From the ban on McDonald’s Happy Meals to smartphones evolving into a shopper’s best pricing tool, a lot of things are changing right in our own backyard. Regardless of where you are in the supply chain, the business environment is constantly changing as a result of technology, public policy, consumer preferences and economic health among others. That doesn’t even include risks that keep most of us up at night…hopefully not all night.

For example, San Francisco recently passed an ordinance that bans using toys to entice kids to buy meals (i.e. Happy Meals). If you’re like me, I can’t remember a time without Happy Meals. Not that I ate them every chance I had, but the term “Happy Meal” is arguably as American as apple pie. If you’re McDonald’s, this ordinance potentially puts a damper on future sales since other cities and locales will likely consider similar initiatives.

Those Happy Meal toys with the promotional tie-ins will likely find homes in other places, just not in San Francisco. From a supply chain perspective, this becomes yet another factor to consider in distribution and planning. While not an issue now since the impact is localized, this becomes more of an issue if adoption takes off in other areas. Likely, McDonald’s will come up with a healthier Happy Meal (yes, that sounds strange even as I write it) to skirt the ordinance. It will be up to the supply chain team to ensure that the right inventory shows up.

A few years ago, the smartphone was viewed as strictly a business executive tool. Today, it’s a mainstream device that everyone from high school students to soccer moms can’t live without. It’s no surprise that for shoppers—that makes most of us—the smartphone has become an indispensable sidekick through store aisles. According to a recent study, more than 40% of smartphone users use their own devices to do price checks when shopping.

Admit it, you’re probably done it…I know I have. With the maturity of online shopping sites and phone apps that turn your camera into a UPC reader, finding the right price couldn’t be easier. For retailers, a multichannel strategy is more important than ever. Whether buying through the Web, walking into a brick-or-mortar store, or a combination, keeping items in stock while maintaining customer satisfaction are essential. The battle between pricing pressures and brand loyalty will continue, and in these economic times, price has the edge.

Having said that, customers want instant gratification, and if your store can’t provide it, that customer and sale are lost—likely for good. The access to information is changing the retail landscape, and you don’t want to be caught with empty shelves if you're a retailer.

Back in July, I wrote about rare earth minerals (REE) and their importance to the high-tech industry. From cell phones, laptops and almost any type of electronics you can imagine, REEs make them work. China controls the largest source of these materials in the world, and thus with control comes risk—risk to the demand base.

As we approach the November elections, I’m reminded of the ramifications of politics both domestically and abroad. In September, China stopped all shipments of REEs to Japan in retaliation for Japan’s detention of a Chinese fishing boat captain. And earlier today, rumors swirled that REE shipments were also being cut to the U.S. and the European Union because of environmental concerns. It certainly highlights the fragility of any supply chain and the risks involved regardless of how much planning is involved. Because of China’s near monopoly of REE (the country holds 95% of the world’s reserves), countries such as Japan and the U.S. potentially face decisions being made based on politics that can be detrimental to economies. In this case, the distribution of REEs becomes a trade weapon.

In my previous post, I equated the Middle East’s control of oil to China’s hold on REEs. The most direct solution remains developing alternative sources. But the major hurdle with alternative sources is time.

Closer to home, big changes will likely come across the national and local spectrums. Here in California, we have a number of initiatives focusing on labor unions and environmental controls among others. That’s not to mention the political offices up for grabs including the governor’s race and the state and federal congressional seats.

What does this illustrate? That supply chain and logistics managers have yet another worry to consider: politics. You may already be tiring of the political campaign ads and rhetoric, but politics matter. Politics is often about bargaining, but that’s little consolation especially for our industry when the deals and paths are often chosen for us.

The economy is a strange animal these days full of uncertainty and prone to dramatic mood swings. Ask any number of financial and industry experts, and you’re likely to hear a wide range of different perspectives (or guesses as I like to call them). For example, the retail area is full of cautious optimism with some retailers seeing growth as small as it may be, while others are still in a holding pattern. Retailers such as Macy’s and Best Buy reported positive quarters while others such as the Gap aren’t. The same mixed bag also applies to 3PLs who are trying to find a balance between inventory and consumer demand. Just last week, Armstrong & Associates estimated that the 3PL industry will see a 13.4% increase from last year (a gross revenue of $121 billion).

