Counterfeit Components in Supply Chain’s

The threat of being supplied with counterfeit components and products has become a significant problem in many supply chain systems. Illicit parts span nearly all industries, including government contractors, electronic suppliers, drug suppliers, and numerous others. Counterfeit suppliers are often sophisticated and track market conditions as diligently as a legitimate producer. When a market for a particular product is growing, counterfeit suppliers ramp up their operations in order to provide consumers or businesses with imitation parts in times of limited supply.

In March 2011, the Senate Armed Services Committee performed a study in order to estimate the amount of phony electronic components that existed in certain U.S. military vehicles. The study found counterfeit parts in cargo planes, Special Operations helicopters, and surveillance planes. These ill-legitimate parts were suspected to be from China, with the total amount exceeding one million. These counterfeit supplies compromise safety, security, and intellectual property protection rights.

In order to reduce the amount of counterfeit parts, businesses and governments are focusing on scrutinizing all supplies flowing through the supply chain. An amendment was made to the National Defense Authorization Act to now require the Department of Defense to detect high-risk suppliers, sub-contractors, and to strengthen the inspection routine. Supplies should only come from certified and trusted suppliers. The amendment also requires counterfeit parts to be reported to appropriate governments officials and to the Government-Industry Data Exchange Program, which shares information from governments and business purchasers. Section 818 of the National Defense Authorize Act describes the compliance measures in more detail.

A study conducted by IHS reported the number of high-risk suppliers to the U.S government and the electronics industry, has grown by nearly 62% from 2002-2011. The government and all industries are encouraged to test supplier compliance often with rigorous testing, inspections, and reporting. The threat of counterfeit components has continued to grow and supply chain experts are looking into ways to eliminate ill-legitimate products in circulation.

More information can be found on the following websites:


Holiday Logistics

Holiday travel can either be an exciting or stressful. With all of the recent fuel cost increase, how does this year holiday travel look? During the Thanksgiving break many worried about airfare, gas, hotel, and other costs while some just worried about weather delays and other unexpected problems that tends to happen on a regular occurrence such as baggage loss. However, it was reported that travel for Thanksgiving went much smoother than usual. There were not as many flight delays because of nice weather, gas prices did not sky rocket like usual, and many consumers took advantage of cheaper forms of travel such as the MegaBus and trains. While last weeks travel may have gone smooth, how does the Christmas holiday look?

Christmas is usually one of the largest holidays of travel. This is when most families have the longest similar breaks from school and work so it is much easier. The travel concerns consumers have during the winter season is mainly cost and convenience. As of yesterday, the Detroit Free Press has reported that airfare for the holiday travel is up from last year. Many airlines have increased their ticket prices along with plenty of hotels. On average it will cost about 8% more for a plane ticket this year than what it cost last year with about 10% price increase for hotels. Fortunately enough, many of the popular vacation destinations have lowered their hotel fees for the season. So why is there such large variations of prices from last year to this year? The airlines and hotels are trying to take advantage of consumer’s holiday travels. They know that consumers are willing to pay more to see family; they also know that around this time of year many workers are going to try to use up their unused vacation days from the year. The price variation in cities verse popular vacation destinations could have to do with where family is located compared to if family are traveling in smaller groups during this season instead of summer months when vacation destinations are larger.

There are a few steps to overcome these rising prices. Many travel agents have also recommended extending your options of when you are able to begin to travel and the day you are willing to come back. This leaves more room to choose days that are cheapest and not as busy. Recently there has also been an increase in joint booking of airfare and hotel. Allegiant Airlines have been very successful with this option and offer large discounts when you choose this option.






A few other things people usually get concerned about during the holiday time are the delivery of their important packages and timeliness. The roads become more congested, companies are receiving many more orders, and things can become very hectic. According to Derby Supply Solutions, the holiday season is a time when consumer demand can make or break a business. The holiday sales make up between 20-25% of the annual sales for most companies and reach almost 40% some retailers. That is a large increase of demand in such a small amount of time (1/12th of the year). This not only increases package delivery requirements for companies but also cause them to rethink how to handle this much business within the office, warehouses, manufacturing, and much more. UPS currently has an average 15.8 million packages delivered on a daily basis. They suspect nearly a 12 million-package increase (average daily volume) during the season. That 12 million-package increase alone is still larger than UPS’s nearest competitor’s average daily delivery volume of less than 11 million (UPS). To adjust to this busy time of year most companies hire seasonal employees, additional flights scheduled, and have extended business hours.

Additional Statistics:

In 2010:

 212 million shoppers visited stores or online websites on Black Friday.

23 million people were shopping on Christmas Eve

62% of shopping is done between November and December

        The average consumers planned on spending almost $700 on gifts

In 2012:

There are 32 shopping days and only 21 shipping days

UPS will hire 55,000 seasonal employees

UPS expects to deliver 500+ packages during the holiday

December 18th is the busiest online tracking day of the year

December 20th will be UPS’s peak day of delivery with 28 million deliveries

Delivering 28 million packages a day is equal to about 300 packages per second!



