Supply Chain by the Numbers for Week of March 4, 2015

Supply Chain by the Numbers

- March 4, 2015 -

Amazon.com Tracks Its Fulfillment Center Design Iterations; Walmart Releases Sustainability Leaders Program for Consumers; Can Phone App Solve Port Congestion Issues? Dollar Rises to 11-Year High



14 Million
That's how many containers the Port of Los Angeles should be able to easily handle. But, "we're gridlocked at a about 8.3 million," according to Gene Seroca, executive director at the port, in an article this week in the Wall Street Journal. It is thought that working off the backlog at West Coast ports, notable LA-Long Beach, will take several months at minimum, now that a tentative labor agreement with the dock workers union has been reached. Is there a smart phone app to the rescue? A company called Cargomatic that has created a system in which drayage drivers just show up at the ports and receive the first/nearest container from any importer signed up for the program, rather than waiting for a specific container to be retrieved, as is usually the case today. This supports a concept supporters dub "free flow" container processing. Sounds like a good idea to us.

5.7%

That's how much the dollar has risen against a standard basket of foreign currencies just so far in 2015, after also rising strongly in Q4 2014. That put the dollar just below levels last seen in September, 2003. The rising dollar is good for US consumers, making imported good less expensive, but not so good for multi-national US companies. A rising dollar makes US exports more expensive, and foreign imports less expensive versus US-made products. In addition, the rising dollar reduces the value of profits achieved by US companies overseas when translated back to US dollars. Consumer products giant Procter & Gamble, for example, recently said that the rising dollar will reduce fiscal 2015 sales by 5% and net earnings by 12%, or at least $1.4 billion after tax. Caterpillar CEO Doug Oberhelman recently said that "The rising dollar will not be good for U.S. manufacturing or the U.S. economy." But nothing seems able to stop the rising dollar, despite continued extremely low interest rates and money printing by the Federal Reserve.



9
That amazingly is the iteration of its fulfillment centers (FCs) that Amazon.com is now working on, as it has developed 10 of its eighth generation FC designs. This from VP of operations Mike Roth, at an "open house" for press and various other dignitaries for one of those eighth generation FCs in Dupont, WA, near Tacoma. The eighth generation facilities are characterized by high levels of automation, notably deployment some 15,000 Kiva robots across those 10 FCs from its acquisition of Kiva Systems in 2012, as well as heavy duty robots to hoist pallets from ground level to overhead conveyors. Roth says the ninth generation facilities currently being designed will involve even more automation and new software to optimize FC operations even more. The Kiva approach allows FCs to carry 50% more inventory, and is said to also increase productivity 50%. There are 500 full-time employees at the Dupont FC amongst the robots, BTW.



3,000
Approximate number of items across 80+ product categories that Walmart will designate as "Sustainability Leaders," under a new program on Walmart.com that will connect the Sustainability Leaders logo with products it says pass the muster. Those will be those products-companies that either rank highest in a category or score above 80 (out of 100) in its calculation. The program is the consumer-facing side of Walmart's Sustainability Index for suppliers launched in 2009, both developed in conjunction with an outfit called The Sustainability Consortium. TSC has developed sustainability criteria for dozens of product categories (e.g., water use is important for some but not all categories), and the scores will be calculated from surveys Walmart will be sending to its vendors. Will consumers gravitate towards the sustainable brands, or maybe even be willing to pay more for them? If nothing else, the new Walmart program will shed some real light on those questions.