sc digest
September 27, 2018 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Trip Report - enVista Fuel Conference bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Distribution Digest
bullet Cartoon Caption Contest Begins bullet Trivia      bullet Feedback
bullet Expert Column and Supply Chain by Design bullet On Demand Videocast



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Supply Chain Graphic of the Week
Digital Supply Chain Initiatives Sure Look Similar to Traditional Ones


A New Way for Supply Chain to Support Home Building

Money Pouring in to OnLine Freight Start Ups
Amazon Opens Yet another Physical Store Concept
Maersk Completes Arctic Route Test


September 5, 2018 Contest

See The Full Cartoon and Send in Your Entry Today!


This White Paper Examines Crucial Factors That Must be Accurate to Ensure Inventory Optimization Projects Deliver Outstanding Results


Feature Story: 3PLs and eCommerce Lead Largest Distribution Center Leases in 1H 2018


Weekly On-Target Newsletter:
September 26, 2018 Edition

Cartoon, Top Undergrad Programs, Maersk Surcharge, Whose Leasing DC Space, Game Theory, More

Building the WMS Business Case 2018

Featuring Long Time WMS Industry Pros Kevin Hume of Tompkins International
and SCDigest's Dan Gilmore

Myopic and Hyperopic Supply Chain Planning

by Henry Canitz
Product Marketing & Business Development Director

Digital Data for Global Supply Chain Analytics

by Gary M. Barraco
Global Product Marketing
Amber Road

Why Business Leaders should think of AI as an Umbrella Term
by Dr. Michael Watson


What is ocean container carrier Matson's claim to fame?

Answer Found at the
Bottom of the Page

Trip Report - enVista Fuel Conference

For the second year, consulting firm enVista held its Fuel client conference last week in Chicago, expanding beyond its transportation focus in the inaugural event to more general supply chain topics, drawing some 130 attendees.

That's a very impressive number for a show in just its second year, especially in the consulting world where such client conferences are uncommon. Hard charging enVista CEO Jim Barnes has seen rapid growth of the company over many years now, and this event was a manifestation of that success.


I was there for just one day of the two-day event, but moderated a panel discussion (see below) and attended some good sessions, which I will summarize here.


"The market will ultimately determine how much delivery cost recovery will be accepted by consumers," Yankee added.


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CSCMP CEO Rick Blasgen kicked off the first day as he did for Fuel 2017 with a highlights of the 2018 State of Logistics report, released in June by CSCMP and consulting firm ATKearney.

Blasgen walked past me on the way up to the podium, and joked he hoped he wouldn't put me to sleep. No need to worry there - CSCMP and Kearney have put together a winning presentation that Blasgen moves through swiftly, bordering on too quickly but not quite crossing that line, with the result being entertaining and effective.

Of course, we covered the report in detail when it was released, but it's worth covering some of Blasgen's presentation as a refresher and for some updated info.

I like Blasgen's metaphor (or is it a simile?) that the supply chain acts like a shock absorber, buffering companies between what the plan is and what actually happens, moving smoothly through the unavoidable pot holes along the journey.

We all know freight costs are soaring, and Blasgen noted spot market truckload rates were up an incredible 30% by the end of 2017, a spike we simply haven't seen before. Is one answer finally some more collaboration on freight moves? Maybe, Blasgen said, but noted one dictionary definition of collaboration is "cooperating with an enemy that has invaded your country." You know, that might just summarize the state of things.

US logistics cost were 7.7% of GDP in 2017. That compares to about 18% of GDP in China, 13% in Europe, and 11% in Japan, so the US is doing something right despite obviously aging infrastructure. Costs as a percent of GDP are down 10% versus 2006, and an amazing 30% since 1990. That is real progress.

Blasgen cited a factoid I had not had not ever heard: a Bain & Co. analysis that found companies with sophisticated supply chains generate profits 12 times greater than average companies do. Can that be right? Will dig into that one later.

Next up was a panel discussion on "unified commerce" led by Barnes, with panelists Carey Lowry of Spencer's, Mike Racer of Sephora, Jeff Starecheski of CVS, and Colin Yankee of Tractor Supply Company - all supply chain and logistics execs of one kind or another.

Panel discussions are very difficult to summarize, especially when the topics of discussion are wide ranging, as was the case here. I'll do my best to pick out some highlights.

I will start with this: when Tractor Supply's Yankee wanted to improve the retailer's efulfillment process, he want down and worked like an associate in the packing/shipping area for a few hours. That's the kind of hands on approach probably a lot more supply chain execs should take from time to time, if not regularly.

Sephora's Racer made the interesting comment that Walmart leveraged logistics to build the world's largest company, whereas Amazon is really a tech company that just happen to focus much of that tech on logistics. He added that Amazon, for all its competitive threat to many, has really raised the profile of supply chain both generally and within Sephora. Now supply chain is brought in early and often on key business decisions at the company, he said, which wasn't always the case, a competitive necessity in the Amazon era.

Yankee also noted just how dynamic the environment is right now. Shortly after winning the company's supply of the year award, a TSC vendor cranked up its own ecommerce operation and is now competing with TSC. Welcome to the club.

I also liked Yankee's modest caution on DC automation. While it has its place in TSC, he said, you have to be careful "You don't become slave to the machine" in your operations. Think I will borrow that phrase for later use. TSC has three tiers of DC automation depending on volumes and processing requirements, from high automation to mostly manual.

