Supply Chain by the Numbers for Week of March 27, 2015

Supply Chain by the Numbers

- March 27, 2015 -

Michigan Auto Parts Plant Saved - but Workers Took a Big Hit; Another Consumer Packaged Goods Sector Mega-Merger; Amazon Expanding Its Indian Operations; IoT Turns Products into Services



$11
That's the starting hourly wage now at what was a Ford/Visteon parts plant in Saline, MI west of Detroit, three years after French parts company Faurecia bought the facility from Ford. The company has invested at least $90 million to improve and automate operations, introduced Lean practices and taken more actions, apparently saving the operation when so many other US auto parts factories have been shuttered over the past decade. But that comes with a heavy cost to workers, with that $11 starting wage that can rise to $15.50 after three years on the job. That’s well down from as much as $28 per hour workers at the plant used to be able to earn. Something in-between seems right to SCDigest.

That's how many fulfillment centers Amazon.com already operates in India, like China a very rapidly growing ecommerce market. It was the etailer to offer two-day and one-day guaranteed delivery in India, which prompted prompted rivals there such as Snapdeal and Flipkart to follow suit and launch same-day delivery as well. Flipkart, for exampel, recently announced plans to launch three-hour delivery this year. Meanwhile, this week Amazon announced it had set up a logistics company in India to deliver products directly to consumers, rather than using third parties. Amazon Transportation Services Private Limited, a subsidiary, will ship goods from sellers who transact on the company's online marketplace in the country. "We want to change how India shops," said Samuel Augustine Thomas, director of transportation for Amazon in India. "The logistics arm has been set up to aid in last-mile delivery as products can be shipped faster."



$1.5 Billion
That's the level of "cost synergies" that are there for the taking as a result of the current owners of Heinz now saying they will acquire Kraft in another consumer packaged goods industry mega-merger. Warren Bufffet's Berkshire Hathaway teamed up with private equity firm 3G to acquire Heinz two years ago, before announcing this deal for Kraft this week, as industry consolidation continues. The $1.5 billion in savings, to be achieved by the end of 2017, includes contributions from such things as leveraging the combined purchasing volumes for ingredients, but as we all know will likely come largely from supply chain network consolidation and general layoffs, certainly impacting the supply chain as well.



1 Billion
That's how many Internet of Things (IoT) enabled items (equipment, devices, pallets, etc.) that researchers from Deloitte say will be shipped/created in 2015 - up up 60% from 2014 and resulting in an installed base of about 2.8 billion connected devices. Importantly, while the research finds there will be some activity in home automation and related consumer applications, most of the action will be on the business side. Take washing machines for example- Deloitte believes the consumer advantage from such a connected appliance is minimal, but that "The insights revealed by this stream of data could be worth hundreds of dollars per machine over the course of its life, recouping the cost of making the IoT-enabled washing machine ten times over." It adds that "A connected product is no longer just a product - it is also a service." - and that is something worth thinking about.