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July 31, 2020 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet The Widening Impact of the Virus on Society, Business, Supply Chain
bullet SCDigest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet New Stock Index

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 Sectors are Most Aggressive in Developing Women in Supply Chain


This Week's Supply Chain

by the Numbers

Worst Quarter for US GDP in History
Big Savings for Some for Moving Out of China, PwC Study Says
eTruck Maker Nikola Breaks Ground on Giant Factory


General Mills Needs more Co-Packers


July 30, 2020 Contest

Show Us Your Supply Chain Wit

It' Back! SCDigest's Weekly

Supply Chain Stock Index



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 29, 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

The term "lean manufacturing" was first intrduced in what year?
Answer Found at the
Bottom of the Page

The Widening Impact of the Virus on Society, Business, Supply Chain

I was on the phone this week with a staff member of a major supply chain organization. Like many, he has almost exclusively worked from home since the second week of March.

Nothing surprising there. But what was perhaps somewhat unusual was the fact that he had filled up his car with gas in that early March time frame - and was still on the same tank all these months later, so little was he now getting behind the wheel or travelling any distance.

This just to provide an anecdote on how profoundly the virus pandemic has and will transform our society and therefore our businesses and thus our supply chains.


The airlines are only still in business because of huge government bailouts. How long can that go on?


Send us your
Feedback here

Seven months ago, the coronavirus was some odd thing happening in China. But with not quite Walking Dead speed, the virus perhaps literally flew across the globe in short order, and is obviously with us still, accelerating in many ways.

While I get out a bit more than it appears the person referenced at the top of this column, like I assume many of you I live a sort of strange existence. Work at home, make it to the grocery store every other day or so, pick up pizza on Friday, maybe hit a home products store on Saturday morning.

I actually am modestly obsessed with thinking through the multi-level impacts of our changing behaviors on so many things.

Let's consider our now rarely driving friend again. He and others like him are buying much less gas, so gas station are hurting. So I assume are soda makers and companies that make cracker packs and other suppliers to convenience stores, where there must clearly be large drops in store traffic.

I would assume oil changes are down, as are new tire sales, and the auto repair sector and anyone else whose business is tied to miles driven (not to mention state gas tax revenues).

Insurance companies are issuing refunds for auto policies, as the risk for accidents fall with the reduction of time on the road. That could become a big issue for insurers eventually.

Soon it will hit the auto sector itself hard if things don't turn around quickly. Cars will last longer, and need to be replaced less frequently. The perceived value of a new car may decline if all it is needed for is to drive to the grocery store every now and again. No SUV needed for carpooling to school in the morning.

The millions of workers connected to the auto industry one way or the other will be impacted, maybe dramatically. Not only factory workers at OEMs and parts suppliers, but at steel and aluminum companies, dealer sales people, and so many more.

You get the idea.

There may be some modest return to normalcy if we do come up with a vaccine or cure for the virus. But so much of the change will be permanent, and transform how most of us live our lives.

Here are a few areas I have been especially following:

The Economy: Is a new Depression coming? It seems certainly possible. The first estimate for Q2 US GDP came out Thursday, showing a massive decline of 32.9% versus Q1 on an annualized basis.

That is by far the worst quarterly reading since they started measuring it in 1947, nearly four times the worst quarter in the Great Recession of 2008-09.

Another 1.4 million laid-off Americans applied for unemployment benefits last week. It was the 19th straight week that more than 1 million people have applied for jobless aid. Before the coronavirus erupted in March in the US, the number of Americans seeking unemployment checks had never exceeded 700,000 in any one week.

The economy is terrible, but so far we have avoided huge corporate layoffs. That may not be far away. It is clear millions of the jobs lost are not coming back for years.

The initial stimulus package and the Federal Reserve pumping cash into the economy have avoided catastrophe and kept the stock market high, but even with a new stimulus bill in the offing that scenario will not last forever. Worse times are to come, I am unfortunately believing.

The Retail Sector: Brick and mortar retail was already of course in decline, a victim of ecommerce generally and Amazon specifically, and new consumer behavior. That decline has accelerated.

Ecommerce sales were up a strong 14.8% in Q1, about in line with previous quarters. But awaiting Q2 numbers from the Commerce Dept., many predict in the stay at home economy that we will see 20% ecommerce growth.

It will not take many quarters of that to kill off most traditional retailers outside grocery, mass merchants, home products, auto parts and maybe a few others. The apparel sector is of course most at risk, with many questioning whether department stores or malls - and hence specialty apparel stores - are even viable. I sure hope they are wrong, even as I never go to a mall.

But things are going to be very different from here on out, as Amazon and Walmart eat what's left of the retail world.

And again looking to the cascading effects, think not only of the huge number of workers in retail who may be out of jobs with nowhere else to really go, but all the businesses beyond product vendors that depend on the retail sector for their own sales, from point of sale system providers to manikin makers to secret shoppers. And just when RFID was actually starting to gain some critical mass at last.

Robotics: As with many of the trends, this one is really seeing a pandemic-induced acceleration of an existing movement, but who doesn't believe the use of robots will rise even more rapidly than the fast trajectory it was already on?

Some will be adopted to reduce infection risk. As we've reported previously, Tyson is rapidly testing robotic chicken deboners even though humans can for now at least do the job better - because robots don't get the virus.

Restaurants are said to be looking hard at robots of all sorts to take the human out of the equation for customers that are demanding "touchless" food preparation.

The pizza guy spinning out dough into a 16 pie - likely an endangered species, as with burger flippers, onion ring makers and many more.

The robots of course are coming fast and furious in supply chain too - with the pandemic giving some cover to companies looking for the right timing for robotic transformation.

The Airline Industry: I have a friend that flew his family to Montana this week. I ask him if he felt safe.

He said Yes - because here was hardly anyone else on the plane. That with flights down like 80% from normal levels.

The airlines are only still in business because of huge government bailouts. How long can that go on?

Air travel volumes will take many years to recover, and they likely won't even modestly improve until a cure or vaccine is found.

So do giant government subsidies simply go on forever? Does air travel almost go away here in 2020?

Millions of jobs and our way of living our lives are at stake.

There is so much more to write about, and I soon might: the impact of on-line schooling, the end of sports, the end of museums, theater, etc., the hollowing out of big cities, declining populations, the end of newspapers, so much more.

It won't reverse and or even slow much of this, but a vaccine can't get here fast enough.

Any reaction to Gilmore's thoughts on the huge impact of the virus on everything? 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: The termĀ "lean manufacturing" was first intrduced in what year?

A: The term "Lean" was coined in 1988 in an article nby John Krafcik of MIT

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