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Supply Chain by the Numbers

- Aug. 9, 2013

  Supply Chain by the Numbers for Week of Aug. 9, 2013

Switching Port Assignments Delivers Big Savings; Input Costs will Continue to Fall, Yergin Says; Companies Did Not Stretch Out Supplier Payments in 2012; Still Trying to Get Back to 2007 Production Levels


$20 Million

That’s how much one retailer was able to save in annual logistics costs simply by re-analyzing at the SKU level which products it brought into the US across the few ports the company used. That according to Toby Brzoznowski, EVP at LLamasoft, in an interesting "Found Money" series on our SCTV channel, on quick and easy wins using network design tools. See "Found Money" in Your Supply Chain Part 1.




Drop in the IHS non-oil commodity index since 2008, according to noted IHS economist Daniel Yergin in a column in the Wall Street Journal this week. Iron ore prices are down 32% from their peak; copper down 30%. The reason: much slower growth in China, which for a decade dominated the world commodity scene, consuming 40% of the world’s total copper usage for several years, as an example. While that was happening, commodity producers were increasing capacity and output to keep up with that now dwindling Chinese demand. The bottom line: you can expect input costs to remain low for some period, Yergin says, and that change will have geo-political ramifications.


Amount US manufacturing output is still below its peak 2007 levels, according to data from the Federal Research. Average 2007 output is the base year for the Fed’s production index, meaning that year has a score of 100. In June, the index registered a score of 95.7. It has been about flat for all of 2013, after a slow but steady climb from the bottom in June of 2009, where the index fell to just 80.3, meaning output dropped some 20% during the depths of the recession. Just when will US manufacturers produce more than in 2007? The answer to that question will have a big impact on economic growth and GDP.



Average numbers of "Days Payables Outstanding" the top 1000 largest public companies in the US had in 2012, according to the annual working capital analysis from REL, a measure of how day's worth of sales a company has in accounts payable. That was flat with 2011, and something of a surprise, given there have been many reports of late of companies extending payment terms to suppliers, such as Procter & Gamble moving from 45 to 75-day terms earlier this year. Perhaps we’ll see that number rise in 2013. REL notes that the top quintile (20%) had an average DPO level of 35.8 days, versus the median level of the entire company list of 24.7 days.

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