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May 4, 2018 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Can Supply Chain Collaboration Save Retailers and Manufacturers? 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 Column and Gilmore's Jab bullet New On Demand Videocast



Discover the Scanners, Mobile Computers, Tablets and Printers with the Features and Form Factors Made for You


first thought


Supply Chain Graphic of the Week
What Countries Spend the Most on Research and Development?


April PMI Continues to Show Manufacturing Strength

Anheuser-Busch Going with Hydrogen Fuel Cell Trucks
Maersk CEO Calls for End to Government Ocean Carrier Subsidies
Container Shippers are Slowing New Ship Orders


April 11, 2018 Contest

See The Full Cartoon and Send in Your Entry Today!

Holste's Blog: Packaging Construction Impacts on Logistics Operations


Weekly On-Target Newsletter:
May 3, 2018 Edition

Cartoon, Apple Supplier Report, DC Robots and AI, Containership Capacity and more


Learn How Blockchain Technology Can be Applied to International Trade

The $100 Billion Returns Question

by Karin Bursa
Executive Vice President

The Impact of Inaccurate Carton Contents

by Kevin Harris
Director of Freight Audit
Compliance Networks

Using Multi-echelon Inventory Optimization to Achieve Measurable Operational Improvements


How many on-site supplier audits did Apple conduct in 2017?

Answer Found at the
Bottom of the Page

Can Supply Chain Collaboration Save Retailers and Manufacturers?

Desperate times call for desperate measures.

That is the axiom I keep coming back to as I survey the consumer goods to retail supply chain, which I do with some regularity.

The retail world is obviously transforming dramatically before our eyes. Last year, there were some 6500 net stores closings in the US. Projections are for similar numbers this year.


In such perilous times, the tendency is to focus inward, not look at how true collaboration might allow some to survive and even prosper.


Send us your
Feedback here

In 2018 we have seen the outright failure of the Toys R Us chain and now the Bon-Ton chain of several department store banners, including Bon-Ton, Elder-Beerman, Younkers, Carson Pirie and others.

What is seismic about the Bon-Ton failure is that it is placing still more pressure on mall owners, many of which had large Bon-Ton anchor stores.

Malls are in deep trouble. The largest mall in the US when it opened in the 1970s, the Randall Park Mall east of Cleveland shuttered finally in 2015. But the land got new life in 2017 when it was announced the space would house - what else - a new 850,000 square foot Amazon fulfillment center.

Macy's recently closed it downtown Cincinnati store - just a few blocks from its headquarters. That one still has me shaking my head.

What most frightens me is that all this is happening in good economic times. What the carnage is going to look like when the next recession finally hits I hate to ponder.

As I have noted before, things are tough for many consumer goods companies as well. The Toys R Us closing is hammering many toy makers. But perhaps most interesting is the challenges of traditional consumer packaged goods products, where changing consumer habits and other factors are putting great pressure on companies from Campbell's Soup to Kellogg, anyone whose products occupy the "center aisle."

And CPG companies are getting hammered by other market forces. Giant Procter & Gamble said prices for its products fell by 2% for the first three months of 2018. That at the same time transportation and most other input costs are rising steadily. Not a pretty picture for the bottom line.

Obviously, there is a lot going on here, most notably ecommerce but of course that doesn't tell the whole story by any means. Consumer shopping habits more generally are undergoing rapid change: more emphasis on fresh rather than packaged foods; less interest in spending time inside a mall on a Saturday afternoon; a sharp decline in the percent of disposable income spent on apparel (from 6% four decades ago to 3% currently - and falling).

There was an article just this week that ecommerce was destroying neighborhoods. CNBC reported that the decimation of retail "has brought a deterioration in places where people congregated, socialized, made friends and were greeted by a friendly face offering an intangible element of belonging to a community."

Of course, there was a similar and equally great change in many downtowns now two or more decades ago as Walmarts moved in and put all the local merchants in small downtowns out of business.

So here we are. How the world will look coming out of all this change I have no idea.

But I do know that for about three decades now there have been calls for greater levels of supply chain collaboration between retailers and manufacturers.

If you look back at all the retail related supply chain initiatives for three decades (Quick Response; Efficient Response; Collaborative Planning, Forecasting and Replenishment; EPC RFID; etc.), the problems and opportunities described for each new initiative are nearly identical - and are all focused around better information sharing.

Yet here we are. The sector has obviously has made some progress, but just incremental, really, from my view. Just a few years back, the VICS organization (later absorbed by GS1) issued a guideline around "building the supply chain from the shelf back." (There is an interesting back story on this that I may share some time.)

But the point of the guideline was the that the famous Bullwhip Effect was still alive and well in the consumer goods to retail sector - and that it could be significantly tamed if retailers and vendors worked together to drive the supply chain from actual consumer demand, all the way back to the factory schedule.

I agreed then, and I agree now. But as far as I can tell, that VICS initiative has gone almost nowhere, with no on-going effort to drive such changes.

