Supply Chain by the Numbers

- March 15, 2018 -

  Supply Chain by the Numbers for Week of March 15, 2018

Tesla Said to be Battling Huge Issues with Bad Parts; US Port Volumes Soaring; Walmart Joins the Grocery Delivery Wars; Whole Foods Vendors in Uproar over New Fees



That rather amazingly is the percent of the parts made or received at electric car maker Tesla's Fremont factory that require rework. That according to a company engineer in a report this week on CNBC. To deal with a backlog of flawed parts and vehicles, CNBC says Tesla has brought in teams of technicians and engineers from its service centers and remanufacturing lines to help with rework and repairs on site in Fremont. They also said that sometimes Tesla has taken the unusual measure of sending flawed or damaged parts from Fremont to its remanufacturing facility in Lathrop, California, about 50 miles away, instead of fixing those parts "in-line." All that of course is related to the huge issues Tesla is having in producing its new lower priced Model 3, for which it is not even close to meeting previously promised production volumes. However, Tesla strongly denies that its remanufacturing teams engage in rework. "Our remanufacturing team does not 'rework' cars," a spokesperson said.



That was the year-over-growth in container volumes in February at the ports of Los Angeles and Long Beach, according to the monthly Port Tracker report from the NRF and the Hackett Group. Outside just the West Coast, Port Tracker estimated the nation's biggest ports handled 1.66 million TEUs last month, a 13.7% increase from last year. This happening as trucking capacity in the US remains a big issue – fueled by the driver shortage – and rates are soaring. That means more cargo is traveling inland from the ports by rail, which provides capacity but is lengthening delivery times for shippers. US rail intermodal shipments last month nearly matched the level of last October, during the peak fall shipping season. Shipments surged 6.9% from the same month a year ago and grew by nearly 14,000 loads from January to February, according to the Association of American Railroads. It's imports driving the volume spike for sure; at the Southern California ports, export loads rose 4.8% last month, but that's a minor blip in the overall 32% increase in overall container volumes.



That's how many cities in which Walmart will offer home delivery of groceries by the end of the year, including same-day delivery in New York City. On-line grocery orders will be packed in Walmart stores, after which orders will be handed off to a third-party delivery company or startup that uses contract workers to ship orders to homes. In fact, Uber will be one of the initial partners, expanding a test started in 2016. Other crowdsource delivery companies will be added later this year, a Walmart spokesman told the Wall Street Journal. Walmart currently offers grocery delivery in six cities through Uber and a rival called Deliv. The plan also includes using Jet, the on-line retailer Walmart purchased in 2016, to offer a same-day grocery-delivery service in New York City to compete with Amazon's Prime Now, and in other areas where Walmart does not have a strong local store base. It's the wild west in grocery delivery right now. Costco, Kroger and other retailers added more cities and products shoppers can order through Instacart, a delivery startup that uses contract workers. In December, Target acquired Instacart rival Shipt for q whopping $550 million.




That is the percent of their invoices that large vendors to Whole Foods will have to pay soon basically to receive store "merchandising services" from a single provider. That and other changes are happening as the grocery chain moves to a centralized procurement model from a more regional one. The centralization was already under way before Amazon aquired Whole Foods last year, but that doesn't stop many vendors from somehow seeing Amazon as the villain in the process. Under the new program, anything store-related - from handing out free samples to checking inventory and refreshing shelf displays - now has to go through a retail-services firm called Daymon. Whole Foods used to let suppliers handle this themselves, or hire someone else to do it. "To successfully run this program, we need your financial support," Whole Foods said about this and other changes in a recent email to vendors. A meeting has been scheduled for March 19 between the company and its vendors, who are reported to be up in arms against the moves.