sc digest
July 14, 2016 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet 1H 2016 in Supply Chain in Numbers and Charts bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet New Cartoon Caption Contest Begins bullet Trivia      bullet Feedback
bullet Expert Insight and Supply Chain by Design bullet New Videocast and On Demand Videocasts

Making Spaces Smart: Automated Restock Alerts Keep Lines Up and Running


first thought


Supply Chain Graphic of the Week
Where the Robots are Coming


Amazon Prime Day Drives Record Sales

US Distribution Space Being Leased is Soaring
Diesel Prices Expected to Stay Low in 2017
Container Volumes Out of China are Really Slumping


Making Spaces Smart:
Automated Restock Alerts Keep Lines Up and Running


Week of July 11, 2016 Contest

See The Full-Sized Cartoon and Send In Your Entry Today!

Holste's Blog: Shippers Take Advantage of Donating Excess Inventory to Non-Profit Organizations

Weekly On-Target Newsletter:
July 13, 2016 Edition

New Cartoon, Amazon Picking Contest, New APICS Cert, Whirlpool Net Design and more

Manage What Matters

Discusses the Law of the Vital Few, the Pareto Principle, ABC Analysis and How to Manage by Exception

The Tactical View: What's Missing in Today's Supplier Integration Market

by John DiPalo
Chief Strategy Officer
Acsis Inc.

Profit Maximization Feature and Amazon's Focus on Lead Time to Grow Revenue

by Dr. Michael Watson


What country has the highest manufacturing robotic density - number of robots per 10,000 manufacturing workers?

Answer Found at the
Bottom of the Page

1H 2016 in Supply Chain in Numbers and Charts

It is a big time cliche, but a picture really is worth a 1000 words.

I can say that definitively, because when I put together these reviews of the past year or half year in supply chain, the graphics I use really do tell the story.


It was great times for global shippers too, as Chinese Containerized Freight Index continuing to fall, down to 650 or so recently from a recent high of 1110 in 2014.


Send us your
Feedback here

Last week, I provided a month by month chronology of the top stories for the first six months if 2016, which you will find here: 1H 2016 Supply Chain Review.


This week, I am back with a look at the 1H in what I call numbers and charts.


The economic environment that has such a big impact on our supply chain was mixed, as it has continually been for a number of years. Q1 US GDP was finally pegged at a weak 1.1%, with a slow start to the year yet again, repeating a recent pattern. China's growth fell below 7%, and perhaps quite a bit below, while Euro Zone growth was about just 0.5%.

Q2 is likely to be better, but the weak Q1 number likely means we will see tepid full year growth once more, somewhere just over the 2% mark.


The International Monetary Fund has recently predicted 2.2% US economic growth for 2016, down a bit from earlier forecasts, and global growth of a weak 3.2%, about the same as 2015. Meanwhile, the level of global trade continues to fall below the level of economic growth - a big change from a few years ago - and has basically been flat for past 18 months, according to a report just this week from the UK's Financial Times. Does this spell looming troubles?


US manufacturing, once a bright spot early on in the pseudo-recovery after the Great Recession, has been flat for a long stretch, including the 1H of this year. The US Purchasing Managers Index from ISM paints a mixed view, ending a five-month string below the 50 mark that separates manufacturing expansion from contraction in March, the first of four straight months then above 50 through June.

But US manufacturing output numbers have been flat for a year, according to the Federal Reserve estimates, with the index numbers as shown in the chart below relative to the baseline year (index = 100) of 2012. As can be seen, there has been no increase in 2016, and the scores around 103 mean just 3% growth in output since 2012 - less than 1% per year.

Oil started the year continuing a plunge that began in 2015, falling to the low 30-dollar range in January, as gas and diesel prices followed suit. That as OPEC decided to keep pumping despite the low price to drive out US frackers.

That strategy partially worked, and oil started to climb again in April, almost hitting $50 mark for a bit, now settled in at about $45 per barrel. Diesel prices fell nationally to just below $2.00 per gallon in late February, increasing to a still modest $2.40 or so recently with the rise in oil.

Those lower fuel costs and a generally weak freight environment made it good times for shippers. The Cass Linehaul Index, which measures per mile US truckload rates before accessorials, fuel and other charges, fell four out of the first five month year over year, a big change from 1H 2015 when rates rose rapidly.

Meanwhile, through May the Cass Intermodal pricing Index has fallen an incredible 17 consecutive months.

It was great times for global shippers too, with the Chinese Containerized Freight Index continuing to fall, as shown below, down to 650 or so recently from a recent high of 1110 in 2014, as rates are below variable costs for many/all container lines, leading to the recent consolidations.

I have more but am out of space. Hope you enjoyed this review in numbers and charts.


Anything we missed? What do these trends tell you? Let us know your thoughts at the Feedback button below.

View Web/Printable Version of this Column

NEW Videocast:

Supply Chain Software Trends and Opportunities 2016 Benchmark Report

Results from SCDigest's New Benchmark Study, Including a Special Focus on Cloud-Based Solutions

In this outstanding Videocast, we'll summarize important trends and developments on both the user and technology provider fronts, based in part on results from a new SCDigest survey on trends, opportunities, and practices in supply chain software.

Featuring  Dan GilmoreJohn Murphy, Senior Director, SCM Applications Product Marketing, Oracle and Jim Heatherington, Vice President, AVATA.

Tuesday, Aug. 2, 2016

On Demand Videocast:

Supply Chain Design as a Continuous Business Process - The Whirlpool Story

From Project to Process: Here's How to Get It Done

In this outstanding Videocast, we'll explore the changes needed to make supply chain design a continuous process, emerging new best practices in supply chain design, and how consumer products leader Whirlpool has successfully embraced this 360-degree approach.