Well, maybe these desperate times for retailers and manufacturers could be enough to at last change the status quo. Walmart, Target, and other chains have launched programs and new chargebacks to reduce vendor variability, mostly around fill rates and on-time shipments. I applaud that generally, but these programs have a top-down, compliance feel, not a collaborative one.

Poor fill rates and late shipments are sometimes the result of vendor planning and execution issues. But far more often, they are the result of poor visibility to demand and order plans by the retailer. This of course is the essence of the Bullwhip Effect.

The reality is that in general retailers have not embraced the time-phased inventory and order planning in the way manufacturers have for decades. Interestingly, at a meeting of retailers and vendors a few years back, a few retailers which had started to share more of this info were griping that they weren't getting back from vendors for the effort - mostly meaning lower prices. But of course, improved fill rates and on-time shipments have their own rewards.

In our recent benchmark study on the state of retail-vendor supply chain relationships, we asked both retailers and vendors to rate the barriers to better collaboration.

As seen in the chart below, the top rated barrier for both retailers and vendors/manufacturers is a lack of quality/availability of data to act upon to collaborate (scale of 1 to 7, with 7 being the highest barrier - score is the average among respondents).This lack of actionable information is of course the essence of the initiatives around ECR, CPFR, RFID, etc. But not much really changes.

What are the Barriers to Better Supply Chain Collaboration?

Interestingly, as you can also see in the chart both retailers and vendors rated their own ability to collaborate as a very low barrier, and the capabilities on the other side as a high barrier. In other words, "It's not us, it's the other guy."

So here we are. There are clearly forces at work that go far beyond the opportunities for better supply chain collaboration. But in such perilous times, there is a tendency to focus inward, not look at how true collaboration might allow some to survive and even prosper while others wither away.

If it was me, I would be giving it a try.

What's your view on the state of retail-vendor collaboration? Is it now or never? Let us know your thought at the Feedback button below.


On Demand Videocast:

Digitizing the Order Management Process

Orders Still come in Many Different Forms and Systems - Here's How to Get them Under Digital Control

This videocast discusses breaks down all the ways in which orders can arrive, the downstream challenges associated with each, and the benefits of digitization.

Featuring Dan Gilmore, Editor along with Esker's Sarah Joiner.

Now Available On Demand

On Demand Videocast:

Reducing Costs through Automated Inventory Replenishment & Analytics

How Motor City Industrial Taps into Data Visualization to Help Customers Identify Waste, Reduce Inventory

This videocast discusses how to connect people, processes and technology across commerce and supply chain operations to achieve unified commerce.

Featuring Dan Gilmore, Editor along with Joseph Stephens, CEO, Motor City Industrial, Jay Fielder, Supply Chain Technology Manager, Motor City Industrial and Mike Wills, Chief Revenue Officer, Apex Supply Chain Technologies.

Now Available On Demand

On Demand Videocast:

Yes, Retailers and Distributors Can Survive and Thrive by Unifying Commerce and Supply Chain

Integrated Approach will Improve Customer Experience as Smart Retailers Move Beyond Omnichannel

This videocast discusses how to connect people, processes and technology across commerce and supply chain operations to achieve unified commerce.

Featuring Dan Gilmore, Editor and enVista CEO Jim Barnes, a highly recognized industry expert on retail and distribution.

Now Available On Demand


We received a good handful of emails on Dan Gilmore's column on Just How "Tariff-ying" is It?, which offered some thoughts and insights on the tariff moves from the Trump Administration, as published below.

Feedback on Just How "Tariff-ying" is It?


Thanks for a simple yet insightful assessment of the tariff situation. We should wait for the details to be published to see what kind of game plan the administration will be rolling out. Nevertheless, the complaints by some that we will be hurting our allies fall on my deaf ears. If our "allies" are dumping aluminum and steel into our markets, then they aren't acting like true allies and deserve to be taken to the woodshed.


These issues are complicated and not to be taken lightly, however, the government has too often not taken action against the dumpers for rear of their reaction. The lack of action has resulted in the loss of jobs and capacity. It's time to stand up and push back on the offenders.


Mike Albert
Director Business Development


As a student of economics back in the late 60s there was one clear lesson - there is no such thing as "fair trade" and never has been. It is a myth.

I must confess to being a supporter of Professor Galbraith's views on countervailing power and can readily see their relevance with a little manipulation in the field of international trade. I would add to the mix the law of unintended consequences, and would agree with those that say there are not going to be any winners in the long run if we start to get into tariff wars.

Fairness is highly subjective - it depends upon where one stands. Should the objective not be just to make more trades and to make them freer?

David MacLeod
Learn Logistics Limited






Excellent column on the new tariffs. As always, an insightful and balanced analysis from Gilmore.


This is a complex issue, with shallow reporting. While no one wants a trade war, the status quo isn't right either - China is taking its huge trade balances and using them to surge ahead economically - and militarily. It doesn't even hide its plans.


A nearly $400 billion trade deficit with China simply cannot be good despite whatever the free trade advocates say.


George Simmons



Q: How many on-site supplier audits did Apple conduct in 2017?

A: 756, according to its new Supplier Progress Report, up from 705 in 2016.

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