CVS's Starecheski, who was at Kellogg's and Sears before his current spot, noted the on-going challenge of managing free or low cost shipping. He said companies really need to develop delivery cost models for different classes of service, make estimations of what customers are willing to pay for shipping, and then work with marketing to create the pricing - with the obvious question of how much the retailer wants to subsidize the delivery costs.

This is obviously still an evolving and difficult issue, and may be so for many years.

Spencer's Lowry offered some similar thoughts, noting his company's first reaction when the topic was raised was "What do you mean you can't do next day delivery?" It could be done, logistics said back, but here are the cost impacts, both in capital and operational expense. Execs took one look and decided customers could live without next day for now. He also added that of course many company executives buy items from Amazon and are Prime members, which naturally enough helps to set expectations within Sephora, as at many other companies.

"The market will ultimately determine how much delivery cost recovery will be accepted by consumers," Yankee added.

There was lots more - a very good discussion by four very knowledgeable executives.

I moderated a panel on the growing DC labor crisis, featuring Tim Short of grocery chain Wegmans, Shannon Kohl of accessories brand Very Bradley, my friend Tom Stretar, who heads enVista's Labor Management practice, Charlie Hillebold of material handling system integrator HCM Systems, and Jerome Dubois of mobile robot firm 6 River Systems.

Since I was moderating I could not exactly take notes, but I did receive an audio recording of the session that I will use to later do a summary article in our OnTarget weekly newsletter, but I can share a few keys points. I started by noting we are in an unprecedented "labor inversion." In the US since March, the number of posted jobs openings has exceeded the number of unemployed - and that gap is growing.

Good luck finding DC workers at $14.00 an hour in this environment. Even if you can, you are likely pulling from the bottom of the barrel in terms of quality in most markets.

Wegmans' Short said it takes his company 30-40 recruits to wind up with one hired employee (not said, but I assume drug testing issues are a big factor in that ratio). Short and Vera Bradley's Kohl said there is no question the current dynamic is pushing wages much higher.

I asked Stretar if the potential to need less labor, with all the recruiting and retention challenges, was starting to emerge as a key driver of LMS interest and adoption, beyond just the cost savings that usually are driving Labor Management initiatives. He said absolutely Yes, and both Hillebold of HCM and Dubois of 6 River Systems said they were also seeing labor avoidance from a human capital requirement as now greatly influencing automation interest beyond just reducing the cost of labor.

In the end, automation really is the only answer, the panel generally agreed, though how fast it will spread is still the question. But the number of DC workers in the US has grown 50% since 2014 - the labor pool is just not going to support much more expansion, in my opinion.

In an interesting presentation on combatting rising transportation costs, enVista's Nate Rosier reinforced the point that a company's transportation spend is largely a function of its network - but that shrinking or expanding the number of DCs can each lower costs, the difference largely related to the impact of often not well understood inbound freight flows.

All told, a solid event from enVista and VP of marketing VP JJ Schambow. Will be at the CSCMP Conference in Nashville next week - hope to see you there.

Any reaction to this conference summary? Let us know your thoughts at the Feedback button below.



On Demand Videocast:

Digital Transformation's Value to the Supply Chain

The Future of Order Management

This videocast breaks down what digital transformation is and how automated order management solutions equate to supply chain benefits.

Featuring Dan Gilmore, Editor along with Esker's Dan Reeve.

Now Available On Demand

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


We received several emails on a recent s First Thoughts column on "RFID in the Supply Chain: A Look Back and Ahead." A selection is below.

Feedback on RFID in the Supply Chain: A Look Back and Ahead


Great recap of the Walmart RFID initiative timeline. Brings back memories.

Working in Technology Solutions for a 3PL serving one of the "Top 100", I was deeply involved in analyzing, designing, proposing and implementing the RFID solution to tag and verify pallets and cases.

From a technology standpoint, it was an exciting time. However, challenges were many...the RFID tags initially available were of poor quality, different products required different types of tags, some RFID "consulting" companies didn't have the expertise to add real value, name a few. The situation improved after the 1st year of production when tag quality improved, process became standardized and product packaging grew more RFID-friendly.

I don't think many people were surprised that the initiative eventually fizzled. Walmart was pressuring vendors for lower prices, more frequent and smaller deliveries and RFID tagging. Something had to give. However, I won't be surprised to see it eventually used in retail that can support and pay for a more complete RFID process through the stores. There are benefits to be had.

John Dillon




Great summary Dan! Thanks, and I will look forward to "What's Ahead".


My opinion of RFID has always been that it is interesting technology that likely has a place in managing some part of the supply chain, but it doesn’t really replace serialized barcoded labels and solid data integration via EDI like platforms (including blockchain) for the wide majority of uses. Give me a good ASN with that contains the required product data (even down to lot/serial numbers when required), and I don’t need electronic tags. I can track anything I need by referencing the SSCC.

A decent inventory management system and solid processes and procedures trumps tagging for inventory control. However there is clear advantage in the IoT world if you need to track things like temperature history etc. during transit and while in storage (another story)

Steven R. Murray
Lead Process Auditor and Senior Research Associate
Warehousing Education and Research Council






Thank you for an outstanding column and perspective.

Your timeline of the Walmart RFID initiative should go into some kind of supply chain history machine - don't lose it.

This was frankly a highly mismanaged program on many levels. How it went so wrong has never really been explained, though the lack of value for vendors as you note was in the end the key issue.

Bud Sigmund
Benton Harbor, MI



Q: What is ocean container carrier Matson's claim to fame?

A: Based out of Hawaii, it is the largest US container carrier, ranking number 32 on the Alphaliner top 100 list.

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