In Case You Missed It

• Amazon says it will not sell drugs as it disrupts healthcare.
• Sustainability is within reach for data-driven supply chains.
• GE's CEO has new supply chain plans for the company.

Market Snapshot

The storms of Q3 took a big toll on supply chains last month, according to comments made in the October 2017 ISM Manufacturing Report On Business.

Nearly every indicator measured by the PMI grew in October, which is not necessarily a good sign. Sure, it means orders and production are up, but it also represents supply chains are operating at full capacity which increases costs as well. In fact, the three indicators that contracted in October — inventories, customers' inventories and supplier deliveries — support this argument. The combination of these factors are increasing prices and backlogs, as well.

A number of ISM respondents across various industries suggest these changes are directly tied to the recent hurricanes.

"Hurricanes have caused shortages in the resin market, resulting in price increases, inventory constraints and increased lead times," said a respondent in the computer & electronic products industry.

"Incoming orders are strong, mainly due to recovery efforts in the wake of Hurricanes Harvey and Irma. Backlogs are up due to operating inefficiencies," said another in the machinery industry.

Business is good, however. So good, in fact, a respondent in the nonmetallics mineral products sector said the plants are sold out for 2017. A member of the transportation equipment industry added business is "better than expected."

That is relatively good news for October, as maximum capacity means companies will innovate in order to improve their production potential. Even if they do not, at least it is better than slow growth.

Technically Speaking

All supply chains rely heavily on two key factors: labor and technology, and this week saw some news that combined both.

Ford is piloting an exoskeleton to help boost worker productivity and safety in a few factories. The EksoVest would help assembly workers who lift their arms about 1 million times a year, decreasing the number of on-site injuries at the companies' plants. With the new technology, the automaker seeks to reduce time lost by unsafe practices while making its labor processes more sustainable.

However, not all companies value labor as a key asset. In fact, some are actively looking for ways to reduce labor costs altogether by using technology. A recent report revealed Amazon's cashier-free store may soon be ready to go. In fact, the company may soon be bringing the tech to its newly acquired Whole Foods Markets, according to Bloomberg.

Breaking Ground

Logistics real estate is in such high demand, even the large amounts of building cannot keep up, raising leasing prices in popular hubs.

The Riverside Press-Enterprise reports the Inland Empire's inland distribution and fulfillment centers' vacancy rate fell below 5% in the third quarter and leasing rates are expected to rise. The region has reportedly added 540 million square feet of storage space due to e-commerce, and several more-than-1-million-square-foot projects are underway. Much of this growth is driven by increased traffic at the Port of Los Angeles and Port of Long Beach.

Perhaps for that reason, states are investing more in their ports as they hope to drive freight traffic through their region. The Port of Oakland, for example, just received approval for a new 440,000-square-foot logistics hub, and JAXPORT announced it would build a new automobile handling terminal capable of processing 25% capacity.

Mergers and Analysis

It was a big week in the electronics components industry, as Broadcom and Qualcomm made headlines with a surprise takeover bid.

Late last week, semiconductor company Broadcom made an unsolicited, $103 billion offer to take over the chip company. On Monday, Qualcomm rejected the offer, noting Broadcom had "dramatically" undervalued the offer and posed regulatory challenges, CNBC reports.

But, as with any unsolicited bids, the story does not end there. Broadcom has made it clear it is still interested in taking over the company, and analysts predict a proxy-battle may soon follow on the board. Apple, both companies' top customer, may also play a role in the ensuing war.

In the meantime, the two companies continue to build their empires. Broadcom said it had completed its acquisition of Brocade Communication Systems on Friday, and Bloomberg reports Qualcomm's buy of NXP Semiconductors is set to receive approval from the EU.