The Friday Report: July 16, 2021

Food Industry Shaken by JBS Ransomware Attack

The ransomware attack on the largest meatpacker in the world seems to have shaken up the food industry and instigated questions about its cybersecurity.   JBS, based in Brazil, has operations across the globe and was forced to shut down numerous U.S. and Australian plants, creating a wave of fear in beef markets.  JBS admitted paying the $11 million ransom and its plants were back online after losing less than one day’s production.

The news generated inquiries about cybersecurity across the food industry.  Industry experts report that the computer systems of many food companies remain vulnerable, with unsecured computer devices, outdated computer software and other issues rampant.  Government enforcement of computer security standards in the food industry are lax and food safety regulations fail to explicitly address the issue of cybersecurity.

As the meat industry is primarily in the hands of only a few companies, this puts the meat supply at undue risk if the supply chain were to be disrupted.

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Germany Shows Weaker Rebound after COVID

One would think that a global surge in demand would be great news for German manufacturers.  In May, the growth of Germany’s export fell below expectations by a rate of only 0.3% over April figures.  Also, in May, weak export orders for cars, lower demand for manufactured goods and industrial production were the big news.  In July, investors showed lower confidence in Germany’s economic recovery.

This is largely believed to be due to the ramp up of the COVID-19 Delta variants.  It has been publicly speculated that this may lead again to lockdowns later this year and increased fears of supply shortages.

German manufacturing is highly automobile-oriented.  With the shortage of semiconductor chips, German manufacturing is at somewhat of a stalemate.  The country’s economy seems to have weathered the economics of the pandemic better than many other European nations and looks forward to strong demand of its industrial goods to return to pre-crisis output levels.

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American Eagle Outfitter’s Supply Chain Transformation Produces Measurable Results

Retailer American Eagle Outfitters has been undergoing a supply chain transformation over the past year.  Reducing SKU counts has enabled the retailer to focus on “the most productive styles” and turn times have been improved.

By opening multiple regional distribution centers in Boston, Los Angeles, Chicago and Jacksonville, American Eagle Outfitters has been able to pull three weeks of inventory out of stores and into this network.  This effort has resulted in keeping in-stock levels up and has provided more options on where the inventory can go.  The result was noticeable.  With fewer shipments per order, American Eagle Outfitters were able to deliver to consumers 1.5 days faster than the time period, Q1 2019.

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