sc digest
October 26, 2017 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet The Four Scariest Supply Chain Worries this Halloween Season 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 Gilmore's Daily Jab and New Expert Column bullet NEW Videocasts and On Demand Videocast

first thought


Supply Chain Graphic of the Week
A Look at Warehouse Rates and Vacancies across US Markets


Distribution Centers Bringing Many Jobs to Small US Markets

Truck Driver Shortage to be Worst Ever by End of Year
Amazon has Huge Number of Bids for HQ2
Container Volumes - and Capacity - on the Rise


September 25, 2017 Contest

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

Holste's Blog: Shippers Searching For More Flexible, Adaptable, Scalable & Cost Effective Solutions

Weekly On-Target Newsletter:
October 25, 2017 Edition

Cartoon, 3PL Study Part 2, Lots of Labels, XRaying Procurement, Digitization and more

Still Lots of Different Bar Code Labels on HP Printer

by Dan Gilmore

Supply Chain Agility and your Digital Transformation Effort

by Nathan Pieri
Chief Product Officer
Amber Road

Learn how Organizations can Take a Holistic, Integrated Approach to Digitizing Their Supply Chain


Then MIT graduate student John Krafcik was the first to use what important supply chain term in a journal article in 1988?

Answer Found at the
Bottom of the Page

The Four Scariest Supply Chain Worries this Halloween Season

After several weeks of various conference "trip reports," I am back to a more standard First Thoughts column this week.

I have several topics "in the hopper," if you will, but none was quite jelling yet, when long-time SCDigest editorial assistant Joan Nystrom wondered if there was a way to connect a column in some way to the current Halloween season.

I pondered, and thought this might be good: "What are some scary things in our supply chain universe right now?" Here are my top four:


Earlier this year, McKinsey researchers calculated that 49% of time spent on work activities could be automated with "currently demonstrated technology.


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Eventual Conflict in the South China Sea: I am have been writing about this for a number of years, and even conducted a video interview with former UN ambassador John Bolton on the topic.

As probably most are at least generally aware, China continues to lay claim to what were really a series of rocks and outcroppings in the South China Sea, upon which it has built a series of artificial islands far from the Chinese mainland - and then started arming them and building landing strips.

The US and several other nations in the region vigorously reject these Chinese claims and island building, and indeed last year there was ruling by the Permanent Court of Arbitration in The Hague which said there was no legal basis for China's maritime claims. China says that ruling is invalid.

And the tensions are getting worse, not better. For example, earlier this year the Global Times, a Chinese tabloid controlled by the Communist Party's People's Daily newspaper, reported that the Legislative Affairs Office of the State Council is considering amendments to the 1984 Maritime Traffic Safety Law.

The amendments are slated to take effect in 2020, and if enacted, would violate Beijing's obligations as a signatory to the UN Convention on the Law of the Sea. Specifically, the changes would require foreign ships to obtain permission to pass through these "Chinese waters."

China's rules are inconsistent with the internationally accepted concept of "innocent passage," which is incorporated in a UN convention, and recognized by customary international law.

The effect, however, of China's proposed rules will depend on how expansively Beijing interprets "Chinese waters". China's official maps show nine or ten dashes that enclose about 85% of the South China Sea. Beijing takes the position it has sovereignty to every island, shoal, atoll, rock, and other feature inside that infamous line, so far beyond normal ocean boundaries as to be absorbed.

The US and others will not allow such Chinese control of these waters, through which trillions of dollars of ocean trade move every year.

Meanwhile, just last week Chinese President Xi Jinping very forcefully outlined plans to become the world's biggest superpower within the next 30 years. That as the US continues to occasionally sail Navy ships right past the fake islands in what it calls "freedom of navigation" operations - while China warns the US to stay clear of the islands in strident language.

This simply is not going to end well. It may be next year, it may be 10-20 years from now, but there will be a flash point, and who knows happens from there. The impact on the supply chain are hard to overestimate - and truly frightening.

The Impact of Robots on Jobs and Society: Robotic technology is advancing at a breathtaking pace. And here I am referring just to physical robots, not the software robots driven by artificial intelligence and other software advances. But make no mistake about it, it is software progress much more so than the mechanical gains that is driving robotic advances, as the rate of improvement follows a more digital (Moore's Law) path.

There are definitely two camps here: one that acknowledges that of course robots will take some jobs, but argues that even more jobs will be created, at higher wages, as robots take over repetitive physical tasks in factories and distribution centers (and fast food restaurants and many other types of businesses.)

Others, including me, are less optimistic. I've noted many times the "robots for humans" campaign driven by the Chinese provincial government in Guangdong, where even in low wage China a company called Changying Precision Technology Company invested heavily in robots and saw factory employment drop from 650 to 60, with the company saying that might fall to 20 later on.

Earlier this year, McKinsey researchers calculated that 49% of time spent on work activities could be automated with "currently demonstrated technology."

I think the robots are taking over - the question is really just the pace, which is uncertain. The impact on supply chain costs may be good, but the potential impact on society is truly scary - none of us know what is on the other side of this revolution. I am worried.

Digital Disruption: Virtually every business is or can be threatened by some type of technology-driven disruption. Which brings my mind one of my favorite quotes, from former GE CEO Jack Welch in 2000: "If the rate of change on the outside exceeds the rate of change on the inside, the end is near."

So this is something scary not in a more macro sense but rather in the futures of individual companies and sectors, with the demise of corporate icon Kodak in the face of a digital assault perhaps the leading example.

Ecommerce is of course roiling the retail sector and by extension consumer goods. One research firm just predicted that Amazon's US share of ecommerce sales will be 53% by the mid-2020s, sales that overall will have at least doubled by then (I think that last estimate is low). What does consumer goods to retail supply chain look like then?

