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January 12, 2012 - Supply Chain Newsletter

This Week In SCDigest

bullet Supply Chain Year in Review Part 2 bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic of the Week and Supply Chain by the Numbers bullet This Week In "Distribution Digest"
bullet New Cartoon Caption Contest Begins This Week! bullet Trivia
bullet New Expert Contributor bullet Feedback



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Supply Chain Year in Review Part 2

Last week, I looked at key trends, themes and issues for the supply chain in 2011. As promised, this week we offer more of a news oriented view of key events in the supply chain by month last year.


Data collection and wireless systems vendor Intermec announces it is buying Voice technology leader Vocollect for $190 million.

It's announced that on-line Holiday shopping sales for 2010 soared more than 15%.


The "megaship" era in ocean shipping reaches a new milestone, as Maersk Line announces it is buying a least 10 new "Triple E" vessels that can hold a new record 18,000 TEUs. Later in the year, it signs up for more, even as capacity continues to exceed demand in the industry. First delivery will be in 2013.

GM says that its total hourly labor costs are down to 6% of revenue - versus an astounding 30% just a few years ago.


"Anything we missed in our run down of the top supply chain stories of the year?"


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feedback here


Japan is hit with a devastating earthquake and then tsunami, which apart from the human tragedy has huge supply chain implications, exposing risks (sometimes from minor but essential components/ chemicals made only in Japan) many companies did not know they had. Impact just now finally ending.

A report by the GAO to Congress says truckers are not paying their fair share of the true costs of trucking, mostly in the area of "social costs" like greenhouse gas emissions and traffic congestion, suggesting that increases in something like diesel taxes may make sense to make truckers and shippers pay their real costs. Keep an eye on this one.

Procter & Gamble opens its first new US factory in 40 years, a paper products plant in Utah.


In what is considered by many an extraordinary move, the National Labor Relations Board acts to block a nearly finished, non-union Boeing airplane factory in South Carolina, saying the move is an illegal retaliation for previous strikes at facilities in Washington state. The suit later goes to trial, but a new Boeing agreement with its union in the fall leads the NLRB to drop the action (the plant will open and be non-union).

Walmart, appearing to be losing market share, reverses previous SKU-reduction initiatives and says it will add back at least 8500 items to its shelves. It ultimately returns 10,000 SKUs.

Although initially seeming opposed to the idea that has been under debate since the mid-1990s, the Obama administration gives the go-ahead to a three-year, expanded program to allow Mexican truckers to deliver loads far into the US.


Oil prices peak for the year at about $114.00 per barrel (WTI), falling to as low as $76.00 by October, but ending the year at about $101.00, up roughly 9% for the year. Many other commodity prices also peak in May.


In a well publicized study, Boston Consulting Group predicts manufacturing costs in Western China will be on par with the lowest cost regions of the US by 2015 (before other supply chain costs). Several others studies find the same thing, predicting a US manufacturing renaissance.

The Annual State of Logistics report finds logistics costs in 2010 rose 10.4% to 8.3% of GDP, a reversal of direction from 2010 but still well below the 9.9% of GDP seen in 2007.

Maersk Line CEO Eivind Kolding gives speech calling for radical changes in the ocean shipping arena that makes it easier for shippers and is more reliable and sustainable, among other recommendations.


Dr. Don Bowersox of Michigan State, one of the supply chain industry's most respected thought leaders and co-founder of the initial organization that today is CSCMP, died after a battle with cancer at age 79.

Gartner names its top graduate and undergraduate US university programs, and Penn State comes out on top of both rankings - though as always the rankings have their critics.

The National Industrial Transportation League (NIT League) submits a very specific petition to the Surface Transportation Board relative to proposed new rules for how so-called "reciprocal switching." This is for captive rail shippers (only one carrier can handle the freight), which could get another rail option by requiring carriers switch cars to another carrier where feasible, at pre-set fees, as Canada requires now. Proposal seems reasonable, has broad support, but no action to date.

Thailand starts to experience flood conditions, which ultimately last for four months. The crisis literally shuts down the computer hard drive industry, which Thailand dominates, impacting hundreds of electronics companies both directly and indirectly, and affects other supply chains as well.

The ATA wins gains partial victory in federal appeals court decision of Port of LA and regulation of drayage drivers, ruling that the rules cannot ban independent drivers - that regulation is reserved for federal regulation - but allowing onerous reporting requirements to continue.


Honeywell completes acquisition of LXE, further consolidating the wireless terminal market. Though the deal was primarily made for LXE's aerospace related products, the deal gives Honeywell's data collection business a real shot in the arm, as LXE has long been very strong in solutions for distribution centers and ports.

Wall Street Journal reports that China is using its near monopoly on "rare earth metals" to coerce Western and Japanese manufacturers in electronics and green energy technologies to move their operations into China, as the country continues to lower export quotas and raise prices dramatically for those exports it does allow. Prices are dramatically lower for companies operating in China.


Macy's reverses its previous stance that it will wait for awhile on RFID to get more retailers and standards on-board and announces a program it says will have item-level RFID capabilities in place in all 850 of its Macy's and Bloomingdale's stores by the end of the third quarter of 2012 - an aggressive agenda indeed.

Union violence erupts at grain terminal at Port of Longview in Washington state - over which union should represent the workers, as the IWLU knocks over railcars and threatens supervisors over the terminal management company's use of a different union, the Operating Engineers. The pictures are dramatic.

Local newspaper in Allentown, PA reports that working conditions in local DC are brutally hot, a number of workers having required medical treatment, with local medical official having called federal officials to complain of "unsafe working conditions" at the facility. Amazon seems to acknowledge the issue, saying it had "urgently" installed new air conditioners in four DCs, including Allentown.

