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March 24 2023
Supply Chain Digest Flagship Newsletter


This Week in SCDigest

bullet The Mysterious Drop in eCommerce bullet SCDigest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet New Stock Index

New Chain Cartoon Caption Contest!

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Session 4 - As is/To be Process Modeling

March 30, 2023

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first thought


Supply Chain Graphic
of the Week


Inbound Container Volumes Continue to Sink

This Week's Supply Chain Numbers

Walmart Launches Drone Service
US Manufacturing Flat in February
Cyber Attack Shuts Down Major Food Distributor
Dramatic Reduction in CO2 needed by 2030, UN Report Says


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Expert Insight

How can a WMS be used for your Micro-Fulfillment Center?


Its Purpose Consists of Bringing the Logistics arm of Your Operation Closer to the Customer and end Consumer


Victoria Cardenas
Strategic Account Executive


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The Importance of Pre-Shipment Inspections for Supply Chain Diversification



Pre-shipment Inspections can Mean the Difference Between Success and Failure in Today's Competitive Global Market


Viktor Haggstrom
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 This Week's SCDigest OnTarget Newsletter

Cartoon, Top SCDigest Stories of the Week

What did the 1990s retail sector supply chain initiative ECR stand for?
Answer Found at the
Bottom of the Page


The Mysterious Drop in eCommerce

On-line shopping is taking over the world.


Or maybe it's not.

I am fresh back from MHI's ProMat show in Chicago, where interest in automation for distribution processes was at high levels, with almost 50,000 registrants, up from roughly 35,000 at the last ProMat in 2021, and roughly the same for the sister show MODEX in 2022.



The share of ecommerce as a percent of overall retail has remained basically flat since Q4 of 2022.

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That interest in DC automation is certainly driven by the continued issues nationwide in terms of labor shortages and costs. But in retail, consumer goods and some other businesses, that has also been closely connected to the rise in efulfillment, with its labor-intensive and costly piece-picking processes to ship on-line orders to consumers' homes.

As ProMat, mobile robot vendors that support such piece picking processes saw very high numbers of show attendees crowding into their booths.

But interestingly, as ProMat was ending its four-day run on Thursday came this surprising news: Walmart is laying off hundreds of employees at ecommerce fulfilment centers across the country.

In a statement, Walmart said it made the cuts "to better prepare for the future needs of customers," which of course doesn't make much sense, but that's what we got.

As first reported by the Reuters news service, Walmart confirmed that it is eliminating hundreds of jobs at five fulfillment centers in Pedricktown, New Jersey; Fort Worth, Texas; Chino, California; Davenport, Florida; and Bethlehem, Pennsylvania. It told Reuters it was reducing its workforce because of a reduction or elimination in evening and weekend shifts.

About 200 fulfillment center jobs will be cut at a the southern New Jersey facility alone.

So much for large signing bonuses and ever higher wages in the scramble for efulfillment workers.

What in the Sam Hill is going on here, as my grandmother used to say?

It certainly appears we have hit an ecommerce ceiling.

In Walmart's case, ecommerce sales rose 12% in the most recent fiscal year, which ended Jan. 31. That compares with 11% growth in fiscal 2022 and but 79% in fiscal 2021, when COVID changed market dynamics and sent ecommerce sales skyrocketing.

Here are some other data points:

• February parcel volumes were actually down in the estimated mid-single digits compared with a year earlier, according to ShipMatrix, which analyzes parcel shipping data.

16,9000 US jobs at trucking, warehousing and parcel-delivery companies were cut in February, following a drop of 2,200 jobs in January, with a slowdown in ecommerce being cited as a key factor.

Somewhat buried in its Q4 earnings release was the fact Amazon's on-line sales actually fell 2% in Q4, continuing a pattern stretching back a year.

It has been widely reported that Amazon has stopped or stalled opening a number of planned fulfillment center openings, and it was reported last year that Amazon was actually looking to sub-lease what is now viewed as excess fulfillment center space.

The US Census Bureau keeps track of ecommerce sales, and though I have heard some criticism that its numbers are off it seems to be the best we have. Over the last four quarters, starting with Q4 2022 and then the preceding three quarters, the data shows what appears decent year-over-year growth: 6.5%, 9.3%, 7.2%, and 6.8%.

But in most cases, that is not as fast as overall retail sales growth. The share of ecommerce as a percent of overall retail has remained basically flat since Q4 of 2022. Much of the growth in both brick and mortar and ecommerce in the last year is simply the result of high inflation, with unit volumes flat or down slightly.

So what's it all mean? I think the growth of ecommerce has permanently slowed, as was of course inevitable given the "law of large numbers," and the crazy levels of growth seen in 2020 through mid-2021, as COVID dramatically changed buyer behavior.

But does all this mean companies will cut back on investment to support efulfillment?

Maybe a little, but I think cycle time and cost pressure will still drive many to deploy new hardware and software despite slowing on-line sales.That actually could be a factor in the Walmart layoffs. Greater efficiencies in the pick, pack and ship processes, combined with slower growth, means off-shifts and weekend work are no longer needed to get the orders out the door.


In fact, Walmart rival Target is continuing to spend big on building out a network of sortation center despite its own slowdown in ecommerce volumes, recently noting on-line customers still require rapid delivery regardless of what is happening at a macro level.

In the end, the move to highly automated DCs will continue and may actually accelerate, even as the ecommerce growth curve permanently flattens.


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Understanding Distributed Order Management

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

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

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The Constraints and Challenges of Planning and Implementing Port Operations

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

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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.

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What did the 1990s retail sector supply chain initiative ECR stand for?

A: Efficient Consumer Response

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