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Supply Chain by the Numbers

- July 23, 2015 -

  Supply Chain by the Numbers for Week of July 23, 2015

Mercedes Embraces a New Logistics Model for Auto Parts; 3D Printers Threaten Hollywood Revenue; Big Blue has Unenviable Streak Going; NRF Revises 2015 Retail Sales Forecast Down



That is the level of logistics cost reduction per vehicle produced that Mercedes-Benz expects to achieve from a major revamp of its parts and component supply chain. Turns out that while Mercedes assembles cars all over the world, most parts for those cars are still made in Europe, and shipped rather inefficiently to all those plants. In fact, Mercedes is saying that supply chain costs (transportation, inventory, etc.) can actually exceed manufacturing costs in some of the company's lower-wage plants. So now the luxury car maker has opened a 90 million-euro consolidation center where components from European suppliers will be consolidated and repacked more efficiently for shipping abroad to Mercedes plants in China, the US, and South Africa. It said it may also establish similar centers in growth regions like China and North America. It added that with growing supply chain complexity, delivering the right part to the right factory at the right time and in the right place on the assembly line is an increasing challenge.




That's how many 3D printers will be sold worldwide in 2015, more than double the total in 2014, as falling prices combined with increasing product applications are stoking growth. Some 3D printers can be had for under $1000 now, and prices as always with such technology-based products are surely headed lower. This will certainly have a big impact on supply chains over time, and is already becoming a big risk to the entertainment industry. How? A growing army of amateurs and professionals are producing toys and related merchandise based on movie characters, etc., in some cases just for their own use, in some cases for sale. Turns out such merchandise revenues are a key component of the total Hollywood profit picture. Few legal actions have been taken yet, and in some cases it is not clear who to go after relative to these unlicensed products, but the entertainment world is watching this very closely, the Wall Street Journal reports this week.


That's the new forecast for US retail sales in 2015 from the National Retail Federation, down from the 4.1% level the NRF had projected previously. That after a weaker than expected first half, in which retail sales grew only 2.9%. All these numbers include inflation, meaning for example that real 1H growth was not much more than 1%. The drop from 4.1% to 3.5 % growth may not sound like much, but it is a decrease of about 14%, hardly chump change and representing billions of dollars of lower spend if accurate. Walmart recently said customers were preferring to pocket savings from tax refunds and lower gas prices than spend, while the NRF places some of the blame on Washington, saying "too much time has been spent crafting rules and regulations that almost guarantee negative consequences for consumers and American businesses alike."



Surprisingly, the number of consecutive quarters that tech giant IBM has seen its revenue decline year over year, including in Q2, according to its earnings release this week. In fact, in Q2 IBM saw a whopping 13.5% drop in sales versus 2014, though it would have been down just 1% if not for impact of the rising dollar. Tech trends like mobile and Cloud have been eating into IBM's traditional hardware and IT infrastructure businesses. Big Blue has seen dark days a couple of times over the past three decades, but always managed to find a new path to success. IBM has been changing its product mix, including recently shedding some supply chain software solutions, notably the Sterling TMS solution (acquired last year by Kewill) and the former LogicTools supply chain network design and inventory optimization products (acquired this year by LLamasoft), though IBM has kept others, such as Distributed Order Management.

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