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November 10, 2017 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Trip Report: Interesting Tales from Retail Value Chain Federation Fall Conference 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 New Expert Column and Supply Chain by Design bullet November Videocast and NEW On Demand Videocasts

first thought


Supply Chain Graphic of the Week
When will Peak Oil Demand be Reached?


On-Line Grocer Ocado Automates DC for Success

Deal with the Devil on Chinese Aircraft?
Carrier Now Offering Minimum Weekly Driver Pay
Net US Store Closings are Very Much on the Rise


September 25, 2017 Contest

See Who Took Home the Prize!

Holste's Blog: Optimizing System Performance

Weekly On-Target Newsletter:
November 9, 2017 Edition

Last Chance Cartoon, Truckload Q3 Results, Grocery Picking Robot, E2open Move and more

"Winter is Coming" - Do You Have the Right Supply Chain Metrics to Weather the Coming Storm?
by Henry Canitz
Product Marketing & Business Development Director

Reinforcement Learning Explained Using the Beer Game
by Dr. Michael Watson

Learn the Five Key Reasons Manufacturers Need Multi-Tier Connectivity


What share of total US freight transportation spend goes to rail?

Answer Found at the
Bottom of the Page

Trip Report: Interesting Tales from Retail Value Chain Federation Fall Conference

I am fresh back for just the second time from the Retail Value Chain Federation (RVCF) fall conference at the JW Marriott Desert Ridge resort in Scottsdale - same venue as the Gartner Supply Executive Conference in recent years - and though I was there just one day, it was a very good experience.

A number of years ago, Kim Zablocky, with a background in consumer goods, founded the Retail Vendor Compliance Federation, an organization and forum largely for retail vendors to gripe about chargebacks and devise strategies for avoiding them.

But a short while later, Zablocky got the bright idea of broadening the organization and inviting retailers into the fold, and changing the focus from chargeback issues to one of fostering retail-vendor collaboration. To that end, for example, the conference facilitates one-on-one meetings between individual retailers and manufacturers to discuss issues and opportunities - though there is still a healthy level of vendor chargeback griping and vice versa, as I will discuss in a moment.


The consultants say that Amazon - perhaps much different that some retailers - really has no interest in chargeback revenues, only improving supply chain performance.


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Before I summarize the handful of sessions I attended, I will started with just some notes from a very interesting lunch conversation I had with a business development executive for a major freight forwarding company on Amazon's potential global logistics services plans.

My new acquaintance said Amazon already brings in about 60-80,000 containers from offshore into the US right now, and that this number could grow to some 250,000 in five years, likely pushing Amazon past Walmart as the largest container importer.

Many of Amazon's recent moves, he said, are simply due to its insatiable search for more capacity, as it is stained almost everywhere with its still mid-20 percentage growth in merchandise sales.

He does not expect, however, that Amazon will indeed get into the global logistics business directly, contrary to many reports, including some here on SCDigest. The returns on such an investment would be very low compared to what Amazon can get from say building more fulfillment and sorting centers around the globe.

But what my new friend does expect is that Amazon will put together a complete, end-to-end global logistics service that manufacturers and merchants around the globe will be able to leverage to ship goods cheaply and quickly from their locations to consumers in the US and Europe. So, it would be an offshoot of “Fulfilled by Amazon,” though handling shipping only not storage and picking, but would allow a manufacturer in say India to reach global consumers much more easily.

“This could be a huge driver of revenue growth,” he said - as if there wasn't enough Amazon growth already.

What's more, my expert does not expect Amazon to directly compete with UPS, FedEx and the USPS for parcel delivery, for similar ROI reasons. But what he does expect - and what he said is already happening - is that Amazon will support the creation of additional competitors in the parcel space, both to keep downward pressure on rates and again to add capacity.

We both noted how with Amazon's recently announced service to deliver orders right into a customer's home after purchase of a kit that includes a smart lock and a video camera there was no mention of FedEx or UPS having signed up to make these in-home deliveries, for a service that is going live in some cities this week. So who will be providing that last mile service? A very interesting question indeed.

I attended a very interesting 90-minute session for vendors only basically to discuss retailers chargebacks and what if anything can be done, both generally and then for specific retailers, a discussion driven by questions submitted by session attendee, with about 100 vendors in the room. There was a similar session for retailers only, where likely there was similar griping about vendors.

The RVCF conference is a semi-private gathering, so I am not going to mention any participant companies by name.

The complaint I found most interesting related to a specialty retailer that about a year ago - out of nowhere - started issuing big chargebacks for bar codes on GS1128 shipping labels that it said were below its standard of an A or B grade.

Now ignore for a moment that a quality grade of C or above is generally considered acceptable. Why all of a sudden was this retailer finding quality issues, from vendors that had been shipping it goods the same way for years? One vendor said his company bought new printers and upgraded its label stock - to no avail. Another did investigative work to see if carriers were somehow damaging its labels, as its on-going verification testing showed it was consistently producing A-level bar codes. The research absolved the carriers of causing any damage.

