sc digest
January 5, 2017 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Supply Chain Year in Review 2016: Top Trends and Themes 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 Winners bullet Trivia      bullet Feedback
bullet Expert Column bullet New Videocast and On Demand Videocasts

Last Chance! 10th Annual Gartner-SCDigest Supply Chain Study!

One of the Most Popular and Respected Studies in the Industry Each Year


As Always, Survey Respondents Receive Complimentary 
Gartner Research - a $300-500 Value 


first thought


Supply Chain Graphic of the Week
What Retailers Do CPG Companies Think are Best to Do Business With?


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

As Always, Survey Respondents Receive Complimentary Gartner Research - a $300-500 Value


Week of December 12, 2016 Contest

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

New Guide Discusses The Art of New Product of Demand Planning

Holste's Blog: When Looking For a New DC Shippers Must First Develop A Requirements Document

Weekly On-Target Newsletter:
January 4, 2017 Edition

Cartoon, Top CPG Supply Chains, Amazon Blimp DC, Ocean Rates in 2017? and more

The “-abilities” of Global Trade Management: Bracing for Instability in 2017
by Jim Preuninger
Chief Executive Officer
Amber Road


Something called Gateway City (not a city) and 1957 – what was the supply chain breakthrough?

Answer Found at the
Bottom of the Page

Supply Chain Year in Review 2016: Top Trends and Themes

It was as always a news-filled and fast moving supply chain world in 2016.

Below are what I see as the top and/or most impactful overall supply chain themes and trends in 2016. This is not meant to list individual events (that will come next week), but rather broader developments that indicated or drove major changes to supply chain practice.

Donald Trump Elected President: What will be the impact of Trump on the economy and the supply chain? We don't yet know of course, but it will be a very different direction from what we've had, that seems certain.


Put simply, 2016 may have been the most tumultuous year in history of the container shipping industry.


Send us your
Feedback here

In November, I suggested the supply chain likely will be affected in multiple areas from a Trump administration: successful shaming of companies offshoring production/jobs (already of course happening); pull back of environmental mandates and greater push for US energy development, with possible adjustment to the never legally binding 2015 UN Paris climate accord; significant change over time to the aggressively pro-labor National Labor Relations board seen under Obama; and possible heavy tariffs on some imported goods (which now looks like it may take the form of an unusual thing called a border adjustment tax). 

We will see.

Continued Amazing Advances in Robotics: The robots are coming, and coming fast. It is almost hard to keep up with the news, which arrives literally daily. As just one of hundreds of examples, a robot from a company called Starship that sort of looks like R2D2 from Star Wars started making grocery and restaurant meal deliveries in a few Euro metro markets last summer, with many more to follow. Later in the year, US retail giant Lowe's introduces the LoweBot, a smart little fellow that can help customers more effectively navigate the store to find products and assist employees with inventory scanning. 

Of course, many of the robots are being deployed in the supply chain, and IDC predicted in November we will soon see the rise of the Chief Robotics Officer at companies. 

Some say the robots will actually create more jobs than they eliminate - wish I believed that were true.

The Relentless Amazon Assault on Everything: The Amazon machine continued on in 2016, growing merchandise sales roughly 30% quarter after quarter, taking share from everyone, and having many retailers and even manufacturers plenty worried. But there was a lot more from Amazon in 2016 that could roil the existing supply chain world order. 

Early in the year came reports that Amazon was working aggressively on "Project Dragon Boat," an aggressive global expansion of the company's Fulfillment by Amazon service, which provides storage, packing and shipping for independent merchants selling products on the company's website. Amazon is said to envision "a global delivery network that controls the flow of goods from factories in China and India to customer doorsteps in Atlanta, New York and London," Bloomberg wrote. As part of that strategy, Amazon was said to have plans to take on freight forwarding and brokerage services directly, eliminating a set of middlemen. It acquired various licenses to make the capability possible in both the US and China.

