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Supply Chain by the Numbers

- Nov. 3, 2011


Supply Chain by the Numbers for Week of Nov. 3, 2011


Major Distributor Makes Bold Bet on SCM Planning - and Hits Jackpot; Continued Rail Carrier Pricing Power; Import Toy Story Hurting; Risk being Experienced Far Down the Supply Chain


£2 Million

Amount of money Andrew Lewis, head of global supply chain planning for large electronics and maintenance products distributor RS Components (known as Allied Electronics in the US) boldly promised to return to the company in savings in just the last few months in mid-2008 if the CFO would allocate 500,000 pounds for a new planning system - on-budgeted, as the recession was starting to be felt. The CFO said Yes - and Lewis delivered four times the investment that year, and more later. See Bold Move to Deploy "Next Generation" Planning Systems at Start of Recession Pays off for Major Distributor RS Components




The price increase per unit (basically, railcar-miles) that rail carrier CSX was able to achieve through rate increases in Q3, according to estimates last week from well-known transportation industry financial analyst John Larkin, as the rail carriers continue to enjoy good times. Interestingly, CSX promised to reduce its operating ratio (operating expenses as a percent of operating revenues) to 65% by 2015, down from 70.4% in Q3, meaning profit margins from operations would improve more than 5 percentage points.


The number of respondents in a new survey who said the supply chain disruptions they experienced in the last year were rooted in tier 2 or below (supplier's supplier), versus 61% that were due to problems at a tier 1 supplier directly. The study was performed by the Zurich Financial Services Group and the UK Business Continuity Institute, based on survey results coming from 599 companies across 62 countries and 14 industry sectors.



Drop in toy shipments into the US from offshore in September, making it the eighth consecutive monthly drop in year over year toy imports. Year to date, toy imports are down 7.6%, among the factors in the very lackluster container import numbers being seen in the US in2011 (at least from a port and carrier point of view). We think that the drop is the result of a combination of consumers cutting back on discretionary spending, continued conservative retailer buying strategies, and probably the continued move from traditional toys to electronic games and such. However, toys were the second-largest containerized import commodity in September, retailers and brand companies build up for the Christmas season.


Oct. 3, 2008

There are valid reasons for both the DC and DSD distribution models, but neither should determine the store assortment, which depends on the consumer.

The Distribution Center model makes sense when you have many prepackaged products which are continuously replenished and require little in-store servicing. With the facility justified, you can also add seasonal and holiday 'in and out' products which can share the distribution network.

The key is to manage the time supply of inventory in the warehouse and distribute it efficiently.

The Direct Store Delivery model can be implemented purely as a distribution method or also allow the manufacturer to manage some of the in-store merchandizing.

I do not see any advantage of using DSD simply to deliver merchandise. Although it may help the 'mom and pops' that are on the same route as a large retailer, the DSD model must be more expensive. Once the big drops are removed, it will become more costly to reach the independent retailers but the larger retailer must benefit.

If DSD is used to support in-store merchandising, then you have a different story. The manufacturer's representative can give their products the individual attention that increases their sales. The bad thing is that they can also load up the store with inventory if no one is watching.

Bill Bittner
BWH Consulting


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