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Supply Chain by the Numbers
   
 

- May 20, 2016 -

   
  Supply Chain by the Numbers for Week of May 20, 2016
   
 

Impressive New Self-Driving Truck Start Up; Yergin on Where Oil Price is Headed; Walmart has Decent Results, Sees Stock Price Jump; Seagate Sees Forecast Accuracy Make Big Jump

   
 
 
 

1000

That is how many trucks start-up Otto is looking for to help the start-up company test new technology for self-driving big rigs. Otto was started by Anthony Levandowski, an engineer who helped steer Google's self-driving technology before leaving Google to start Otto with two other former Google engineers and robotics expert Claire Delaunay. For now, the robot truckers would only take control on the highways, leaving humans to handle the tougher task of wending through city streets. Although only four months old, Otto already has outfitted three big-rig cabs with its automated technology. The company completed its first extended test of its system on public highways in Nevada during the past weekend. Though safety of course is a big concern and obstacle, Otto notes that robot truckers are less likely to speed or continue to drive in unsafe conditions than a human, and will never get tired. And then there is this point from the company: "It's really silly to have a person steering a truck for eight hours just to keep it between two lines on the highway."

 
 


 
 
 

$50

That is where well-known oil industry pundit Daniel Yergin expects the price per barrel to be this fall, up modestly from the current level of around $45 per barrel but well up from the plunge to $26 seen briefly in February. That according to a recent column Yergin wrote for the Wall Street Journal, in which he also noted that "by Autumn declining production and rising demand should put the market roughly in balance" at that $50 mark. He also says that "The effect of the oil-price collapse over the past two years can be seen in the postponement, delay or cancellation of multibillion-dollar exploration and production projects around the world. The latest report from my company, IHS, notes that 2015 marked the lowest level of new conventional oil discoveries since 1952." That development in turn of course reduces supply, moving the market back more in balance. US shale oil production has also taken a big hit, with many bankruptcies, but Yergin says that by 2020 world oil consumption could be 5.7 million barrels a day higher than this year's 95.6 million, and prices will have to rebound to provide the signal for new investment. US shale will play an important role because it is "short cycle," Yergin adds, meaning new shale production can be brought on much more quickly than multibillion-dollar megaprojects that can require a decade or more.

 
 
 
 
 
9.6%

That is by how much Walmart's stock price jumped yesterday on news that it had achieved just under a 1% rise in its Q1 sales, it sharpest one day stock rise since October, 2008. Why such a big spike on a rather patry jumped in sales? Because even that small rise is bucking the trend of other retailers, such as Macy's and Target stores, that have posted disappointing Q1 results. What's more, Walmart was able to achieve that revenue increase while decreasing inventories 3.5%. Sales at Walmart's US stores open at least a year rose 1% in the quarter ended April 30 - the seventh straight quarter of such gains. Profits at Walmart, however, were down 7.8%, as it continues to invest heavily in ecommerce. "The numbers are not great by any means, but they are good compared to what expectations were," said Brian Yarbrough, retail analyst at brokerage Edward Jones. We'll note Q1 revenue at Amazon was up 28%.

 
 
 
 

18

That has been the improvement in data storage vendor Seagate's forecast accuracy a quarter out since acquiring a new demand planning system (Logility) and transforming to become a more demand-driven enterprise. That improvement took forecast accuracy from the low 50 percentage range to 70% today, an improvement that has had an important impact on inventories and the bottom line. That according to a presentation by two Seagate managers at this week Gartner Supply Chain Executive Conference in Scottsdale, AZ. Seagate also emphasized the imperative to get your demand planning hierachies right, noting they actually paused the project several times to make sure they had those hierarchies nailed. Also impressive is Seagate's collaboration with top OEM customers, with which it develops first an unconstrained forecast, then a constrained demand and supply plan, and finally a detailed look at execution across that plan on a monthly basis.

 
 
 
 
 
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