But Amazon of course wasn't done. In September, the Wall Street reported Amazon was working on project "Consume the City," involving Amazon's plans to build its own massive parcel delivery network that would eventually compete with UPS and FedEx, as it leases cargo aircraft and buys thousands of truck trailers.

Meanwhile, Adobe Digital estimates that Amazon had a dominant 36.9% share of all US on-line sales in the 2016 holiday season. There was much more from Bezos and company. I ask again, can Amazon be stopped?

Continued Growth of eCommerce and the Impact on Brick and Mortar:

Statistics from the US Dept. of Commerce showed ecommerce growth of 14-15% in quarters 1 to 3 in 2016, and no doubt Q4 will show similar growth. That means ecommerce sales will doubly roughly every 5 years or so.

But that has been true for many years running - so why call it out in 2016? Because the impact on brick and mortar stores was more noticeably felt last year. A number of major retailers announced significant stores closing in the year, including Macy's ( an ecommerce leader which just announced additional closings), Walmart (though there was more nuance to the closings here), Aeropostale, Ralph Lauren, The Limited, Finish Line and more.

That is just inevitable when ecommerce sales are growing 15% per year, right?

But the impact of ecommerce on retail is even more profound. For example, almost all of Walmart's CapEx spending is going into ecommerce capabilities and fulfillment centers. In March, news that Target is writing its own new supply chain applications for assortment planning, digital merchandising, store ordering and forecasting, supplier ordering and demand forecasting for this new Omnichannel age. The clear message: the traditional linear, DRP driven supply chain capabilities in retail are fading going away, with major ramifications.

Tumult in the Ocean Shipping Sector: Put simply, 2016 may have been the most tumultuous year in history of the container shipping industry, as the level and pace of alliance forming, mergers, acquisitions, failures, and restructurings was perhaps unprecedented.

Key events include the formation of two new alliances - the Ocean alliance and THE Alliance - and the resulting break up of existing networks; a series of acquisitions in the sector; and the complete bankruptcy of South Korea's Hanjin Shipping Company, which caused huge supply chain disruptions when tens of thousands of containers it had couldn't move for weeks. The Hanjin failure also ended the notion that container carriers would somehow always be able to somehow literally stay afloat no matter how bad the financial times became.

All this in large part due to rock bottom container rates and continued massive red ink for carriers.

What will all this change mean for shippers in 2017 and beyond, especially with the two new alliances set to begin operations in April? Your guess is as good as mine.

Continued Tension in the South China Sea: In a very important but mostly unnoticed story, China continued to provoke the US and regional neighbors such as Japan and Vietnam with its continued - and in 2016 even more aggressive - claim to a series of tiny rock formations far off the Chinese mainland.

China even more aggressively expanded the rocks into larger and larger artificial islands in 2016, later adding runways, and in December, placing antiaircraft weapons and other arms on all of them.

The U.S. and its Asian allies are afraid - and probably will directly challenge - Beijing's plans to use its expanding military power to enforce its territorial claims in the area and to take control of shipping lanes that carry more than $5 trillion of world trade annually.

In October, a US navy destroyer sailed near islands claimed by China in the South China Sea on Friday, drawing a warning from Chinese warships to leave the area.

This is real geo-political and supply chain powder keg, and scarily the fuse burned shorter in 2016. Do some scenario planning on this now.

Other important supply chain themes/trends: traditional packaged food manufacturers - so prominent in supply chain history - under pressure from consumers and grocers as market moves away from processed foods; great progress in both drones (Walmart demos inventory-taking drones inside a DC) and autonomous trucks (and even container and cargo ships), but many, many barriers remain, though one pundit says last week that children being born today will never have to learn how to drive a car; the US dollar continues strong rise, showing confidence in US economy but making exports more expensive and imports cheaper, a likely barrier to Trump's goal of reviving US manufacturing.

Next week, our popular look at the year in supply chain 2016 in numbers and charts here in this column, plus a month by month list of the top news stories in 2016 on our home page and/or OnTarget newsletter.

