sc digest
July 28, 2016 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet What Countries are Tops in Logistics? bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet Cartoon Caption Contest Continues bullet Trivia      bullet Feedback
bullet New Expert Insight bullet Tuesday Videocast and On Demand Videocasts

Making Spaces Smart: Automated Restock Alerts Keep Lines Up and Running


first thought


Supply Chain Graphic of the Week
Logistics Performance Rankings for 160 Countries Worldwide


Amazon Sees Q2 Profits Soar

DHL Making Big Network Investments in the US
Chinese Factory Wages Way too High?
US Intermodal Volumes Continue to Tank


Making Spaces Smart:
Automated Restock Alerts Keep Lines Up and Running


Week of July 11, 2016 Contest

See The Full-Sized Cartoon and Send In Your Entry Today!

Holste's Blog: Shippers Looking To Automate – Test Recommended Solutions Prior To Committing

Weekly On-Target Newsletter:
July 27, 2016 Edition

Cartoon, Warehouse Airbnb. Retail Inventories, Supplier Integration and more


Manage What Matters

Discusses the Law of the Vital Few, the Pareto Principle, ABC Analysis and How to Manage by Exception

The Expanded World of Supply Chain: Taking on Supplier and Customer Relations

by Dan Reeve
Director of Sales and
Business Development

The "-abilities" of Global Trade Management: Are Your Digital Platform Capabilities Ready to Challenge Business as Usual?

 by Nathan Pieri
Chief Product Officer
Amber Road


Speaking of freight forwarders, which are the globe’s five largest in terms of ocean TEU managed (hint: none are US companies)?

Answer Found at the
Bottom of the Page

What Countries are Tops in Logistics?

Every couple of years, the folks at the World Bank (which is headquartered in Washington DC, if you didn't know) put out a report analyzing the logistics competencies of most nation's across the globe - 160 of them this year, the same as in the last report issueD in 2014.

The 2016 report (Connecting to Compete: Trade Logistics in the Global Economy) was released in late June. For whatever reason, the excellent report does not receive much press coverage in the US, though I am happy to say SCDigest summarizes each edition. 


Five countries have been in the top 10 overall for the last four reports, dating back to 2010: Germany, Netherlands, Belgium, United Kingdom, and Singapore.


Send us your
Feedback here

So we will do that again here for the 2016 report, the fifth such effort. And let's just agree that it is good the big thinkers and high rollers at the World Bank recognize logistics is a critical element of a country's competitiveness.

The report notes, for example, that "Efficient logistics connects firms to domestic and international markets through reliable supply chain networks," adding that "Conversely, countries characterized by low logistics performance face high costs, not merely because of transportation costs but also because of unreliable supply chains, a major handicap in integrating and competing in global value chains."

We all know that, but it's good to see the World Bank say it too.

The core of the report is a ranking of those 160 nations from top to bottom based on what is called the Logistics Performance Index (LPI), based on a combination of six different attributes. This year, Germany remains the top spot, while Luxembourg moves from number 8 to number 2. The US fell from the 9 spot in 2014 to number 10 this year.

Somalia, Haiti and Syria took the bottom three spots, only because North Korea was not included in the rankings. Not quite sure how ISIS figured in the Syrian score.

The six attributes that go into the LPI are as follows:

• The efficiency of customs and border clearance ("Customs").

• The quality of trade and transport infrastructure ("infrastructure").

• The ease of arranging competitively priced shipments ("Ease of arranging shipments").

• The competence and quality of logistics services - trucking, forwarding, and customs brokerage ("Quality of logistics services").

• The ability to track and trace consignments ("Tracking and tracing")

• The frequency with which shipments reach consignees within scheduled or expected delivery times ("Timeliness").

In the end, using some standard statistical methods, every country included in the Index is given a score between 1 and 160 for each attribute, with that score ultimately translated to a number between 0 and 5 (to two decimal places), which are then averaged to produce a final score.

How does the World Bank acquire such data? The results are obtained from an elaborate survey of freight forwarders worldwide, which seems like a reasonable approach to me. The surveying is quite sophisticated, with respondents rating logistics competence in their own countries and then also a limited number of other countries they know best.

The survey is also conducted in two phases, with results from the first phase used to target respondents for the second phase to get enough data for the results to be significant for each country.

So, below you will find a chart of the top 20 nations in the 2016 report, showing not only the ranking from 1 to 20 but also the component scores for each of the six attributes.

