Supply Chain by the Numbers

- March 15, 2019 -

  Supply Chain by the Numbers for March 8, 2019

Walmart Ups Chargeback Standards Again; Massive New Fuel Tax Proposed in Michigan; US Store Closings at Torrid Pace in 2019; US Moves Past Saudi Arabie in Fuel Exports



That is the level of "chargeback" relative to invoice for each case that fails to meet Walmart's new "on time, in full" requirements. For example, a milk delivery containing 19 of the 20 cases ordered would get a 95% in full rating, below Walmart's 97.5% threshold for food consumables. That supplier would incur a 3% fine on the missing case. Two cases short would trigger a 6% chargeback versus invoice. What's more, suppliers that ship full truckloads must now deliver orders within a specified two-day window 87% of the time, up from an 85% rate it targeted previously. Suppliers with LTL shipments must now hit a 70% on-time threshold, a significant jump from the previous target of 50%. The only good news for suppliers: they won't be fined twice for non-compliance, the company said. That means a shipment that arrived two days late would incur a 3% chargeback against the full invoice, but wouldn't also be fined for cases shorted from the order. "When we receive the product that we ordered, we see better sales," said Steve Bratspies, the chief merchandising officer for Walmart US.


45 Cents

That is the proposed new, very significant, increase in taxes on gasoline and diesel Michigan Gov. Gretchen Whitmer's budget has proposed to provide funding for infrastructure improvements in the state. The proposal calls for the tax hike in three 15-cent increases from Oct. 1, 2019, to Oct. 1, 2020. (Some tax relief would be offered to lower income families.) The tax increase is meant to generate $2.5 billion a year in revenue. With the federal gas tax unchanged since 1993, an increasing number of states have or are considering their own fuel tax hikes. New Ohio Governor Mike Dewine recently proposed a 18-cent gas tax increase, though it looks like the legislature will approve an 11-cent hike instead. If approved by the legislature, the additional 45-cent increase would make Michigan’s gas tax a total of 68 cents and be the highest in the country. Currently the highest fuel tax rates are in Pennsylvania, where the tax on diesel is 75.2 cents per gallon and the gas tax is 58.7 cents per gallon. Whitmer, a Democrat, may encounter obstacles in getting her budget plan approved because the state legislature has a Republican majority.



That was the last year in which the US exported more energy (oil, natural gas) that it imported. But it is expected to happen again in 2020, according Energy Department's statistics division. In more good news for the US, the country will surpass Saudi Arabia later this year in exports of oil, natural gas liquids and petroleum products, like gasoline, according to energy research firm Rystad Energy. That milestone, driven by the transformative shale boom, would make the United States the world's leading exporter of oil and liquids. That has never happened since Saudi Arabia began selling oil overseas in the 1950s, Rystad said in a report Thursday. "It's nothing short of remarkable," said Ryan Fitzmaurice, energy strategist at Rabobank. "Ten years ago, no one thought it could happen." The key factor of course: fracking technology that has opened up huge swaths of oil and natural gas resources that had been trapped in shale oilfields in Texas, North Dakota and elsewhere.



That's how many retail store closings have already been announced in the US for 2019, according to updated data from Coresight Research. And it's only March. Retailers announcing store closings include Payless Shoes (2500 stores), Gap, Sears, Family Dollars, Victoria's Secret, J.C. Penney, Tesla and Abercrombie & Fitch. Last year, Coresight tracked 5,524 store closures, down more than 30% from a record 8,139 closures announced in 2017. But it appears 2019 will challenge that record. Even Amazon, blamed for causing many of the shuttered stores, is getting into the act, announcing last week will close all 87 of its pop-up shops inside Whole Foods, Kohl's and malls across the country. But Amazon is planning a new network of regular grocery stores (not under the Whole Foods brand) and adding to its cashier-less Go convenience stores. Despite all that, analysts say the US is still "over-stored," especially when compared with other countries.