sc digest
November 17, 2016 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Readers Respond - The Trump Supply Chain bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet Cartoon Caption Contest Continues bullet Trivia      bullet Feedback
bullet New Expert Column bullet Videocast and New On Demand Videocasts
  Learn More About how to Accelerate Your Time to Value
With a SaaS Supply Chain Management Solution

first thought


Supply Chain Graphic of the Week
An Inflection Point in 3D Printing?


Chinese Manufacturers Thrive on Government Subsides

IKEA DC Going Solar Big Time in Illinois
LTL Carriers Retain Pricing Power Even in Face of Weak Volumes
Singles Day Sales Continue Rapid Growth



Week of November 8, 2016 Contest

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

White Paper Discusses how to Manage Volatility in Developing Markets to Deliver Strategic Success

Holste's Blog: Depending On Size, Shippers Think Differently About Order Fulfillment Operations

Weekly On-Target Newsletter:
November 16, 2016 Edition

New Budget Cartoon, LTL Q3 Review, GE 3D Parts, SC Fraud and more

The “-abilities” of Global Trade Management:
Sourcing Agility’s Increasing Importance
by Gary M. Barraco
Global Product Marketing
Amber Road

Machine Learning in Supply Chain Planning
by Henry Canitz
Product Marketing Director


Which sector - retailers, wholesalers, or manufacturers - has the highest "inventory to sales ratio," calculated as inventory levels divided by one month of sales?

Answer Found at the
Bottom of the Page

Readers Respond – The Trump Supply Chain

As we ease into a big Thanksgiving holiday here in the US next week, I am going to take the easy way out and let readers do the talking this week, as I have often done in the past.

Last week, I wrote a column I called "The Trump Supply Chain?", which was meant to do two things: (1) explain a bit why Trump was able to prevail through most of the Midwest, from my view as a near lifetime Ohio resident; and (2) offer my thoughts on what the impact is likely to be on the supply chain from a Trump administration.

That generated more than 20 reader emails, many of them of the short and sweet variety, most saying "great job" and others – confusing prediction for endorsement – not so complimentary.


Can such smart coordination really take place across multiple levels of government and business? I wish I could be as optimistic.


Send us your
Feedback here

But majority of the emails were great, several providing very detailed responses. Below is a summary of some of the best.

Reader Bob McIntyre of DBK Concepts grew up in Michigan as son of a Chrysler engineer, and hangs his shingle now in Dayton, OH near me. He sent a fascinating letter chronicling what he has seen selling a variety of products in the region over several decades.

He recalled, for example, a plant of auto parts maker Takata that once existed north of Dayton.

"In the 1980s, I was doing a small project with them. I was there on a Wednesday, and told the plant manager that I'd be back Friday with demo equipment to show them. He said that would be great," McIntyre wrote. "When I got there Friday morning, the plant had been closed, and all of the production had been moved to Mexico. The plant manager hadn't even known it was going to happen."

Mirroring the views of many, he opined that "Over the last thirty years, companies have based all of their decisions on increasing shareholder value. As the global market grows, companies expand overseas for a variety of reasons: cheap labor; lax, or nonexistent safety and environmental regulation; ability to sell in the countries they manufacturer without import tariffs; and close proximity to a population of billions with a growing middle class demand."

These are many of the issues for sure. What can be done, if anything? Not clear.

Jon Kirkegaard of DCRA has some real ideas on this very question, however.

"Supply chain design and strategy should be used to enable business and government policy goals. As one who has volunteered significant time to use supply chain and advanced manufacturing to promote US jobs, I have witnessed the dysfunction," Kirkegaard wrote, noting that he has donated nearly three years of time to Texas Governor's office to develop an Industry Cluster initiative.

He says that while the program raised nearly a half billion dollars to fund Texas businesses that would use supply chain strategy and advanced manufacturing to promote jobs, "Last I checked they were mostly funding businesses largely importing goods or some politicians friends supposed cure for cancer."

He offered three strategies he believes that could positively impact US manufacturing:

(1) Promote Postponed Manufacturing in US: Government policy should support and help US companies create a postponed manufacturing - or what Kirkegaard calls an "assembly coordination" - product supply chain. He says postponement can greatly reduce shipping costs, protect intellectual capital, and dramatically reduce working capital as the components can be used to make 1000's of times more product variety then just a single SKU wrapped in Styrofoam, stuffed in a shipping container essentially half full of air.