Source: World Bank

See Full Image

European countries obviously dominated the rankings, holding the top four spots, 7 of the top 10, and 12 of the top 20. China came in at number 27, up one spot from 28 in 2014. Mexico was number 54. Outside of South Africa, which came in number 20, the top ranked African country was Uganda at 58.

The full rankings from top to bottom are shown as our Supply Chain Graphic of the Week as well.

Interestingly, for all the handwringing relative to US logistics infrastructure challenges, the US actually ranked number 8 in the world on that attribute, though that was down from the 5th spot in 2014. But also as in the last report, the US would have been near the top ranking overall except for a relatively poor rating of number 19 on ease of international shipments.

Top ranked Germany also rated as having the best logistics infrastructure, I'll note.

Five countries have been in the top 10 overall for the last four reports, dating back to 2010: Germany, Netherlands, Belgium, United Kingdom, and Singapore. Japan had been in that club, but fell to 12th place in this year's report.
 Sweden would be on that list too except for oddly falling to 15 in 2012.


There has been some change but not a lot in the rankings over time. Below is a table SCDigest created to show how this year's top 10 ranked in previous reports dating back to 2010. Obviously there is some "noise" in the data - we doubt Austria's logistics performance really jumped 15 spots worth since 2014 - so we also average out the scores of this year's top 10 over the past four reports in the last column for some additional perspective. Clearly Germany, Singapore and the Netherlands have been dominant over time.

The report ends on an interesting note, commenting on the growing sort of battle between the need to inventory and delivery in crowded urban areas and the amount of space logistics typically requires for warehousing, truck traffic, etc.

Hinting that it may start rating the logistics capabilities of major cities around the globe before too long, the report says "The World Bank is thus increasingly involved in urban logistics projects in Brazil, China, Kenya, Morocco, and other countries."

If you want to wade through the full report, the link is here (2016 World Bank LPI) but saving you time by summarizing the key data is what we do here at SCDigest.

Any reaction to the 20-16 World Bank LPI ratings? What's seems right and not right, if anything, to you? Is the US place appropriately? Let us know your thoughts at the Feedback section below.

View Web/Printable Version of this Column

Tuesday Videocast:

Supply Chain Software Trends and Opportunities 2016 Benchmark Report

Results from SCDigest's New Benchmark Study, Including a Special Focus on Cloud-Based Solutions

In this outstanding Videocast, we'll summarize important trends and developments on both the user and technology provider fronts, based in part on results from a new SCDigest survey on trends, opportunities, and practices in supply chain software.

Featuring  Dan GilmoreJohn Murphy, Senior Director, SCM Applications Product Marketing, Oracle and Jim Heatherington, Vice President, AVATA.

Tuesday, Aug. 2, 2016

On Demand Videocast:

Supply Chain Design as a Continuous Business Process - The Whirlpool Story

From Project to Process: Here's How to Get It Done

In this outstanding Videocast, we'll explore the changes needed to make supply chain design a continuous process, emerging new best practices in supply chain design, and how consumer products leader Whirlpool has successfully embraced this 360-degree approach.

Featuring Dan Gilmore, Editor, SCDigest, and Toby Brzoznowski, Executive Vice President, LLamasoft and Brian Streu, Manager, Supply Chain Design, Whirlpool

Now Available On Demand

On-Demand Videocast:

A Benchmark Study on Supplier Integration in an Outsourced World

Featuring Real World Experiences from DuPont, Honeywell and Acsis, Inc.

A new benchmark study of practitioners reveals the priorities, expectations and challenges of achieving real-time visibility into goods as they move through third-party production cycles.

Featuring Dan Gilmore, Editor, SCDigest, and John Dipalo,Chief Strategy Officer, ACSIS, Peter Musser, IT Services Delivery Specialist, DUPONT and Bruce Stubbs, Director, Industry Marketing Honeywell Scanning & Mobility

Available On Demand


Catching up on a variety of Feedback this week, starting with an older response from Marc Wulfraat of MWPVL International on why truck trailers that we hadn't placed here yet that we thought was worth publishing, plus several others on various topics.

Feedback on Why Amazon is Acquiring Truck Trailers


Our interpretation of Amazon's acquisition of trailers is:


1) The company is seeking to improve how it moves merchandise between its internal network of distribution centers (replenishment center to fulfillment center; fulfillment center to fulfillment center; and fulfillment center to sortation center).

