Roughly four months after Blue Bell Creameries voluntarily recalled most of its ice cream and frozen yogurt products and suspended operations after listeria outbreak concerns, the Texas based producer has now resumed selling and distributing its products in select locations.
In April, Blue Bell widened a series of voluntary recalls to now involving all of its branded ice cream, frozen yogurt, sherbet and frozen snacks branded products distributed among 23 states and various international locations. The recall was prompted after samples of Blue Bell Ice Cream chocolate chip cookie dough ice cream tested positive for the potentially deadly disease, listeria. The illness was tracked by health officials to a Blue Bell production line in Texas, and later to another production line in Oklahoma. Three deaths were linked to the outbreak.
Production plants in Alabama, Oklahoma and Texas have since undergone extensive cleaning and decontamination under regulatory oversight. Alabama Public health officials gave Blue Bell the OK to resume production and sale of ice cream manufactured at its Alabama plant in early August.
At the time of the voluntary recall, Blue Bell took relatively swift action by actively removing products from retailers and other food service facilities it served. A statement from Blue Bell’s CEO Paul Kruse apologized to consumers along with a firm commitment to fix the problem.
Today’s visit to the Blue Bell web site features a prominent commitment to consumers for producing safe, high quality, great tasting ice cream as well a statement related to upgrading of procedures and employee training. Blue Bell notes that it continues to retain an independent microbiology expert for ongoing evaluation and has implemented a “test and hold” process where production runs are tested and held until results are received before distribution to markets.
The company remains very active on Twitter and Facebook, thanking consumers for their patience and providing updates as to which flavors of ice creams are currently available and in which states.
However, the cost of this recall, as has been the case with many other product recalls, remains troublesome. Four months of limited revenues can do that.
In July, Blue Bell management reached out to a prominent Texas billionaire investor for an added infusion of cash. That investment was reported as “significant” and came with a partnership arrangement with the company.
Hopefully, with new processes, training and revamped production facilities, consumers can look forward to enjoying a popular brand of ice cream.
There has been much reporting within social and business media regarding the potential industry supply chain disruptive effects of the recent massive warehouse explosions that affected the facilities adjacent to the Port of Tianjin.
It is rather important and crucial that industry supply chain and sales and operations team obtain meaningful and insightful information regarding what is happening on the ground as well as the potential short or long-term supply chain impacts, if any.
We at Supply Chain Matters are disappointed to observe that certain technology and service providers are attempting to utilize this tragic incident as a backdrop to product marketing outreach campaigns. Neither should technology providers suddenly become news outlets.
Not good ideas by our lens.
Supply chain technology providers should instead continue to educate on the benefits of the technology they provide and allow industry supply chain teams to receive clear, unfiltered and unbiased insights and information from informed and educated sources.
One of the better Tianjin perspectives Supply Chain Matters has reviewed to-date ia a published white paper: The Aftermath of the Tianjin Explosions: A Global Supply Chain Impact Analysis, authored by supply chain risk management provider Resilinc.
While this 24 page white paper does include some product marketing, along with requiring registration, the bulk of the report provides meaningful and insightful information related to potential immediate, near-term, medium and longer term supply chain impacts.
The paper concludes that the less apparent ripple effects of the warehouse explosions will be felt weeks, months and even years to come.
The paper provides meaningful background information regarding this vital logistics and manufacturing hub, which services industry needs of automotive, commercial aerospace, high-tech, petrochemical and general industrial manufacturing supply chains, among others. It further outlines important mapping of industrial manufacturing and supplier concentrations within close proximity of the explosions, based on a mapping of over 30 sites in a 2-10 mile radius of the blast. Four large industrial zone districts are adjacent to the port, with the port serving as what is described as the largest free trade zone in northern China, and the second largest Vehicle Processing Center for importing and exporting of automobiles.
On the topic of near-term ripple effects, the Resilinc analysis predicts that extensive delays can be expected for most companies and sites moving products through Chinese ports as government agencies deal with the after-effects of a regulatory environment needing extra attention.
There are predictions that Tianjin port operations will only begin to resume normal operations by approximately mid-September, and that any containers now at the port will be inaccessible for the next two months, even if they are intact. Resilinc indicates that for any suppliers located within 2-15 miles of the explosions, companies may presume 12-16 weeks of delays.
Long-term impacts outlined related to the ripple effects of increased regulatory actions impacting certain industry sectors including the location and storage of goods near large population centers.
Regarding potential long-term impacts, the paper cites Chinese media as indicating the economic cost of Tianjin crisis could be as high as $8 billion.
If your organization is dependent on operations, logistics partners, suppliers or service providers in the Tianjin area, we recommend you review this report which can be accessed at the following Resilinc web link. (Some personal registration information required)
Every year at just about this time, ocean container shipments inbound from China and other Asian ports begin to surge as retailers ramp-up inventory levels in anticipation of the Thanksgiving and Christmas holiday buying period. Ever year at this time, Supply Chain Matters features commentaries noting how the ramp-up is progressing.
Last year, we raised early concerns about potential labor disruptions occurring along U.S. West Coast ports. We all know how that turned out. Multiple industry supply chains encountered long delays and inventory disruption, some at considerable cost.
