Supply Chain by the Numbers for Week of January 5, 2017

Supply Chain by the Numbers

- January 5, 2017 -

The Heavy Cost of Phantom Retail Inventory; Amazon Keeps Rolling Out the Robots; Climate Skeptics Hope Research Funding Formula Changing; China's Euro Freight Rail Service Expands Again



5
That is how many times more lost sales were being created from out-of-stocks for one laundry detergent brand sold by a large retailer than the company believed, according to new research from Fredrik Eng Larsson of the Stockholm Business School, Daniel Steeneck of the Air Force Institute of Technology, and James Rice Jr. of the Massachusetts Institute of Technology Center for Transportation & Logistics. The culprit, they say, is "phantom inventory:" goods that show up in management systems as available but in fact are hidden from view because they’ve been misplaced, often tucked away in a backroom and forgotten. "Most measurements of known stock-out levels give a misleading impression of how a store or product is performing," the trio say. What's the answer? Special analytics using machine learning technology, the three professors argue, which they claim can do a much better job of identifying when an out-of-stock is occurring than current methods.

$2.5 Billion

That's about how much federal research money is doled out annually for climate research, according to a recent article on RealClearPolitics- almost all of it going to those doing work to support the aggressive anti-warming side of the fence. But now climate skeptics in universities and labs are hoping they can get a piece of the action under a Trump presidency, after being largely shut out under eight years of the Obama administration and even under George Bush before that. Many of the skeptics actually believe there is some degree of man-made global warming, but question the size of the of impact, the real level of so-called carbon senstivity, and other aspects of the current warming orthodoxy. "In reality, it's the government, not the scientists, that asks the questions," said David Wojick, a longtime government consultant who has closely tracked climate research spending since 1992. If a federal agency wants models that focus on potential sea-level rise, for example, it can order them up. But it can also shift the focus to how warming might boost crop yields or improve drought resistance, Wojick says. But many think it unlikely there will be any major change in the direction of US goverment backed climate research even under Trump.



45,000
Incredibly, that is the number of Kiva Robots that Amazon.com now has deployed in its fulfillment centers, according to an article this week in the Seattle Times. That is up 50% from the 30,000 or so the company said it had deployed at this time last year. Of course, Amazon surpsingly acquired Kiva Systems in 2012 for some $775 million, it now seems clear to lock up Kiva's manufacturing and deployment resources for this massive roll-out - and maybe to keep the machines out of the hands of competitors as well. The orange Kiva robots can be said to have ushered in the "goods to picker" concept in distribution, with the AGV-like machines delivering inventory for piece-picking to humans at special stations. Amazon still has hundreds of thousands of fuflillment center employees, so it's not like the robots are getting rid of all the workers - yet. An Amazon executive told the Times that the number of robots used varies from DC to DC, saying that some are "fully outfitted" in robots, while others don't have "robot volume" to justify deployment.



8
That's how many countries will now be served by China Railway Corporation's China to Europe service, after the freight carrier announced it had started a train bound for London earlier this week. The means the UK will now join Kazakhstan, Russia, Belarus, Poland, Germany, Belgium and France as part of the ambitious multi-billion dollar "One Belt, One Road" strategy to link China to global markets. The new service will travel from Yiwu West Railway Station in Zhejiang Province, Eastern China to Barking, London, taking 18 days to travel over 7,400 miles. China now services 15 different cities across those eight Euro countries, with 39 routes linking 16 Chinese cities to Euro markets. Through June 2016, 1881 services had run from China to Europe this year, but just 502 had returned, as there are far more imports from China into Europe than the other way around. The returning journeys transported items such as German meat products, Russian woods and French wines to China markets. China certainly seems to be taking a very long view on this program, with heavy investment if not much payback yet.