Supply Chain by the Numbers

- Aug. 17, 2017 -

  Supply Chain by the Numbers for Week of Aug. 17, 2017

Amazon's New Instant Delivery; Manufacturing Emloyees not Getting Laid Off, They are Quitting; New eHighway Test in Germany; Will Chinese Debt Load Lead to Economic Crisis?



That's how many minutes it supposedly will take Amazon workers to pick products for on-line orders and get them into lockers for customer pick-up under a new concept the company calls “Instant Pickup” points. Amazon has launched the service around five college campuses, such as the University of California at Berkeley, and has plans to open more sites by the end of the year, including one in Chicago's Lincoln Park neighborhood. Shoppers on Amazon's mobile app can select from several hundred fast-selling items at each site, from snacks and drinks to phone chargers. After the two minutes it takes to pick and secure the orders, customers are sent an access code to open one of the lockers. Some retail experts are saying that with the program Amazon is targeting a new market segment – the “impulse buy.” Amazon apparently considered automating the picking process – like some sort of giant vending machine – but decided against the automation for now. The service ups the ante on Amazon's previous fastest fulfillment program, the 15 minutes it takes for grocery orders via AmazonFresh Pickup.



Perhaps surprisingly, that is how many US factory workers voluntarily left their jobs in June, according to the US Bureau of Labor Statics, compared to 29,000 who retired and 101,000 who were laid off. What's more, the share of employees voluntarily leaving manufacturing has climbed from 1.1% to 1.6% since June 2015. (During that period, the broader economy's quitting rate barely budged, from 2 to 2.1%.) Government data also shows workers in the manufacturing sector are giving up their jobs at the fastest pace in a decade. What is driving this trend? It seems likely that the key factor is that employees simply don't like manufacturing work in a period when job openings in other sectors are rampant. However, analysts cannot say for sure whether manufacturing employees are fleeing for better paychecks, hopping to another assembly line or exiting the workforce entirely. Overall, manufacturing employment has been growing in recent years, but slowly. "People had the impression that manufacturing was shrinking because people were getting fired," says Christian Zimmermann, an analyst at the Federal Reserve Bank of St. Louis. "But there is a lot of churn going on. People are quitting to take other jobs."



That's how many kilometers on the German autobahn will be outfitted with an overhead charging system similar in concept to how electric trolleys operate. The new stretch of “eHighway” will allow specialized hybrid trucks to access power from above. The core element of the system is an intelligent pantograph (an apparatus mounted on the roof of the trucks to collect and distribute the power) combined with a hybrid drive system. Trucks equipped with the system operate locally emission-free with electricity from the overhead line and automatically switch to a hybrid diesel engine on roads without overhead lines. With this field trial – which is being constructed by German industrial giant Siemens - the eHighway concept will be tested on a public highway in Germany for the first time. Siemens says its eHighway is twice as efficient compared to internal combustion engines. That not only means cutting energy consumption in half, but also significantly reducing local air pollution. While the touted benefits of the approach seem valid, critics of the idea generally cite the enormous costs that would be involved in building eHighways on a mass scale.



That is what China's level of debt relative to GDP is likely to be in 2020, just a few years away, according to a new warning from the International Monetary Fund. That, the IMF says, could be a big economic problem. "International experience suggests that China's credit growth is on a dangerous trajectory, with increasing risks of a disruptive adjustment and/or a marked growth slowdown," IMF experts wrote this week, noting the level of China debt was a still worrisome 235% in 2016. Debt-fueled investment in infrastructure and real estate has underpinned China's growth for years, but Beijing has launched a recent crackdown over fears of a potential financial crisis. Some are comparing China's current situation to that of Japan's economy in the early 1990s, similarly dependent on debt, which in the end led to now nearly three decades of economic stagnation. By comparison, the US debt to GDP ratio is about 106%, wich many believe is too high.