Top 10 Supply Chain Threats: Kathy Fulton of ALAN on the threat of disruptions from weather extremes
Weather is always a risk to the resiliency of a supply chain, and shifts in climate patterns seem to be making it an even more important risk for which supply chain executives need to be prepared. We run down the risks and how they could impact your supply chain operations.
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Transcript
About this week's guest
Kathy Fulton is executive director of the American Logistics Aid Network (ALAN). She leads the organization in facilitating donations of logistics services and equipment to enable delivery of millions of dollars’ worth of humanitarian aid. Fulton served as the organization’s director of operations from 2010 until her promotion in 2014.
Fulton’s passion is the intersection of supply chain and emergency management, focusing on the critical role logistics and supply chain professionals play in disaster relief. She serves on national workgroups focused on efficient coordination of logistics activities during disasters, including those hosted by the National Academies of Science, Engineering, and Medicine, the Department of Homeland Security, the Transportation Research Board, National Voluntary Organizations Active in Disaster, and the National Emergency Management Association.
Preceding her work with ALAN, she was senior manager of information technology services at Saddle Creek Logistics Services, where she led IT infrastructure implementation and support, corporate systems, and business continuity planning. Fulton holds a bachelor’s degree in mathematics from Northwestern State University of Louisiana and master’s degrees in business administration and management information systems from the University of South Florida.
David Maloney, Editorial Director, CSCMP’s Supply Chain Quarterly00:02
The Covid-19 pandemic showed us just how vulnerable supply chains are. Today we face many threats: shipping delays; a lack of workers; failing infrastructure; transportation rates that are out of control; cybersecurity threats; and of course, a worldwide pandemic that is still very much with us. But with each of these threats comes opportunities. Welcome to this limited podcast series from CSCMP’s Supply Chain Quarterly, the Top 10 Supply Chain Threats.
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Today, we focus on weather extremes. Here is your moderator for this segment, Mitch Mac Donald, group editorial director emeritus of Supply Chain Quarterly.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly01:13
Hello, and welcome to the latest installment in our podcast series on supply chain risks. Our topic today is extreme weather and the risks it pose[s] to supply chains worldwide. And with both severe weather and supply chains in the mainstream news like never before, who better to join us for discussion on this topic than Kathy Fulton, the executive director of the American Logistics Aid Network, or ALAN, for short. Kathy, thanks for joining us. I think it's your first podcast seating with us. We're excited to have you. The general consensus, clearly, is that not only is weather becoming more extreme, but it's popping up in nontraditional ways in nontraditional areas. Now, as part of your work with ALAN, you have to be much more plugged in than a lot of us on this. Is that general consensus, right? Is the weather getting worse, and is it hitting areas in ways it historically has not?
Kathy Fulton, Executive Director, American Logistics Aid Network 01:35
Hey, thanks for having me. Yeah, absolutely. I mean, you can see the number of extreme events climbing over the past, you know, decade even, but in different ways. Thinking, you know, I think about the drought we're having out in California right now, right, you know, just historic, low lake levels, and, you know, conversations we've never had to have before, because of these extreme events. You look at 2020 and the hurricanes that we had: record number of hurricanes. So, that number and the, not just the extremity of the events, but the impacts that they're having on populations. So, weather's not a problem if it's happening where nobody lives...
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly02:43
Right.
Kathy Fulton, Executive Director, American Logistics Aid Network 02:44
but now we're building in places, and the weather is occurring in places, that is having an impact not just on humans, but on our supply chains, which means also more humans.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly02:55
Exactly. Yeah. And as you're saying that, I'm thinking about, in terms of places you wouldn't actually see it. I don't think ever in our lives that we've seen a video image of water running down the stairs into a New York City subway.
Kathy Fulton, Executive Director, American Logistics Aid Network 03:08
Right.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly03:08
Yeah.
Kathy Fulton, Executive Director, American Logistics Aid Network 03:08
Right, yeah, I mean, and the loss of life that accompanies that, because we're not accustomed to dealing with that, right? We're just—we have not built our infrastructure to handle these extreme events. So, as we look at, how do we mitigate, how do we prepare for these things, it's going to take really creative thinking, not just for, like our built environment, but also how we live our lives.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly03:34
Right. Right. Now, things are changing, and they'll continue to. On the difference of some different geographic areas being impacted, ALAN is coming up on 15 years?
Kathy Fulton, Executive Director, American Logistics Aid Network 03:46
Sixteen. Hurricane Katrina in 2005, so 16 years.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly03:49
Yeah, um, in, you know, a lot of experience now, a lot of sense of how to best rally support, how to deploy support, how to get things where they needed to be, but now that they're starting to have to be in different places. Is that complicating, or are you in the routine and say, we just do the same things, but now it has to go to New Jersey rather than Mississippi.
Kathy Fulton, Executive Director, American Logistics Aid Network 04:13
The Gulf Coast, right. Yeah, it is different. But the thing that I would say that helps us is that there are logistics operations everywhere and, with pushing more logistics into urban areas, you know—and we can talk about whether that, whether that has an impact on some of these extreme events—but as those you know, as those logistics hubs get closer to point of consumption, that means that those assets and resources become available to us to support the humanitarian activities.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly04:49
So, the naturally occurring expansion of logistics operations, to quote get closer to the customer is being done for capitalism reasons, for commerce, for business, but it's actually, there's a side benefit that now we have more options deployed in more areas?
Kathy Fulton, Executive Director, American Logistics Aid Network 05:07
That's right. Yeah, I mean, you know, we still have pockets of the country where, you know, it just doesn't make sense to have that density of logistics. Fortunately, at least for now, those are still areas where the extreme events, you know, don't have as much impact, you know. As more people move to Wyoming and Montana, for example, the logistics, you know, infrastructure will follow. So, it's a race.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly05:38
Yeah. Is, are there any specific things that—not speaking in terms of, in support of ALAN, and response, but just, you know, in crisis situations, it affects supply chain resiliency?
Kathy Fulton, Executive Director, American Logistics Aid Network 05:51
Yep.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly05:52
Any thoughts on any changes in approach a process that supply chain folks might have to consider to prepare for the fact that the resiliency of my supply chain is going to be tested more often, and in more ways than I ever thought.
Kathy Fulton, Executive Director, American Logistics Aid Network 06:04
Yeah.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly06:05
What should they be doing?
Kathy Fulton, Executive Director, American Logistics Aid Network 06:06
Well, you know, this is one of the areas where I think technology is keeping pace or advancing beyond how we're using it. So, the visibility that has been, you know, growing over the past few years, you know, this, this push towards being able to see end to end with your supply chain, gives us an advantage to also say, "Okay, well, if we know this information about our supply chain, about our nodes and flows, right, where our physical components are, then we can layer on top of that the particular risks that are occurring." So, we can see how a new extreme event, you know, that may not have occurred in a place previously, is going to impact our supply chains, okay? So, I think from that perspective, having that visibility, applying it in those ways, whether it's digital twins, or whether, you know—I don't know all the technology terms anymore—but I think that that's going to help us better respond to prepare or mitigate against these extreme events.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly07:12
They actually, as you're saying that, they're actually, I mean, the purpose and objective of a supply chain in its normal state, is not all that different than the purpose and objective when it's trying to help respond to a disaster. So, the same approaches, as you're saying this thing, it's the standard answer: It's your job to fully exploit enabling technologies, if you don't, you'll be at a disadvantage. That's really where [we've come].
Kathy Fulton, Executive Director, American Logistics Aid Network 07:35
We talk about not just exploiting the existing technologies, but exploiting their design. So, if you think about, you know, exactly what we talked about, we have these planned bottlenecks, as they were, of logistics hubs.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly07:51
Yeah. Yep.
Kathy Fulton, Executive Director, American Logistics Aid Network 07:51
Right? But that also means that's a concentration that we can draw upon, and because they're closer to the people, that means there's more of them. So, if Hub A within a city is down, maybe Hub B can surge to support it. But it's thinking about, how do we do that on the fly? So, how do we, how do we recognize that we can shift those flows to continue to serve a population?
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly08:18
Has ALAN's ability to respond when needed during this pandemic period, at a time that many supply chains are, if not fully broken, at least seriously impaired, has that trickled down to impact ALAN's ability to respond in the way you want it to, and if so, could you tell us how that...?
Kathy Fulton, Executive Director, American Logistics Aid Network 08:39
Short answer is, absolutely, yes, one hundred percent, and because, you know, I don't want to take resources away from a supply chain that is already stretched thin, right? So, being able to ask our partners, Hey, can you donate your services to support this, you know, other supply chain, this other need that is occurring?, that we have to think about that closely. Like, is it better to keep that pre existing supply chain moving, or is it better to, in that moment, serve the the replacement supply chain? We've had amazing support from the, from the industry. You know, people are finding creative ways to support us, whether that is, you know, working not with just their primary assets, but partner assets, you know, helping us to really dig down through the supply chain, find that available capacity, find the ways to continue serving those who are affected by crisis.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly09:39
To close: Neither of us are scientists, and I would not suggest either of us are experts, but by the nature of your work and the great work you do. you may have some insights that are a little deeper than the rest of us. Is this going to continue to escalate? Is this going to—are we not yet near the end of seeing what climate change could do in terms of impact to supply chains?
Kathy Fulton, Executive Director, American Logistics Aid Network 10:06
In my unscientific, but studied, opinion...
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly10:12
You asked the question better than I did!
Kathy Fulton, Executive Director, American Logistics Aid Network 10:14
No, I truly do believe that we are reaching that tipping point where it's going to be very hard to come back from, right? So, we have to think about, how do we restructure our supply chains so that there is less impact on the environment, so that we're not doing more harm by our activities, than good, you know? And whether that means, you know, nearshoring, reshoring, or just, you know, completely changing our model, we do have to change something.
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly10:50
Both the business case and the human case for having a more sustainable supply chain is being made right in front of us
Kathy Fulton, Executive Director, American Logistics Aid Network 10:57
One hundred percent, because, I mean, what's the point of having fabulous supply chains if there's no one, you know, if the earth can't support the people to... ?
Mitch Mac Donald, Group Editorial Director Emeritus, CSCMP’s Supply Chain Quarterly11:08
Absolutely. Kathy, thank you, as always, you've given us some great insight for our audience, and thanks for joining us for a conversation. And thank you for tuning in. If you haven't done so already, please subscribe to this podcast so you can listen to our entire upcoming series on supply chain risks. I'm Mitch Mac Donald, and thanks again for listening to the Supply Chain Quarterly podcast.
David Maloney, Editorial Director, CSCMP’s Supply Chain Quarterly11:32
Thank you for joining us for this podcast from CSCMP’s Supply Chain Quarterly, the Top 10 Supply Chain Threats. We encourage you to subscribe wherever you get your podcasts.
Benefits for Amazon's customers--who include marketplace retailers and logistics services customers, as well as companies who use its Amazon Web Services (AWS) platform and the e-commerce shoppers who buy goods on the website--will include generative AI (Gen AI) solutions that offer real-world value, the company said.
The launch is based on “Amazon Nova,” the company’s new generation of foundation models, the company said in a blog post. Data scientists use foundation models (FMs) to develop machine learning (ML) platforms more quickly than starting from scratch, allowing them to create artificial intelligence applications capable of performing a wide variety of general tasks, since they were trained on a broad spectrum of generalized data, Amazon says.
The new models are integrated with Amazon Bedrock, a managed service that makes FMs from AI companies and Amazon available for use through a single API. Using Amazon Bedrock, customers can experiment with and evaluate Amazon Nova models, as well as other FMs, to determine the best model for an application.
Calling the launch “the next step in our AI journey,” the company says Amazon Nova has the ability to process text, image, and video as prompts, so customers can use Amazon Nova-powered generative AI applications to understand videos, charts, and documents, or to generate videos and other multimedia content.
“Inside Amazon, we have about 1,000 Gen AI applications in motion, and we’ve had a bird’s-eye view of what application builders are still grappling with,” Rohit Prasad, SVP of Amazon Artificial General Intelligence, said in a release. “Our new Amazon Nova models are intended to help with these challenges for internal and external builders, and provide compelling intelligence and content generation while also delivering meaningful progress on latency, cost-effectiveness, customization, information grounding, and agentic capabilities.”
The new Amazon Nova models available in Amazon Bedrock include:
Amazon Nova Micro, a text-only model that delivers the lowest latency responses at very low cost.
Amazon Nova Lite, a very low-cost multimodal model that is lightning fast for processing image, video, and text inputs.
Amazon Nova Pro, a highly capable multimodal model with the best combination of accuracy, speed, and cost for a wide range of tasks.
Amazon Nova Premier, the most capable of Amazon’s multimodal models for complex reasoning tasks and for use as the best teacher for distilling custom models
Amazon Nova Canvas, a state-of-the-art image generation model.
Amazon Nova Reel, a state-of-the-art video generation model that can transform a single image input into a brief video with the prompt: dolly forward.
Economic activity in the logistics industry expanded in November, continuing a steady growth pattern that began earlier this year and signaling a return to seasonality after several years of fluctuating conditions, according to the latest Logistics Managers’ Index report (LMI), released today.
The November LMI registered 58.4, down slightly from October’s reading of 58.9, which was the highest level in two years. The LMI is a monthly gauge of business conditions across warehousing and logistics markets; a reading above 50 indicates growth and a reading below 50 indicates contraction.
“The overall index has been very consistent in the past three months, with readings of 58.6, 58.9, and 58.4,” LMI analyst Zac Rogers, associate professor of supply chain management at Colorado State University, wrote in the November LMI report. “This plateau is slightly higher than a similar plateau of consistency earlier in the year when May to August saw four readings between 55.3 and 56.4. Seasonally speaking, it is consistent that this later year run of readings would be the highest all year.”
Separately, Rogers said the end-of-year growth reflects the return to a healthy holiday peak, which started when inventory levels expanded in late summer and early fall as retailers began stocking up to meet consumer demand. Pandemic-driven shifts in consumer buying behavior, inflation, and economic uncertainty contributed to volatile peak season conditions over the past four years, with the LMI swinging from record-high growth in late 2020 and 2021 to slower growth in 2022 and contraction in 2023.
“The LMI contracted at this time a year ago, so basically [there was] no peak season,” Rogers said, citing inflation as a drag on demand. “To have a normal November … [really] for the first time in five years, justifies what we’ve seen all these companies doing—building up inventory in a sustainable, seasonal way.
“Based on what we’re seeing, a lot of supply chains called it right and were ready for healthy holiday season, so far.”
The LMI has remained in the mid to high 50s range since January—with the exception of April, when the index dipped to 52.9—signaling strong and consistent demand for warehousing and transportation services.
The LMI is a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
Specifically, 48% of respondents identified rising tariffs and trade barriers as their top concern, followed by supply chain disruptions at 45% and geopolitical instability at 41%. Moreover, tariffs and trade barriers ranked as the priority issue regardless of company size, as respondents at companies with less than 250 employees, 251-500, 501-1,000, 1,001-50,000 and 50,000+ employees all cited it as the most significant issue they are currently facing.
“Evolving tariffs and trade policies are one of a number of complex issues requiring organizations to build more resilience into their supply chains through compliance, technology and strategic planning,” Jackson Wood, Director, Industry Strategy at Descartes, said in a release. “With the potential for the incoming U.S. administration to impose new and additional tariffs on a wide variety of goods and countries of origin, U.S. importers may need to significantly re-engineer their sourcing strategies to mitigate potentially higher costs.”
Freight transportation providers and maritime port operators are bracing for rough business impacts if the incoming Trump Administration follows through on its pledge to impose a 25% tariff on Mexico and Canada and an additional 10% tariff on China, analysts say.
Industry contacts say they fear that such heavy fees could prompt importers to “pull forward” a massive surge of goods before the new administration is seated on January 20, and then quickly cut back again once the hefty new fees are instituted, according to a report from TD Cowen.
As a measure of the potential economic impact of that uncertain scenario, transport company stocks were mostly trading down yesterday following Donald Trump’s social media post on Monday night announcing the proposed new policy, TD Cowen said in a note to investors.
But an alternative impact of the tariff jump could be that it doesn’t happen at all, but is merely a threat intended to force other nations to the table to strike new deals on trade, immigration, or drug smuggling. “Trump is perfectly comfortable being a policy paradox and pushing competing policies (and people); this ‘chaos premium’ only increases his leverage in negotiations,” the firm said.
However, if that truly is the new administration’s strategy, it could backfire by sparking a tit-for-tat trade war that includes retaliatory tariffs by other countries on U.S. exports, other analysts said. “The additional tariffs on China that the incoming US administration plans to impose will add to restrictions on China-made products, driving up their prices and fueling an already-under-way surge in efforts to beat the tariffs by importing products before the inauguration,” Andrei Quinn-Barabanov, Senior Director – Supplier Risk Management solutions at Moody’s, said in a statement. “The Mexico and Canada tariffs may be an invitation to negotiations with the U.S. on immigration and other issues. If implemented, they would also be challenging to maintain, because the two nations can threaten the U.S. with significant retaliation and because of a likely pressure from the American business community that would be greatly affected by the costs and supply chain obstacles resulting from the tariffs.”
New tariffs could also damage sensitive supply chains by triggering unintended consequences, according to a report by Matt Lekstutis, Director at Efficio, a global procurement and supply chain procurement consultancy. “While ultimate tariff policy will likely be implemented to achieve specific US re-industrialization and other political objectives, the responses of various nations, companies and trading partners is not easily predicted and companies that even have little or no exposure to Mexico, China or Canada could be impacted. New tariffs may disrupt supply chains dependent on just in time deliveries as they adjust to new trade flows. This could affect all industries dependent on distribution and logistics providers and result in supply shortages,” Lekstutis said.
Grocers and retailers are struggling to get their systems back online just before the winter holiday peak, following a software hack that hit the supply chain software provider Blue Yonder this week.
The ransomware attack is snarling inventory distribution patterns because of its impact on systems such as the employee scheduling system for coffee stalwart Starbucks, according to a published report. Scottsdale, Arizona-based Blue Yonder provides a wide range of supply chain software, including warehouse management system (WMS), transportation management system (TMS), order management and commerce, network and control tower, returns management, and others.
Blue Yonder today acknowledged the disruptions, saying they were the result of a ransomware incident affecting its managed services hosted environment. The company has established a dedicated cybersecurity incident update webpage to communicate its recovery progress, but it had not been updated for nearly two days as of Tuesday afternoon. “Since learning of the incident, the Blue Yonder team has been working diligently together with external cybersecurity firms to make progress in their recovery process. We have implemented several defensive and forensic protocols,” a Blue Yonder spokesperson said in an email.
The timing of the attack suggests that hackers may have targeted Blue Yonder in a calculated attack based on the upcoming Thanksgiving break, since many U.S. organizations downsize their security staffing on holidays and weekends, according to a statement from Dan Lattimer, VP of Semperis, a New Jersey-based computer and network security firm.
“While details on the specifics of the Blue Yonder attack are scant, it is yet another reminder how damaging supply chain disruptions become when suppliers are taken offline. Kudos to Blue Yonder for dealing with this cyberattack head on but we still don’t know how far reaching the business disruptions will be in the UK, U.S. and other countries,” Lattimer said. “Now is time for organizations to fight back against threat actors. Deciding whether or not to pay a ransom is a personal decision that each company has to make, but paying emboldens threat actors and throws more fuel onto an already burning inferno. Simply, it doesn’t pay-to-pay,” he said.
The incident closely followed an unrelated cybersecurity issue at the grocery giant Ahold Delhaize, which has been recovering from impacts to the Stop & Shop chain that it across the U.S. Northeast region. In a statement apologizing to customers for the inconvenience of the cybersecurity issue, Netherlands-based Ahold Delhaize said its top priority is the security of its customers, associates and partners, and that the company’s internal IT security staff was working with external cybersecurity experts and law enforcement to speed recovery. “Our teams are taking steps to assess and mitigate the issue. This includes taking some systems offline to help protect them. This issue and subsequent mitigating actions have affected certain Ahold Delhaize USA brands and services including a number of pharmacies and certain e-commerce operations,” the company said.
Editor's note:This article was revised on November 27 to indicate that the cybersecurity issue at Ahold Delhaize was unrelated to the Blue Yonder hack.