One thing that experts agree on is that businesses can’t remain on the sidelines indefinitely. While the financial numbers provide a potpourri of good and bad, they do show that the economy is stabilizing, albeit not as fast or significantly as we would like. Shaky economy or not, increasing competition coupled with growing customer demands will run its Darwinian course. In my book, customer expectations and whether they’re being met is the true gauge of success.

ARC Advisory Group recently released a report showing that logistics providers are more tech savvy than you think. The problem, however, is that many rely on older technology or legacy systems that aren’t scalable nor provide the upfront customer facing to compete. It’s a common issue that I often come across. Whether they’re relying on Excel spreadsheets or an older database system, businesses are using technology, just not the best available. The reason is often due to costs or reducing it, but short-term savings usually mean foregoing long-term ones.

Companies should be reassessing their needs and capabilities more than ever. What most will find is that having the right tools can better prepare them for future growth opportunities, and build a competitive advantage. That may sound cliché, but successful companies have followed that formula for eons…no uncertainty there.

This past week I attended CSCMP’s annual conference in San Diego, one of the industry’s top events for everything and anything supply chain. One of the differences with this conference is its educational focus where the gathering is more about learning and exchanging ideas rather than selling the latest wares. A fair amount of visitors to the RedPrairie booth were college students intent on networking and hearing about the innovations in our world (robot pickers anyone?)

One particular grad student stands out (and not just because her thesis is on cloud computing in the supply chain). She asked a rather pointed question—“Why doesn’t the supply chain get much respect outside of the business world?” Jokingly I told her, the supply chain doesn’t get much respect from the business world either.

There’s certainly an ounce of truth to my response, although businesses today are more cognizant of the financial benefits of a strong supply chain and logistics strategy. In many ways, I equate practice of supply chain strategy to the art of public relations. Having worked at various PR firms, I can tell you that PR doesn’t get much respect either, that is, until you need it. For many, they treat supply chain efficiency as an afterthought, unable to see the benefits beyond the cost. But, the logistics industry hasn’t done itself any favors either.

As an industry, we haven’t done an effective job reaching out to the general public. I would venture to guess that public perception—positive or negative—is either low or non-existent, although your typical shopper will likely remember when the store didn’t have a particular sweater in stock. For those of us who work in any industry related to the supply chain, we are often caught up in our own little world. While we may understand and tout the value that we deliver, the struggle comes is in getting the public to recognize that value.

Think it doesn’t matter? Regardless of where you stand on issues, consider public policy for example. From food recalls and railway improvements to green initiatives and transportation regulations, the general public can’t make educated decisions without an understanding of where we fit along with the implications.

A few weeks ago, I tweeted about UPS and its new “We Love Logistics” ad campaign. While it doesn’t quite roll off the tongue, it’s a good start. With any cloud, the silver lining here is that we have nowhere to go but up. We just need to make a concerted effort, and with the next generation of supply chain pros, I expect that to happen.

With the U.S. dealing with its own share of economic issues, it’s easy to forget that we’re not alone in this global economy. Other nations are dealing with the same uncertainty and forced to jump through similar hurdles. The supply chain is no different, and while the infrastructure here in the states could stand some improvements, countries in the midst of significant changes face major growing pains. One thing is for sure…while the resources may be available on paper, changing attitudes can often be a difficult and even insurmountable hurdle.

For example, India is a nation where growth can be severely limited by its infrastructure. According to a report by McKinsey & Co., India has $45 billion in losses annually because of inefficient logistics. That’s a staggering amount until you realize that those losses could more than double to $140 billion in the next decade. Right now, 57% of the country’s freight is done by roads, 36% by railways, 6% by waterways, and 1% by air. But, if it is to successfully expand and cut its losses, India will need to build out the rail and waterways system, shifting more than 45% of freight movement to rail. Will it happen? No one can know for sure, but it will take focus from the government and significant investment (more than $700 billion) to make it happen.

