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  Supply Chain Trends and Issues: Our Weekly Feature Article on Important Trends and Developments in Supply Chain Strategy, Research, Best Practices, Technology and Other Supply Chain and Logistics Issues  
 
 
  - Jan. 20, 2014 -  

A Timeline of Key Supply Chain Events in 2013

The Biggest Stories of the Past Year include Bangladesh Tragedy, UPS Christmas Fail, Important Court Win for the ATA

 
     
     
  by SCDigest Editorial Staff  
     
 

A week ago, SCDigest editor Dan Gilmore offered his take on the key themes and trends in supply chain and logistics in 2013. (See The Year in Supply Chain 2013.)

SCDigest Says:
Stories about Amazon.com, and eFulfillment generally, dominated much of the year's news cycles.

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As promised in that piece, below is a timeline of key supply chain events by month over the past year, which can serve as a key reminder of important stories in 2013. You can also find our top stories for 2013 in the Green supply chain here: The Top Green Supply Chain Stories of 2013.

 

January

In a story first broken by SCDigest, JC Penney tells suppliers it is backing off program to RFID tag at the item level virtually every SKU it sells, breaking a promise made in 2012 by CEO Ron Johnson. Penney will stick with tagging a few categories for now, likely to conserve cash at the struggling retailer. Johnson is shown the exit door not long after.

Serious but at times humorous supply chain scandal breaks out involving horsemeat being sold as regular beef in many retail chains and even some frozen packaged food in the UK and elsewhere in Europe. Leads to some grocery stores promising costly DNA testing on all meat products. Not just food safety, but is "food integrity" coming soon?

In wake of fire in Pakistan that killed 112 at a factory that was making clothes for Walmart through a sub-contract deal, Walmart announces major changes to sourcing policies, including no sub-contracting without permission, and the end of a "three strikes before you are out" approach to supplier violations.

February

Agreement is finally reached between the International Longshoremen's Association (ILA), which covers dock workers at 15 East and Gulf coast ports, and the port alliance, after months of wrangling and numerous threats of a potentially crippling strike. That was some 5 months after contract initially expired. Key issue was a royalty program, dating back to the 1960s, that paid ILA workers for each container moved through the ports. Appears the union mostly won.

UPS puts 100 all-electric delivery trucks into service in various parts of California. They only have a range of 75 miles on a single battery charge, however, meaning they can only work on fairly dense delivery routes. The electric trucks will cost about $178,000 apiece, or close to three times the price of conventional trucks.

March

Federal Appeals Court hears testimony in American Trucking Associations legal challenge against new Hours of Service rules, arguing the data used the Federal Motor Carriers Safety Association in its cost-benefit analysis was hugely flawed. Court does not rule by July 1 enforcement data, and FMCSA refused ATA request to delay rules until a decision, so rules went into effect two weeks ago. Court ultimately rules against the ATA in late July.

Bloomberg reports Walmart having a tough time keeping its store shelves stocked, and that the company recently put a senior executive in charge of fixing the issues. "We run out quickly and the new stuff doesn't come in," Walmart's US CEO said at a meeting. Walmart says the comments were taken out of context.

Engine maker Cummins and tractor producer Peterbilt provide update on new "SuperTruck" development, funded in part by U.S. Energy Department program. Early tests show diesel mileage of 9.9 mpg, increasing current mileage performance by more than 50%. The gains come from changes to the engine and truck aerodynamics. More tests schedule for the rest of the year, but press announcement is very confident.

April

Building housing several apparel factories in Bangladesh collapses, killing more than 1100, and bringing to light the complex and often murky world of the global softgoods supply chain.

 

FBI raids homes and offices of managers and executives at giant truck stop owner Pilot Flying J, over allegations the company has for years been short changing carriers and private fleet owners on contractually promised rebates. Many class actions suits have since been filed.

FedEx announces new parcel services, focused on e-commerce. For $10.00, FedEx says it will promise e-commerce deliveries within a two-hour window. For $5.00, you can reschedule the delivery day or location, with detailed instructions for the driver. And for free, customers can sign up on the FedEx website to be notified of pending deliveries by email, text or phone.

May

Reports from several sources say large companies such as Procter & Gamble are extending payment terms to suppliers from 45 or even 60 says to 90 or even 120 days, in a bold move to improve cash flow. Most offer bank-based factoring programs to ease their own suppliers' cash flow challenges, but real pain will be felt if interest rates rise.

Reports surface that Amazon will begin testing a new on-line grocery service in the Los Angeles and San Francisco markets in weeks, and could expand that to as many as 20 markets in 2014 if successful.

Group of mostly European retailers and brand companies announce plan to support improvements in Bangladeshi factories, following the April tragedy. Most US companies stay out, worried about the binding nature of some committments and possible litigation explosion. US group led by Walmart and Gap release their own plans in June. Not clear either plan has gained traction, and apparel exports from Bangladesh are falling, in part due to turmoil/violance connected to the issues of factory safety.

