Supply Chain Optimization

Given the flurry of news articles about different responses to tariffs (especially as the end date for the 90-day pause on reciprocal tariffs approaches), I'm sure many folks (both in industry and academia) are struggling to wrap their heads around this topic. To aid in developing collective understanding, Yao J., David L. Ortega, and I worked together to coauthor a study titled, "Shock and Awe: A Theoretical Framework and Data Sources for Studying the Impact of 2025 Tariffs on Global Supply Chains" that can be freely downloaded from Journal of Supply Chain Management at this link: https://lnkd.in/gFHEpsdp. Below I've reproduced the diagram central to the framework we advance. A few words: •The crux of our framework is that changes in tariff levels cause firms to experience demand or supply shocks, which in turn can trigger a variety of behaviors (e.g., exporters reducing prices or shifting goods to other markets). These behaviors can be legal or represent misconduct (e.g., falsifying country of origin). While certainly not encouraging such behaviors, they will need studied (e.g., as in https://lnkd.in/gw5gQtPH). •Different actions result as importers make tradeoffs between (i) adjustment costs [e.g., the cost of shifting tooling from one country to another], (ii) transaction costs [e.g., the cost of teaching new suppliers how to produce your goods], (iii) adjustment costs for early action [e.g., reduced conformance quality while new suppliers move down the learning curve], and (iv) opportunity costs for late response [e.g., failing to shift production results in available capacity in alternative sourcing locations being captured by rivals]. •In general, I've been very pleased with how well subsequent news stories (e.g., https://lnkd.in/guMCCgrm) can be mapped to the theory we advanced. Implication: For anyone interested in understanding how firms are responding to tariffs in industry or academia, I suggest giving this paper a read. It's nontechnical and provides, to the best of my knowledge, the most holistic framework yet advanced for understanding this complex topic. #supplychain #shipsandshipping #supplychainmanagement #markets #economics #logistics #transportation

Imagine strolling down a street in China and spotting a small, bright-yellow electric van humming along - completely driverless! These so-called “Little Yellow EVs” are part of a new approach to last-mile delivery, the crucial (and often most expensive) final stretch of getting packages or meals right to your doorstep. Equipped with self-driving technology, these compact vehicles aim to cut labor costs, reduce delivery times, and shrink carbon footprints. But why is this such a big deal? Traditional delivery methods often involve multiple handoffs and extra steps that slow things down and add expenses. Autonomous vehicles operating on sidewalks or bike lanes can simplify the process, boosting efficiency and freeing up human couriers for more complex tasks. Plus, the use of electric power helps lower emissions - an increasingly important goal in busy urban areas. If these pilot programs continue to thrive, it’s likely that you’ll start seeing similar driverless delivery vans in other cities around the globe. Of course, questions about safety, regulations, and public acceptance remain - technology moves fast, but communities need to keep pace with smart policies and trust-building measures. Have you come across any self-driving delivery vehicles in your neighborhood yet? #innovation #technology #future #management #startups

Running simulations: base model vs. lookahead model I see people posting on the use of “simulations” for planning inventory policies. If you are using a lookahead model (which is typical for most real-world inventory problems), there are two models where simulation can be used:   1.    The base model, which can be a simulator or the real world. 2.    The lookahead model, which is used in the policy for planning the future to make a decision now. See the figure below - I use the same notational style for both models, but the lookahead model uses tildes on each variables, which also carry two time subscripts: the point in time we are making the decision, and the time period within the lookahead model.   The base model is used to evaluate the policy, and is needed to perform any parameter tuning. The base model can be based on history or a simulation of what you think the future can be.   When simulating inventory policies, special care has to be used because we do not have historical data on market demand – we typically just have sales, which can be “censored” (a topic that has been recognized in the inventory literature for over 60 years). For example, if we run out of product (and there is no back ordering), we lose the sales, which typically means that we do not see (or record) them.   I find it is generally best to run simulations using mathematical models of uncertainty so that we can run many simulations, testing different policies. Stockouts depend on properly simulating the tails of distributions, along with market shifts, price changes and supply chain disruptions. There are, of course, settings where you have no choice but to test your ideas in the field. It is expensive, risky, and slow, but sometimes you just have no choice, especially when you have to capture human behavior.   If your policy requires planning into the future, you really need to be using a stochastic (probabilistic) model of the future which properly captures the tails of distributions. With long lead times, you should also plan for the possibility of significant disruptions, which can mean that you also have to capture the decisions you might make in the future. See chapter 19 of:   https://lnkd.in/dB99tHtM (“tinyurl.com/” with “RLandSO”)   for an in-depth treatment of direct lookahead policies. #supplychain #inventory  Nicolas Vandeput Joannes Vermorel

