sc digest
November 30, 2017 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet The End of the Fossil Fuel Era? bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet Santa Cartoon Caption Contest Continues bullet Trivia      bullet Feedback
bullet Expert Insight and Supply Chain by Design bullet New Townhall, Videocast and On Demand Videocast
  11th Annual Gartner-SCDigest Supply Chain Study!

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


Survey Respondents Receive Complimentary Gartner Research
(See Details Here) - a $300-500 Value

first thought


Supply Chain Graphic of the Week
Carrier Operating Performance by Mode for Q3 2017


Store Traffic Down, On-Line Up Big So Far

Oil Prices Creeping Up on Strong Economy
US Taking Action Against Low Price Aluminum Imports from China
Tesla Truck Battery - Reality or Not?

A "Third Way" to Address the Growing Labor Crisis in US DCs?


November 14, 2017 Contest

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

Holste's Blog: Understanding Future Job Creation Issues - More Questions than Answers

Weekly On-Target Newsletter:
November 29, 2017 Edition

Santa Cartoon, Tesla Truck Concerns, DC Labor Crisis, Lean Value and more

Developing a Global Supply Chain Autobahn for China

by Kae-por Chang
Managing Director
Amber Road China

"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


What do the following companies have in common: Gillette, HP, Johnson & Johnson, Kimberly-Clark,Kraft-Foods, Nestle Purina; Procter & Gamble, and Unilever have in common?

Answer Found at the
Bottom of the Page

The End of the Fossil Fuel Era?

In 2006, rather by accident when reading an investment article, I came upon the term and concept of "Peak Oil." I was hooked, and wrote a First Thoughts column on it shortly thereafter.

Back then, hardly anyone had heard the term, as I know from asking at a few speaking engagements around the time how many in the audience had heard the term. Few raised their hands.

But Peak Oil became much more known in 2007 and 2008, when oil prices first surged to a once unthinkable $100 per barrel, then peaked at nearly $150 in July of 2008.


Despite some chance oil prices could trend a bit further up from here, the long term trend is likely to be down - because global demand will peak in perhaps less than 10 years.


Send us your
Feedback here

After a long career in logistics, a man named Chuck Taylor went on a 2-3 year campaign warning supply chain managers about the looming impact of Peak Oil. "We're not going to run out of oil, but the oil we can produce will be hard to extract and expensive," sending gas and diesel prices soaring, Taylor said as recently as early 2012 on an SCDigest videocast.

His efforts in this area were the key to Taylor winning CSCMP's Distinguished Service Award in 2010. (Taylor later died unexpectedly in July, 2012).

What is - or maybe better was - Peak Oil? It is a concept derived from the work of a Shell Oil engineer back in the mid-1950s named M. King Hubbert. To the dismay of his employer, Hubbert wrote a paper from his study of the behavior of oil wells.

Naturally enough, when wells are young and contain a lot of pressure, the oil comes out pretty easily. That flow then diminishes over time, and the oil is harder to extract. It becomes fairly easy to predict, Hubbert said, when the maximum output from a given well will be reached. After its peak production for say a year's time, output will then decline over time even though there may still be a good amount of oil left in the ground.

That concept can be taken from an individual well to an entire oil field, to a nation, and even to an entire globe. At the time, Hubbert in fact predicted that the US would reach Peak Oil in 1970, to the scorn of many other oil men at the time.

He was almost dead nuts on. In 2010, Global Peak Oil was expected to be reached any day, if it hadn't happen already. There was talk of $200 oil. I was a believer.

And we were all very wrong, it appears. No one talks about Peak Oil today. What is the issue du jour today in the oil patch is now instead Peak Demand. More on that in a second.

What happened? A couple of things. First, growth in the demand for oil globally started slowing much faster than predicted, and has actually been falling in most developed economies in recent years, the result of technology improvements, alternative fuels and more.

In addition, US oil output surged with fracking technology, putting it at or near the top of oil production globally. What this did was: (1) change the demand-supply demand balance dramatically, from what modestly in supply's favor to moving to the demand side, as US oil flooded the market. Combine that with a tepid global economy, and oil price fell dramatically in 2014 and then stayed there, with remarkable stability (despite a recent modest upturn in prices to the $60 range.)

And despite some chance oil could trend a bit further up from here, the long term trend is likely to be down - because global demand will peak in perhaps less than 10 years.

This is obviously of great concern to oil companies - and many countries themselves. While predictions for Peak Demand vary a bit, as seen in the chart below, most agree it will come within two decades, three at the max, though a couple of oil companies see no peak coming. I think they are wrong.

And that is in large measure because it now seems to me inevitable that electric cars and maybe even trucks are going to reach a critical share of new vehicle purchases very soon.

"The idea that electric vehicles and alternative forms of energy will increasingly displace crude oil is one that big-name investors are starting to ask about," the Wall Street Journal wrote in May.

China, for example, is building 800,000 charging stations for electric cars just this year alone. Meanwhile, the country's vice minister of industry and information technology said China is working on a timetable to end sales of fossil-fuel-based vehicles, in a market that comprises a full one-third of the global auto sales.

