When AWS recently announced a new supply chain software package designed to help companies gain better visibility, make informed decisions, and reduce errors, I was eager to get feedback on how significant this development is from Joanna Martinez, supply chain expert and Acceleration Economy analyst. We got together by video for a timely discussion where Joanna weighed in on the current state of affairs in supply chains, China’s influence, the volume of data that AWS has available, and how customers could benefit.
01:47 — Joanna lays out current supply chain challenges that endure even amid some improvements that are taking place. Joanna recently was able to purchase a car after long delays — that’s one indicator of improvement. Still, China remains a concern. From a military standpoint, the situation with Taiwan and the possible disruption in terms of shipping routes and the ability to produce goods remain concerning, as does Covid-19 and the unrest that’s taking place in other parts of the country. When one entity is responsible for a quarter of the world’s manufacturing output, there are a lot of variables that could go bad. Even if one of them goes bad, it’s going to wind up having an effect on the rest of the world.
03:12 — There’s also inflation and the labor unrest that’s taking place, the inability to find truckers, rail strikes, and more. To the extent that workers are willing to strike, you’d have more possible disruption. And of course, there is the weather. With global warming and all of the changes taking place, what does that mean to the food supply?
04:42 — Responding to the idea that these disruptions are more broad-based than industry-specific, Joanna notes that when it comes to supply from China, it’s going to be the manufacturing and retail industries that take the heaviest hit. Among her customer base, the manufacturing companies are very reliant on goods or parts that are manufactured in Asia. Professional services organizations have a lot more latitude — they are buying more services and technology. Professional services companies often have the ability to switch from one supplier to another and can do so with a bit more flexibility.
05:42 — AWS’ new software is not yet available but it’s being offered in a preview mode. Amazon is a huge player in the cloud, they run what’s possibly the world’s biggest logistics operation so they have considerable supply chain expertise. It seems AWS’ entry into this market could have a major impact.
06:28 — One of the things Amazon is touting is machine learning-powered insights. When you’re using machine learning, you need a lot of data, right? The more data, the better the insights are. Who has more data than Amazon? Joanna recalls a statistic that Amazon ships 22% of the world’s packages. So think about the logistics and all the insight Amazon has. We know what has gone well for the company and what has gone wrong. If AWS is truly capturing that information and using those insights to help its clients, it’s a real game changer.
07:22 — A couple of years ago, when we were in the midst of Covid-19, the Port of Los Angeles had containers that were being held in the queue for 40-45 days, and Amazon was one of the first to come up with a creative option: They went to more obscure ports, unloaded the containers, and shipped them where they needed to go, changing that supply chain and the routes they were taking. If that’s the kind of innovation that they’re going to offer to their customers, it’s going to be awesome, particularly for those small and mid-sized companies. If you’re a Fortune 20 company, you have plenty of money and plenty of people to be able to manage that kind of thing. For the companies that don’t have the capability, the people, and the brainpower to be able to go out and invest in software and really manage their supply chain end to end, the possibilities could be endless.
11:53 — A lot of clients that Joanna’s firm serves are in service industries and less likely to be affected by AWS’ new software. Those that could see direct benefits are manufacturing companies. In the Northeast US and Long Island, there are lots of small and medium-sized manufacturing companies that stand to be able to leverage Amazon’s capabilities. Amazon’s software is so intuitive, we all use it to order what we need. So, if you take that to the business side of things, and Amazon brings that same intuitive thought process to its product, it should open up lots of opportunities for smaller companies to be able to at least understand where things are, what opportunities exist, and start thinking differently about the kind of routes they’re using — and maybe even where they’re manufacturing.
14:43 — Looking ahead into 2023, Joanna hopes to preview the Amazon product and bring more hands-on insight to future discussions. Also, Covid-related disruptions are diminishing and we increasingly see things like the investments being made in the United States for chip manufacturing and rethinking the whole idea of doing parts of the manufacturing process in other parts of the world; Joanna believes technology is going to allow more nearshoring. As a result of that, you mitigate some of the supply chain risks that are inherent with time and distance.
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