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Supply Chain by the Numbers

- Sept. 3, 2020 -

  Supply Chain by the Numbers for Sept. 3, 2020

The Great Smart Phone Caper by some Amazon Drivers; Autonomous Trucking Technology Firm Ike Seeing Orders; US PMI has Strong August Level; Pandemic Changing Consumer Behavior



That's within how many feet Amazon's dispatch system for rapid delivery "Instant Offers" can locate a potential smart phone's location. Why is this relevant? Because a news story on this week said Amazon delivery drivers are hanging phones from trees near some Amazon Whole Foods and delivery station locations in order to be seen by the system as being closer to the pick-up location than other drivers parked down the block. It works like this: A coordinated group of drivers are syncing their main phones up to the devices that are suspended in trees and then parking nearby to wait. When a delivery opportunity is released by Amazon, it looks like the drivers with the synced phones are closer, and they get the offers first, a huge advantage in what is apparently intense competition to get Amazon work. Drivers who are not involved with the procedure have convened in on-line chat rooms to decipher how other drivers are beating them to orders so quickly, Bloomberg wrote. Some have taken their complaints to Amazon, and Bloomberg viewed an internal email in which the company said it would investigate but not be able to share its conclusion with the drivers.



That is how many trucks powered by autonomous trucking technology provider Ike Robotics have been reserved as they become available by several firms, including three logistics service providers: Ryder, NFI Industries and DHL. Ike's model is to provide technology on a subscription basis to truck makerso will sell or lease the complete tractors. Others such as TuSimple are trying to build their own networks using their own autonomous trucks. While still early it seems in the testing/regulatory approval process, most observers see autonomous trucks as serving to move linehaul freight long distances, likely supported by local drivers to navigate the first and end moves of the rigs. Interestingly, some are noting that in addition to eliminating the costs of a driver, the autonomous trucks will be able to keep moving near round the clock, free from the hours of service rules that constrain drivers, improving truck utilization substantially. With the lower costs, trucking will be more competitive with intermodal freight.




That was the level of the August Purchasing Managers Index from the Institute for Supply Management, well above the 50 mark that separate US manufacturing expansion from contraction. That was up 1.8 percentage points from the July reading of 54.2, and marks the third straight month above 50, after steep pandemic-related declines below 50 in April and May. In even better news, the New Orders Index registered a very strong 67.6, an increase of 6.1 percentage points from the July reading of 61.5 and a good sign for future manufacturing activity. Of the 18 manufacturing industries ISM tracks, 15 reported growth in August. Three down sectors were: printing and related support activities; petroleum and coal products; and furniture. Perhaps oddly, the Inventories Index registered 44.4, 2.6 percentage points lower than the 47 reported for July. Inventories contracted for the second straight month after two consecutive months of expansion, making this is the lowest reading for the Inventories Index since January 2014.




That was the rise in US sales of instant coffee in Q2, among many major changes in consumer behavior stemming from the COVID-19 pandemic and the switch for many to working at home. That according to analysis from Reuters. Sales of ketchup and other condiments jumped 21.5% from April to June and 13.5% in the four weeks to August 22 despite prices increasing by 7.2%. Demand for expensive disposable diapers fell by 2.9% in Q2 as parents opted for cheaper generic options because they can keep a better eye at home. Demand and prices have also increased for more expensive or "splurge" items like $106 men's Nike Air Max sneakers and $105 Lululemon yoga pants, the Reuters theory being that as consumers saved on gas and other normal work expenses, they had cash to buy some luxury goods. Prices for many consumer packaged goods have been rising with the increased demand. "Brand manufacturers have been fattening their pockets with profits while putting unprecedented pressure on the consumer who has to pay those higher prices," said Burt Flickinger, retail consultant at Strategic Resource Group.

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