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July 19, 2019 - Supply Chain Flagship Newsletter
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This Week in SCDigest

bullet 1H 2019 Supply Chain in Numbers and Charts
bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Distribution Digest/Green Supply Chain
bullet Cartoon Caption Contest Winner bullet Trivia      bullet Feedback
bullet New Expert Column and Supply Chain by Design bullet New Videocast and On Demand Videocasts
 

THIS WEEK'S FEATURED VIDEOCAST



Understanding Distributed Order Management

Highlights from the New "Little Book of Distributed Order Management"


In this outstanding Videocast, we'll discuss DOM, based on the new Little Book of Distributed Order Management, written by our two Videocast presenters.


Featuring Dan Gilmore, Editor along with Satish Kumar, VP Client Services, Softeon.

 

 
first thought

SUPPLY CHAIN NEWS BITES


Supply Chain Graphic of the Week
Global Trade Volumes Continue to Sag


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IKEA Closing US Factory

bullet
Retail Sales Surprisingly Strong
bullet
Amazon Workers in Minneapolis and Germany Strike
bullet
The Real Cause of Global Warming?

   

CARTOON CAPTION CONTEST WINNER

May 29, 2019 Contest



See Who Took Home the Prize!

ON DEMAND VIDEOCAST
The Grain Drain: Large-Scale Grain Port Terminal Optimization

The Constraints and Challenges of Planning and Implementing Port Operations

This videocast will provide a walkthrough of two ways to formulate a MIP, present an example port, and discuss port operations.


Featuring Dan Gilmore, Editor along with Dr. Evan Shellshear, Head of Analytics, Biarri.




vpic

Feature Story: Shippers Harnessing New Age Technology in Bid to Recruit New Warehouse Workers

 

pic GSC Feature Story:Could the Real Cause of Global Warming be Low Cloud Cover?
   

ONTARGET e-MAGAZINE
Weekly On-Target Newsletter:
July 17, 2019 Edition


Last Chance Cartoon, WMT Chasing AMZN, Clouds and Warming, More

ON DEMAND VIDEOCAST
How Supply Chain Companies Can Achieve Decision-Centric Optimization


The Most Important Outcome of Implementing an Algorithm-Based Supply Chain Optimization Solution

Featuring Dan Gilmore, Editor along with along with Dr. Z. Caner Taskin - ICRON's Chief Technology Officer and a Professor in the Department of Industrial Engineering at Bogaziçi University.



NEW EXPERT INSIGHT
Is Your Supply Chain Transparent?



by Sarah Trescott
Marketing Manager
Surgere, Inc.

EXPERT INSIGHT
Streamlining the Movement of Goods in the EU



by Kjell Bornkamp
Product Manager
Amber Road

SUPPLY CHAIN BY DESIGN
The Three Use Cases for Data Scientists



by Dr. Michael Watson
Northwestern University

TRIVIA QUESTION


What did Procter & Gamble do with Schnuck's Markets in St. Louis in about 1987?

Answer Found at the
Bottom of the Page


1H 2019 Supply Chain in Numbers and Charts

Wrapping up our review of the first half year in supply chain 2019, this week we offer our popular look at the six months in numbers and charts.

Last week, I summarized what I thought were the key supply chain themes and trends of 2019 (see 1H Supply Chain Year in Review 2019), which included our top supply chain stories of the first half.

So, let's get right to it.

GILMORE SAYS:

After a torrid 2018, the Cass truckload Linehaul Index,which tracks truckload rates, slowed considerably here in 2019.

WHAT DO YOU SAY?

Send us your
Feedback here

We always do a check on the US and global economy, as that has such an impact in the end on supply chain practice.

After real GDP growth of 2.9% in 2018 - just missing reaching the 3% growth level amazingly not seen since 2005, Q1 started off the year strong enough at 3.1%, after rising 2.2% in Q4.

 

But there are concerns the trade wars that dominated supply chain news in 1H 2019, along with growth now for 10 years that may at last be running out of steam, are leading to slower economic growth.