Companies making any physical product that deals with handling information or media are under major threat to have that product go completely digital. Who needs a Garmin GPS when it's on my phone, or a police scanner radio when its functionality can be delivered via software/Cloud? And have you heard Uber is being Ubered by a peer-to-peer platform that takes out Uber's cut?

These are scary times for many companies, and others probably should be more scared then they are. The "innovator's dilemma" (how hard it is for most existing companies to innovate due to impact on current business model) is clearly in full force. What does the business landscape look like in 20 years?

The Potential Collapse of NAFTA: President Donald Trump ran hard against the North American Free Trade agreement, and won the election with the strong support of rust belt states.

Talks between the US, Canada and Mexico are underway - and not going well. Canadian prime minister Justin Trudeau recently said he remains optimistic about the potential for a NAFTA deal but noted that Canadians must be "ready for anything." The outcome here is far from clear.

I think the idea of NAFTA - generally free trading between the three main North American countries - makes a lot of sense. But the negative impact of the deal on US manufacturing with regards to Mexico is very real and growing. The US trade deficit in goods with Mexico will be over $60 billion this year and rising.

So I think some tweaking is in order - but a total NAFTA collapse would be very bad, roiling supply chains and the economy. "The collapse of the 1994 trade deal would reverberate throughout the global economy, inflicting damage far beyond Mexico, Canada and the United States and affecting industries as varied as manufacturing, agriculture and energy," the New York Time says, adding it would create "chaos in the auto industry."

The stock market would also get hammered, perhaps crashing hard from current lofty levels.

All this we want to avoid by some sensible adjustments that make NAFTA a win-win for all three countries, as the textbooks say is possible. But a sudden collapse would be a real trick and no treat - something to be worried about indeed.

So there you have my top four scary things in the supply chain to be worried about this Halloween. Let's hope the worst we get is a few smashed pumpkins instead.

Any reaction to these supply chain Halloween scares? What is frightening to you in the supply chain right now? Let us know your thoughts at the Feedback button below.


New November Videocast:

Supply Chain Optimization Series Part 2: Planning by Design - a Breakthrough New Approach to Supply Chain Planning

A New Apps-Based Approach to Planning is Changing to Traditional Paradigm, Enabling Better, More Rapid Decision-Making

Discover the challenges organizations face with their existing planning solutions and how an apps-based approach is allowing business to rapidly build solutions molded to their business processes that complement their existing planning software.

Featuring SCDigest's editor Dan Gilmore and Director of Product Management for LLamasoft, Jim Wilson.

Wednesday November 8, 2017

November Videocast:

Reallocating Resources to What Really Matters: Order Management's Impact on Supply Chain Excellence

Using Cloud-Based Technology to Create Visibility, and Eliminate Inefficiencies and Errors in the Order-to-Cash Process

Discover how, working in harmony with your ERP system, an O2C automation solution that leverages machine learning addresses the root causes of inefficiencies.

Featuring SCDigest's editor Dan Gilmore and Esker's Sarah Joiner.

Tuesday November 7, 2017

On Demand Videocast:

Supply Chain Optimization Predictions and Misses: A Look at Back at Optimization Trends in 2017 - Where We're Headed in 2018

A Look at How Events this Year Impacted Supply Chain Design and Optimization - and How You can Be Ahead of the Curve in 2018

A look at unforeseen events of 2017 - and how they impacted supply chain practice, as well as, a discussion in key trends that we can expect in optimization in 2018 and beyond.

Featuring LLamasoft EVP Toby Brzoznowski and Supply Chain Digest Editor Dan Gilmore.

Available On Demand


We received a number of emails, some from our content partner RetailWire, on our OnTarget piece on the growing trend of people having RFID chips implanted in their hands to automate/control various actions, in a movement some call "transhumanis."

A selection of these is below. More next week.


Feedback on Implantable RFID Chips


In an age where privacy is under constant attack, I cannot fathom how this level of personal intrusion could become widely accepted. While I understand the convenience and efficiency this approach could have to automate tasks, I would be profoundly concerned about who controls this information and how it might be used for nefarious purposes or hacked by bad actors.

Mark Ryski
Founder, CEO & Author

HeadCount Corporation


Definitely the stuff of Ebocloud.

There will always be fringe interest in anything, but widespread adoption of implanted chips will meet extreme resistance. The article touches upon the Big Brother concern, which is top-of-mind whenever " implanted chips" are discussed.

Although there are some security/convenience benefits and although recent data breaches are the poster child for more security, there is no true advantage for retailers to be considering these measures. Retail has about a thousand things to get right before this could ever make sense and at $10-12/hour pay, retail associates are very unlikely to see the benefit of having their bodies invaded for their employer.


Ken Lonyai
Consultant, Strategist, Tech Innovator, UX Evangelist




Why would the transhumanism movement gain traction when the same goals can be met without surgically implanting chips? I expect the smartphone or watch will be used to automate these same tasks for a decade or more before implants gain even a little toehold.

Ron Margulis
Managing Director

RAM Communications




The difference between this and 1984 is that this assumes people will volunteer to have their privacy invaded at a heretofore unseen level. I agree with Mark; I cannot imagine why anyone would want this type of privacy invasion. Have we become so that lazy that we don't want to push a button to open our garage door or hit a switch to turn on our computers?

I am sure there will be those that think this is a great idea, that is, until the first hack or until stories come out about how security was thwarted by someone removing a chip from a person's hand (or worse) to enter a building or restricted area.

Steve Montgomery

b2b Solutions, LLC





Q: Then MIT graduate student John Krafcik was the first to use what important supply chain term in a journal article in 1988?

A: Lean.

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