June

Annual State of Logistics report from Rosalyn Wilson and CSCMP finds logistics costs as percent of US GDP unchanged at 8.5% in 2012. Opinion is that logistics costs unlikely to rise much in relative terms in the next few years either. Recent high point was 9.9% in 2007.

American Trucking Associations largely wins important Supreme Court verdict limiting the Port of LA's ability to regulate drayage drivers, which in the end wasn't about the environment as claimed but a move to promote unionization of drayage drivers.

Walmart admits it is behind in e-fulfillment vs Amazon, vows to catch-up, with major commitment to using its store network as part of the solution.

The three largest container shipping carriers by capacity (Denmark's Maersk Line, Switzerland's Mediterranean Shipping Co. and France's CMA CGM) announce plans for a new alliance (called P3) in which they will pool vessels and capacity. The three account for about 37% of total global container capacity, and the move has many shippers worried.


(Supply Chain Trends and Issues Article - Continued Below)


 

 
 
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July

New Hours of Service rules for truck drivers go into effect before court ruling that ultimately supports FMCSA's authority to issue new regulations is later rendered. Though much criticized by many in the trucking industry, predictions relative to major hit to fleet productivity later prove overblown.

eBay announces it is expanding its eBay now same-day delivery service to several new markets beyond San Francisco, San Jose, and Manhattan. Expansion will involve support for additional areas of New York City as well as Chicago, Dallas and perhaps more.

The first of the giant Maersk Triple E's, capable of carrying more than 18,000 TEU, started on its maiden voyage, leaving the port of Busan, South Korea on its way to Southeast Asia and then Europe.

August

Walmart holds major conference/exhibit saying it is looking for suppliers with "made in America products," in a case of deja vu from the late 1980s.

September

US Federal Trade Commission finally approves Honeywell's acquisition of Intermec, leaving US with basically two providers of wireless systems for distribution and manufacturing, Honeywell and Motorola Solutions.

Reports that there is surprisingly some revival in the US apparel and textile sectors, which had been devastated for some two decades by offshoring. A Parkdale Mill's factory is reopened near Gaffney, SC, for example, but it now produces 2.5 million pounds of yarn a week with about 140 workers. In 1980, that production level would have required more than 2,000 people.

Bloomberg reports than Walmart is having trouble keeping inventories low, saying the retail giant is going to slow down its purchases from suppliers in Q3 and Q4 to battle the inventory bloat.

Lowes announces it will run a Texas distribution center entirely on natural gas trucks, a milestone in alternative fuel vehicles.

October

News breaks that for past few years, under program it calls Vendor Flex, Amazon has been co-locating mini-fulfillment centers inside a few consumer goods manufacturers DCs, such as Procter & Gamble. Traditional retailers are not happy with the arrangement.

Giant Accenture roils procurement software market with acquisition of Procurian. Just a few weeks earlier, SciQuest announced plans to acquire procurement software provider CombineNet.

eBay acquires Shutl, a UK-based provider of software that connects drivers for same-day delivery.

US Energy Information Administration says US likely to finish 2013 as top global producer of oil and natural gas, supplanting Russia, as fracking revolution continues on.

November

Once struggling LTL carrier YRC Worldwide, which appeared to be righting its financial ship in 2013, drops a bomb on Teamsters union, asking it to extend concessions put in place in 2009 through 2019, in the face of mounting debt payments. Just recently, the union overwhelmingly rejected the deal, but a new offer is being developed.

Amazon says it has worked out deal for Sunday deliveries in New York and Los Angeles immediately and Dallas, Houston, New Orleans, Phoenix, possibly other markets, in 2014.

Meanwhile, the Wall Street Journal breaks story that Amazon in battle with Johnson & Johnson, and other manufacturers, over claims that some of the thousands of "third party" sellers that use Amazon as their web channel are selling expired, damaged (e.g., packaging) or otherwise uncontrolled product through Amazon's platform.

December

Amazon CEO Jeff Bezos tells 60 Minutes that the eCommerce giant has been testing potential for package delivery via unmanned drones. Company quickly later posts video of how drone delivery would work, but many questions remain.

New Federal Motor Carrier Safety Administration rules relative to more expensive surety bonds lead many thousands of freight brokers to call it quits, though some of those will become agents for larger firms.

JC Penney announces it has lost tens of millions of dollars in 2013 from a botched transition to RFID tagging of all items and then reversing that strategy, leaving the struggling retailer without any electronic article surveillance tags for many months, leading shoplifters to go wild.

USA Today breaks news that Amazon is building new "Pantry" service focused on so-called "center-aisle" items and larger packaging sizes, designed it appears to take on warehouse clubs such as Costco and Wal-Mart's Sam's Club. Word is the Pantry service, to be launched in 2014, will ship anything that can fit is standard size large box for low flat rate.

UPS overwhelmed with huge surge in last minute surge in last minute ecommerce orders, fails to deliver tens of thousands of orders etailers promised for pre-Christmas delivery, but many retailers share some of the blame, with some promising next day delivery for orders as late as 11 p.m. Dec. 23rd.


Any key supply chain stories or events we missed? Let us know your thoughts on the Feedback button or section.

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