The Friday Report Blog: January 26th, 2024

Quick wrap up of a few hot topic newsworthy stories in the supply chain logistics industry

LG Energy Solution and WesCEF Initiate Partnership with Lithium Supply Deal

LG Energy Solution and WesCEF are expanding their lithium supply partnership, a strategic move aimed at bolstering LG’s North American manufacturing capabilities and supporting the production of Inflation Reduction Act-compliant vehicles. This year, WesCEF will supply LG with up to 85,000 tons of lithium concentrate, essential for manufacturing high-quality, sustainable batteries. The concentrate will be processed into battery-grade lithium hydroxide at WesCEF’s upcoming Mt. Holland project in Western Australia, set to start production early next year.

This partnership underscores LG Energy Solution’s commitment to enhancing its supply chain within North America, where it operates or is establishing eight facilities, including ventures in Michigan, Arizona, and collaborations with six other entities. Amid efforts to comply with the IRA and reduce dependency on critical mineral supplies dominated by China, LG Energy Solution is diversifying its sources, including a notable partnership with Chile-based Sociedad Química y Minera. Together with WesCEF, LG is exploring opportunities to deepen cooperation on mineral and chemical processing, ensuring a robust and compliant supply chain for the burgeoning electric vehicle and battery market in North America.

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Under Armour Makes Steady Progress in Streamlining Its Inventory

Under Armour is making notable progress in streamlining its inventory, achieving a 9% reduction to $1.1 billion, signaling a move towards normalization in its stock levels. This improvement, highlighted by CFO Dave Bergman, comes alongside a drop in the cost of goods sold by 7.8% year over year, thanks to lower freight costs and successful negotiations with vendors to reduce product costs. Despite these advances, the sportswear brand has had to navigate through promotional strategies to reduce excess inventory, impacting its gross margin. This shift towards a more balanced inventory aligns with broader market trends towards normalization, although the retail environment remains competitive. Under Armour’s focused efforts on inventory management and cost reduction are expected to positively influence its financial performance in the upcoming quarters, marking a significant step forward in its operational strategy.

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Amazon’s Plan for Less Packaging and More Savings

Amazon is enhancing its shipping efficiency and sustainability efforts by extending its Ships in Product Packaging (SIPP) program to a vast number of merchants utilizing Fulfillment by Amazon in the U.S. and Canada.

This innovative program allows products to be shipped in their original packaging, eliminating the need for additional Amazon-branded packaging. Initiated after a successful pilot program, SIPP is designed to streamline packaging processes, reduce waste, and lower shipping costs for sellers. The program underscores Amazon’s commitment to sustainability by aiming to phase out plastic mailers and shift towards more eco-friendly packaging solutions.

Sellers participating in SIPP benefit from cost savings while still ensuring products reach customers in excellent condition. This move is part of Amazon’s broader strategy to leverage technology and data to increase operational efficiency and support the environment.

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