One vendor then said he had in fact identified the root cause of the new chargebacks. After visiting one of the retailer's DCs, he learned the retailer had acquired new handheld bar code verifiers right before the quality chargebacks started arriving. He bought one of the $5000 devices himself, and found that if you quickly scanned the bar code, the grade was high, but if you went more slowly, the grade fell, often to C.

This seemed to explain the mystery, but when discussed with the retailer, did the chargebacks stop? No. A couple of vendors said they had seen some reduction in chargebacks after switching to so-called direct thermal printing versus using a thermal transfer ribbon, but the relief was only partial. Such can be the strange world of vendor compliance.

Also strange, one major department store has started to issue "post audit" chargebacks for violations not flagged at the time but one or in some cases even two years later, when proof of a lack of the violation may be gone or hard to find. These are often related to a "failure to consolidate" shipments - but the lack of consolidation was usually the result of the carrier showing up late (days, weeks) for its scheduled pick-up. What's a vendor to do? There were no real answers suggested by the audience, other than keep battling. There was 90 minutes of this.

The conference had an emphasis on issues/opportunities relative to vendor drop shipping, including a panel discussion with three manufacturers and a 3PL. Suffice it to say, there is no universal approach to inventory management. Some pool their inventory across channels, including drop ship; others have separate inventories and locations; and some mix the inventories physically, but logically keep separation and allocation. Is one better than the other?

There is also a growing trend of creating special collections for retailers, SKUs that will be drop shipped and not be available in the vendor's own direct-to-consumer assortment. Wow.

Finally, a very good presentation from two young former Amazon employees who have smartly started a consultancy (Ortega Group) that advises clients on how to best do business with the on-line giant.

I did not realize how aggressive Amazon is about leveraging chargebacks, especially for short shipments, but the consultants say that Amazon - perhaps much different that some retailers - really has no interest in chargeback revenues, only improving supply chain performance. Key emerging issue is Amazon requiring vendors to ship in shippable packaging, not in full cases, to of course improve Amazon's own picking and shipping cost.

This in turn drives much higher costs for vendors, but this program (ships in own container, or SIOC) is going to be a major focus for Amazon in 2018. And don't complain to the buyer - an algorithm determines which vendor SKUs would benefit Amazon most from going SIOC. Watch out for this one.

There is so much more, but I am out of space. I may write some more on this, if there is interest.

As noted, I was just there for a day, but a very nice job by RVCF - there is a lot here for retailers and vendors beyond getting some gripes off of your chest.

Any reaction to this summary of the RVCF fall conference? Agree with the freight forwarder's predictions for Amazon logistics? Do you have any strange compliance stories to share? Let us know your thoughts at the Feedback button below.


New November Videocast:

The Modern Control Tower: Orchestrating Your Digital Supply Chain

What is a Supply Chain Control Tower and What Does It Do?

These experts will discuss how operational control towers have evolved past their visibility and transportation roots to focus on taking action for every end-to-end customer order across the multi-party supply chain.

Featuring Dan Gilmore, President & Editor-in-Chief of Supply Chain Digest plus Martin Verwijmeren and Brian Hodgson of MP Objects.

Wednesday November 8, 2017

NEW On Demand 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.

Now Available On Demand

NEW On Demand 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.

Now Available On Demand


This week, more of the emails, some from our content partner RetailWire, stemming from 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."

Feedback on Implantable RFID Chips


Really? Too, too, too creepy.

Paula Rosenblum
Managing Partner
RSR Research


With the current workforce, I don't see employees sacrificing their privacy for convenience, however for the younger generations coming into the workforce I could see this catching on. I'm always amazed at how easily teens give away personal information (email, age, sex, hobbies, address) at events for a free t-shirt or sunglasses. As the world becomes more digital the younger generations will be much more accepting.

Seth Nagle





I'm one of those people that would consider being "chipped" if it made my life better. My only concern is putting a foreign object into my body. However this type of chip is different. This is about making life at work easier. A wave of the hand or other type of gesture and "stuff" happens.

I always thought the smartphone would be the ultimate in creating automated convenience. Open up the app, click on something and again, stuff happens. This chip eliminates the phone. But, at what point does the level of ease not make any difference? I think we are at the point with technology that we can create an almost transhuman experience. Now how can we use this most effectively?

Shep Hyken
Chief Amazement Officer
Shepard Presentations




We can't stop technology and no one knows how far it will go. I see this as something in the future, but not within the next few years, most likely decades. First, the technology needs to be perfect. Second, we need to have numerous tests determining if there will be any long-term side effects that could cause harm to the body. And third, the public has to want this technology and accept it. When asked about how retailers can benefit, I would say all employers could benefit - but will they be able to mandate their employees to get these implants? So many questions will need answering before we get there.

I think, for now, retailers need to focus more on where we are in 2017, and why so many stores lose sales because of poor service. They need to implement solutions that involve good old-fashioned human interaction and maybe in about 20 to 30 years we can look at implants as the next best thing.

Art Suriano
Chief Executive Officer

The TSi Company





Q: What share of total US freight transportation spend goes to rail?

A: 8%, according to the 2017 State of Logistics Report from CSCMP.

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