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Supply Chain by the Numbers

- Dec. 4, 2013

  Supply Chain by the Numbers for Week of Dec. 4, 2013

Amazon Just Drones On; Entering Manhattan is a Heavy Toll on Truckers; New Steel Plant Sold in a Real Steal; JC Penney's Amazing Item Tagging Blunder



The number of minutes under which envisions a new Amazon Prime Air service will deliver on-line orders - using small drones. That according to founder and CEO Jeff Bezos during an interview on Sunday on CBS's 60 Minutes program, where the secret program was unveiled, later supported by a short web page containing a video of a drone delivery. Is this a high tech fantasy, or something that could really come to market? Amazon notes the US FAA has promised regulations for unmanned aircraft by 2015 (we'll see about that), and that it will be ready whenever the regulations are in place. Skeptics, however, say the idea of widespread drones in urban markets is many years away if not impossible due to safety concerns.




The incredible toll some truckers will have to pay starting Sunday to cross the George Washing ton Bridge, Lincoln Tunnel, or three other routes into Manhattan, up from $90 currently. That is for large trucks paying with cash, and thankfully is good for a free trip back off the island. That toll drops to $78 and $84 per round trip for EZPass users during off-peak and peak hours, respectively, but that is still a hefty fee for sure. One independent trucker told a local TV station that on busy days he may spend $400 on tolls for multiple trips into the city. The new toll will be $13 cash/$11 EZPass for regular cars. If you ever wondered why things are so expensive in Manhattan.....


$1.55 Billion

The price that a joint venture between Arcelor-Mittal and Japan's Nippon Steel will pay to acquire a three-year old steel mill in Alabama from Germany's ThyssenKrupp, ending what was among the worst supply chain disasters of all time. ThyssenKrupp spent at least $5 billion to build the plant, under a complex supply chain strategy that involved sourcing raw sheet metal from the company's sister factory in Brazil. But shortly after the factory was built in 2010, finished steel prices in the US fell sharply, while prices for the sheet steel coming out of Brazil rose sharply, and the company seemed to underestimate shipping costs for the sheet steel. Thyssen began taking bids for the factory in late 2012, but the deal was just finalized this week.


$28 Million

Bizarre extra financial loss JC Penney announced this week it incurred in its Q3 due to extra high levels of shoplifting in its stores. How so? When Penney's announced in late 2012 it wanted all items RFID tagged by early 2013, up from just a few categories at the time, it told suppliers it would use the RFID chips for loss prevention (electronic article surveillance) as well, so there was no need for source tagging of EAS sensors. Then, the RFID plans were suddenly canceled, and somehow the word to start using EAS tags again was never communicated. So Penney's went months without most security tags - news which travelled fast through the shoplifting crowd, who had a field day. That blunder cost the now money-losing chain a full percentage point of margin reduction. Penney is busily tagging current and incoming merchandise now. See Sudden JC Penney Retreat from RFID Led to Rash of Store Thefts.

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