Supply Chain by the Numbers for Week of Oct. 2, 2014

Supply Chain by the Numbers

- Oct. 2, 2014 -

US Soon to be Number 1 in Oil Production; 3PLs are Closing the Dreaded IT Gap; Zara Spending Millions on RFID Tags - but with Plans for Reuse; Diesel Prices Falling Desite Mid-East Turmoil



11.5 Million
Number of barrels of "liquid petroleum" that the US has been producing in recent months - putting it on par with the world's number 1 producer, Saudi Arabia. Liquid petroleum includes not only oil but also ethane and propane. The Financial Times wrote this week that "With US production continuing to boom, its output is set to exceed Saudi Arabia's this month or next for the first time since 1991," as the US fracking revolution continues on. The Saudi's noted that they could easily increase daily production by some 2.5 million barrels if it wanted to, but think their current level is right based on global demand. Meanwhile, US Energy Information Administration chief Adam Sieminski said this week that without this surging US production, world oil prices could be near $150 per barrel, versus the $95 or so for Brent Crude currently.

60%

Share of 3PL users that say they are satisfied with the IT capabilities of those outsource providers - a record high level. That according to the 19th annual Third Party Logistics Study, released last week as always at the annual CSCMP conference in San Antonio, an effort headed by Dr. John Langley of Penn State University, as it has for all 19 years of the study. For a number of years, the report has been tracking what it has called the "IT gap," in which 3PL users placed a high level of importance on 3PL IT capabilities, but saw those capabilities as being pretty low. The percent of shippers who say a 3PL's IT capabilities is a critical element of overall success has risen from 89% in 2002 to 97% in this year's results, while the percent of shippers satisfied with those capabilities has increased at a much faster rate, from just 27% in 2002 to 60% this year - good news for 3PLs.



500 Million
Number of EPC RFID tags that Spanish retailer Zara has order to support its item-level tagging rollout to all of its nearly 2000 stores by 2016. That represents about one-sixth of all tags that will be procured this year for item-level apparel tagging. At a cost of still ten cents or so per chip, that tag buy adds up to a rather significant expense, but unlike other retailers on this same RFID path, Zara has plans to reuse these passive tags. Most retailers have had tags place inside labels or hang tags, where they basically become throwaways after a consumer buys the product. But Zara is having the EPC tags placed inside the plastic housing of the existing Electronic Article Surveillance (EAS) tags it is already using, so that the EPC chips can easily be recycled and assigned to new items back at the DC. We are very close right now to a tipping point for item-level tagging in soft goods retail.



$3.75
That's the average on the road price for diesel fuel last week, according to the US Energy Information Administration. That is the lowest level since July of 2012. The last time the average cost of diesel increased in a week was on June 30. Since that time it has fallen every week, except for one week earlier this month when it was unchanged. Over this time it has declined 16.5 cents. All that as turmoil in the Middle East rages on - the days of "geopolitical risk" driving oil prices higher seems to be temporarily over, for whatever reason, which is simply amazing. Despite some swings in oil prices over the past couple of years, the price of diesel has remained remarkably stable, now getting out of its two-year trading range - to the low side, great news for shippers.