Supply Chain by the Numbers

- September 18, 2014 -

  Supply Chain by the Numbers for Week of Sept. 18, 2014

UPS Bulking Up Manpower for 2014 Peak; Here Come Ships Bearing Gypsy Moths; Some but Not All Getting Procurement ROI; Tesla's Sweet Nevada Factory Deal



Number of temporary workers parcel giant UPS plans to hire in the US for the Christmas season this year, in hopes of avoiding the last minute delivery meltdown the company saw in 2013. That 95,000 is up from about 55,000 last year. And UPS is not investing just in people to make sure things go smoothly in 2014: The company said it was also adding thousands of new or leased delivery vehicles, trailers, aircraft and portable loading aids for the period. All told, will increasing spending on new technology and extra manpower by 21% to $2.5 billion this year, much of that focused just on the Christmas season peak period. Lack of aircraft capacity in the face of a huge surge in on-line orders right before Christmas, combined with a snowstorm in Texas that backed many deliveries up, were the two key factors in last year's failure.




Number of ships trying to enter the ports of LA and Long Beach this season that have been turned away for carrying the destructive Asian gypsy moth, including three more this week. That's up from nine ships in last year’s season. The moths can be devastating to local plant life. In 2004, nearly 14 million acres on the US East Coast were attacked by the insect, from which that area is still recovering. These foreign moths eat up to 600 species of plants, much more than indigenous gypsy moths in North America, and most often come from ships carrying cargo from China, Japan, South Korea and Russia. Since 2009, incoming ships have been inspected for signs of the moths, and turned away for fumigation if any are found. The process can delay a ship with the moth six days or even more. It is possible/likely that ships entering other West coast ports have also been delayed, but that information has not yet been reported.


The payback top procurement organizations get from their investment in supply management people and tools, meaning 11+ dollars in hard savings come back from each dollar invested. The number for the average firm: a ratio of just 4.5, a positive return for sure, but less than half that of the leaders. All this according to a new study from AT Kearney, Institute for Supply Management, and the Chartered Institute of Purchasing and Supply, based on a unique measurement system developed by Kearney. Laggard companies: they get back a little less than they spend. Ouch. This is some interesting stuff – see Delivering ROI and Relevance from Procurement Operations.


$1.3 Billion

The amount of tax breaks that electric car maker Tesla will receive from the state of Nevada in return for deciding to build its new $5 billion battery factory in the Reno area. While all companies work hard for these types of deals, Tesla may have taken it to new levels, starting with a formal bidding process across states, with a minimum opening bid of $500 million in tax breaks. With the Nevada deal, Tesla will be exempt from property taxes for 10 years and sales taxes for 20 years. It will also get $195 million in transferable tax credits that it can sell to any other businesses. Tesla also gets a 10% to 30% electricity discount over eight years, and can sell excess electricity it generates from renewable sources it is building back to the electric companies for a healthy profit. On top of all that, its current battery maker Panasonic is going to pay 30-40% of the cost of factory construction in return for running the place as a contract manufacture. This has to be one of the greatest negotiating successes for a new plant of all time