Get Back to Work!

Welcome back to The Supply Times!

After a brief Labor Day break, it’s time to get back to work, sharing updates on supply management and, well, the trends of getting back to work. Plus, I’ll update you on some of the great things I’ve been reading, watching, and listening to!

Let’s get started.

Industry Highlights: The Great Chinese Exodus

At the beginning of 2021, the general sense among economists was that companies’ attempts to shorten their supply chains was nothing more than a Covid-induced measure, one that would pass as quickly as the novel virus itself.

They were wrong on both accounts. Not only are some businesses bracing for another wave of the new Omicron BA.4.6 strain, but companies have continued to explore more efficient supply chain options.

In many ways, it makes sense. An overhaul of supply chain practices has been long overdue, which the pandemic brought to light. And even though some strain on the system has eased, many companies have still forged ahead with supply chain improvements as they seek to trim costs, become nimbler in response to demand spikes, and gain more control over distribution.

A recent Supply Chain Dive article highlighted that household goods distributor SpartanNash saw a 9 percent YoY improvement in order throughput at its warehouses in Q2, adding to its 7% increase in Q1. SpartanNash CFO Jason Monaco attributed the improved savings guidance to the company’s supply chain updates, which included adding and subtracting network sites and adjusting operations to account for increased grocery pickup and delivery service demand.

One particular strategy many companies have been employing is pulling their manufacturing out of China, the long-time hub of choice for most multinational corps. Call it what you want—onshoring, reshoring, nearshoring—a lot of manufacturing is coming home to the States. In fact, Bloomberg reported references to -shore words in corporate meetings and press releases has increased over 1,000 percent since the pandemic.

But it’s not just hot air. According to Dodge Construction Network, a data and analytics company that tracks US construction, the construction of new US manufacturing facilities has increased 116 percent this year. I’ve previously talked about the massive chip factories being built in Phoenix and Ohio, but aluminum and steel plants are also popping up all over the south, in part to combat the tariff situation that’s not yet been addressed by the US government.

Just to quantify this a bit further, a UBS survey of C-suite execs found that 90% were either in the process of pulling out of China or intended to. Another 80% said those plans included returning to the US.

But don’t count the Sleeping Giant out yet. UBS experts ALSO recently reported that economic and regulatory conditions have started to improve in China, and further normalization in supply chain and export activity was expected to improve.

It will be interesting to see how companies respond as China recovers from the drastic punches it took during the worst of Covid, especially considering the current inflated cost of construction and materials here in the US.

The Future of Work: Get Back to Work!

Labor Day has now passed, and with it comes an interesting plea (code for demand) from companies: Get back to the office.

A new Wall Street Journal article reports that after almost two years of softly coaxing employees back to the workplace with donuts in the breakroom—and in some cases, extra financial incentives—many are putting their feet down.

Companies like Apple, Prudential Financial, and BMO Financial Group plan to roll out universal return-to-work policies this month to get their staff back in person. And Goldman Sachs, which has been on the warpath since March to get employees into the office, is removing all vaccination requirements to remove that final barrier.

“A lot of employers are saying, ‘We’re going to set a line of demarcation’ this fall,” Workhuman chief HR officer Steve Pemberton told the WSJ.

Navigating this demand is tricky for companies, given the recent trends of workers leaving positions and the 11.2 million job openings reported by the Bureau of Labor Statistics earlier this month.

While many understand that employees’ needs have shifted since the pandemic, they are also quite concerned about productivity, which as I shared in the last The Supply Times issue, is in its sharpest decline since 1948.

Others are taking a more hard-nosed approach. The Wall Street Journal recently profiled Mat Ishbia, a CEO of a Michigan mortgage lender who, in the summer of 2021, demanded all employees return to the office—or face the consequences.

Ishbia said he lost 500 employees—a little over 6 percent of his workforce—as a result of the policy, but he still maintained he had no regrets. “Not one second did I second-guess this decision,” Ishbia said. “Without question, it’s been worth it.”

Sounds like a guy who really values his workers. But hey, to each their own when it comes to running their business. Sometimes you have to make the tough decisions and tell your workers—enough is enough.

The Supply Aside: What I’m Reading, Watching, Listening to, and Thinking About RE: Supply Chain, Work, and Beyond

📕 Read: I’ve had Andressen Horowitz cofounder Ben Horowitz’s book, The Hard Thing about Hard Things: Building a Business When There are No Easy Answers on my shelf since it came out, and I was recently compelled to pull it down. Horowitz is one of Silicon Valley’s most respected and experienced entrepreneurs, and his book offers great advice on building and managing a startup by walking through practical steps for managing some of the toughest problems that leaders face. It’s a little funny and very real, and I think it’s an insightful read for budding entrepreneurs and business vets alike.

 📺 Watch: A well done gritty crime drama is something I always enjoy, so I’ve recently been checking out City on a Hill, starring Kevin Bacon. It’s a dark cop show that the Bostonian dynamic duo of Ben Affleck/Matt Damon helped produce. It takes place in the ‘90s, when everything was a little different. I love it because it harkens back to the type of vibe of not just Boston, but pre-9/11 America. Even though I wasn’t living in the US in the early ‘90s, it’s still something I can relate to from a historical perspective. If you like The Town or Gone, Baby Gone, or The Departed, you’ll eat this one up as much as I did.

👂 Listen: Crypto guru Anthony Pompliano is putting out a bunch of great content lately, but one I’ve really been getting into is his show, The Pomp Podcast. Pompliani’s cast of guests is impressive—hosting Chamath, Mark Cuban, and Anthony Scaramucci among others—and I love his discussion on the current economic environment and trends. Recently, he had a 90-minute interview with Carlyle Group co-founder David Rubenstein that really showed some insight into the billionaire’s success.

💡 Think: As the ‘quiet quitting’ furor continues to rage on, a procurement leader asked if quiet quitting and being disengaged were one and the same. Are people conflating the two since not everyone that is burned out just stopped working on the job? Such people would be discovered fairly quickly and wouldn’t go far in their careers. It’s an interesting point, especially since the latest Gallup poll indicated that 50% of the workforce may have succumbed to this quiet quitting phenomenon. That sounds like an excessive amount, so I have my doubts. Unless it’s all these people that don’t want to return to the office. 😊 Managers that can balance results with healthy relationships with their team will be the ones that fare well. For the rest: work on engaging, providing hybrid opportunities, and remembering to be human.

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