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June 12, 2020 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet The Virus Crisis - It's not Over til It's Over
bullet SCDigest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet New Stock Index/Green Supply Chain

New Cartoon Caption Contest!

bullet Trivia      bullet Feedback
bullet New Expert Column bullet On Demand Videocasts


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Supply Chain Graphic
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What Actions did Company Takes to Deal with Virus Supply Chain Disruptions?


This Week's Supply Chain

by the Numbers

Massive Store Closings
eTruck Maker Nikola Sees Stock Soar
World Bank Predicts Major Drop in Global GDP


Wareihouse, Parcel Jobs See more Gains


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pic GSC Feature Story:Bloomberg Says Amazon Evaluated but Rejected Idea to Push Customers to Slower but Greener Delivery Options

The State of Retailer-Vendor Supply Chain Relationships 2020

Are Things Getting Better and More Collaborative - or Heading in the Other Direction? Third Biannual Study - Please Participate


Weekly On-Target Newsletter:
June  10, 2020 Edition

Cartoon, Top SCDigest Stories of the Week

What to Do about Lack of Gender Diversity in Supply Chain Management

Abel Tamanji

Senior Student at University Of Wisconsin-Whitewater

The Foundations of Successful ASN Programs

Clarity, Detail and Sensibility

What is significant in supply chain terms about the name "Cadabra"?
Answer Found at the
Bottom of the Page

The Virus Crisis - It's not Over til It's Over

For more than two months I used this First Thoughts column to review and comment on the week's news on the coronavirus and the supply chain, from the economic impact to the non-stop reports of the pandemic running wild in US meat packing plans.

But a couple of week's ago, with the country "opening up," the news flow slowed dramatically. Rules were relaxed, people were out (commonly without masks, at least in my home base of Ohio), factories and restaurants opened, and the virus threat seemed to be receding.


Politico added that "The number of meatpacking workers dying from the coronavirus is still rising, and employees across the country are scared to come to work."


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I have just one observation: "It ain't over til it's over," as former Yankee great  Yogi Berra supposedly quipped.

Earlier this week, Dr. Ashish Jha, director of the Harvard Global Health Institute, said that one hundred thousand more Americans will die from coronavirus by September, doubling the country's current death toll of just over 112,000.

"We right now have about 800 to 1,000 Americans dying from coronavirus each day. If we don't have anymore spikes during summer, over the next three months, we'll cross the 200,000 mark," he told NBC's Today on Thursday

That would be much faster than it took for the first hundred thousand deaths. And that if the new open, end of lock down measures don't send infections and deaths even higher.

"We still won't be done," Jha added. "This pandemic is going to be with us until next spring when we have vaccine," Jha said, as if a vaccine is a sure thing.

Coronavirus hospitalizations have been increasing in at least nine states - mostly in the south and south-west of the country - over the past two weeks.

The possibility of a second wave - and a return to lock down policies and other restrictions - sent the stock market tumbling this week, after a strange rise of almost 40% from the bottom in late March despite a tanking economy and the risk of a second outbreak. The Dow Jones average was down 1800 points on Thursday alone.

"There's just been a happiness trade that has been out of sync with everything," said well-known CNBC commentator Jim Cramer.

Problems with the virus and the food supply are hardly over, just because the reporting in the media is largely moved on.

Bloomberg reported this week that at least 60 food-processing facilities outside the meat packing industry have seen outbreaks, with more than 1,000 workers diagnosed with the virus.

These are the first national numbers of their kind, Bloomberg said. The Environmental Working Group compiled the data using local media reports because, it turns out, there are no federal agencies reporting the data.

"The true total is almost certainly higher," Bloomberg says. "Fruit and vegetable packers, bakers and dairy workers are risking infection as the virus spreads through processing plants where employees deemed essential have mostly remained on the job during the pandemic, sometimes laboring in close quarters."

As we reported two weeks ago, as I predicted early on, there have been significant rates of infection of generally migrant workers across a growing number of farms, where the people often work, travel, and domicile in close quarters.

Then news this week that there have been almost 1000 workers on farms in Immokalee, FL, considered the country's winter tomato capital. The actual number of infections is almost certainly much higher.

