Supply Chain by the Numbers

- Aug. 3, 2018 -

  Supply Chain by the Numbers for Week of Aug. 3, 2018

Uber Calls it Quits on Self-Driving Trucks; Levi's Turning Its Blue Jeans Supply Chain Green; Expanding the Driver Pool; Economic Good Times Roll On


$680 Million

That was the potential amount ride sharing giant Uber was going to pay the owners of Otto, a maker of self-driving truck technologies, if certain performance targets were met, when the deal was struck in July of 2016. But now, Uber is shuttering its autonomous truck unit to focus all its resources on self-driving cars. However, to understand the full story, you must know Uber's autonomous truck efforts have been hampered by controversy and legal battles since the acquisition. The deal became the subject of an intellectual property lawsuit by Google, citing the role of Anthony Levandowski, the co-founder of Otto, who was a head engineer at Waymo, Google's self-driving car spinoff, before leaving to start Otto. Waymo accused Levandowski of taking trade secrets with him and providing them to Uber. The suit was settled with a payment from Uber of $245 million to Waymo. And did Otto's owners and employees get any money out of the original deal? Not clear, but Otto is gone and won't be meeting any targets, though the Uber Freight load matching app lives on.



That is the reduction in CO2 emissions from its supply chain that iconic jeans maker Levi's said this week that it would eliminate by 2025. To reach that target, Levi's will obviously have to work closely with suppliers in its almost totally outsourced supply chain, since it can't just set mandates and hope to get compliance. "The supplier side of this is what I would consider the most interesting part of our new approach to climate change," says Michael Kobori, vice president of social and environmental sustainability. The company's retail stores, distribution centers, offices, and the two remaining factories it still owns only account for 1% of its total carbon footprint. Growing cotton is 10% of the footprint. But making fabric and sewing clothing, respectively, are 31% and 9%. Without working with suppliers, the company is obviously limited in the amount of its emissions it can reduce. A recent pilot with one supplier in Bangladesh resulted in a 20% reduction in CO2 and $1 million in energy savings.



That is the percent of US truck drivers who are men, while about two-thirds of drivers are white. Who cares? Well maybe almost all of us should, as some carriers and governments are trying to find a way to expand the driver pool to address the current shortage of at least 50,000 drivers and rising. An article last week in the New York Times said there are efforts to attract more women and minorities into the profession, and most controversially to allow 18 year old drivers on federal highways. None of these strategies will be easy. "There's still men out there who think women shouldn't be driving trucks. They're few and far between, but they're vocal," says Ellen Voie, the president of the Women in Trucking Association. The Trump administration is supporting a pilot program that would allow 18 year old drivers to operate commercial vehicles across state lines – if they have military training. While the program is a trial, it indicates a willingness to allow drivers under 21 to make interstate deliveries. Some states allow younger drivers within their boundaries, but many safety groups vigorously oppose the change.



That was the level of the US Purchasing Managers Index for July, according to data from the Institute for Supply Management this week. That was down a couple of percentage points from June, but still well above the 50 level that separates manufacturing expansion from contraction. The new orders index was also very strong, at a level of 60.3, in a good sign for future manufacturing activity. But the prices index was also very high, and signaling higher raw materials prices for the 29th consecutive month, as inflation is back in the supply chain. Meanwhile, the Federal Reserve Bank in Atlanta predicted the good economic times will roll on, forecasting that real GDP will increase 5% in Q3, as real GDP growth of 3%+ for the full year seems increasingly likely for the first time since 2005.