Supply Chain by the Numbers

- August 14, 2014 -

  Supply Chain by the Numbers for Week of August 14, 2014

Target Resets Its Canada Supply Chain; USPS Parcel Volumes Surging Due to Partnerships; BMW Jumps on China Part Price Reduction Bandwagon; US Carriers Continue to Keep Fllets Flat or Lower



Number of retail stores Target has in Canada, which have performed poorly after a disastrous launch by Target into Canada in 2013, troubles due in large part to supply chain woes. The company has now said it is executing a "supply chain reset" in the country, starting with a detailed physical inventory in each store, implying perpetual inventory counts were simply way off. Reports are that in 2013, the bar codes on cases of goods indicated quantities per case that did not match Target’s computer counts, causing huge inventory errors and much manual counting and re-labeling at its three Canadian DCs - and thus empty store shelves. Target's loss on its Canadian unit is some $1 billion thus far.




Share of FedEx's total US ground network that moves in part through the United States Postal System, according to a recent article in the Wall Street Journal. The equivalent number for UPS is not known, but is thought to be roughly in the same range if not more. For FedEx, that translates into some 2.2 million parcels per day that are delivered for it by the USPS, as part of its Smartpost service; UPS calls its equivalent service Surepost. Both use the postal system for the back-end of their cheaper 2-7 day delivery options.The post office's "parcel select" services, which support FedEx and UPS' programs as well as some Sunday deliveries for, have grown nearly 500% versus 2009 to about 1.29 billion packages in 2013, though some suggest the USPS pricing is too cheap.


Number of tractors that truckload carrier Swift Transportation had at the end of Q2, according to its recent quarterly earnings report, down from 11,021 in 2013. That despite the fact that freight demand has recently been rising by nearly all measures, including the carriers' own commentary. Now you know why capacity is increasingly tight, and rates are clearly headed higher. And Swift was hardly alone: Werner ended the quarter with 7035 tractors, down from 7150 in 2013; JB Hunt's truckload segment continues to shrink, ending Q2 with 1,860 tractors compared to 2,018 a year ago. In some fairness to the carriers, the severe driver shortage is a key factor is keeping fleet sizes low, but this is not good news for shippers.



Discount on auto parts sold in China announced late last week by German automaker BMW, no doubt in response to the numerous antitrust investigations the country is pursuing against Western companies across a variety of industries for selling goods in China at higher prices than they do in other markets. That is not legal in China. BMW rival Daimler had recently dropped parts prices in China an average of 15%, but that wasn’t enough to keep Chinese regulators from raiding the company’s China headquarters in Shanghai looking for evidence of excess pricing. This is a very big issue there – time to check your company's pricing levels soon to avoid fines and other sanctions.