Rising fuel prices foster the viability of rail transport

Halfway through the presidency of Bush 1, the Federal Railroad Administration conducted a comparative study between rail and truck transport to determine which mode was more fuel efficient, and its conclusion was a definite, if intuitive, one. Transportation of goods, when the commodity is modally competitive, requires less fuel by train. Since those days, new technologies have improved the transportation industry’s ability to meet customers’ ever more taxing expectations, themselves a product of the new technologies. Intermodal strategies, railcar designs, commodity mix: these are some of the aspects of the industry that experienced the most significant innovations, bringing with them increased efficiency across most associated costs, including fuel.

In 2009, the FRA conducted another study that recreated relative measurements from the 1991 study in an effort to find correlating results with current data and quantify the technological effect of the preceding two decades on fuel efficiency. 23 movements were examined where rail and truck compete for freight. No commodity movements were considered where either truck or rail are considered by industry standards to be a preferable means of transport.

The FRA concluded that railroad transport’s fuel efficiency improved about 20% between 1990 and 2006, citing changes in traffic mix, technological improvements, and changes in operating practices as significant contributing factors. The fuel efficiency of trucks improved 11% between 1992 and 2002. Operational calibration and technological improvements to almost every mechanical aspect were the primary stimuli. The study’s conclusion asserts that the rising cost of fuel has incentivized this drive toward energy-conserving innovation in the transportation industry, and that the trend indicates a continuation of conservation consciousness, even if for the sake of the bottom line. Railroads are ideally suited to the anticipated effects. While the trucking industry has experienced an increase in freight activity of over 50% between 1990 and 2005, this despite the fact that it is less fuel efficient, as a mode of transportation its flexibility at every level is the reason for this. But as fuel costs continue to climb, the fuel efficiency of rail transport will drive the industry ever more toward intermodal designs, and the ensuing integration of train services within industry-wide strategies will increase rail operators’ modal vitality.

Pipeline Regulations

           After the re-election of President Obama he has made it very clear that his administration will begin to take a strong look into the pipeline transportation industry.  The Obama administration is looking to tighten up the regulations on pipelines and make sure their level of safety greatly increases.   During his most recent term in office pipelines have taken several lives and one of the largest being the natural gas pipeline explosion in San Bruno California.  In the San Bruno tragedy on September 9, 2010 a 30” steel pipeline exploded and killed eight people while destroying 38 homes in the process.  Disasters like this one are the main target that will be addressed with the coming regulations.


San Bruno pipeline explosion

One of the potential regulations that the Obama administration could be looking to impose is the inspection of older pipelines that had bypassed previous regulations to the grandfather clauses.  These inspections will hopefully catch any structural damage in the pipes but currently the industry lacks the proper inspection technology to make a complete and thorough search impractical.  The pressure testing that’s currently used to test many of the newer types of pipelines may even damage some of the older pipelines further.  Jeffrey Wiese the Associate Administrator of Pipeline Safety with the Department of Transportation’s Pipeline and Hazardous Material Safety Administration (PHMSA) points out another flaw in the inspections when he said, “You have pipelines that are the sole gas source into a town.  You can’t just take them out of service for an inspections”.  Another possible regulation that the Obama administration may impose is a much greater increase in the number of homes required to use pressure shut off valve that will shut off supply of gas if there is an issue with the distribution system. These shut off valves won’t allow gas to transport through faulty pipes but have also been proven to shut off at incorrect and inopportune times.  Customers living in the northern parts of the country will not be happy if their gas is improperly cut off during the frigid winter months.

The regulations that are sure to come to pipeline industry will aim to improve safety and hopefully encourage companies to invest research and development money into inspection technology.  Wiese describes the inspection process of pipelines today as “grossly underinvested” and with regulation put in place by the Obama administration hopefully the ball will get rolling with more research in this department to prevent future disasters.


Healthcare Logistics

            While health should remain the number one priority for every individual, it is sometimes overlooked in the busy lives we face. Without maintaining a healthy lifestyle, life loses it’s value.  Logistics in itself is a complicated subject, throw in all of the necessities required for a hospital and you are really beginning to make things challenging. Not only do hospitals require employees and machines, they also require a constant supply of equipment, drugs, pharmaceuticals, patient history of patients and other medical devices. Because of the high importance that hospitals hold, it must be assured that the logistics partners have experience and knowledge in what they are doing. When it comes to healthcare, there is little margin for error.

            Main drivers for a proficient supply chain manager is to help manage the high healthcare costs that continue to increase. Having an educated professional manage these numbers will help reduce the costs in the healthcare supply chain. Unfortunately, it is unknown where the greatest opportunities for increased quality and lower costs lie in the supply chain, resulting in major inefficiencies. By increasing our staffing in healthcare logistics, perhaps some of these puzzling questions can be answered.