What did I miss? Would love to hear your perspective.

What is your reaction to Gilmore's list of the top theme and trends in supply chain for 2016? What would you add? Let us know your thought at the Feedback button below.

View Web/Printable Version of this Column

New Videocast:

Innovation in Shipper-3PL Relationships Benchmark Study Results

New Research will be Unveiled from SCDigest and JDA On This Increasingly Important Topic

In this outstanding broadcast, SCDigest and JDA recently completed new research study on innovation in shipper-3PL relationships, with the goal of obtaining the perspectives of both shippers and service providers on this increasingly important topic. All registrants will be sent a copy of the report will all the data shortly after the Videocast.

Featuring SCDigest editor Dan Gilmore and Danny Halim and Lori Harner of JDA.

Tuesday, February 7, 2017

On Demand Videocast:

New Cloud WMS Solution is Game Changer for Warehouse Management Deployment and Flexibility

New Technology and Deployment Approach Offer a Simply Better Way to WMS Implementations - Learn How

In this outstanding Videocast, we will cover the latest in each-picking robotics, co-bots, artificial intelligence, autonomous vehicles, sensors, drones and droids.

Featuring  Dan Gilmore, Editor, along with Mark Hawksley and Bruno Dubreuil of TECSYS, a leading provider of WMS solutions.

Available On Demand

On Demand Videocast:

Successful Supply Chain Vendor Compliance - for Retailers and Beyond

Author Norm Katz on Vendor Compliance "By the Book"

In this outstanding Videocast, Katz will summarize key elements of book, to include: Compliance program guiding principles; What is permissible under the law relative to vendor chargebacks; Common mistakes companies make in rolling out and maintaining vendor compliance programs; The many "E's" of successful vendor compliance, from "Envision" to "Ethics."

Featuring  Dan Gilmore, Editor, Norman Katz, consultant and author of "Successful Supply Chain Vendor Compliance," and Greg Holder, CEO, Compliance Networks

Available On Demand


Lots of Feedback from Dan Gilmore's First Thoughts column on The Trump Supply Chain?, with his analysis of what we can likely expect in terms of supply chain impact from the Trumpster. A few of those below, more in coming weeks. There were quite a few.

Feedback on The Trump Supply Chain:


I'm an Ohio guy too. (Dayton). I grew up in Michigan as one of six kids of a Chrysler engineer, and a school teacher. I graduated from college in 1975, and began my sales career in industrial safety equipment with a company that had been in business since 1883.

Several things have happened since I was a teenager north of Detroit. The 'Big Three' auto manufacturers poo hooed the import invasion. Saying import quality was not as good. Oil prices were not a concern. That changed with the oil shortages of the 70's, and increasing quality of imported products.

On the labor front, people forget that during the forties and fifties, union and management clashes were frequent. And, gains won by unions were extended the salaried workers as well. My Dad knew that if it wasn't for the union wins, salaried and employees at non-union companies, would not have things like company retirement plans, health insurance, paid vacation, and 40 hour work weeks. After winning a big auto company contract (early 80's), my boss and I were invited to tour a Midwest plant. A VP from the company gave us the grand tour. He was sure to point out the efficiency of their new robots. And, the fact that they didn't have to pay benefits or healthcare, cool and heat the plant as much, and didn't have to worry about employee (aka union) grievances. When he finished, my boss said, "That's great. But tell me, how many of those robots are going to buy the cars they just built?"

Over the last thirty years, companies have based all of their decisions on increasing shareholder value. As the global market grows, Companies like P&G and Emerson Electric expand overseas for a variety of reasons. Cheap labor; lax, or nonexistent safety and environmental regulation; ability to sell in the company they manufacturer without import tariffs; and close proximity to a population of billions with a growing middle class demand.

