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July 10, 2020 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Six Months that Changed the Supply Chain World Forever
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



A new report from ARC Advisory analyst Clint Reiser lays out the
landscape across WMS, WES and Warehouse Control System (WCS)
software, detailing the WES value proposition, and describing
important changes in the WES market.


first thought


Supply Chain Graphic
of the Week
What Cities are Seeing the Most DC Construction?


This Week's Supply Chain

by the Numbers

Walmart Launching Amazon Prime Challenger
Plan for West Coast Electric Truck Charging Stations
Depressing Economic Forecast from the CBO


Chinese Rampant IP Theft


May 27, 2020 Contest

See Full Size Cartoon Submit Entry

It' Back! SCDigest's Weekly

Supply Chain Stock Index


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:
July 8, 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

Manufacturing represents about 11% of US GDP.  What is the percent in Germany?
Answer Found at the
Bottom of the Page

Six Months that Changed the Supply Chain World Forever

For nearly 20 years, at the end of the each first half and full year I have used this column to review key supply chain trends and the most important news and events by month for readers.


Well, it won't be so here for H1 2020, when the coronavirus simply overwhelmed everything else.

Many of us might have thought the Great Recession of 2008-2009 was a once in a generation or even lifetime event. Compared to the first six months of 2020, that deep recession was a minor blip.


For years we've been told we are seeing a return of urbanization. Now, the migration is going the other way.


Send us your
Feedback here

Whatever the new nor mal turns out to be, we're clearly never going back.

I am actually going to start somewhat in the middle of the global virus timeline but near the start of the crisis in the US.

The MODEX show from MHI was scheduled from March 9-12 at the World Congress Center in Atlanta. It is a huge show that normally draws about 35,000 attendee, full of materials handling, supply chain software, and other vendors exhibiting their wares.

Three weeks before the show, no one was really paying attention to the virus. A little closer in, the virus started having an impact in the US - the first US death was reported on February 29 in Washington state. But in just a few days leading up to the start of the show, virus infections were being reported in numerous locations across the country, literally overnight.

MHI ultimately decided to go ahead with the show. I took a flight on a smaller plane to Atlanta, on which two or three people were occasionally coughing. When they did, you could feel the whole plane listening to the dreaded sounds, wondering if these passengers were infected and sending droplets in the air towards the rest of us.

I have no doubt that if the show was scheduled to start two or even one day later it would have been cancelled. A handful of exhibitors pulled their people out, leaving in some cases major exhibits sitting empty in the convention center hall for four days. Very strange, if perfectly understandable.

The crowd I would estimate was down 65%. Many of those that came left early. Seeing a friend or meeting someone new involved an awkward moment where you had to figure out if you were going to do a head nod, elbow bump, or actual handshake.

I must confess that if someone held out their hand, which several did, I shook it - nervously waiting for a moment of escape when I could hit the washroom or reach for some hand sanitizer.

Fortunately, there turned out to be just small handful of infections connected in any way to the show.

The impact of the virus short, medium and long term almost can't be overstated, some of that visible now, but much else we have yet to see really develop.

Perhaps the most amazing is the whole "work at home" phenomenon available to many white collar workers that will alter employment models and processes permanently. I could write a whole column on this single topic alone, perhaps starting with how "Zoom meeting" morphed overnight from lightly used business technology to the key tool to connect now distributed at home workers and serve as a consumer e-lifeline.

Many companies are finding productivity didn't fall sharply at all, as was feared. Perhaps, CEOs are thinking, we really don't need all that expensive office space.

I drove by a suburban office building complex in Ohio not long ago and saw nearly empty parking lots. It made me think of the janitorial services that probably are now longer needed, the nearby lunch joints that were forced to be closed by governments and now that are partially back open in most states but have seen their customers in those nearby office building simply disappear. Probably not too many FedEx packages being delivered to those empty building either.

Will it even be worth hiring a service to keep the parking plowed in snow-heavy states?

Gasoline stations, tire stores, and auto repair shops have undoubtedly seen their businesses take a huge hit as far fewer workers drive to jobs, a phenomenon that will soon bleed into sales of new cars.

Next: For years we've been told we are seeing a return of urbanization, with childless millennials flocking back downtown to be near the action, ditch car owning, and embrace Uber.

Now, the migration is going the other way, and like other impacts of the virus, maybe is just an acceleration of an existing trend.

An article in the New York Times recently said that "the urge among some big city residents to leave due to the coronavirus may be temporary. But is follows a deeper, more powerful democratic trend."

I ask: could remote working and the move by many to get out of large cities cause many of them, especially New York City, to simply be hollowed out? I think that is a real possibility.

Of course, nearly all retail stores outside of grocery, drug, and home improvement were forced closed in most states. That left say Target stores able to not only sell groceries and other essentials but also blue jeans - while the dedicated apparel stores remained closed.

The result: a wave of retail store closures and outright bankruptcies that is probably its early stages, while Amazon, Walmart, Target, Kroger and other large "essential" stores saw sales soar. There are real questions as to whether the department store and shopping mall concepts are even viable any more.

Again, much of this is simple acceleration of existing trends, but something has changed.

eCommerce sales have been rising at now a 20% year-over-year pace since the pandemic, well above the 14-15% before, strong enough on its own. But if the 20% growth range persists, the huge societal and supply chain ramifications of this transformation will be here all the sooner.

I wouldn't want to be in the Point of Sale technology business, that's for sure. And will it be just Amazon, Walmart and a handful of others in retailers soon, as brand companies seek on-line salvation? The world, and the consumer goods to retail supply chain, will be vastly different.

Schools closed, and moved on-line at all levels. Harvard is apparently confident it can carry on at $50,000 plus per year for on-line learning, but I think their numbers will drop - as will virtually everyone else's, absent steep tuition cuts. Colleges make tons of their money on dorm room and board - gone in an on-line delivery world.

Many seemingly job safe academics with tenure will find tenure doesn't save them from a virus induced staff reduction. Some - perhaps many - colleges will fail. University towns that were semi-recession proof will find they are deeply exposed, with no one there to buy pizza and beer and rent apartments, and many faculty and staff unemployed.

There are so many other virus impacts you could almost go on forever. What happens to society when the "fiscal cliff" is reached soon as government stimulus payouts and rules prohibiting evictions end is scary to ponder.

Some of these and many other changes may slow if we get a vaccine sometime soon. But many others will be here to stay, making the first six months of 2020 by far the most impactful of my lifetime.

Is this the most impactful six months in your lfetime? What are some long term changes you see that will result? 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.

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


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: Manufacturing represents about 11% of US GDP. What is the percent in Germany?

A: About 24%

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