2) The purchase of trailers allows Amazon to stage trailers at these facilities to allow flexibility in terms of timing of loading operations similar to having a drop trailer program with a supplier. It enables Amazon to secure trailer capacity within its own network which implies a greater degree of control as opposed to relying on third party carriers. Bottom line it provides more control over transportation operations.

3) There is likely a modest cost savings associated with this move. Amazon is not buying tractors and therefore does not carry the burden of having the insurance obligations that a trucking company pays for.

4) There is a side benefit in that the trailers serve as giant moving marketing billboards so free advertising doesn't hurt the cause.

5) Perhaps the most important benefit is one that has nothing to do with transportation and everything with Amazon Prime Now. There is a possibility that some of these trailers can be used as “warehouses on wheels”. Companies who sell off the back of a truck understand how this works. The trailer is loaded up with hyper-fast SKUs that are frequently ordered from fulfillment centers. The trailers are loaded in such a way that the driver can access the goods from inside the trailer. Trailer parks in a staging location near an urban center.

Orders are picked off the truck and delivered by localized resources to consumer doorstep in under 60 minutes. Think of this as extending the Amazon Prime Now network without having the Prime Now buildings in every location that needs to be served. This could be a Trojan horse that enables 60 minute service levels to many smaller and midsize cities that make up a substantial portion of the population. Amazon is famous for thinking out of the box so call me crazy but could this be yet another way to move goods to market?

Marc Wulfraat
MWPVL International Inc.



Feedback on Understanding the Gartner Top 25 Supply Chain List


In regards to the Gartner Top 25, I think it is the gold standard that all companies desire to be aspire to. I have participated in the voting for many years and think the methodology includes many factors, some Supply chain centric, some not.

An enhancement would be to add additional Supply Chain KPIs Key Performance Indicators. There are plenty to choose from, but adding more of these critical measurements would truly indicate the real performance of a company's Supply chain expertise. And that is what the Top 25 is all about.

Tom Dadmun
Supply Chain VP, retired




The metrics used are inward facing. I suggest that Gartner should also use customer facing metrics like on time shipment or Perfect Order fulfillment (both SCOR metrics)

Blair Williams CFPIM, CSCP

Editor's Note: The challenge is Gartner gets its performance measures, such as ROA or inventory turns, through public filings. The metrics suggested in these two feedbacks, which would be great if possible, are not available in those filings and would have to be self-reported by companies.

In addition, most companies on the list have multiple divisions/SBUs, etc., so the question would be how to come up with a single number, which usually isn't calculated across these units.


Feedback on Risk Management

One of my colleagues from Cranfield University used to conclude her half-day session on the management of risk, resilience and vulnerability in the supply chain with the following conclusions:

• No system is invulnerable
Risk, a problem to resolve, but never solve
Identify what you can and take a position
Manage or mitigate as appropriate
Beware the strategic disconnect
Forewarned is forearmed
A case for the rehabilitation of ‘slack'
Creeping crises were systemic risk in action
Dialogue between industry & policy makers helps
Political and commercial aims often diverge


Bearing in mind the context that the audience was defense and military related and therefore focused on capability rather than availability I found her conclusions both pragmatic and intellectually challenging. In particular the remark concerning "slack" struck home because as a former logistics practitioner and an industrial engineer I had wavered between always having a little spare capacity up my sleeve and an almost genetic disposition to cut out waste.

As an academic she was posing the question: should we not make a case for slack (although recognizing that the term itself was not really sufficient to fully explain the concept)? Events in recent years would support this view. The question is how should one program in slack in such a way that it is not redundant.

What is the mix of physical assets, human resources, systems flexibility, etc., that is required to reduce vulnerability and ensure resilience. How does one convince a line manager, senior VP, CFO, of the merits of such a seeming heresy in these days of austerity and short termism?

I think that this is an issue worth debating and finding solutions - SCDigest would seem a possible forum.

I hope this gives you a little more background without going into it in too much depth. I happy to answer more questions as and when you have them.

David Macleod
Learn Logistics Limited



Q: Speaking of freight forwarders, which are the globe’s five largest in terms of ocean TEU managed (hint: none are US companies)?

A: 1. Kuehne + Nagel; 2. DHL; 3. Sinotrans; 4. DB Schenker; 5. Panalpina, based on 2015 volumes, according to Armstrong & Associates

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