Featuring Dan Gilmore, Editor, SCDigest, and Toby Brzoznowski, Executive Vice President, LLamasoft and Brian Streu, Manager, Supply Chain Design, Whirlpool

Now Available On Demand

On-Demand Videocast:

A Benchmark Study on Supplier Integration in an Outsourced World

Featuring Real World Experiences from DuPont, Honeywell and Acsis, Inc.

A new benchmark study of practitioners reveals the priorities, expectations and challenges of achieving real-time visibility into goods as they move through third-party production cycles.

Featuring Dan Gilmore, Editor, SCDigest, and John Dipalo,Chief Strategy Officer, ACSIS, Peter Musser, IT Services Delivery Specialist, DUPONT and Bruce Stubbs, Director, Industry Marketing Honeywell Scanning & Mobility

Available On Demand


Catching up on a variety of Feedback this week, starting with an older response from Marc Wulfraat of MWPVL International on why truck trailers that we hadn't placed here yet that we thought was worth publishing, plus several others on various topics.

Feedback on Why Amazon is Acquiring Truck Trailers


Our interpretation of Amazon's acquisition of trailers is:


1) The company is seeking to improve how it moves merchandise between its internal network of distribution centers (replenishment center to fulfillment center; fulfillment center to fulfillment center; and fulfillment center to sortation center).

2) The purchase of trailers allows Amazon to stage trailers at these facilities to allow flexibility in terms of timing of loading operations similar to having a drop trailer program with a supplier. It enables Amazon to secure trailer capacity within its own network which implies a greater degree of control as opposed to relying on third party carriers. Bottom line it provides more control over transportation operations.

3) There is likely a modest cost savings associated with this move. Amazon is not buying tractors and therefore does not carry the burden of having the insurance obligations that a trucking company pays for.

4) There is a side benefit in that the trailers serve as giant moving marketing billboards so free advertising doesn't hurt the cause.

5) Perhaps the most important benefit is one that has nothing to do with transportation and everything with Amazon Prime Now. There is a possibility that some of these trailers can be used as “warehouses on wheels”. Companies who sell off the back of a truck understand how this works. The trailer is loaded up with hyper-fast SKUs that are frequently ordered from fulfillment centers. The trailers are loaded in such a way that the driver can access the goods from inside the trailer. Trailer parks in a staging location near an urban center.

Orders are picked off the truck and delivered by localized resources to consumer doorstep in under 60 minutes. Think of this as extending the Amazon Prime Now network without having the Prime Now buildings in every location that needs to be served. This could be a Trojan horse that enables 60 minute service levels to many smaller and midsize cities that make up a substantial portion of the population. Amazon is famous for thinking out of the box so call me crazy but could this be yet another way to move goods to market?

Marc Wulfraat
MWPVL International Inc.



Feedback on Understanding the Gartner Top 25 Supply Chain List


In regards to the Gartner Top 25, I think it is the gold standard that all companies desire to be aspire to. I have participated in the voting for many years and think the methodology includes many factors, some Supply chain centric, some not.

An enhancement would be to add additional Supply Chain KPIs Key Performance Indicators. There are plenty to choose from, but adding more of these critical measurements would truly indicate the real performance of a company's Supply chain expertise. And that is what the Top 25 is all about.

Tom Dadmun
Supply Chain VP, retired




The metrics used are inward facing. I suggest that Gartner should also use customer facing metrics like on time shipment or Perfect Order fulfillment (both SCOR metrics)

Blair Williams CFPIM, CSCP

Editor's Note: The challenge is Gartner gets its performance measures, such as ROA or inventory turns, through public filings. The metrics suggested in these two feedbacks, which would be great if possible, are not available in those filings and would have to be self-reported by companies.

In addition, most companies on the list have multiple divisions/SBUs, etc., so the question would be how to come up with a single number, which usually isn't calculated across these units.


Feedback on Risk Management

One of my colleagues from Cranfield University used to conclude her half-day session on the management of risk, resilience and vulnerability in the supply chain with the following conclusions:

• No system is invulnerable
Risk, a problem to resolve, but never solve
Identify what you can and take a position
Manage or mitigate as appropriate
Beware the strategic disconnect
Forewarned is forearmed
A case for the rehabilitation of ‘slack'
Creeping crises were systemic risk in action
Dialogue between industry & policy makers helps
Political and commercial aims often diverge


Bearing in mind the context that the audience was defense and military related and therefore focused on capability rather than availability I found her conclusions both pragmatic and intellectually challenging. In particular the remark concerning "slack" struck home because as a former logistics practitioner and an industrial engineer I had wavered between always having a little spare capacity up my sleeve and an almost genetic disposition to cut out waste.

As an academic she was posing the question: should we not make a case for slack (although recognizing that the term itself was not really sufficient to fully explain the concept)? Events in recent years would support this view. The question is how should one program in slack in such a way that it is not redundant.

What is the mix of physical assets, human resources, systems flexibility, etc., that is required to reduce vulnerability and ensure resilience. How does one convince a line manager, senior VP, CFO, of the merits of such a seeming heresy in these days of austerity and short termism?

I think that this is an issue worth debating and finding solutions - SCDigest would seem a possible forum.

I hope this gives you a little more background without going into it in too much depth. I happy to answer more questions as and when you have them.

David Macleod
Learn Logistics Limited



Q: What country has the highest manufacturing robotic density - number of robots per 10,000 manufacturing workers?

A: South Korea, at 347, according to the last estimate from the Int'l Robotics Federation, just ahead of Japan (339). The US is 7th at 135.

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