This year shows signs of different industry dynamics that could once again lead to some disruption, or at the least, the need for very careful and methodical supply chain planning and synchronization.
The Wall Street Journal reports that a combination of tepid growth and a continued sluggish Eurozone economy has now motivated ocean container carriers to significantly cut back on scheduling. According to the report, the G6 Alliance, consisting of carriers APL, Hyundai Merchant Marine, Mitsui OSK, NYK, Hapag Lloyd and OOCL announced this week the cutback of 12 round-trip sailings from Asia to Europe starting in September. This equates to a one-sixth reduction in capacity for that route. This follows an earlier announcement from the 2M Alliance consisting of Maersk Line and MSC indicating it with withdraw 10 percent of capacity from the Asia to Europe route until further notice.
The timing of these cutbacks, while advantageous to container carriers, is not advantageous to industry supply chains. The open question is whether the removal of this much container capacity heading toward Europe will have any later impacts as we move closer to the holiday season.
It is further another indication of the significant gross overcapacity situation of ocean container fleets. According to the WSJ, freight rates between Shanghai and Rotterdam barely cover carrier operating costs, hence the announced cutbacks. The carriers are significantly reducing capacity to insure higher freight rates, in spite of dramatically reduced fuel costs.
In a related development, industry leader A.P. Moeller Maersk, in reporting its latest financial results, gave strong indications that it will defend and even expand its industry market share position. That raises the likelihood of additional industry cost or capacity cutting moves. The question is timing.
Maersk Lines additionally revised its estimates of global container volume down to a range of 2-4 percent from the previous 3-5 percent growth estimate which is a further acknowledgement of reduced global shipment volumes.
For industry supply chains, especially those that are B2C and retail focused, the timing of these ocean industry cutbacks is troublesome, coming at the time of peak seasonal movement. On the one hand, such cutbacks in scheduling may provide added flexibilities for alliances moving surge container volumes from Asia to North America. One of the newer mega-container ships can carry lots of last-minute cargo. On the other hand, the reduction in capacity places added pressures on various procurement and supply chain planning teams to carefully plan remaining inbound movements and required safety-stock levels. The challenges of container chassis availability and the ability of certain ports to be able to efficiently unload and reload the newest mega-container ships remains an open concern.
If any major U.S. or European port were to encounter a disruption or significant backup over the next three months, carriers will likely be reluctant to have ships sitting idle and generating additional operating costs. The open question is how many supply chain teams elected to balance inbound movements among U.S. West and East coast ports, and now, European ports.
Once again, it is going to be a challenging holiday surge period where careful planning will prove to be a key difference. Sales and Operations planning teams need to have a keen eye on supply chain planning and execution along with early-warning mechanisms. The lessons of from 2014 have hopefully translated into enhanced planning and risk mitigation since the turmoil of global transportation continues to play out.
Last week, while on our two-week summer break, we took the time to alert Supply Chain Matters readers to the reports of severe explosions that occurred last Wednesday at the major Chinese logistics center at Tianjin. The reports and video images alone implied to this author that this was a concerning event.
Since that time, the scope and implications of this tragedy continue to evolve.
Reports now indicate that this tragedy has taken 112 lives with upwards of 700 people injured as a result of the two massive explosions. According to media reports, 95 people, mostly firefighters, are still missing. Supply Chain Matters expresses our condolences and concerns for all of the victims of this tragedy.
The video and visual footage of the wide-scale destruction is sobering to view. The China Earthquake Networks Centre indicated the initial explosion had a power equivalent to three tonnes of TNT, while the second was the equivalent of 21 tonnes. The blast zone extended in excess of 2 kilometers.
Yesterday, authorities confirmed reports that hundreds of tons of the highly toxic chemical sodium cyanide were present in the warehouse involved in the initial explosion. A BBC report indicates that the warehouse stored other chemicals including calcium carbide, sodium cyanide, potassium nitrate, ammonium nitrate and sodium nitrate. The warehouse itself was operated by Ruihai International Logistics Co. and questions have been raised as to how much of the chemical was authorized for storage. Chinese media indicates that at least one member of staff from Tianjin Dongjiang Port Ruihai International Logistics, which owns the warehouse, has been arrested.
When burned, sodium cyanide releases hydrogen cyanide gas which is now the overriding concern for residents throughout the Tianjin area as the clean-up efforts continue. According to published reports from the BBC and The Wall Street Journal, criminal prosecutors are vowing to conduct an extensive probe amid a growing concern that regulators often turn a blind eye to enforcement of regulations.
Chinese Premier Li Keqiang has visited the scene and has met with the victims of this major disaster and has indicated that regulators will act in transparency regarding readings of current air, water and soil quality within the area. Nearly 3000 troops with chemical protection equipment are reportedly combing areas outside of the 2 kilometer blast zone for possible hazardous chemicals that were ejected by the explosions.
