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Supply Chain by the Numbers
   
 

- July 20, 2012

   
  Supply Chain by the Numbers for Week of July 20, 2012
   
 

US Logistics Ranking Improves; Internet Sales Tax Ban Falling; China Cozies Up Still More to Africa; Ocean Shippers to Pay Big Bucks to Developing Nations?

   
 
 
 

$25 Billion

The amount of money that IMF Christine Lagarde, head of the International Monetary Fund, said could be raised through emissions taxes on air and ocean freight carriage. That, she said, would be a juicy 25% of the total $100 billion being thrown about as needed “for climate adaptation and mitigation in developing countries.” That in turn has to do with deals that have been discussed for the past several years in which richer nations would help poor ones transition to low emissions economies, or pay them to in effect forego some economic growth. In the end, this means that shippers/importers would be paying for these programs. Wow.

 
 



 
 
 

5-10%

The price advantage on-line rivals often have over Lowes relative to not having to charge sales tax, the company told the Wall Street Journal this week, after it published an article saying that a variety of factors are moving towards ending the tax exemption for on-line merchants. Amazon.com is giving up its fight against the tax, the story said, but probably because its rapidly growing network of DCs means it will have a physical presence in so many states (and thus have to collect sales taxes for orders shipped to those states) that it wants to make sure its rivals also have to pay. This change could alter some of the current e-commerce dynamics – and also put more pressure on e-merchants to wave shipping costs.

 
 
 
 
 
3.93

The composite US score on the third Logistics Performance Index from the World Bank, which rates the logistics effectiveness of 155 nations based on six criteria, from efficiency of the customs clearance process to track and trace capabilities. Each attribute is rated by appropriate freight forwarders on a scale of 1 (low) to 5 (high), and then averaged. The US placed ninth this year, up from 15th place in the 2010 report, behind number 1 Singapore, which averaged 4.13.

 
 
 
 
 
$20 Billion

Amount of money China said this week it will make available in low cost loans to African nations for infrastructure, agriculture, and other projects, as China continues to use its economic clout and vast foreign currency reserves to win influence in the resource-rich continent. China’s trade levels with African countries have double in the past six years. However, South Africa’s president said that the current model where African nations ship commodities to China and get back Chinese made finished goods was “unsustainable” in the long term.

 
 
 
 
 
 
Feedback
2008-10-03

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
President
BWH Consulting



 


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