I have a new first question for every CPG founder I speak to: How are you (or might you be) affected by the tariffs? Unacceptable answers: ❌ "We're not worried about it." → You should be. Tariffs impact pricing, margins, and supply chain risk. If you haven't analyzed them, that's a red flag. ❌ "I don't know yet." → You don't need perfect answers, but you should be able to estimate based on your current materials and supply chain, and you absolutely must have a plan to get them. ❌ "We'll figure it out if/when it happens after the 90 days." → That's reactive. Investors fund proactive founders who get ahead of problems. ❌ "Our manufacturer/distributor/importer/supplier will handle that." → You're responsible for your unit economics. Push for real answers. You can't wave this away. Acceptable answers are: SOURCING MATERIALS: -My raw materials are sourced from [country], and the current tariff is X% and possibly going to Y%. This will change my margins from A% to B% in a worst-case scenario. - I source my materials from an importer/distributor/supplier, and I've asked them for exact figures. Early calculations show a decline in my gross margin from X% to Y%. MANUFACTURING: - We manufacture in the US and aren't directly impacted, but our packaging components are sourced from [country] and will increase costs by $C. - We're currently offshore. We've run models on relocating to a US partner. Costs would rise by $C per unit and delay production by 4–6 weeks. - We manufacture offshore and plan to continue doing so. Our landed cost will increase by $C per unit due to new tariffs. We've modeled this into our margin assumptions and adjusted pricing, sourcing, and volume targets accordingly. EFFECT ON RETAIL PRICE: - We're raising prices to protect margin, and we believe we can hold demand because we are a premium product/were low to begin with/have a sticky customer base. But we're reducing forecasted units by X%, and we'll hit profitability Y months later. - We're holding prices and accepting lower margins. It's going to slow our path to scale by Z months, and I've updated our capital plan accordingly. ALTERNATIVES: - We've researched new suppliers/manufacturers in A, B, and C. Our best options are [A, B, or C] in the short term and [A, B, or C] in the long term. We've implemented a quarterly sourcing review process to avoid surprises and stay proactive. CASH FLOW IMPACT - Tariffs increase our landed cost by X%, which changes our inventory strategy. We now need $Y more in working capital per order cycle. This shortens our runway by Z months and changes our next raise to A. Of course, these aren't the only acceptable answers, but please note what the acceptable answers have vs. the unacceptable: - Detail - Specific Data - Research-Backed Estimates If you haven't done this work, I suggest preparing this before pitching. PS - Reach out if you need a good fractional CFO recommendation to help you with this. I have several.

𝗧𝗮𝗿𝗶𝗳𝗳𝘀 𝗮𝗿𝗲 𝗯𝗮𝗰𝗸. 𝗕𝗶𝗼𝘁𝗲𝗰𝗵 𝗶𝘀𝗻’𝘁 𝗿𝗲𝗮𝗱𝘆. The first real trade shock since COVID is hitting, and CDMOs and biotechs are still using playbooks built for stability, not volatility. Tariffs and trade controls are exploding across major economies. Supply chains once optimized for cost are now liabilities. You’re flying blind f your team doesn’t have a geopolitical nerve center. Here’s what I’m seeing from the frontlines: 🧭 𝗚𝗹𝗼𝗯𝗮𝗹 𝘀𝗼𝘂𝗿𝗰𝗶𝗻𝗴 𝗶𝘀 𝗳𝗿𝗮𝗴𝗺𝗲𝗻𝘁𝗶𝗻𝗴: What used to be a question of price is now a question of access and exposure. APIs, consumables, and critical reagents are crossing multiple borders and one policy shift can disrupt an entire production run. 📦 𝗖𝗗𝗠𝗢𝘀 𝗮𝗿𝗲 𝗯𝗲𝗶𝗻𝗴 𝗮𝘀𝗸𝗲𝗱 𝘁𝗼 𝗱𝗼 𝘁𝗵𝗲 𝗶𝗺𝗽𝗼𝘀𝘀𝗶𝗯𝗹𝗲: Absorb upstream tariff costs, accelerate timelines, and maintain pricing. Spoiler: You can’t do all three without strategic trade modeling. 📉 𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗮𝗿𝗲 𝘄𝗮𝘁𝗰𝗵𝗶𝗻𝗴: If your biotech isn’t proactively assessing tariff exposure across your suppliers, your CDMO partners, and your revenue markets, you’re not protecting your burn rate, let alone your valuation. So what do the smart operators do? They build trade resilience across three timeframes: 𝗡𝗼𝘄: Fix customs delays, optimize bonded warehousing, and rethink safety stock. 𝗧𝗵𝗶𝘀 𝘆𝗲𝗮𝗿: Engage regulators, clean up HTS code classification, and model cross-border cost impacts. 𝗡𝗲𝘅𝘁 𝗻𝗼𝗿𝗺𝗮𝗹: Rethink your global manufacturing footprint. That low-cost producer may cost you more in volatility than they save you in dollars. This isn’t just a logistics problem...it’s a C-suite, investor, and board-level problem. If your strategy doesn’t account for trade disruption, you don’t have a strategy, you have a spreadsheet that’s about to get blown up.