 

The first official Q2 GDP numbers have not been released, but the Atlanta Federal Reserve Bank now forecasts real GDP growth of just 1.5% in Q2 - up, however, from 1.3% previously.

 

But growth in China is slowing significantly, down to 6.2% in Q2, the lowest quarterly level in 27 years - and the official number is almost certainly overstated.

The International Monetary Fund expects the global economy to grow 3.3% in 2019, down from 3.6% in 2018, citing trade concerns.

In the US, the IMF economists foresee 2019 growth of 2.3%. The IMF cut its outlook for the euro-area economy to just 1.3%.

Consistent with a slowing economy, the US Purchasing Managers Index from the Institute of Supply Management managed to stay above the 50 mark that separates manufacturing expansion from contraction every month in the 1H- but barely of late. As seen in the ch
art below, the PMI was just 51.7, and trending down since the January number of 56.6%.

Another view of US manufacturing strength is the index on output for US factories from the Federal Reserve.

 

US manufacturing output accelerated in June, climbing for the second straight month, thanks in large part to increased production of motor vehicles and parts.

The Federal Reserve said this week that manufacturing production rose 0.4% last month, above the 0.2% expected by analysts in a Reuters poll.

The June numbers were stronger than the 0.2% growth seen in May, which had been the first growth of 2019 after several months of manufacturing declines or flatness.

However, as can be seen from the chart below, US manufacturing output has been flatish for many years now - and at a June level of 105.2 is just 5.2% above the baseline year of 2012 seven years later, meaning growth of less than 1% annually since then.

What's more, that also means current output remains well below the peak year of 2007, when the index reached an historic high of 110.0 in December.

Oil prices were mostly up in the quarter, though dropping in the last couple of months. The price for WTI started $46.54 per barrel, which turned out to be the lowest level of the 1H.

The price went up steadily until reaching a 1H peak of $66.30 in late April, a gain of 42% from the start. But it was mostly downhill from there, with a price at the end of June of $59.09, a gain of 27% since the beginning of the year.

Despite those rather significant gyrations, US diesel prices were remarkably stable, starting the year at $3.04, rising a bit to a 1H high of just $3.17 the week of May 6, and then falling back to the same $3.04 level that started the year at the end of June.

Commodity and input prices were falling for most of the 1H, after a very long period of increases. The ISM Prices index indicated rising input prices for the 34th straight month in December, but dropped into negative territory in January. The index was below 50 - indicating falling prices - again in February, before popping a bit above 50 for the next three months. The June level dropped again to just just 47.9, clearly signaling demand is weakening and causing falling procurement costs.

Freight volumes were mixed, with ATA freight tonnage index down 6.1% in May (no June number yet). Compared with May 2018, the index increased 0.9%, the smallest year-over-year gain since April 2017. "Tonnage appears to be leveling off," the ATA says - another sign of a slowing economy.

 

After a torrid 2018, the Cass truckload Linehaul Index, which tracks truckload rates,slowed considerably here in 2019.

 

As can be seen in the chart below, rates were trending down since the start of the year, and in June were up just 0.9% year-over-year. "The trajectory on a nominal basis strongly suggests that the TL index will go negative next month and stay negative (compared to 2018) through the end of the year," Cass notes, is goods news for shippers.

It was a tough first half for US railroads. Total US rail traffic for 1H 2019 was down 3.1%, while the once fast growing intermodal component was down 3.2%.

In terms of ocean container carriers, the China Containerized Freight Index jumped to a two-year high of 890 at the end of January, coinciding with the tail-end of the great US container import boom, precipitated by the great pull-forward of 2018. But keep in mind that still means rates were more than 10% below those seen in 1998!

The index then promptly fell below 800 late April before ending June at about 815. No wonder carriers can't make any money.

The World Trade Organization expects trade to rise by a mere 2.6% in 2019 - the same as projected global GDP growth (which is lower than the IMF forecast cited above). Not long ago, it was common for global trade to be double the rate of GDP growth.