But I digress. I sold safety equipment in the Midwest for one of the top three manufacturers in the country. I had contracts with everyone. AK Steel, P&G, GE, Ford, GM, Chrysler, NCR, IH, Honda, and yes, the tire companies too. As they moved overseas, or moved to robotics, the market for personal safety equipment tanked. So, being in the birthplace of barcoding, and having a bit of experience with the fledgling PC industry, I switched to the barcode industry.

My contacts with the big manufacturers made it easy to transition. I sold to all of the GM plants in Dayton, NCR, Reynolds & Reynolds, Standard Register, Emerson, P&G, NCR, AK Steel, Mead, and on, and on. As you know, in the beginning of the industry, companies and their workers had to be educated on the technology. When I would do an automation project for a company and be dealing with the rank and file shop floor, or DC employees, the company line was, "This will make your jobs a lot easier, and make you more efficient". However, behind closed doors with management, a question that almost always came up was, "How many people do you think this will allow us to eliminate?" Again, the increase shareholder value mantra.

I sold to the mines in West Virginia, Kentucky, and Southern Indiana. Nothing Trump says, or does, is bringing those jobs back. Mining is now done with mega machines. (Mountain top mining). And, as long as natural gas is cheaper, there is no incentive to support coal. That would be like a politician saying they were going to bring back whale oil as an energy source when oil was discovered. (BTW - When I sold safety equipment, I also sold coal, jet fuel, gasoline, and diesel fuel. I also had relatives high up in the oil industry. If you want someone who really knows the score on energy, talk to Bernie Sanders)

Do you remember the Takata plant in Piqua? In the 80's, I was doing a small project with them. I was there on a Wednesday, and told the plant manager that I'd be back Friday with demo equipment to show them. He said that would be great. When I got there Friday morning, the plant had been closed, and all of the production had been moved to Mexico. The plant manager hadn't even known it was going to happen.

There is a plant that makes automotive parts on the West side of Dayton. (I can't remember the name). They were a safety and barcode customer of mine. They went from 480 employees, down to about 100. Production was moved to China. About four years ago, and Jon Boehner was interviewed by one of the local TV stations in the plant. The plant manager told the reporter that the only reason they weren't shut down completely, was because they were needed as emergency backup when Chinese quality, or shipment reliability failed. When Boehner was pressed for a comment on what he thought about it, he replied, "We don't want to make them mad."

Fuyao is a customer. Their locating to the U.S. is great news. All of the big press as a 'win' should be tempered by the fact that the vast majority of 'employees', are contract employees, and do not actually work for Fuyao. A former customer in Eaton, Neaton Auto Parts, hires entirely through Staffmark. DMax, (or Tenneco - I wasn't watching closely) was recently on the news touting their need for 400 employees. The person being interviewed said that these were good jobs, and the starting pay was eleven something an hour, and in three years, you could get up to over thirteen dollars. Really?

Foxconn has 10,000 applications a month. (I believe I may have that wrong, and it's actually per day). We are seeing the production environment of the late 1800's, and early 1900's repeat itself. When the government tells a manufacturer that they won't extend tax breaks to VW in Tennessee if they vote in a union, it's very clear where we're headed. Obama has done more to combat unfair trade than any President before him. Tariffs will further encourage companies to make, and sell, their products overseas. My former safety company now has no U.S. manufacturing, their industrial division is closed, and their retail products (rainwear, gloves, and boots) are now sold at Ace and Big Lots.

I even had a former Dayton customer you might know (Shore to Shore Merchandise Identification - since sold). Tried to buy Zebra printers from me when I worked for a master distributor. These were going to various overseas countries. Zebra told them that the only way could get service on them was to buy them where they were being installed. An international hospital chain that is a customer, buys scanners in England and ships them to their U.S. facilities, because they are sold at lower prices. U. S barcode equipment manufacturers routinely sell scanners in foreign countries at lower prices than the U.S.

Even Wal-Mart touts their 350 million dollar "Buy American" campaign. That's laughable. To the unsuspecting public, that's a great PR stunt. They think it's a lot of money. To Wal-Mart, it's the equivalent of loose change in their couch.