Spain has been battered by the economic downturn. And with more than 40 percent of jobs there in the service sector along with an impending need to reduce fixed costs, cloud computing would seem a natural fit. Unfortunately, that doesn’t make the concept of cloud computing widely accepted. According to a recent article, the risk-averse culture of its citizens make the data and where it’s stored an issue, while the large public sector (one of the largest in Europe employing more than 3 million people), has been slow to make any changes in general. In fact, an overall resistance to change has hampered cloud computing adoption. It’s funny because these attributes may as well be describing the U.S. even though cloud computing has made significant strides over the past two years.

For all the talk about the “new normal”, the biggest hurdle is still the unwillingness to change. Both India and Spain understand what needs to be addressed to expand their economies, but unable to make it happen fast enough. Again, my intention isn’t to single out India and Spain because frankly, our country is more or less in the same situation. New normal requires new thinking, or at least, a revised approach. Unfortunately, that’s easier said than done, but at what expense?

Renewable energy has been a topic many have discussed over the past few years, and here in California, it tends to be a highly visible issue especially during election years. Silicon Valley, once solely a tech haven, has gradually evolved and expanded into green technology. From harnessing the sun through solar cells to converting algae into fuel for vehicles, renewable energy is finally getting the acknowledgement it deserves.

With that said, the industry of renewable energy is facing a critical time that will either hinder or elevate it. Deloitte’s Global Energy & Resources Group recently released a report on the top 10 issues and trends in renewable energy. Among them, the core issues focus on government regulation, sustainability and funding sources. Flexible regulations and financial incentives in the past have helped to nurture the industry. But with the current economy, those policies and incentives are on shaky ground. In addition, funding sources are in constant demand as startups and emerging companies seek the time, and human and technological resources to grow their green businesses.

One important part of the study focuses on the supply chain, and the need to significantly develop this area to meet the needs of renewable energy companies. In any business, technology only goes so far and scalability is essential for growth and sustainability. Deloitte points out new investors to renewable energy should look to the supply chain. And why not? Besides having a reliable network for receiving and delivering resources, collaborating with partners and customers is often the difference between success and failure when it comes to credibility and reputation.

As I’ve often discussed, the supply chain is the lifeblood of any business. Considering how spending on the supply chain tends to be secondary for many organizations, creating and maintaining a viable supply chain network for renewable energy would certainly be something to tout.

I don’t know about you, but with the spate of food-related recalls the past few weeks, you’d think that our food supply was in trouble. Not that this year has been any different, but the outbreaks and illnesses seem much bigger and magnified than in years past. That’s why I wasn’t surprised by the opposition to the impending stamp of approval by the Food & Drug Administration (FDA) for genetically engineered (GE) salmon.

Food safety here in the states tends to be lax primarily because there isn’t any regulation with meat (no pun intended) that ensures accountability. By accountability, I mean establishing the necessary visibility to track and trace items as they travel through the supply chain from origin to destination. To take that step further, traceability needs to extend beyond distributors and include those involved in the manufacturing process. Determining the cause or origin of an outbreak especially when it concerns food products can take months if ever to narrow down, and even then, it’s not clear cut. In that time, consumers are impacted from a health and financial perspective, while businesses suffer from tarnished reputations.

In an ideal world, this scenario doesn’t have to be. Small or large, businesses have a wide array of technology to choose from within a suitable budget. GE salmon is a perfect example of why supply chain accountability is necessary. If the FDA finally approves this, the salmon will likely be sold everywhere. While it has yet to be determined if special labeling will be used to differentiate GE salmon from those that are natural, the company behind the product has said no cross breeding will occur. The FDA has been resource strapped for years, and you only need to watch the daily news to see the result.

Regardless of how you feel about genetically altered foods (which many of us have been eating over the years), the bigger problem is that we don’t have a regulated or consistent process for traceability in this country. And that’s something that should scare us more.

