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Supply Chain by the Numbers

- Oct. 1, 2015 -

  Supply Chain by the Numbers for Week of Oct. 1, 2015

Small US Carriers Slow to Add to Fleet Due to Truck Cost; US PMI Remains Positive in September - but Barely; Advanced Auto Gets New Reason to Increase Replen Cycles; LLamasoft Gets Goldman Infusion



That's the number of new trucks that the James Burg Trucking Company in Warren, MI has purchased in the last seven years to add to its fleet of 90 vehicles despite rising customer demand over that period. Why? The soaring costs of new trucks, driven primarily by stricter environmental controls, prices which James Burg himself says are up 60% from what a truck cost in 2008, according to a recent article in the Wall Street Journal. The Journal itself cited statistics that showed a still steep but lower rise than that, with prices up from about $100,00 per sleeper truck in 2009 to $128,000 today. With many other smaller firms thinking the same way, it helps explain the continued slow growth in capacity in the US truckload market. And while many larger carriers in fact have been buying a lot of new trucks to benefit from better diesel mileage, in general they have been selling off – often to overseas markets - nearly equal numbers of trucks, keeping capacity tight, though there have finally been some signs of fleet expansion in recent quarters.




That is the number of consecutive months of manufacturing expansion in the US, as measured by the Institute for Supply Management's Purchasing Manager's Index, after the September number once again exceeded the 50 mark that separates expansion from contract – but just barely. The September reading came in at 50.2, a decrease of 0.9 percentage point from the August reading of 51.1, and the lowest level since May 2013. The PMI has seen steady declines in recent months, with September marking the fourth straight month over month decrease, and with a score well down from the levels of 57+ at the end of 2014. While the economy is not tanking, there are definite signs of a slowdown. The New Orders Index was also weak, at 50.1 in September.


That's the number of its 4000 total stores that parts retailer Advance Auto says it will be replenishing on a daily basis by the end of the year, up from just 77 in Q1. Why the rapid change? Apparently some of Advance Auto's key competitors do daily replenishment already, and now an activist investor firm named Starboard Value LP has taken significant stake in the firm, and it believes the less frequent replens are hurting sales by leading to out-of-stocks. "Advance Auto has substantially underperformed peers on almost any measure, including operating margins, revenue growth, and total shareholder return," Starboard said in an announcement. Nothing like an activist investment firm to focus the minds of company executives.


$50 Million

That how much funding supply chain network design software provider LLamasoft announced it will be receiving this week from an arm of Wall Street investment firm Goldman Sachs. Company founder and CEO Don Hicks told Crain's Detroit Business the funding will be used for product development and growth through acquisition. He said the company is in negotiations for a deal to buy an overseas firm that could close in a few weeks. The deal values LLamasoft at some $200 million, a rich price for a company that has not been in business all that long, but has come in recent years to dominate the supply chain network optimization market, with recent moves to expand its supply chain planning footprint to new areas.

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