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Supply Chain by the Numbers

- April 8, 2016 -

  Supply Chain by the Numbers for Week of April 8, 2016

Alibaba Now Number 1? Showdown at the Steel Industry Corral in the UK; Amazon Once Again Expands Same Day Delivery Coverage; Ford Moving Many Cars to New Mexican Factory


$482.1 Billion

That's at minimum the amount of revenue that Chinese on-line giant Alibaba achieved through its ecommerce platform in its fiscal year ending March 31. We know that because in a filing with the US SEC this week the company said that it has "become the largest retail economy in the world as measured by gross merchandise volume (GMV) on its China retail marketplaces." It even goes so far as to say that this result has been validated by accountants from PriceWaterhouseCooper. Since Walmart achieved sales last year of $482.1 billion (in its 2016 fiscal year), the clear implication is that Alibaba has exceeded that number, with some analysts estimating the total will come in at $490 billion - and growing much faster than Walmart. The comparison is a little unfair, however, as Alibaba itself actually neither sells nor delivers any merchandise. It instead just acts as an on-linemarketplace for other etailers. So it is in a sense like a mall operator taking credit for all sales for the retailers that operate under its roof.




That's about the number of jobs at the giant Tata Steel Port Talbot plant in the Wales region of the UK, all of which are threatened as India's Tata announced it was putting that factory and others in the UK for sale starting next week. The issue? Rock bottom steel prices across the globe, driven by slackening demand, especially in China, and huge amounts of overcapacity. Cheap Chinese steel is entering the European and UK markets, causing big losses at steel makers there, with Tata saying it has lost more than $5 billion in its Euro operations since 2010. The travails of Tata have become a huge political issue in the UK, with some warning the country may lose nearly all of its steel making capacity, causing calls for nationalization of the industry from some quarters. Senior managers at Port Talbot and another plant in the country are madly trying to raise the huge sums needed to acquire and upgrade those factories. What plays out in the UK could have political ramifications in the US.

$1.6 Billion

That's how much Ford is planning to spend to build a new car assembly factory in the Mexican state of San Luis Potosi, in a announcement this week that is sure to become part of the political debate. While Ford didn't announce specifically what cars would be made at the new factory when it opens in 2018, experts expect Ford to move nearly all of its small car production there, as it can't make money on those models with the existing US cost structure. Ford said the planned Mexican plant will employ about 2800 workers. The better news is that the UAW's new four-year contract with Ford, signed last year, guarantees new vehicles for the Wayne, MI assembly plant that now makes many of the smaller models in 2018 and 2020 and a $700-million investment that preserves the plant's 3,924 jobs. That said, Mexican auto production more than doubled in the past decade, and research firm IHS Automotive expects it to rise an additional 50% to just under 5 million vehicles by 2022. U.S. production is expected to increase only 3%, to 12.2 million vehicles, over that time.



That's how many more US urban markets will be supporting with its same day delivery service, bringing the total of cities supported to 27. New to the program will be Charlotte, Cincinnati, Fresno, Louisville, Milwaukee, Nashville, Raleigh, Richmond, Sacramento, Stockton, and Tucson. Meanwhile, same day will also now be available in new areas in central New Jersey, Dallas-Fort Worth, Los Angeles, and San Diego. With Amazon's same-day delivery, its Amazon Prime members place orders in the morning in order to take free delivery by mid-evening, typically 9 PM. The service is available for only a subset of Amazon's product offering, but that still includes over a million items across dozens of categories. The efulfillment wars continue on.

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