This disaster occurred in the logistics zone serving Beijing, and one of the busiest ports in China and perhaps the world. The port is a major trading center for commodities and metals and a gateway to the industrial northern regions of China. Reports indicate that shipping containers were tossed into the air like matchsticks and were crumpled by the blasts and a logistics park containing several thousand cars was incinerated by the fireball. Renault indicates that some 1,500 of its cars were lost, while Hyundai indicated that around 4,000 cars on the site may have been lost as well.
While the port remains partially open, operations are noted as restrictive due to continued investigations and checks within the area. Toyota announced that it was closing production lines at its factories near Tianjin until the end of Wednesday, while agricultural machinery maker John Deere suspended work indefinitely. Both saw some of their workers injured by the blasts.
For industry supply chain teams, the implications of the Tianjin disaster will likely continue in the coming weeks or months. As the building tide of widespread sentiment reflecting that regulators have turned a blind eye to industrial safety, there will likely be increased scrutiny of manufacturing and logistics operations, particularly those involving forms of hazardous or industrial materials. Already, China has ordered a nationwide check on dangerous chemicals and explosives.
Similar to the 2013 tragedy involving the Rana Plaza explosion in Bangladesh, the 2015 Tianjin explosion could well be a watershed event concerning industrial safety standards. Anticipate that individual firms and industry groups will be motivated to become more active and involved in assuring international standards of warehouse and factory safety, particularly in areas adjacent to high population areas.
The Tianjin disaster could well turn out to be one that either defines improved safety standards or one that places certain industry supply chains with heightened challenges to assure and attest to individual worker and industrial safety standards. Social responsibility practices will likely again be tested against product margin needs. The final outcome is one yet to be determined, but one that reflects the realities that China needs to maintain its export volumes and global competitiveness.
In our previous Supply Chain Matters posting, we called attention to the announced acquisition of Precision Castparts by Berkshire Hathaway and its speculated impact on commercial aerospace industry supply chains. Already this week, there are two other developments with industry supply chain implications.
Earlier this week, the People’s Bank of China elected to suddenly de-value China’s yuan by a record 1.9 percent, precipitating the yuan’s biggest one-day loss in nearly two decades. The action came after the news that China’s exports shrank a significant 8.3 percent in July amid continuing concerns that China’s economy is slipping more than previously reported.
This sudden news has rocked global markets and has raised the Spector of more devaluation of foreign currencies particularly those related to Asian based countries.
For industry supply chain teams, strategic sourcing, procurement and S&OP teams will need to pay particular attention to quickly changing economics related to sourcing of production and/or products. China is obviously positioning to boost its export sectors and that will have implications in the coming weeks and months.
One other development that warrants monitoring is that related to natural and other disasters.
Typhoon Soudelor struck the island of Taiwan and coastal China this past weekend. Taiwan, a key production center for semiconductor, high tech and consumer electronics supply chains, experienced severe flooding and landslides across the island. More than a meter of precipitation fell in some areas, and there were reports of significant power disruptions. The severe storm move on to China impacting certain coastal cities. High tech supply chain teams have obviously initiated supply chain risk assessment efforts to ascertain if the typhoon had any significant impact to supply and production planning. We suspect that there may be some impacts,
In another development unfolding as we pen this commentary, international media is reporting that catastrophic explosions have occurred in the Chinese port city of Tianjin. Reports indicate that upwards of 50 people have died with scores injured. According to a CNN report, the initial explosion may have come from an industrial warehouse that may have stored dangerous and flammable chemicals which spread to other adjacent buildings and warehouse facilities. The force of the explosion extended to nearly 2 kilometers and registered on earthquake monitoring instruments which imply a massive force. More news will be unfolding concerning this incident.
It seems as though supply chain risk has become a weekly occurrence, regardless of the season.
Yesterday, a fire broke out at an Apple facility located in Mesa Arizona, just outside of Phoenix, which initially made lots of news. According to a video report from a local news channel, the fire spread rather fast and was believed to have been ignited by solar panels on the roof of this facility. Various news reports indicate that a dozen people were evacuated from the facility, and it took 35 minutes for the fire department to put out the flames. The Deputy Chief of the Mesa Fire Department is quoted as indicating that the fire spread rather rapidly at the 1.3 million-square-foot plant but was confined to a section of the roof over a loading dock.
What is somewhat significant is that this facility was previously designated by former supplier GT Advanced Technologies to be a high volume plant for the production of sapphire glass. That plan was abandoned with the sudden bankruptcy of GT Advanced and Apple has since taken possession of the facility. In February, Apple announced that it would instead convert the Mesa facility into a world class, sustainable data center. At the time, Supply Chain Matters voiced its disappointment that Apple did not consider sourcing more manufacturing at this facility.
Such an incident involving an Apple facility was assured to garner both traditional and social media coverage. As we pen this posting, Google had indexed nearly 100 different reports related to yesterday’s fire. Apple stock also took a hit yesterday on the news.
It is not likely that this incident will be of any major concern to Apple’s supply chain teams but perhaps Apple’s facility teams will seek an in-depth investigation as to whether the solar panels contributed to the cause of the blaze. Investing in the most modern, state-of-art energy and sustainably efficient mega data center probably needs assurances that solar panels will not erupt into flames.