Boeing finally delivers its first 787 Dreamliner aircraft, more than three years late after a series of supply chain snafus related to outsourcing more sub-assemblies than ever before causes havoc.


California releases as required by an earlier law final details for its Cap and Trade program for carbon emissions - the first of its kind in the US. The new requirements start in 2012 and at first only impact 650 large manufacturing and utility sites, but in 2015 will hit fuel distributors, meaning higher costs for consumers and truckers. How high? That's the unknown question.

A Walmart logistics exec tells CSCMP session the retailer has made changes in its program to take control of inbound freight, being more collaborative in its discussions with suppliers and for now backing off if the supplier isn't interested, though says it is often in a supplier's best supply chain interest to take a look.

IBM announces what it says is a breakthrough in supply chain optimization technology - the ability to optimize two or more variables simultaneously. The multi-optimization technology allows easy development of full trade-off curves between two variables, such as cost and service.

A JCPenney executive surprises everyone by announcing at a conference in Arkansas that the retailer has already rolled out RFID infrastructure to all of its US stores. Most thought it had only a 30-store pilot. says it will be operating an amazing 69 US distribution centers by the end of the year, including 17 that will be opened in 2011 alone. All retailers - pay attention.


American Trucking Associations says it will take portions of the Port of LA/drayage drivers decision it lost in June and appeal them to the Supreme Court. The Court of course has to agree to take the case first.


National Labor Relations Board (NLRB) passes proposal that would dramatically speed time from when a unionization effort gets enough support to force a vote to when the vote is actually taken - which under the new rules could be in as little as 10 days. Most believe the shorter time period favors the union's chances. Rule still has to be approved by the full NLRB, which could happen soon now that Obama has named three new members in recess appointments.,

Federal Motor Carriers Safety Administration issues final changes to Hours of Service Rules. Changes do not included provision most dreaded by shippers and carriers - reduction in driving time per day from 11 to 10 - but does in effect reduce driving time per week from 82 to 70 hours and has other changes that has industry angered.

The UN Climate conference in South Africa ends with a dud, managing just weak agreement to reach an agreement in the future and Canada and Japan bowing out of the Kyoto Protocol, which survives as a Euro only entity until 2017.

Of course, we could have added more, but this is a pretty good list. Anything important we missed? Please let us know.

Anything we left out of our list on the most important news of 2011? Anything strike you after reviewing this list? Let us know your thoughts at the Feedback button below.




Supply Chain Graphic of the Week:

Factory Utilization's Slow
Climb from its Depths

This Week's Supply Chain by the Numbers for Jan. 13, 2012:

  • Truckload Carriers Had Pricing Power
  • December Retail Sales Disappoint
  • Smiths Medical "Sees" Lower Inventory
  • The New Ships Keep Coming and Coming...


January 9, 2011 Contest

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Weekly On-Target Newsletter:
January 11, 2012 Edition

New Cartoon, Year in Charts,
WMS Testing, Water Risk,
Fuel Cell Lift Trucks and more

Holste's Blog: Upgrading DC Controls Software Yields 20 to 30 Percent More System Handling Capacity


Top Story: When it Come to Warehouse Management Implementation, there Can be No Short Cuts When it Comes to User Testing, Fralick Says

Top Story: Material Handling Association Aims to Broaden Reach with New MODEX Show in Atlanta in February

Top Story: Integrating Manual with Automated Operations Reduces Headcount While Increasing System Throughput, Flexibility & Adaptability

Visit Distribution Digest

Tuesday's Videocast:

Leveraging Supplier Collaboration to Drive Supply Chain Excellence

Protecting the Ability to Deliver While Driving out Costs and Promoting Stronger, Collaborative Relationships with Suppliers

Featuring Rich Flynn, Regional Materials Manager, Smiths Medical North America and Bill Buckley, Director of Solution Development, CDC TradeBeam

Tuesday, Jan. 17, 2012



This is a tough one - what famous actress from Hollywood's early days played a key role in the development of the concept of "frequency hopping" for radio signals - used then for military purposes to avoid jamming, today in our wireless systems to avoid interference?
Answer Found at the Bottom of the Page


We received a number of brief responses to our Supply Chain Christmas Carol - mostly just short thank you's for an enjoyable read. We publish a brief selection of those letters below.


Feedback on a Supply Chain Christmas Carol:


Well worth the space, a familiar story, supply chain oriented, open ending. Just a little concern of that Gilmore family, they should invest in a good TV so there is no family chatter, lol.

Michael Van Vugt


Well done. Looking forward to the continuation - your thoughts on the future of the supply chain.

Chris Hogan


Great Christmas story today....clever and well done.

Gene Tyndall

Tompkins Associates

comma I feel sorry for the SCDigest team working under that mean old Ebenezer Gilmore. You put out a lot of obviously great material with a relatively small team - I hope you rewarded them with a whole week off for Christmas this year.

Ed Coughlin
Solon, OH


That was a very fun Supply Chain Christmas Carol, but left me wondering - are you going to show us the harder but more fruitful path for the Supply Chain Future any time soon?

I agree that for all the progress, there is still a lot of work to do. I wonder - does the best path always have to be harder?

Pam Schroeder
Chicago, IL area


Great story! I liked it a lot... But what happened during your future trip... I am really at a great expectation to know about those "visions" you had, or at least finish the history of what ypur thoughts are regarding that two roads in the future.... I'll appreciate that because the history remains incomplete for me.

Jaime Vinces




Q: What famous actress from Hollywood's early days played a key role in the development of the concept of "frequency hopping" for radio signals - used then for military purposes to avoid jamming, today in our wireless systems to avoid interference?

A: The famous and beautiful Hedy Lamarr. Google it for the full story.

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