Supply Chain by the Numbers

- May 10, 2019 -

  Supply Chain by the Numbers for May 10, 2019

Warehouse Jobs Keep Growing and Growing; Apple Supplier Audits having Big Impact; Nestle Ending DSD; Shippers Often do not Select Lowest Carrier Bid



That's how many US warehouse-related jobs have been created in the past 12 months, including another 5400 in April, according to a report this week from the Labor Department. That growth continues to be driven by – what else – efulfillment. Brian Devine, senior vice president of logistics-staffing firm ProLogistix, said he is seeing "huge growth" for logistics and ecommerce workers in key hubs like Southern California's Inland Empire; areas of New Jersey near New York City; Atlanta; Indianapolis; and Memphis."There are not enough workers in those markets," Devine says. "The unemployment rate is so low that it's difficult for us to fill those positions." He said the average wage for ProLogistix workers jumped 6.8% in April from the same month a year ago, to $13.81 an hour. Hiring in the warehousing and storage sector be pumped soon given Amazon recently announced plans to invest $800 million in Q2 to make one-day free shipping the standard for its Prime members, instead of two days.



That's how many site audits of suppliers that Apple conducted in 2018, according to the company's recently released Supplier Responsibility Progress Report for 2019. That is up just a bit from 756 in 2017, but the total does not include another 279 smelter and refinery third-party audits relative to conflict mineral issues. The sites are evaluated in the audit against its Supplier Code of Conduct, an evolving standard that Apple says now involves more than 500 elements or expected behaviors across many areas, from environmental practices to treatment of workers, not only at direct Apple suppliers but potentially any company that is part of its extended supply chain. "If we discover that standards aren't being met, we work side by side with suppliers to help them improve," says Apple CEO Tim Cook in an introduction. "If a supplier is unwilling or unable to meet our requirements, we end our business relationship with them." Apple says the audits last year found 76% high-performing supplier facilities, and just 1% low-performing, with a 30% increase in high-performing suppliers versus 2017.



That is the percent of shippers that choose the lowest price for a truckload freight move on the digital load board PostBidShip's web platform, the company said last week based on its analysis of shipper activity. "We see that a high percentage of shippers aren't selecting the lowest bid; instead, they are choosing to work with high-quality carriers they have confidence in," said Sam Levin, chief executive officer of PostBidShip. Using historical data, PostBidShip found that the second lowest bid was awarded 55% of the time. Other bids were selected 20% of the time. Subscription-based PostBidShip hosts reverse auctions for spot market freight, creating a marketplace for shippers and carriers but is not involved in the transactions as a broker.



That's how many jobs will be lost as Nestle US ends it long standing practice of direct store delivery (DSD) for many of its products, in a model that seems to be about dead outside of bread, soda, chips and beer. Nestle will instead ship goods to retailer DCs for them to move to individual stores - meaning lots of drivers, merchandisers and other staff are no longer needed. The company said May 7 that it is shutting down its DSD network for products such as DiGiorno and Skinny Cow, beginning in the third quarter. That means the elimination of an operation that now includes 230 facilities, 1,400 trucks and 2,000 different delivery routes. The unit was able to reduce costs but, ultimately, the direct store model was too expensive even once the company "reached the maximum point of efficiency," Steve Presley, CEO of Nestle USA, said. "You can't have that duplicative cost in the structure." In 2017, Kellogg announced plans to eliminate 1,200 distribution jobs as it exited direct store delivery to cut logistics costs. That means the company is relying more heavily on retailers to put its products on shelves. Snack giants Mondelez International and PepsiCo Inc.'s Frito-Lay both still rely on DSD, arguing it helps boost sales to have employees in stores stocking products – at least for now.

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