or Search by TOPIC
Search Supply Chain Videocasts
  Sign-Up Free Newsletter
Supply Chain by the Numbers

- April 13 , 2012


Supply Chain by the Numbers for Week of April 13, 2012


The Advantage; Natural Gas Prices Impacting Supply Chain Strategy; Truck Driver Turnover Finally Slows; Is Chinese Trade Surplus Going to Shrink?



Average lower price for the same goods at versus, according to a recent study be William Baird & Company, when shipping costs are included for both but sales tax is not included for Amazon. Walmart generally has to include sales tax for every order, whereas for now Amazon does not have to assess sales tax for shipments to states where it has no distribution center operations. The study found Amazon undercut prices by even more, at 14%. The issue was raised relative to how brick and mortar retailers can combat the “shop in store, order on-line” trend among consumers.




Price that US natural gas reached this week per million BTU – the lowest level seen since 2002. That matters to the supply chain for several reasons, including making the value proposition for moving to natural gas trucks very attractive, as carriers and shippers would save nearly $2.00 per gallon of diesel at these levels when switching to liquid or compressed natural gas engines. Additionally, the rock bottom nat gas prices (the result in the explosion in US natural gas resources as a result of the fracking process) is driving electricity prices down for manufacturing operations (and pushing even the cheapest coal out of the picture at a growing number of utilities).


The level of long-term trade surplus relative to GDP that is appears likely the International Monetary Fund will forecast over the long-term for China, according to an article in the Wall Street Journal this week. That’s down from the existing forecast of 7%. That 2% difference makes a big deal, as it would weaken the argument that China’s currency is way over valued and calls for China to adjust its current government-controlled exchanged rates versus the dollar and other currencies. Since 2009, the IMF has described the Chinese currency as “substantially undervalued,” and came close to calling it “fundamentally misaligned,” though China blocked that move. But that could change now, helping China’s exports.


Level of over-the-road/truckload driver turnover in Q4, according to the American Trucking Associations this week, down a single percentage point from Q3. However, that reverses a trend of rising turnover rates since the first quarter of 2010, when the measure bottomed out at 39%. For the full year, the large truckload turnover rate in 2011 averaged 83%, the highest average since 2007, when driver churn at large carriers was 117%, according to the ATA. That turnover rate peaked at 136% in 2005, contributing to a major capacity crisis in the industry at the time.


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


Supply Chain Digest Home | Contact Us | Advertise With Us | Sitemap | Privacy Policy
© 2006-2014 Supply Chain Digest - All Rights Reserved