The US tariffs are in fact it seems having an impact on Chinese imports, which were down 7.8% in May. But that still left a huge trade gap of $29.9 billion for the month. And recently analysis from AT Kearney found the reduced imports from China are just moving to other Asian countries, with the total import from 14 Asian countries including China up 9% in the first half even as China exports fell.


The growth of ecommerce sales in the US remains strong - but is slowing. Growth in Q1 was 12.4%, according to the Commerce Depart, but that is down from the 15-16% seen until about a year ago. It was 12.1% in Q4.


Amazon is not yet out with its Q2 numbers yet, but in Q1 its total revenue grew 16.9% compared with the year-ago period, representing the slowest expansion since the first quarter of 2015, but taking it to quarterly sales of $59.7 billion. Its North American revenue saw a 17% increase, but much lower than last year's 46% growth.

 

But it is making money - net income in the quarter was a robust $3.6 billion, a record.


I have lots more but am out of space. Hope you enjoyed all this.


What is your reaction of 1H supply chain 2019 in numbers and charts? What would you add? Let us know your thought at the Feedback button below.

 
   

New Videocast:

Understanding Distributed Order Management

Highlights from the New "Little Book of Distributed Order Management"

In this outstanding Videocast, we'll discuss DOM, based on the new Little Book of Distributed Order Management, written by our two Videocast presenters.


Featuring Dan Gilmore, Editor along with Satish Kumar, VP Client Services, Softeon.

Wednesday, July 31, 2019

On Demand Videocast:

The Grain Drain: Large-Scale Grain Port Terminal Optimization



The Constraints and Challenges of Planning and Implementing Port Operations


This videocast will provide a walkthrough of two ways to formulate a MIP, present an example port, and discuss port operations.


Featuring Dan Gilmore, Editor along with Dr. Evan Shellshear, Head of Analytics, Biarri.


Now Available On Demand

On Demand Videocast:

A Blueprint for WMS Implementation Success


If You Want a Successful WMS Project, You will Find the Blueprint in this Excellent Broadcast


This videocast lays out the keys to ensuring your WMS implementation goes smoothly, involves minimal pain, and accelerates time to value.



Featuring Dan Gilmore, Editor along with Todd Kovi of Radix Consulting and Dinesh Dongre of Softeon.


Now Available On Demand

YOUR FEEDBACK

Some of the short feedbacks on our recent piece on The Top Supply Chain Innovations of All-Time

Feedback on The Top Supply Chain Innovations of All-Time:

comma

Always enjoy reading your work and it was a great pleasure to see our Continuous Replenishment Program (CRP) ranked #2 of your Top Supply Chain Innovations. CRP certainly served to transform how the grocery industry operates, initially leading to the Efficient Consumer Response initiative, Collaborative Planning, Forecasting and Replenishment (CPFR) and in turn strategic retailer/supplier partnerships.


Ralph Drayer
Supply Chain Insights LLC




 

comma

Very informative.

 

Just for the record and to be accurate, when you update your list do not forget to accurately represent the background history that led to P&G's CRP initiative with Walmart & Kmart.

Had RP&G followed up on mu recommendation back in 1988, P&G and Walmart would have been the very first users of what we call "Flowcasting" 20 years earlier than Kraft and and Walmart did.

 

Andre Martin
Co-Inventor
Distribution Requirements Planning and Flowcasting



 


a

 

comma

 

Fantastic, well researched list of innovations. Thanks for the work.



Steve Collins
Chicagoland



 

comma

 

Wow, Dan thanks for the Kudos on behalf of all of IBM on the innovation article. Hope we can live up to our past in the future of this area.

Erik Bergeman
IBM Retail Solution Executive

SUPPLY CHAIN TRIVIA ANSWER

Q: What did Procter & Gamble do with Schnuck's Markets in St. Louis in about 1987?

A: Pioneered the use of Continuous Replenishment.

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