Mexico may be a tourism Mecca with more than 25 million visitors annually, but it’s also become a haven for supply chain risk. From drug smuggling and kidnappings to extortion and much worse, the level of risk has risen significantly over the past year. For U.S. businesses, America’s south of the border neighbor is both a competitive advantage and a liability.

For supply chain managers, securing shipping operations has become an overwhelming task and in some cases, routine deliveries go through multiple levels of security checks. Cross border smuggling has been an ongoing problem for years, but it seems that the trade has become more violent recently. That leads into a bigger issue: employee safety. A large part of the workforce at American companies in Mexico is made up of U.S. citizens. With the rising crime, ensuring employee safety in the short term coupled with recruiting the best and the brightest in the long term is a constant battle.

According to estimates, security spending accounts for 3 percent of corporate operating costs. And whether or not you travel or live in Mexico, you’re paying as a consumer since those costs get passed on in the form of higher prices.

With the volatility of the environment down there, the importance of supply chain visibility becomes a necessity. While WMS and TMS solutions tend to be looked upon as luxuries here in the states, it’s an essential cost of doing business in Mexico.

Don’t count all your eggs until they’re hatched. That seems to be the sentiment as the nationwide egg recall continues to grow. Now expanded to 17 states covering half a billion eggs, the days of sunny side up may become a distant memory for the hypochondriac in us. Recalls involving food tend to have a significant and lingering negative impact because you are what you eat, and the last thing anyone needs is to be sick.

As with any recall, it’s important to locate the source. But, as we’ve seen time and again, this is not only difficult but usually too late since most of the food has already been consumed. And if history is our guide, the source may likely never be determined. Once again, this brings up the question for businesses—have we learned anything?

Food recalls are nothing new and yet, when one does happen, businesses react like this is the first time for everything. I can already map it out—the initial blame falls on the FDA for lack of oversight; suppliers who have had previous health and work violations are dragged out into the public; and then, everyone talks up a good game about preventing a recurrence in the future. That is exactly what is happening now. Yet, are we any closer to getting answers or change?

The honest answer is not really. The majority of supply chains still lack visibility, while consistent partner collaboration is mostly wishful thinking. Would it have helped to know beforehand which suppliers had previous health and work violations? Mostly definitely, and then businesses could take appropriate action before the fact and not after. But, that’s the problem with recalls today where the strategy is completely reactive instead of being proactive. This recall won’t be the last, but many still act like it is.

We’re near the end of summer (although I don’t think San Francisco ever broke 70 degrees) and if the events of the past year are any indication, some of us may have learned a few things. Here are my observations:

• No matter how prepared you think are, you aren’t. British Petroleum is a prime example of a company having a crisis plan on paper, but exhibiting little experience in the actual execution.

• The concept of control is a worthy, yet unrealistic goal. You can anticipate issues that may impact your supply chain, but ultimately, you control very little when it comes to external factors. Iceland’s Mt. Eyjafjallajokull volcanic eruption disrupted air travel and commerce for weeks, and for the most part, there was nothing anyone could’ve have done. Companies may have alternate shipping routes and plans, but chances are most didn’t have volcanic eruption in their crisis management manuals.

• What’s old is new again or something like that. Cargo theft has been on the rise since Q4 of last year, while daily cyber threats are the norm. The post Cold War escapades culminating in a spy swap and the kickback scandal involving an Apple executive signal that nothing ever really changes.

• The “new normal” means get used to lower expectations. The economy continues to sputter along, and all the indicators from retail to employment numbers haven’t changed much. So in many ways, slow, steady and even flat is a good place to be for the supply chain.

This may seem simplistic, but information is still your most valuable asset. Having it in real-time can set you apart from your competition, and not having it, well, puts you at the bottom of the barrel. Information may not prevent every disaster or logistical mishap, which is bound to happen, but it certainly makes them easier to handle. And the “new normal” is much easier to swallow, at least until things get a little sweeter later on.