Honda is getting into the delivery game—but the real story isn't what they're building, it's why they're building it. The old joke in the industry is that Honda only builds cars because they need a spot for their engines. They are a hardcore engineering operation. If you ever get a chance to make it to Marysville, OH where Honda's US factory is located, you're in for a few surprises. The facility is awesome and you can virtually smell gasoline everywhere. So Honda isn't just building an electric quadricycle called the eQuad—they're offering it as a Fleet-as-a-Service model through their new Fastport business unit. We've heard this Fleet-as-a-Service model from robotics companies and autonomous truck developers. The math is compelling: when I analyzed Tesla's lease versus sales profit last year, I found that they make their entire sales profit in just seven days on a lease model. Clearly, this news did not escape Honda. Here's what makes the eQuad compelling for urban delivery: 🚴♂️ Built for the city: ·      Can use bike lanes—a game-changer for urban logistics ·      23-mile range with swappable batteries (zero charging downtime) ·      Designed specifically for last-mile delivery from the ground up 🔧 Fastport's Fleet-as-a-Service innovation: ·      AI-powered fleet management and optimization ·      Full lifecycle support: software updates, maintenance, battery replacements ·      Honda isn't just selling vehicles; they're selling uptime and efficiency ⚡ The timing is telling too: ·      Late 2025 deliveries, 2026 mass production ·      Urban delivery demand exploding ·      Cities cracking down on emissions ·      Honda positioning right at the inflection point 🚀 It shows that legacy manufacturers still have the ability to truly innovate—not just in electric powertrains, but in reimagining entire business models. Sometimes the best disruption comes from those who understand engineering fundamentals. #supplychain #logistics #innovation #electricvehicles #lastmile

Don’t put yourself—or your products—at risk. Uniform conditions in your controlled spaces aren’t optional; they’re a regulatory must-have. 🔍 𝗧𝗵𝗶𝗻𝗸 𝗮𝗯𝗼𝘂𝘁 𝗶𝘁: What if you opened your fridge and found one side freezing and the other side warm? Now, imagine that unpredictability in your warehouse, lab, or transport system. That’s a recipe for disaster. 𝗧𝗲𝗺𝗽𝗲𝗿𝗮𝘁𝘂𝗿𝗲 𝗺𝗮𝗽𝗽𝗶𝗻𝗴 is your safeguard. By profiling every hot and cold spot, you uncover hidden risks before they compromise sensitive goods, ensuring product quality and compliance. 𝗪𝗵𝘆 𝗱𝗼𝗲𝘀 𝗶𝘁 𝗺𝗮𝘁𝘁𝗲𝗿? - In pharma, a vaccine’s potency depends on precise temperature control—one deviation can mean the difference between efficacy and failure. - In food processing, safety hinges on strict storage; inconsistent temperatures can lead to spoilage and regulatory violations. - For regulatory compliance, mapping is essential for audits and 21 CFR Part 11 requirements. 𝗗𝗼𝗻’𝘁 𝗴𝗮𝗺𝗯𝗹𝗲 𝘄𝗶𝘁𝗵 𝗾𝘂𝗮𝗹𝗶𝘁𝘆 𝗼𝗿 𝗰𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲. Temperature mapping is the centerpiece of product integrity and regulatory peace of mind. Protect your brand, your customers, and your bottom line. #TemperatureMapping #PharmaceuticalValidation #QualityControl #Compliance #ProductIntegrity #Ellab #Validation #Qualification #Calibration #Monitoring

Any manager can have a high-performing team. Pick one and take action today (tips below): 1. Set a Clear Mission Average teams execute tasks. High-performing teams drive outcomes. Your team needs to know exactly: • Why their work matters • How it impacts the company • What winning looks like The mission isn't a statement. It's their North Star for daily decisions. 2. Hire Aligned Talent High performers want to work with high performers. Stop compromising on: • Work ethic • Learning appetite • Team-first mentality One mediocre hire can destroy your culture. One fantastic hire can elevate everyone. 3. Care for Your Team High performance requires high trust. Get serious about: • Understanding their personal goals • Supporting their life challenges • Being there when it matters The best performers choose teams that care. Show them that's you. 4. Give Real Support High performers need rocket fuel, not red tape. Invest in: • Spaces that raise their energy • Tools that multiply their impact • Resources that accelerate results Remove one major obstacle weekly. Watch their productivity soar. 5. Respect Autonomy High performers need freedom to excel. Start trusting them to: • Design their approach • Make key decisions • Own their outcomes Micromanagement suffocates excellence. Give them space to innovate. 6. Reward Generously High performers know their worth. Get aggressive with: • Above-market compensation • Accelerated growth tracks • Meaningful recognition Don't wait for annual reviews. Reward excellence in real-time. 7. Develop Constantly High performers crave mastery. Create opportunities for: • Skill growth • Stretch assignments • Leadership development Treat learning like a priority. Not an after-party. 8. Eliminate Problems High performers hate waste. Ruthlessly target: • Broken processes • Unnecessary meetings • System inefficiencies Every barrier you remove Multiplies their impact. The difference between good and great teams? Great teams get better every day. Pick one area. Take action today. Watch your team transform. Helpful?  ♻️ Repost to help others.  💡 Follow Dave Kline for more.

