Supply Chain by the Numbers

- Sept. 8, 2016 -

  Supply Chain by the Numbers for Week of Sept. 8, 2016

Walmart Further Tightens the Screws on Suppliers; Delta Says RFID is Reducing Lost Baggage in a Big Way; Amazon Cuts Cross-Border Delivery Time; Hanjin Fail Causes Global Logistics Chaos



That's the number of days Walmart is now providing as a "window" for vendor shipments to arrive at its DCs, down from four day previously. That as Walmart, Target and others start to tighten up what have been very loose requirements on things like on-time deliveries and fill-rates, far looser than could be tolerated in the manufacturing sector, for example. That change was announced in a recent Walmart blog posting for vendors, saying the change will go into effect in February, 2017. In addition, the fill rate requirement is being raised from 90% to 95%, measured at the case level. While Walmart was relatively late to the vendor chargeback game, for some time it has charged a whopping 3% of the invoice to non-compliant shipments. Those chargebacks will now occur more often, as the on-time and fill rate rules are tightened even further. "There is not a ton of communication on it from Walmart's end," about this, says Andrew Lynch, president of Zipline Logistics, a Columbus, Ohio-based 3PL. "None of our clients came to us about it - we started going to them."




That's how many days Amazon is now committing to deliver small items from many overseas suppliers to US customers, down from eight days previously. The commitments only apply to orders from Amazon Prime customers, though that is a sizable segment. That makes Amazon delivery of small, inexpensive items from China, for example, much faster than the two weeks to 30 days it can take using marketplaces owned by Alibaba, EBay, and Alibaba, for example, largely relies on the etailers using its platform to manage shipping. US on-line shoppers will spend about $30 billion this year on cross-border transactions, a 10% increase from 2015, with China the leading source of goods purchased, according to a February report by EMarketer. Amazon hopes the improved service will up that number for itself in a big way, and further differentiate it from on-line rivals. The Amazon move is a further counter to the EPacket program, an agreement between the US Postal Service and China Post that provides Chinese merchants cheap access to US shoppers on small packages weighing as much as 4.4 pounds. But it costs more and takes longer than Amazon's cross-border service.

$14 Billion

Incredibly, that is the estimate of the value of goods currently stranded at sea as the result of the bankruptcy filing last week by South Korea's Hanjin Shipping Co. Dozens of ships carrying more than half a million cargo containers have been denied access to ports around the world because of uncertainty about who would pay docking fees, container-storage and unloading bills. Some of those ships have been seized by the company's creditors. For example, Samsung Electronics Co., also from South Korea, said it has cargo valued at about $38 million stranded on Hanjin ships in international waters. "People are still trying to figure out how to get their boxes off the boat and move them," said Nate Herman, a senior vice president for the American Apparel & Footwear Association. Bankruptcy filings in its home country and some others may help, actually, but shippers and brokers say the rulings don't solve the shipping line's problems in the US, as it is unclear whether Hanjin will be able to afford to have the ships unloaded once they dock. Moreover, the courts' rulings don't necessarily apply to ports in Asia and Europe. Quite the mess.



That is the read rate of RFID bag tag labels that Delta airlines is experiencing as it continues to roll out its new $50 million luggage tracking systems first announced a few months ago. That compares with 90% or so scan rates for traditional bar code baggage tags, with most non-scans related to the orientation of the bar code versus the scanner – not an issue with RFID. With the Delta system, as luggage enters the belly of a plane, a reader on the belt mechanism will scan that bag tag and verify that it has been loaded onto the correct aircraft. Ultimately the system will include RFID readers on 1,500 belt loaders in 84 of its busiest airports, with a wider network of 4,600 RFID readers, 3,800 printers, and 600 pier-and-claim readers across a labyrinth of conveyor belts in 344 airports, allowing it to pinpoint any missing item's last-known location Delta is reported to be paying less than 10 cents per RFID bag tag, versus 3 cents for a traditional bar code label - but the airline hopes it will make that back in lower costs associated with lost luggage and increased preference by flyers.