Like today’s economy, we all know the state of our supply chains are changing. Along with it comes a degree of uncertainty, and how we act and react will either bring success or failure. If you believe the pundits, the economy is quickly losing steam. For supply chain managers, this is a vulnerable time where volatility and risk are just around the corner.

SC Digest published results from a survey of supply chain executives that identify five supply chain challenges. Without going into detail on those challenges since many of us face those each day, the overall themes focus on pricing volatility, the lack of tightly integrated customer and partner networks, and an a growing list of risk management issues. What’s worth considering are the proactive initiative that companies can implement. These initiatives can be whittled down to two words: focus and empowerment.

It sounds simple, but accuracy and visibility continue to be the name of the game. An organization needs to focus on bringing flexibility to the supply chain meaning scalability and adaptability. The environment is constantly changing and supply chains must respond to that change. With that comes a certain level of trust and giving managers the responsibility to make decisions at the local and global levels. While appointing a chief supply chain officer creates a point person for the most key decisions, the reality is that companies need talent at all levels intelligent and ready to make strategic decisions in the trenches.

Even with the economy sputtering a bit, companies that can address the obstacles in the short term will prime themselves for the eventual economic recovery. Too many focus on the near term, and that’s usually what separates the great companies from the average ones.

The Bay Area tends to be a lively place when it comes to culture, sports and public policy. So it must be quite the story when it involves counterfeiting which is what happened today. Apparently, several shops located in Fisherman’s Wharf were raided over the past few days for selling counterfeit retail items including purses and sunglasses valued at $100 million. While yet another cautionary tale of the vulnerabilities of the supply chain and the credibility of partners, the story highlights the other willing party in this mess—the consumer.

Store owners who knowingly sell counterfeited brand items are no doubt part of the problem since this impacts the bottom line of the real companies behind the brand names. Because counterfeit items are cheaply made, a bigger and longer term issue is for the consumer who unknowingly buys these items assuming they’re legitimate. Poor quality can damage the brand loyalty and reputation. But what about the consumers who knowingly buy counterfeit items?

These consumers are equally at fault, and it’s easy enough to find the many who would willingly buy knockoffs because they’re relatively cheap. These types of consumers generally don’t consider what they’re doing harmful, but the consequences can be significant. That’s the thing about the supply chain. As a legitimate business, you can use the tools to gauge demand and create the necessary supply chain efficiencies, but there are things beyond your control.

China is a primary source of counterfeit goods, and the effectiveness of those supply chains is obvious. Of course, counterfeit products are only one in a long line of supply chain risks. The question remains, are you doing everything you can to minimize those risks?

With the economy still on the mend, economists are easy targets for humor. I wouldn’t doubt that many may even believe that an economist is someone who gets rich explaining to others why they are poor. The same can be said about supply chain industry forecasters who have wide ranging opinions on whether companies have learned their lesson from the recession. That point is clearly illustrated in this recent lessons learned article. The theme focuses on whether businesses will change their supply chain practices in a post-recession world. If the opinions are any indication, the answer is no, and maybe yes.

Have companies changed their supply chain practices? For years, the concepts of supply chain collaboration and visibility have been preached as the cornerstones of everything from inventory management to fleet maintenance. Yet, when you still have over 600,000 warehouses in North America without a computerized inventory management system, you realize that preaching isn’t the same as practicing. While it probably made sense for companies to upgrade systems and outsource logistics functions during the downturn, many did the opposite by bringing them in house. Even now in the post-recession economy when outsourcing functions is a prudent strategy for managing growth, companies are reluctant. On this count, the answer would be no.

On the other hand, companies are paying more attention to their business relationships. Undoubtedly, many long-standing relationships with partners were strained or lost in the past two years negotiating over a few dollars. With demand slowly edging back up, I believe many companies are approaching relationships with a stronger focus. In a post-recession period, establishing the right network is essential for any degree of success. So, in terms of understanding the importance of collaboration, have companies changed their view of what constitutes supply chain success? This one gets a tepid, slightly warm yes.