But the current tomato season is coming to an end, and health professionals now worry that as those workers move north to work the summer fields in other parts of the country they will take the virus with them.

The problems at meat packing plants is hardly over, by the way. This week, for example, news that 287 workers have tested positive for the coronavirus at the northern Utah meatpacking plant owned by giant JBS.

A JBS spokeswoman said that the plant "is open at a reduced capacity."

For now, some/most meat packing plants are trying to keep the six feet of separation between workers, but as a excellent piece in the New York Times this week noted, this only works at greatly reduced volumes.

The Times piece included the graphic below of the layout of a typical meat processing plant, with the blue dots representing workers. As can be seen, the only real way to increase separation of workers is to have far less of them in the fabrication area, at least with currently factory floor space. That would mean far lower output - at least until the robots show up someday soon, I suspect.



Source: New York Times

An article this week in The Hill newspaper noted that "Meatpacking plants in the US remain hot spots for coronavirus outbreaks."

Politico added that "The number of meatpacking workers dying from the coronavirus is still rising, and employees across the country are scared to come to work."

What will be the economic impact of all this/ No one knows - forecasts are all over the map.

But I will note that the World Bank this week projected a decline in the global economy of 5.2% this year. If accurate, the decline would be the worst since World War II and nearly three times as steep as seen in the 2009 global recession.

But it warned that "even worse scenario is possible" if the health crisis extends for additional months.

That seems as likely as not to me.

Any reaction to Gilmore's column? Let us know your thought at the Feedback section below.


On Demand 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.

Now Available On Demand

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.

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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


After our column last week noting we've turned from toilet paper shotages to "where's the beef?", our friend David Schneider of David K. Schneider & Company sent us this nice email explaning how the meat supply chain works. Now you know!

Feedback on the Meat Supply Chain:


For beef (and lamb/sheep), there are two stages of meatpacking - Primal and Final.

Primal Cuts are the large cuts - whole sections of the animal, cut away from the carcass, later packed for processing into final cuts.

Some of the larger packing operations run from kill to final in the same complex - the traditional way that people think of a meatpacking plant. But many of the new massive campus operations, including the JBL and Tyson sites in the news, ship under long term contracts meat packaged for retail or portion control use.

For decades the meat supply chain operated at two levels; packing houses that shipped primal-and sub-primal - packaged into vacuum bags and frozen for shipping to grocery stores - where meat cutters cut and package the final cuts for sale at that location.

Today, a sizable portion of the production from the kill line is still primal to package and shipped to other companies/facilities that do the Final cuts. Most of the consumers of primal and sub-primal are wholesale distributors, local butchers, Costco, and Asian grocery, where there is still local meat cutting.

A large portion of the US grocery market no longer operates local meat rooms in their retail locations. Walmart is one significant example of the retail scene, as is most of the Royal Dalheize group (Stop-n-Shop, Giant), Aldi, Lidl, and other growing chains. Those contracts with retailers are under tight margins, costs supported by the typically much higher foodservice contracts with bigger and steady margins.

The supply chain innovation that Tyson, JBL, and the rest employed was centralization and concentration of labor into these large campuses - close to the production of the animals. Our modern network of refrigerated logistics - temperature controls trucks and warehouses - helps facilitate the consolidation of the final steps of meat cutting from local to the market to local to the source.

Primal cuts flow between companies in the meat industry like cash - and interesting features in the USDA regulations allow for long term freezing of primal cuts that can sell later as fresh meat. There are times where hundreds of millions of pounds of frozen primal cuts sit in 3PL freezer warehouses. I suspect at this moment, hundreds of millions of pounds of frozen primal cuts sit in warehouses, unable to move to the market because there are fewer places that can do the final cut. I suspect the owners of this meat don't want to ship these cuts because to ship now erodes the future profit margin of the packaged and portion-controlled product.

The COVID virus exposes a substantial risk of consolidation and full-integration of production in the supply chain.

David K. Schneider
David K Schneider & Company, LLC    


Q: What is significant in supply chain terms about the name "Cadabra"?

A: It was Jeff Bezos original preference to name what became

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