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Supply Chain by the Numbers

- Sept. 13, 2017 -

  Supply Chain by the Numbers for Week of Sept. 13, 2017

Private Labels at Costco, Others, on the March; China Ready to Mandate Only Electric Cars; Very Different New Store Concept for Nordstrom; Blockchain Set to Disrupt Maritime Insurance Sector



That is the rather amazing share of warehouse club Costco's sales coming from its Kirkland Signature private label product line. And that percentage is growing, according to an article this week in the Wall Street Journal. The Signature brand covers items ranging from milk to toilet paper, men's shirts, golf balls and many more. The Wall Street Journal, for example, noted sales of the Kind brand energy bars sold through Costco are likely to fall now that Costco has introduced a similar Signature offering - which costs less. Jeremy Smith of consulting firm LaunchPad Inc., which works with food brands seeking Costco shelf space, tells clients: "Assume a 'KS' version of your product will come into the market." While branded goods are under pressure from store brands generally, the challenge is especially acute at Costco, as it only stocks about 3800 SKUs, versus more than 100,000 in a large grocery store. The Wall Street Journal says Costco often introduces a new Kirkland product when its buyers or executives believe a brand isn't selling at the lowest possible price. Building successful store brands is also a priority at Walmart and Amazon, as they look to boost margins and attract shoppers. Procter & Gamble refused to sell a private label diaper to Costco. But Kimberly Clark said Yes, and now the only diapers at Costco are the Signature line made by Kimberly Clark and KC's own Huggies Line. This is hardball.



That is how many charging stations for electric cars will be built this year in China. That news as this week the country's vice minister of industry and information technology said China is working on a timetable to end sales of fossil-fuel-based vehicles, in a market that comprises a full one-third of the global auto sales. China is hardly the only one. Recently, France and the UK., the world's sixth- and seventh-biggest markets, said they are planning to phase out sales of non-electric cars by 2040, while Norway aims to reach that point a decade sooner. India, which is expected to surpass both Germany and then Japan to become the world's third-biggest auto market by 2020, is on a similar path. Prime Minister Narendra Modi's hopes to see electric vehicles rise to 44% of the fleet by 2030. The switch to electrics - including hybrids - is coming on like a tsunami, and will likely soon usher in the end of the fossil fuel era, with huge consequences.


$30 Billion

That perhaps surpassingly is what ocean shippers of all kind spend globally on insurance for their shipments. Why do we offer that factoid? Because it was announced this week that a joint venture had been formed among Microsoft, Maersk Line, accounting firm EY and technology firm Guardtime to apply so-called blockchain technology to the currently complex world of marine insurance. The solution will built using Microsoft's cloud-based platform called Azure. The program will involve the creation of a shared database that logs information about shipments – and importantly potential risks - in order to help ships comply with insurance regulations. The partnership also says the database would make this information transparent across what is a complex network of parties and variables. The system promises to bring some automation to a sector an EY executive said is "completely inefficient." The idea is not just to eliminate paper-based documentation and the resulting information latency by moving it to a decentralized electronic ledger. The more revolutionary idea is to enable more dynamic types of insurance depending on unforeseen occurrences. For instance, if a cargo ship is entering a war zone or area beset by piracy, insurers could offer real-time coverage to reflect that specific situation, a risk that could vary day by day. Blockchain may be overhyped, but as with track and trace in the global food sector, it may also bring disruption to the maritime insurance sector.



That is how many apparel items high end department store Nordstrom will stock at a new, smaller concept format set to open in Los Angeles, as the retail world continues to evolve rapidly. Instead, the store will offer shoppers personal stylists to help pick out clothing and accessories from web sites, dressing rooms to try them on, on-line ordering, and services, such as alterations, manicures, wine and beer and hand-delivery of items to customers' cars – a totally different shopping experience. The Nordstrom's "Local" store will have a small 3,000 square-foot footprint, which is a fraction of the average 140,000 square-foot size of its department stores. Customers can shop and pick up their purchases at Nordstrom Local on the same day, if ordered before 2 pm, with curbside pick-up if desired. The inventory will come from full sized Nordstrom stores in the area. The orders can also be delivered to customer homes the same day if ordered by the same deadline. What on earth is happening in retail? Bonobos, a men's fashion brand acquired by Walmart this summer, also opened a store in downtown Detroit this year that, like Nordstrom Local, is set up specifically for on-line sales and high-end service. At Bonobos, a shopper tries on clothing and orders it on-line for store pick-up or home delivery.

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