and no wealth communities needs are at the bottom of the consideration of privatized interests. The damage to the climate is one of those interests. Do any of the speakers want to address how these communities don't get even more marginalized?
08:56:21 From Shayne L Figueroa (she/her) to Everyone:
Great research done by Dr Ruddell and his FEW-sion team on food/energy/water nexus and supply chains: https://nau.edu/nau-research/supply-chains/
08:56:42 From Shayne L Figueroa (she/her) to Everyone:
08:57:24 From Shayne L Figueroa (she/her) to Everyone:
great short movie and spatial analytics tool with data/policy overlays called FEW-tool
09:01:15 From Patrick Tuck to Everyone:
Louisiana Baton Rouge $79,966,896.00
09:01:18 From Patrick Tuck to Everyone:
09:02:13 From Patrick Tuck to Everyone:
Is Baton Rouge spending any of these dollars on education and youth development?
09:04:31 From Alfredo Cruz to Everyone:
Besides Walmart and Amazon, our local anchor institutions, Hospitals, Universities and local governments, could do better by diversifying its procurement practices and help build our local supply chains by building capacity of locally owned and DBE businesses
09:06:32 From Rev. Alexis Anderson to Everyone:
Can any of the speakers talk about challenges of operating in a global marketplace and needing global talent and the competing challenges of being a parish with a 287 G agreement and not necessarily a warm and inviting culture as it relates to welcoming labor from all parts of the world, particularly people of color and non-technical workforces?
09:06:40 From Shayne L Figueroa (she/her) to Everyone:
Want to know more about your domestic food production, Follow the United Farm Workers on Twitter
09:07:00 From Shayne L Figueroa (she/her) to Everyone:
09:08:49 From Laquitta Bowers to Everyone:
Given the opportunities and challenges faced by supply chain organizations today and the continued shortage of talent at every level, can anyone speak about recruiting women and how this changes the power dynamics in the C-Suite?
09:12:56 From Patrick Tuck to Everyone:
The dollars referenced for Baton Rouge are specifically ARPA funds.
09:13:37 From Ye-Sho Chen to Everyone:
09:16:46 From Rev. Alexis Anderson to Everyone:
We have thousands of people incarcerated in this state who are not being trained in any way for the global marketplace and yet there bodies are being used to undercut the wage market (Prison Enterprises). Can any of the speakers discuss our failure to educate those currently incarcerated in the opportunities of the future?
09:17:10 From Shayne L Figueroa (she/her) to Everyone:
American Factory - https://www.newyorker.com/business/currency/american-factory-a-new-film-from-the-obamas-explores-the-challenges-of-a-globalized-economy
09:18:16 From Shayne L Figueroa (she/her) to Everyone:
09:18:16 From SK Groll to Everyone:
Cannot recommend that film enough for a really interesting look at globalization + manufacturing^^
09:19:09 From Shayne L Figueroa (she/her) to Everyone:
Also, fast fashion (think old navy, yoga pants, etc) https://truecostmovie.com/
09:19:28 From Shayne L Figueroa (she/her) to Everyone:
09:20:03 From Shayne L Figueroa (she/her) to Everyone:
Energy transition and what it looks like here vs other places: https://www.youtube.com/watch?v=RvaE0PFna84
09:20:10 From Shayne L Figueroa (she/her) to Everyone:
09:23:30 From Shayne L Figueroa (she/her) to Everyone:
Covid showed the fragility of supply chains and the American Hubris of its strength. It also showed the lack of investment in infrastructure.
09:24:04 From Shayne L Figueroa (she/her) to Everyone:
Comparative vs Absolute advantage— Econ 101 :-)
09:25:22 From Shayne L Figueroa (she/her) to Everyone:
The Rare-Earth Elements—
Vital to Modern Technologies and Lifestyles
09:25:30 From Shayne L Figueroa (she/her) to Everyone:
09:26:12 From Judy Touzin to Everyone:
Thank you for all the resources, Shayne!
09:26:27 From Manny to Everyone:
Not So “Green” Technology: The Complicated Legacy of Rare Earth Mining
09:26:33 From Manny to Everyone: