A year ago, as the pandemic ravaged country after country and economies shuddered, consumers were the ones panic-buying. Today, on the rebound, it’s companies furiously trying to stock up. Mattress producers to car manufacturers to aluminum foil makers are buying more material than they need to survive the breakneck speed at which demand for goods is recovering and assuage that primal fear of running out. The frenzy is pushing supply chains to the brink of seizing up. Shortages, transportation bottlenecks and price spikes are nearing the highest levels in recent memory, raising concern that a supercharged global economy will stoke inflation.
Copper, iron ore and steel. Corn, coffee, wheat and soybeans. Lumber, semiconductors, plastic and cardboard for packaging. The world is seemingly low on all of it. “You name it, and we have a shortage on it,” Tom Linebarger, chairman and chief executive of engine and generator manufacturer Cummins Inc., said on a call this month. Clients are “trying to get everything they can because they see high demand,” Jennifer Rumsey, the Columbus, Indiana-based company’s president, said.“They think it’s going to extend into next year.”
The difference between the big crunch of 2021 and past supply disruptions is the sheer magnitude of it, and the fact that there is — as far as anyone can tell — no clear end in sight. Big or small, few businesses are spared. Europe’s largest fleet of trucks, Girteka Logistics, says there’s been a struggle to find enough capacity. Monster Beverage Corp. of Corona, California, is dealing with an aluminum can scarcity. Hong Kong’s MOMAX Technology Ltd. is delaying production of a new product because of a dearth of semiconductors.
Further exacerbating the situation is an unusually long and growing list of calamities that have rocked commodities in recent months. A freak accident in the Suez Canal backed up global shipping in March. Drought has wreaked havoc upon agricultural crops. A deep freeze and mass blackout wiped out energy and petrochemicals operations across the central U.S. in February. Less than two weeks ago, hackers brought down the largest fuel pipeline in the U.S., driving gasoline prices above $3 a gallon for the first time since 2014. Now India’s massive Covid-19 outbreak is threatening its biggest ports.
For anyone who thinks it’s all going to end in a few months, consider the somewhat obscure U.S. economic indicator known as the Logistics Managers’ Index. The gauge is built on a monthly survey of corporate supply chiefs that asks where they see inventory, transportation and warehouse expenses — the three key components of managing supply chains — now and in 12 months. The current index is at its second-highest level in records dating back to 2016, and the future gauge shows little respite a year from now. The index has proven unnervingly accurate in the past, matching up with actual costs about 90% of the time.
To Zac Rogers, who helps compile the index as an assistant professor at Colorado State University’s College of Business, it’s a paradigm shift. In the past, those three areas were optimized for low costs and reliability. Today, with e-commerce demand soaring, warehouses have moved from the cheap outskirts of urban areas to prime parking garages downtown or vacant department-store space where deliveries can be made quickly, albeit with pricier real estate, labor and utilities.
Once viewed as liabilities before the pandemic, fatter inventories are in vogue. Transport costs, more volatile than the other two, won’t lighten up until demand does. “Essentially what people are telling us to expect is that it’s going to be hard to get supply up to a place where it matches demand,” Rogers said, “and because of that, we’re going to continue to see some price increases over the next 12 months.” More well-known barometers are starting to reflect the higher costs for households and companies. An index of U.S. consumer prices that excludes food and fuel jumped in April from a month earlier by the most since 1982. At the factory gate, the increase in prices charged by American producers was twice as large as economists expected. Unless companies pass that cost along to consumers and boost productivity, it’ll eat into their profit margins.
A growing chorus of observers are warning that inflation is bound to quicken. The threat has been enough to send tremors through world capitals, central banks, factories and supermarkets. The U.S. Federal Reserve is facing new questions about when it will hike rates to stave off inflation — and the perceived political risk already threatens to upset President Joe Biden’s spending plans.“You bring all of these factors in, and it’s an environment that’s ripe for significant inflation, with limited levers” for monetary authorities to pull, said David Landau, chief product officer at BluJay Solutions, a U.K.-based logistics software and services provider.
Policy makers, however, have laid out a number of reasons why they don’t expect inflationary pressures to get out of hand. Fed Governor Lael Brainard said recently that officials should be “patient through the transitory surge.” Among the reasons for calm: The big surges lately are partly blamed on skewed comparisons to the steep drops of a year ago, and many companies that have held the line on price hikes for years remain reticent about them now. What’s more, U.S. retail sales stalled in April after a sharp rise in the month earlier, and commodities prices have recently retreated from multi-year highs.
Caught in the crosscurrents is Dennis Wolkin, whose family has run a business making crib mattresses for three generations. Economic expansions are usually good for baby bed sales. But the extra demand means little without the key ingredient: foam padding. There has been a run on the kind of polyurethane foam Wolkin uses — in part because of the deep freeze across the U.S. South in February, and because of “companies over-ordering and trying to hoard what they can.”
“It’s gotten out of control, especially in the past month,” said Wolkin, vice president of operations at Atlanta-based Colgate Mattress, a 35-employee company that sells products at Target stores and independent retailers. “We’ve never seen anything like this.”Though polyurethane foam is 50% more expensive than it was before the Covid-19 pandemic, Wolkin would buy twice the amount he needs and look for warehouse space rather than reject orders from new customers. “Every company like us is going to overbuy,” he said. Even multinational companies with digital supply-management systems and teams of people monitoring them are just trying to cope. Whirlpool Corp. CEO Marc Bitzer told Bloomberg Television this month its supply chain is “pretty much upside down” and the appliance maker is phasing in price increases. Usually Whirlpool and other large manufacturers produce goods based on incoming orders and forecasts for those sales. Now it’s producing based on what parts are available.
“It is anything but efficient or normal, but that is how you have to run it right now,” Bitzer said. “I know there’s talk of a temporary blip, but we do see this elevated for a sustained period.” The strains stretch all the way back to global output of raw materials and may persist because the capacity to produce more of what’s scarce — with either additional capital or labor — is slow and expensive to ramp up. Read more…..
By Brendan Murray, Enda Curran, Kim Chipman, Bloomberg
While there are many who can’t wait to bid adieu to 2020, there’s no doubt the coronavirus pandemic and the ways businesses had to adjust to ensure their survival changed the trajectory of what 2021 will look like and what businesses should do to get ready for the upcoming year. As a futurist, I help companies understand the latest trends and technologies and offer guidance on how to prepare their businesses for them. Here are the top 10 trends that will drive every business in 2021. I believe every business around the world needs to be ready for these trends.
Work from Home. . .For Real!
When employees were under lockdown orders due to COVID, companies had to quickly adapt operations to a remote workforce. Now that there are some distance and lessons learned from that initial experiment, most businesses are now rethinking their entire business model. Are offices still needed? Some companies experienced an increase in productivity when their workforce went remote.
However, working from home wasn’t ideal for others. Therefore in 2021, businesses need to reimagine their own workspaces as well as provide the proper support for people working from home, such as outfit them with the right office equipment, mental health support, and more so everyone can work from home comfortably.
Data as an Asset
Over the last few years, data volumes have grown massively. The businesses that leveraged this data to better understand their customers and to improve their decision-making are clearly the ones that are outperforming everyone else. Cloud solutions allow us to access data from anywhere. Businesses need to protect and secure data just as they would any other asset.
Another important thing for businesses to consider is how to boost data literacy in their company in 2021 in order to glean decision-making insights from it. This also requires an investment in systems that can efficiently and effectively process, analyze, and store the data streaming into the organization.
In 2021, every business leader needs to reflect on what they’re offering customers and how they operate as a business. There were lots of industries that were completely transformed in 2020, such as the hospitality and events industry. The businesses that are currently thriving even during a pandemic are those that reacted quickly to the changes. For example, restaurants that pivoted to enable expanded take-out abilities or Formula 1 companies that were producing ventilators altered their typical operations to ensure survival. Although businesses have always had to think about how the market is shifting and what transformations that means for business, it will be more important in 2021 to innovate your business model.
Another top business trend in 2021 will be automation. Businesses will evaluate their business processes to see where they can take people out of the process when they aren’t adding any true value. There have already been quite a few shifts in this direction from warehouses, supply chains, autonomous vehicles, trucks, and ships, as well as chatbots that automatically take over customer service inquiries. In 2021, I expect that white-collar automation will be a trend as we consider what bits of a lawyer, doctor, or other white-collar professional’s jobs can be given over to computers and smart robots and delivered through automated interfaces.
As a result of the economic turmoil COVID-19 left in its path, capital markets continue to be nervous. This creates a challenge for businesses that want to raise capital to expand or start a new business. One solution for raising capital has been crowdfunding, blockchain technology, and other decentralized finance options. This will be a big trend in 2021 that will allow businesses to acquire capital easier than through traditional channels.
As companies raced to find new ways of delivering service to customers that were not walking into stores, they began to consider how to deliver some of the services in digital forms using technology such as augmented reality, virtual reality, and mixed reality. To comply with stay-at-home orders, people would use virtual avatars to “try” on make-up, eyewear, and clothes. Ultimately, this “try before you buy” with virtual interfaces will transform how businesses offer their services.
Going from Global to Local
In 2020 there were a lot of reasons to begin to think more locally rather than globally—COVID-10 disrupted international supply chains, there were increasing tensions between the U.S. and China, and Brexit was delivered. Companies began to rethink where they were sourcing and selling their goods because international turmoil could disrupt business. More localized manufacturing and selling are also appealing for environmental awareness.
Purposeful & Meaningful
There’s a trend to have more purpose and meaning in our jobs. Younger generations that are entering the workforce want to connect with a purpose or work for a company that has real meaning. Companies that don’t have a clear or meaningful purpose will struggle to attract talent and customers.
Sustainability has been a concern for some time, but during the pandemic, things shifted in emphasis. As disruptive as the coronavirus was to business, companies are recognizing the environmental crisis could be much more damaging to the world as well as the bottom line than the pandemic. Therefore, every company needs to rethink operations, environmental impact, and their products and how they are being used. This trend of sustainability links closely to the previous trend of a meaningful purpose as companies work to reduce their carbon and water footprint.
During the pandemic, brands relied on engaging with their customers and potential customers across social media. In 2021, there will be a big push toward a more authentic presence on social media and one that’s less curated by social media experts, such as real behind-the-scenes looks at a company. Along with this will be engaging influencers and micro-influencers in your industry—those key people who are driving conversations and engage with your customers.
Bernard Marr is an internationally best-selling author, popular keynote speaker, futurist, and a strategic business & technology advisor to governments and companies. He helps organisations improve their business performance, use data more intelligently, and understand the implications of new technologies such as artificial intelligence, big data, blockchains, and the Internet of Things. Why don’t you connect with Bernard on Twitter (@bernardmarr), LinkedIn (https://uk.linkedin.com/in/bernardmarr) or instagram (bernard.marr)?
Here are 6 trends/industries that are growing faster since the pandemic hit, and you can find many business ideas around them. When looking for business ideas, it’s always a great bet to focus on new trends which result in growing markets and therefore many new opportunities. PS: Sorry for the typo in the video! 😉 Get Business Strategy course here 👉 https://disruptors.academy/business Get Entrepreneurship course here 👉 https://disruptors.academy/startup#business#businessideas
In August 2019, the Arizona Municipal Water Users Association built a 16-foot pyramid of jugs in its main entrance in Phoenix. The goal was to show residents of this desert region how much water they each use a day—120 gallons—and to encourage conservation.
“We must continue to do our part every day,” executive director Warren Tenney wrote in a blog post. “Some of us are still high-end water users who could look for more ways to use water a bit more wisely.”
A few weeks earlier in nearby Mesa, Google proposed a plan for a giant data center among the cacti and tumbleweeds. The town is a founding member of the Arizona Municipal Water Users Association, but water conservation took a back seat in the deal it struck with the largest U.S. internet company. Google is guaranteed 1 million gallons a day to cool the data center, and up to 4 million gallons a day if it hits project milestones. If that was a pyramid of water jugs, it would tower thousands of feet into Arizona’s cloudless sky.
Alphabet’s Google is building more data centers across the U.S. to power online searches, web advertising and cloud services. The company has boasted for years that these huge computer-filled warehouses are energy efficient and environmentally friendly. But there’s a cost that the company tries to keep secret. These facilities use billions of gallons of water, sometimes in dry areas that are struggling to conserve this limited public resource.
“Data centers are expanding, they’re going everywhere. They need to be built in a way that ensures they are not taking critical resources away from water-scarce communities,” said Gary Cook, global climate campaigns director at Stand.earth, an environmental advocacy group.
Google considers its water use a proprietary trade secret and bars even public officials from disclosing the company’s consumption. But information has leaked out, sometimes through legal battles with local utilities and conservation groups. In 2019 alone, Google requested, or was granted, more than 2.3 billion gallons of water for data centers in three different states, according to public records posted online and legal filings.
Clashes over the company’s water use may increase as it chases Amazon.com Inc. and Microsoft Corp. in the booming cloud-computing market. Google has 21 data center locations currently. After pumping $13 billion into offices and data centers in 2019, it plans to spend another $10 billion across the U.S. this year.
“The race for data centers to keep up with it all is pretty frantic,” said Kevin Kent, chief executive officer of consulting firm Critical Facilities Efficiency Solutions. “They can’t always make the most environmentally best choices.”
Google often puts data centers close to large population hubs to help its web services respond quickly. Sometimes that means building in hot and dry regions. The processing units inside heat up easily and water is needed to cool them down.
“We strive to build sustainability into everything we do,” said Gary Demasi, senior director of energy and location operations at Google. “We’re proud that our data centers are some of the most efficient in the world, and we have worked to reduce their environmental impact even as demand for our products has dramatically risen.”
In Red Oak, Texas, a town about 20 miles south of Dallas, Google wants as much as 1.46 billion gallons of water a year for a new data center by 2021, according to a legal filing. Ellis County, which includes Red Oak and roughly 20 other towns, will need almost 15 billion gallons this year for everything from irrigation to residential use, data from the Texas Water Development Board show.
Many parts of Texas are already seeing high water demand, according to Venki Uddameri, director of the water resources center at Texas Tech University. “With climate change, we are expected to have more prolonged droughts,” he said. “These kinds of water-intensive operations add to the local stress.”
Water-scarce cities have to make trade-offs between conservation and economic development, and cash-rich Google is a big draw. “It’s a constant battle in Texas because of wanting both,” said Uddameri.
In August, Google filed a petition with the Public Utility Commission of Texas to strip a local utility in Red Oak, Rockett Special Utility District, of its federal right to be the sole water supplier to the property. Google said it filed the petition after Rockett confirmed it doesn’t have the capacity to meet the company’s demands. If approved, the petition would let Google get water from another provider.
Rockett contested this in a legal response and said Google provided little information on how the water will be used, both in its application to the utility and in “vague” conversations involving company representatives. Despite that, Google made “incessant” requests for the utility to assess if it can meet the company’s water needs, Rockett said in legal filings. Google paid Rockett to do a report on whether the utility could provide enough water for the project. That report has not been submitted and the internet company has been pressing the utility to complete it, according to Google.
Rockett brought a case against Texas’ public utility commissioners for refusing to dismiss Google’s petition despite being aware of the utility’s rights. A Google entity, Alamo Mission LLC, is named as a defendant in the case. Lawyers for Rockett declined to comment on the ongoing case. Google says it’s not the only one looking for an alternative to Rockett. Another development in Red Oak is also seeking an alternate water supply, according to the company.
The planned data center in Red Oak would be Google’s second in Texas. It struck a deal with the city in July 2019. Red Oak officials told residents about Google’s plans ahead of time, according to Todd Fuller, the city manager. There wasn’t much concern about the impact the data center could have on local resources including water, according to Fuller. “Our water system is pretty robust,” he said, adding that the city doesn’t use its full water capacity.
Red Oak isn’t so laid back about water use on its website, though. On a page dedicated to water conservation, the city says it gets half its water supply from Dallas and encourages residents to reduce water use because Dallas’ six reservoirs are 18% depleted. Mandatory water restrictions will kick in if those sources become 35% depleted. Fuller did not respond to requests for comment on the matter.
Google said it doesn’t use all the water it requests, but the company must make sure enough is available for periods of high demand, or when the weather’s particularly hot. That’s necessary to keep internet services reliable, according to the company.
Google’s data center water use became a subject of controversy last year in Berkeley County, South Carolina. An environmental group opposed the company’s request for 1.5 million gallons of groundwater a day from what it said was a “historically threatened” source.
The company has also worked with Berkeley County Water & Sanitation to get 5 million gallons a day from the Charleston Water system. Google said its share of this supply is far less than 5 million gallons a day, with the rest available for the broader community.
Google has been trying to secure the 1.5 million gallons—triple the daily amount it’s currently allowed in Berkeley County—since 2016. The Coastal Conservation League took issue with Google’s refusal to share information on how it will be using the extra water. Despite the opposition, the South Carolina Department of Health and Environmental Control granted Google’s request, triggering a backlash from some residents.
The conservation league called out the DHEC for giving Google so much water while asking a local public utility, Mount Pleasant Waterworks, to reduce its withdrawal from the aquifer by 57% over the next four years. The utility exceeded its previous peak use demand by 25% in May 2019, one of the driest months last year in Berkeley County, according to Clay Duffie, general manager of Mount Pleasant Waterworks.
“It’s unfair that the DHEC is asking us to reduce our water withdrawal while someone like Google can come in and ask for three times more than their original permit and get it,” Duffie said.
Google eventually backed off its groundwater request and reached an agreement with the league to only use it as a last resort. The deal still lets the company withdraw groundwater if there’s a shortfall, when conducting maintenance, or when demand exceeds available potable or storm water supplies during peak user activity.
The Arizona town of Mesa, where Google plans a 750,000 square-foot data center, gets half its water from the drought-prone Colorado River. A contingency plan was signed into law last year requiring states dependent on the river to take voluntary conservation measures. Still, Mesa officials say they remain confident about future supply while continuing to remind residents to limit their water consumption. “We do not have any immediate concerns,” said Kathy Macdonald, a water resources planning adviser with the city. In 2019, Mesa used 28 billion gallons of water, according to Macdonald. City officials expect that to reach 60 billion gallons a year by 2040, a demand Mesa is capable of meeting, she said.
Big companies like Google wouldn’t locate to the city if it couldn’t meet their water demands, Macdonald said. Mesa passed an ordinance in 2019 to ensure sustainable water use by large operations and fine them if they exceed their allowance.
Google has toiled for years to reduce the carbon footprint of data centers. Today, the facilities churn out a lot more computer power for every watt of energy used. In its 2019 environmental report, the company argued that reducing its energy use also makes it more water-efficient. “Generating electricity requires water, so the less energy we use to power our data centers, the less water we use as well,” it said.
However, data center experts say there’s usually a trade-off between water and energy use. “If the water consumption goes down, energy consumption goes up and vice versa,” said Otto Van Geet, a principal engineer at the National Renewable Energy Laboratory.
Google relies on “evaporative cooling,” which evaporates water to cool the air around the processing units stacked inside data centers, according to its environmental report. The most common systems, known as computer room air conditioners, are energy intensive. Evaporative cooling uses less energy, but the process requires more water. Operators will often embrace the thirstier approach because it’s less expensive, said Cook from Stand.earth.
“Water’s cheap. In many places, the energy costs are much higher” he added.
In a data center application the company filed in Henderson, Nevada, in 2018, Google’s considerations included utility and real estate costs, tax incentives and availability of qualified workers.
Google has paid more attention to water use in recent years. It relies on recycled water or seawater where it can to avoid using drinking water or draining local supplies. Google also says it saves water by recirculating it through cooling systems multiple times. In Mesa, the company is working with authorities on a water credits program, but said it’s too early to share more details.
From 2007 to 2012, Google used regular drinking water to cool its data center in Douglas County, just outside Atlanta. After realizing the water “didn’t need to be clean enough to drink,” the company shifted to recycled water to help conserve the nearby Chattahoochee River. It’s difficult to use similar approaches for other data center locations because the required technology isn’t always available, according to the company.
“The Chattahoochee provides drinking water, public greenspace and recreational activities for millions of people,” the company said in a blog post at the time. “We’re glad to do our part in creating an environmentally sustainable economy along the shores of the Hooch.”