Supply Chain by the Numbers

- May 17, 2019 -

  Supply Chain by the Numbers for May 17, 2019

Stanley Black and Decker Joins Reshoring Ranks; Amazon Testing Packing Automation; Will Demand Planning Soon be Done by Machine; Weak Signals for the US Economy



That's how much tool maker Stanley Black & Decker is spending on a new plant in Fort Worth, Texas, as it moves production of Craftsman wrenches from China back to the US, the latest manufacturer looking to use automation to increase domestic output as tariffs raise the cost of imports from overseas. The factory is scheduled to open late next year, and will employ about 500 people to make 10 million Craftsman wrenches and ratchets and 50 million sockets annually. Robots and fast-forging presses will help boost output about 25% above the older forging machinery now used to make Craftsman wrenches in China, helping keep production costs at the new plant in line with those in China, Stanley said. " We're pushing very hard to manufacture where we sell it," Stanley CEO James Loree said in an interview. Loree said restoring Craftsman's made-in-America credentials will strengthen a brand with broad appeal to customers as diverse as homeowners and professional mechanics.



That is the new forecast for US Q2 economic growth, down from a forecast of 1.6% growth previously, and well down from the 3.2% growth seen in Q1. Why the downward revision? First, US retail sales unexpectedly fell in April, though just barely, as households cut back on purchases of motor vehicles and a range of other goods, pointing to a slowdown in economic growth after a temporary boost from exports and inventories in the first quarter. Second, US manufacturing output also fell in April, the Federal Reserve announced this week. That makes three declines and one month of flat growth so far in 2019. "Not a great start to the current quarter," Sal Guatieri a senior economist at BMO Capital Markets in Toronto, told Reuters. In a more upbeat view, Michael Feroli, an economist at JPMorgan in New York said that "Whatever caused last month's disappointment, the general backdrop for consumers still looks pretty favorable."



That was the share of respondent's to a recent Gartner survey who predict demand planning will be completely automated by 2025, according to a Gartner analyst at the Supply Chain Executive Conference this week in Scottsdale. That may not seem like a high number, but it was actually the top choice across a number of other supply chain processes listed in the survey. What's more, also at the conference was a reference to German on-line retailer Otto, which apparently has gone to complete automation of demand planning – and forecast accuracy has never been higher. At another breakout session at the Gartner conference, analyst KC Quah noted how automated forecasting might impact the S&OP process. If this becomes the norm, who needs the demand planning step in classic S&OP? Will AI really replace all the demand planners? That is hard to forecast, but the machines seem to be better at it than humans.



That is the number of manual packing stations at a typical Amazon fulfillment center. But those jobs are at risk, as Amazon continues to test an automated packing systems from Italian company CMC Srl, according to a report this week from Reuters. The company's CartonWrap system scans the bar codes of items coming on a conveyor from picking, then surrounds the items with a corrugate box built to size for each order's items. The items to be shipped come on conveyor belts perpendicular to a long steam of fan-folded carton corrugate. The shipping cartons are formed to the precise size, so no dunnage is required, at least for items suitable to go through the machine. CMC says its CartonWrap system can produce 600 to 700 boxes per hour, as much as four to five times the rate of human order packers. But all the Amazon packers may not lose their jobs yet. The systems cost about $1 million each and require an on-site technician, while CMS is said to be very constrained in its production capacity. SCDigest notes that when faced with a potential capacity crunch for production of the mobile robots from Kiva Systems, Amazon simply bought the company for a princely sum in 2012.

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