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Supply Chain by the Numbers

- Dec. 3, 2020

  Supply Chain by the Numbers for Dec. 3, 2020

Christmas Toy Inventories in Danger Zone; UPS Stops taking Some Retailer Shipments; US Purchasing Managers Index Strong in November; Brick and Mortar Sales Drop Sharply



That incredibly is how many containers meant for toy maker MGA Entertainment (LOL dolls) have been sitting at the ports of Los Angeles and Long Beach for more than a month – imperiling the company's Christmas sales volumes. That of course due to massive congestion at the ports. MGA says only 60% of major retail chains nationwide have enough MGA toys in stock right now compared with the 98% of retailers that typically have sufficient inventory at this time of year According to an article in the New York Post, the slowdown at the ports is hitting many toy makers, especially small and medium size brands – even as demand for toys in the US has jumped as parents look search for ways to keep kids occupied with many schools in virtual mode and day care business closed or restricted. Toy sales are up by more than 19% for the first three quarters this year, according to the NPD Group. Jay Foreman, CEO of toy maker Basic Fun says it is likely that many retailers will even run out of the classic Lincoln Logs before Christmas. Most retailers place their Christmas orders for toys in January and February and fine-tune them along the way. But "if demand is exploding as it has been, you can’t expand your production fast enough," Foreman said, with that challenge exacerbated by the logistics snafus.




That is the number of retail chains that UPS for now at least has stopped picking up parcels for shipment to consumers. That according to a report this week in the Wall Street Journal. The retailers include Gap, Nike, LL Bean, Hot Topic, Newegg, and Macy’s, and offers evidence soaring ecommerce order are stretching the networks of parcel carriers to the limit and likely beyond. With brick and mortar volumes way down, the power curve has dramatically shifted to parcel carriers, which in addition to capping volumes they will accept from retailers exceeding their earlier forecasts are also adding various expensive surcharges. A UPS spokesperson said the company would start to again pick-up packages from customers whose demand exceeded forecasts once more capacity becomes available – which may or may not happen. The spokesperson also told the Journal that the company is working closely with its largest customers to shift volumes to areas with available capacity and making sure they know how much space is available.




That was the strong level of the US Purchasing Managers Index for November, according the monthly report issued by the Institute for Supply Managed released Tuesday. That was down 1.8 percentage points from October’s reading of 59.3, but still handily above the 50 mark that separates US manufacturing expansion from contraction. The New Orders Index came in at 65.1, also down 2.8 percentage points from the score in October but still a very strong reading, in a good sign for future US manufacturing activities. The PMI hs now been over the 50 level for six consecutive months, and is well off the April low of 41.5.



That was the decline in in-store US shoppers on Black Friday last week, the result of both the continuing virus pandemic and perhaps permanently changes consumer shopping habits. That according to a new survey by the National Retail Federation and Prosper Insights & Analytics. Meanwhile, on-line shoppers on that day rose 8% and topped 100 million, the survey found. NRF CEO Matthew Shay says the Big Black Friday decrease of in-store shoppers was also partly the result of shoppers buying earlier this year than in the past. There was also data from Adobe Analytics, which said US consumers spent $10.8 billion on Cyber Monday, up about 15% 2019, making it the biggest day for on-line shopping in history – but that growth number was at the low end of most estimates. The NRF had earlier said it expected total holiday season sales in November and December to rise between 3.6% and 5.2% versus 2019, compared with the 3.5% average seen over the past five years.

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