China is hardly the only one. Recently, France and the UK said they are planning to phase out sales of non-electric cars by 2040, while Norway aims to reach that point a decade sooner. Indian Prime Minister Narendra Modi's hopes to see electric vehicles rise to 44% of the purchases by 2030.

Then we have the Tesla Semi electric truck, sort of previewed last week by CEO Elon Musk, and said to be available by 2019. Walmart, JB Hunt, Meijer and other companies have pre-ordered test units. Musk says one model will get 300 miles per full charge and another 500 miles, with the latter able to get a fast charge that in just 30 minutes will take it 400 miles.

Now as we reported this week, many are saying the battery performance Telsa is claiming simply doesn't exist today, and is highly unlikely to arrive by 2019. But even if that is true - and I think it is - a skeptical Heavy Duty Trucking magazine wrote last week that "Regardless of what you think of Elon Musk and his new truck, bear in mind that he is a visionary" and "is going to impact this industry in one way or the other in the coming years."

It also noted that in the past year we've seen either major product reveals or investments in electric trucks by a host of companies, including, Navistar, Volkswagen, Daimler, Volvo, Cummins, Nikola, Isuzu, and Paccar as well as newer players such as Uber, Embark, Einride, and Waymo. That's not to mention work being done - rapidly - on hydrogen fuel cell trucks.

I firmly now believe we are at the beginning of the end of the fossil fuel era, with profound impacts on society, our supply chains (much more stable costs), and geo-politics. What happens when we just don't care about Middle East Oil? What will be the fallout when countries in that region, and more worrisome Russia, see their state revenues slashed further as oil demand and prices collapse?

I don't know if it's 2025 or 2040, but the world is soon enough going to be very different indeed. Fossil fuels will still be around, but in a much diminished state.

Is Gilmore right or wrong on the coming end of the fossil fuel era? How fast is the decline likely to be? Let us know your thoughts at the Feedback button below.


New December Videocast:

The State of Retail-Vendor Supply Chain Relationships 2017

Results from SCDigest's Second Biannual Benchmark Study of Retailers and Their Vendors - and SCDigest's New Index to Measure State of the Relationships

These findings are being presented in a live panel discussion with interactive questions from audience members throughout.

Featuring Dan Gilmore, President & Editor-in-Chief of Supply Chain Digest plus Greg Holder, CEO, Compliance Networks, Kim Zablocky, President, RVCF (Retail Value Chain Federation)
and Victor Engesser, Retail Executive Advisor, RVCFP.

Wednesday December 13, 2017

December 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 December 6, 2017

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


Catching up on a variety of Feedback emails this week - see below

Feedback on Astounding Changes in Consumer Goods to Retail Supply Chains


This piece certainly belongs in the hall of fame Dan. Simply excellent work.

Going back to the early Greek philosophers it is said the only constant is change (or something like that). While I tend to be a bit of a process geek, and love to see constant flows that can benefit from minor (usually) improvements, the truth is that we must all be pragmatic visionaries about the future of our businesses and those of our business partners.

Everything will change, some things will change significantly, some new things will be introduced and some existing things will disappear. Our success will be based on how visionary we are about the future, how we plan to adapt to it, and how successfully we lead the transition.

Steven R. Murray
Lead Process Auditor and Senior Research Associate

Feedback on Warehouse Control Systems vs Warehouse Execution Systems + Ocado Grocery Robots


Retirement has given me more time to think and perhaps the following train of thought has some relevance in relation to some of the topics covered in your recent package.

There has been much noise about robots replacing human beings particularly where the task is repetitive etc. There has also been comment and speculation about robots being developed/improved to use artificial intelligence and having an ability to learn from their mistakes.

Given these two aspects is there not the prospect of robots gaining emotional intelligence? If that comes to pass then could robots programmed to do warehouse work etc actually decide that it is far too boring and mundane, and therefore employ human beings to do that work for them. Perhaps we just have to wait it out, and that in the long run there will still be employment for the majority after all. Could Amazon and Ocado have got it wrong?

(With my tongue only slightly in my cheek!)

David MacLeod
Learn Logistics Limited



Feedback on Gilmore Review of "The Supply Chain Revolution"



I am the author of The Supply Chain Revolution. I saw your review of the book at Thank you for taking the time to review the book and also asking your readers to provide their perspective. I appreciate it.

While writing the book, I had to balance between competing ideas such as the ones you pointed out - big picture vs. details, small vs. big business. I was hoping to have a follow-up conversation on these topics.

If you would like to discuss these or any other topics covered in the book, please let me know. I will be happy to share my thoughts with you.

Suman Sarkar
Three S Consulting




Q: What do the following companies have in common: Gillette, HP, Johnson & Johnson, Kimberly-Clark, Kraft-Foods, Nestle Purina; Procter & Gamble, and Unilever have in common?

A: They were the original eight participants in Walmart's 2004 RFID pilot for goods being shipped to a Ft. Worth, TX DC.

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