"I have done this analysis for hundreds of US products and have rarely found that the costs are not less for a finished good when you consider customer choice, total supply chain holding and transport costs, and in particular when you consider IP protection and balance sheet losses from IP theft," Kirkegaard wrote.

(2) Incent/Promote/Develop Manufacturing in the Inner City: "Why not use our human resources in the inner city to be involved in the initiative described above (assembly) or in pure manufacturing?" Kirkegaard asks. While there are many challenges, "the benefit and rewards could be staggering."

He adds that "Having created two business' that use this model I can safely say personnel is a challenge but maybe with the right top down perspective, cheer leading, support it can improve."

(3) Green "Supply Chain Coordination": What does that mean? "The amount of resources saved, energy saved, unused product eliminated by even tiny percentage increases in coordination is insanely larger then all the "green" initiatives ever proposed." Kirkegaard wrote. "In essence the first initiative above - assembly coordination/postponed manufacturing - is just a tiny physical example of a larger scale effort to coordinate global supply chain coordination."

Good thinking for sure.

Patrick Lemoine of e2Open said that what has transpired in recent decades is largely simply a response to consumer demand.

"I remember a chart of the US trade deficit with China, where the share of the deficit due to Walmart alone was clearly visible (somewhere in the single digit %)," Lemoine wrote. "Consumers need to understand that the factories have left the US because consumers want to buy T-shirts for $9 and DVD players for $39."

Tony Madison wrote that "I believe there will be some changes but they will need to be regulatory, with some amount of flexible controls written into the rules. This being said, a balance should have been used with the movement of manufacturing on the way out of the US."

He added that "I am sure HR supply chain analysis would have allowed for the balance to consider the downsizing of industries desired by government, which would have allowed the country to develop and train the next generation for the industry shift. Of course this requires that industry and government work together."

Shelley Jordan of Synergy Solutions Group wrote that "As an inventor, I have experienced the Chinese trade "cheating" personally. Also, I have seen the major changes in the last few years in USPTO laws that make it extremely difficult for innovation in America. This is not what America is about. Other countries do not try to keep minds from moving forward and producing products."

He agrees with me that whatever Trump or anyone does, manufacturers are not going to return to the US in droves. However, he said that "If the business got a tax break if they agreed to go into an area that needs the business, even if the area is high poverty and high crime, then that could make a big difference. Also, if a similar type of manufacturing (similar process or product) went to the same city or area, they could also get the tax break, and then supply chain collaboration could take effect." 

He ended optimistically, writing that "So overall, I think that plants will be revived in USA because great things will happen, but it is dependent on wise decisions based in my opinion on what has changed over the past 30 years. Also, it is based on cooperation (not separation) and communication to make these decisions. I believe once the plants and jobs start reviving they will grow faster each year exponentially."

Can such smart coordination really take place across multiple levels of government and business? I wish I could be as optimistic.

Jerry Saltzman of Pfizer thinks too many are making this situation out to be worse than it really is.

"Let's keep this simple," he wrote. "Unemployment is at 4.9%. The overall US trade deficit has been largely stable since 2008. Coal is noncompetitive to gas, which currently is plentiful," adding that "For the first time in at least a decade, there is a small decrease in income inequality. (Not so meaningful until one considers if tires made in the US that are more expensive, someone will need to be able to buy them.)"

He concludes "Advancement and innovation in supply chain principles made globalization a reality. So why do we want to return to high tariff and protectionism? Those Cuban cars are pretty special, I suppose."

All good points, and I will repeat from last week that I have been largely a free trader throughout my life.

But the status quo won't do anything to fix our broken communities, and also as I said last week, a nearly $400 billion annual trade deficit in goods with China can't be a good thing, can it?

There were quite a few more emails, but I am out of space. Look for the full text Feedback in this newsletter over coming weeks.

What do you think will be the biggest impacts on supply chains from a Trump presidency (please keep non-political)? Can he really help revitalize US manufacturing - or is it a lost cause? Any reaction to this reader feedback? Let us know your thoughts at the Feedback button below.