Bob McIntyre
National Account Executive
DBK Concepts, Inc.



Thank you for your great article "Trump Supply Chain". I am an industrial and supply chain engineer / consultant as well as an inventor and I have a dream/vision that I have been focused on since 2008. So I believe in what Trump has been discussing regarding manufacturing, trade, de-regulation, energy and beyond. One big reason is because I have worked with so many companies in supply chain consulting over the years and seen the changes and have been able to see what is going to happen in the future. Part of industrial engineering is forecasting. Also, when you are responsible for supply chain strategy for companies and looking out 5, 10, 15 years you have to know the past, understand the details and the model the future.

As an inventor, I have experienced the Chinese trade "cheating" personally. Also, I have seen the major changes in the last few years in USPTO laws that make it extremely difficult for innovation in America. This is not what America is about. Other countries do not try to keep minds from moving forward and producing products.

One of my certificates is in computer integrated manufacturing systems. My degrees are from Georgia Tech and back then we focused on high quality manufacturing in America. Times changed too quickly. I do believe with "right to work" states increasing and with more use of industrial engineering methods and standards along with major advancements in supply chain that manufacturing costs can be decreased enough to bring manufacturing back to USA and increase what is already here. Many existing manufacturing companies are using parts from China or other countries, where they could be made in USA.

For example, I am working on a big invention project and we want the entire invention (lots of products) to be made in America. However, a major component is a complex electronic circuit board and more. It is very hard to find a company in the USA that can create this high volume. This frustrates me given our great colleges across our country. I believe that in electronics you need EE's, managers and then workers that are trained. Of course you need the special equipment along with quality testing. The first company to start this at high volume would be a winner. Hmm, if this company decides to start the business in a empty manufacturing facility in a poverty stricken area where people need a job and need to be trained. Wow, that would be a winning company and a change in our country that would start a domino affect.

Also, it is about competition. We have so many people that need jobs. We have so many empty buildings in so many locations that are in prime locations from a logistics standpoint that help supply chain in multiple ways. Companies can collaborate in ways to lower costs. Well, which ones want to collaborate, which locations want to improve their environment to attract business. Who wants to work. The list can go on and on. I have a documentary that is not only about manufacturing but also about retail. Overall it is about Freedom from the problems in which Trump discusses, retail e-commerce loss to Amazon, inventory problems and costs, labor issues, poverty stricken areas without work, high crime rate, system duplication, duplication of the same work / non-communication, and so much more.

I am a prayer warrior and I am praying for Trump, his decisions, and who he chooses to work with him. I am also praying for America, all Americans and for a miracle to happen in a way to somehow unify, like Trump said. Other nations watch USA so much. So when great things happen here, eyes are opened and great things happen elsewhere.

Shelley Jordan
Synergy Solutions Group



I believe there will be some changes but they will need to be regulatory, with some amount of flexible controls written into the rules. This being said; a balance should have been used with the movement of manufacturing on the way out of the U.S. Do not know if it can be accomplished now, but it is something to think about.

I am sure HR Supply chain Analysis would have allowed for the balance to consider the downsizing of industries desired by government, which would have allowed the country to develop and train the next generation for the industry shift.

Example: The People analysis was never done, there should have been one. You want to retire an industry in order to improve the focus of U.S. professional services offered to the world.

Then use numbers, increases and reductions that consider the rate of people attrition in the industry, for a result that gives the smallest citizen impact. Of course this requires that industry and government work together.

Tony E. Madison



Q: Something called Gateway City (not a city) and 1957 – what was the supply chain breakthrough?

A: Gateway City sailed that year as first ship built specifically to carry standardized ocean shipping containers resulting from the game-changing innovation designed by Malcom McLean.

© SupplyChainDigest™ 2003-2016. All Rights Reserved.
PO Box 714
Springboro, Ohio 45066