            In our society today, almost everything is expected immediately. This makes the supply chain have to remain organized and work as effectively and efficiently as possible. In the healthcare sector, quick performance should be classified as most important. When lives are on the line, if there is not the necessary equipment, supplies, or drugs to perform a procedure, we are risking valuable lives. With this being said, it is important to not halt any procedures due to lack of goods. Who’s responsibility is this? The supply chain professional who has been hired to take on this important responsibility is. As the importance and complexity of the healthcare logistics becoming more and more clear, many healthcare organizations are contemplating reorganizing their ways and making additions to their current staff to help assure that the logistics are controlled properly and are always prepared for disasters and emergencies.

            In addition to increasing educated staff, new technologies have also been introduced to help contribute to the success of the healthcare facility. New devices such as patient record device, computerized prescriptions, and bar coded verifications are some of the technologies used to increase inventory count, improve accuracy, and more effectively distribute the drug supply.

            Health is what keeps our bodies, friends, family, community, and world functioning. Without maintaining health, our future would not be as bright as it is today. Healthcare logistics is the backbone to running such successful healthcare facilities and keeping our society healthy. It is no wonder that healthcare facilities have recognized the importance of this position within their functions and have decided to rearrange their organization and improve their healthcare logistics in any way possible. An effective and efficient supply chain of products to these locations should be the number one priority to help maintain the success of these organizations during emergencies and disasters to help maintain our robust community.


North American Free Trade Agreement (NAFTA)

On August 12, 1991 the United States, Canada, and Mexico signed the North American Free Trade Agreement (NAFTA) and on January 1, 1994 went into effect.  Although, free trade was already in practice since 1989 between the U.S, Canada, and Mexico the free trade agreement broadened the arrangements between the three nations.  At that time NAFTA made the three countries the largest free market in the world, directly affecting $6 trillion and 345 million people. NAFTA was brought into law in order to end tariff barriers to agricultural, manufacturing, and services trade. NAFTA removed investment restrictions, offered protection to intellectual property, and bright to light environmental and labor concerns. Small business were expected to experience huge benefits from NAFTA since lowering trade barriers would make it easier to do business with Mexico and Canada.

Major Point of NAFTA

  • Elimination of Tariffs for qualifying products. There was a tariff charge imbalance and NATFA would eliminate it over 15 years. Once in effect 50% of the tariffs were eliminated immediately.
  • Elimination of nontariff barriers by 2008. This includes opening the border and interior of Mexico to U.S. truckers and streamlining border processing and licensing requirements.
  • Establishment of standards on health, safety, and industrial standards to the highest existing standards among the three countries. Standards could no longer be used as a barrier to free trade. The speed of export-product inspections and certifications was also improved.
  • Supplemental agreements to insure that countries would not take advantage of one another’s opportunities and weaknesses.
  • Tariff reduction for motor vehicles and auto parts and automobile rules of origin.
  • Expanded telecommunications trade.
  • Reduced textile and apparel barriers.
  • More free trade in agriculture.
  • Expanded trade in financial services.
  • Opening of insurance markets.
  • Increased investment opportunities.
  • Liberalized regulation of land transportation.
  • Increased protection of intellectual property rights
  • Expanded the rights of American firms to make bids on Mexican and Canadian government contracts

No state, provincial, or local governments could impose taxes or tariffs on those goods. In addition, customs duties were either eliminated at the time of the agreement or scheduled to be phased out in five or 10 equal stages. All remaining duties were eliminated on January 1, 2008 as scheduled. Trade among the countries is extremely high. Today NAFTA is a trading platform of 450 million people and $17 trillion.





Beer Pipelines of Europe

Group 6

  When one thinks of a pipeline, they often think of oil being transported to its destination, when in fact pipelines can transport much more; beer.  Beer pipelines are slowly becoming a feature of bar districts and stadiums alike to bring cold beverages to fans or paying customers.  In cities like Randers, Denmark and also Gelsenkirchen, Germany beer pipelines are in use.

Both cities are unique.  In Gelsenkirchen, the home of the German soccer power FC Shalke 04, their arena named Veltins Arena has a five kilometer beer pipeline that runs throughout the stadium.  The stadium stores four cooling centers underneath it that houses 52,000 liters of beer.  Each pipe can transport up to 14 liters of beer in a minute.  The pipelines feed over one hundred bars and restaurants inside the stadium.  However the pipeline sees noticeable fluxuations in the amount of beer moved through the pipeline determinant on if the team wins or loses!  Stadiums make a large amount off of their profits based off of their beer sales.


In the case of Randers, the Denmark the city features a beer pipeline as well.  The Thor Brewery, originally downtown had a pipeline in which it could pump beer to local breweries.  However in the nineties the brewery moved outside the city, but still supplies bars with beer.  Information is extremely limited on this pipeline, but Randers seems like a very interesting place to visit.

With the rise of microbrewery’s the opportunity for beer pipelines may grow.  Bars near microbrewery’s may look to beer pipelines to cut costs and cut down risks of stockouts.  European soccer teams such as Zenit St. Petersburg have seen Schalke’s state of the art pipeline and are looking to implement a beer pipeline in their new stadium.