View Web/Printable Version of this Column

New On Demand Videocast:

A Bold New Paradigm for Supply Chain Planning

The Traditional Approach will Give Way to Apps, Advanced Analytics - Keep What You Have, Add in the New

In this outstanding broadcast, we will explore this new exciting paradigm for supply chain planning in detail, how it can be applied in conjunction with existing planning infrastructure, and why after almost three decades of one planning approach, we may at last be on the verge of a whole new model.

Featuring SCDigest editor Dan Gilmore and Toby Brzoznowski, executive vice president at LLamasoft.

Available On Demand

New On Demand Videocast:

New Cloud WMS Solution is Game Changer for Warehouse Management Deployment and Flexibility

New Technology and Deployment Approach Offer a Simply Better Way to WMS Implementations - Learn How

In this outstanding Videocast, we will cover the latest in each-picking robotics, co-bots, artificial intelligence, autonomous vehicles, sensors, drones and droids.

Featuring  Dan Gilmore, Editor, along with Mark Hawksley and Bruno Dubreuil of TECSYS, a leading provider of WMS solutions.

Available On Demand Soon

November Videocast:

Successful Supply Chain Vendor Compliance - for Retailers and Beyond

Author Norm Katz on Vendor Compliance "By the Book"

In this outstanding Videocast, Katz will summarize key elements of book, to include:
Compliance program guiding principles; What is permissible under the law relative to vendor chargebacks; Common mistakes companies make in rolling out and maintaining vendor compliance programs; The many "E's" of successful vendor compliance, from "Envision" to "Ethics."

Featuring  Dan Gilmore, Editor, Norman Katz, consultant and author of "Successful Supply Chain Vendor Compliance," and Greg Holder, CEO, Compliance Networks

Wednesday, November 30, 2016


Just catching up on some of the many emails we received on Dan Gilmore's somewhat controversial First Thoughts column on An Inflection Point in the Consumer Goods to Retail Supply Chain?, which discussed what seems to be an emerging trend by retailers to finally address rampant supply chain variability.

A few of these feedbacks below - more next week:

Feedback on Reducing Retail Supply Chain Variability


Great perspective on this topic. I do however find the following statement hard to believe and would love to see more info on it: "By the way, the on-time improvement has enabled Target to reduce out of stocks at its stores by more than 50% in the past six months or so."

Mike O'Reilly
Customer Supply Chains

Editor's Note:

That statement was made by Target's COO during its Q2 earnings call, but more correctly was referring to on-line inventories in their DCs, not in-store OOS's.

Dan Gilmore


More on Reducing Retail Supply Chain Variability:


I work in the grocery world and all of this stuff that the retailers are trying to do don't seem to have been very successful.

Walmart planning system upgrade turns out to be a giant step backwards in time.

Walmart does a lot of good things but when they make a mistakes they try to over compensate to make it work.

For Walmart, there was more stem reliability and predictability in their old planning system.

Walmart still is the best in grocery planning but they are not as good as they used to be.

Thanks for you weekly communication.

Name withheld by request

Consumer Products Company



Good article.

Indeed I am experiencing what you describe in your article. What you might choose to mention in the future is that there are step-function increases in supply chain cost for the manufacturer as the retailers supply chain expectations rise. Not so much from on-time being reduced from 4 days to 2 days, but when it becomes +/- 30 minutes, as some retailers already are, then additional costs are incurred by the manufacturer for special transportation services. Intermodal becomes impractical, LTL impossible and then everyone is forced into truckload or 3PL consolidators with standing appointments, milk runs with conservative transit times and lots of costs, again being paid by the manufacturer.

Ultimately the efficiency gained in one part of the supply chain is lost in another and ultimately paid for by the consumer. The bad news for the 600 lb. gorilla retailers is that they are increasingly treating their suppliers badly and the suppliers will look for alternatives such as supply chain efficiency pricing brackets, focusing on growth with better behaving retailers and various ecommerce options.

Dave Perry
Strategic Project Manager
Global Supply Chain Design & Policy



Q: Which sector - retailers, wholesalers, or manufacturers - has the highest "inventory to sales ratio," calculated as inventory levels divided by one month of sales?

A: Retailers by far, with a ITS ratio of 1.54 in September. Manufacturing and wholesalers usually have about the same ITS, 1.30 and 1.29 respectively last month, according to the Commerce Department.

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