What gets measured gets managed. If you don't know what to measure, you don't know what to manage. This is one of my trackers for managing operating and financial drivers, KPIs and metrics. Here's what it does: Let's assume you have a $50 million company that's realizing 28% gross margins (revenue less direct costs). This means you're making $14 million in gross profit. But you think you can do better. Examining the business, you observe 4 problems with direct costs: 1⃣ Problematic suppliers The companies is finding it difficult to manage uncertainty around the operations of its 20 overseas suppliers. The unreliable supply chain led to substantial delays and unexpected costs. To mitigate this, the company has decided to reduce the number of suppliers to 11 to ensure tighter control and more reliable operations. If the company can reduce complexity in its overseas supply chain, it may realize up to $353K in incremental profit. 2⃣ High variable costs / low contribution margin Inflation has led to skyrocketing material costs. Last-minute orders have led to higher material and freight costs. If the company can purchase in bulk and plan further in advance, variable costs can decline. This would lead to an estimated increase of contribution margin from 38% to 40% and incremental profit of $1.9 million. 3⃣ Manufacturing inefficiency Dated machinery and suboptimal scheduling has led to manufacturing inefficiency, worse that what it was in prior years. If the company can manage its manufacturing inefficiency from 13% to 8%, it can realize $616K in incremental profit. 4⃣ High rate of error The company has been dealing with quality control issues. Continuous complaints from customers about product quality have been traced back to inferior components. If the company can address its quality issues from 10% to 2%, it can realize $616K in incremental profit. --------------- Weighting the drivers and KPIs: Through an operational restructuring and process improvement, we believe we can bring an additional $3.525 million in profit (bringing margin up to 35% from 28%). But not all drivers are equal. This is how we weighted the impact of each initiative. 1⃣ Problematic suppliers - 10% 2⃣ High variable costs - 55% 3⃣ Manufacturing inefficiency - 17.5% 4⃣ High rate of error - 17.5% Therefore, improvements in direct variable costs are expected to bring the greatest benefit to profit, more than 3x as much as improving manufacturing inefficiency or errors and more than 5x as much as reducing the supplier base. What's this mean? If you're going to improve your company's financial position, you need to understand the strategic mapping and financial drivers. And you need to know which drivers move the needle the most. If you want to learn more about strategic financial mapping: https://lnkd.in/eRPRJf8N What questions do you have? #seidmanfinancial

As Tariffs Disrupt the Flow, 4 Supply Chain Moves Every Executive Should Make: Tariffs aren’t just a trade issue, they’re a leadership one. As an executive coach, I work with leaders navigating disruption to become more effective in how they think, decide, and lead so their organizations and teams perform at the highest level. Right now, global supply chains are under pressure from shifting tariffs, reshoring mandates, and geopolitical realignment. What used to be a smooth, just-in-time operation is now a daily exercise in adaptability. Here are four strategic shifts every executive should be considering: 🔍 1. Audit Hidden Dependencies Most leaders track Tier 1 suppliers—but disruptions often originate in Tier 2 or Tier 3. Map the full supply chain to understand where risks lie beyond what’s immediately visible. 🌎 2. Go Beyond “China-Plus-One” Relocating from China to Vietnam or Mexico may ease tariff exposure, but true resilience requires a multi-regional approach. Diversify sourcing and distribution to withstand geopolitical shocks. ⚙️ 3. Align Procurement with Enterprise Strategy It’s no longer just about cost. Factor in tariffs, political stability, and fulfillment risk. Ensure procurement and strategy functions are working in tandem—not in silos. 🧠 4. Embrace Supply Chain Intelligence AI tools and digital modeling can help you simulate scenarios and plan proactively. Today’s smart supply chains aren’t static—they’re dynamic, data-driven, and decision-ready. Executives who succeed in today’s environment are the ones who build resilience into their operations and clarity into their leadership. Tariffs may be the current headline, but adaptability, foresight, and strategic alignment are the lasting differentiators. If you are looking for a partner to support you in making your supply chain and your leadership more future-ready, let's connect.