Where does that leave us? You have companies who understand the importance of collaboration, and I think more so than in the past. I see it in the number of inquiries from businesses who want to learn more about managing their inventory. There is a genuine interest in improving supply chain relationships through WMS, TMS and labor management tools among others. But, a hurdle for some is overcoming that hesitancy. So in short, the answer to whether companies have changed their supply chain practices comes down to this—not until they overcome their fears.

A few days ago, I ventured along the waterfront whose route took me along the Port of San Francisco. The port by the bay has certainly seen better days, and many of the buildings that once housed bustling canneries and fishing outposts are now mostly populated by tech startups and restaurants. These days, port activity is more of an afterthought, if thought about at all, for most people. Honestly, I likely wouldn’t give it much thought either if I weren’t in the logistics industry. The reality is that port activity can provide a clear snapshot of the economy and its direction.

Port traffic in the key regions across the states has seen marked improvement supplemented by jobs. For example, Los Angeles saw imports rise 32% and exports by 13% from last year, while Long Beach experienced increases of 27% and 2%. These numbers point to several things: a significant rise in traffic, increased hiring in dock workers, and a rising trade imbalance. Container volume also saw increases on the East Coast with New York/New Jersey seeing a 17% increase in 20-foot containers, while Savannah was up nearly 25%. Keep in mind that the numbers are all still lower than those before the recession, but they’re certainly better than last year.

An economist will talk about the multiplier effect which is what you hope for when it comes to positive growth. Inventory and trade levels go hand in hand because as one increases, more than likely so will the other. And with the increased hiring of dock workers, so does the number of other logistics-related jobs. Of course, at the end of this supply chain is business and ultimately, consumer demand that will determine the degree and sustainability of this growth. This country isn’t out of the woods yet with lagging overall unemployment and tight-fisted credit still major concerns, but the recovery signs are there.

Now, all you need is a plan to take advantage of that recovery and help it along.

There’s a saying that says your product has made it once it’s been counterfeited. If that’s the case, then the Amazon Kindle may be an overwhelming success. Not to make light of an ever increasing problem that costs companies billions of dollars and a significant loss of jobs annually, but fake Kindles are making the rounds. The fate of the Kindle is no aberration, and serves as yet another example in the annals of offshore sourcing and fakery.

Don’t misunderstand my perspective—offshore sourcing is a strategic and in many cases, essential part of a company’s business strategy. For better or worse, the world’s different economies rely on it to ensure productivity, demand generation, and profitability. But with the benefits of offshoring come significant risks, and the Kindle is the latest example. When establishing supply chains overseas in low-wage countries, the security of intellectual property is vulnerable. Whether products are copied or specs are “borrowed”, the integrity of checks and balances usually doesn’t pass with flying colors.

And, the proof is right in front of us via the World Wide Web. All you have to do is look on electronic bulletin boards and Internet forums where products are bought and sold to get a glimpse. Just take a look at the country of origin of the seller along with the typical below market price tag, and chances are you’ve stumbled onto something.

Not that the IP risk doesn’t exist when dealing with domestic suppliers and partners, but oversea regulations and enforcements tend to be lax depending on the geographical and economic demographics. Besides counterfeit name brand apparel and merchandise, we’ve seen this with music CDs and movie DVDs, computer software and hardware and just about anything you can imagine.

According to the ARC, “counterfeit goods make up 5-7 percent of world trade…the International Anti-Counterfeiting Coalition (IACC) and the US Federal Bureau of Investigation estimate that counterfeiting and piracy cost the U.S. economy between $200 to $250 billion per year, contributing to the loss of approximately 750,000 American jobs."

While anti-counterfeiting tools are available, they alone can’t address or even solve all the problems. In fact, the best approach begins with assessing a multitude of things including corporate policies, training and the supply chain. Of course, combating fakery or not, when it comes to the supply chain, the basics are what matter: visibility and accountability. And regular communication and collaboration with partners wouldn’t hurt either.