Supply Chain by the Numbers

- Dec. 8, 2016 -

  Supply Chain by the Numbers for Week of Dec. 8, 2016

Amazon has Sights Set on Brick and Mortar Grocery Stores; UK Retailers and CPG Companies Tussle over Pricing; Population in Japan Headed to Scary Lows; Smithfield Foods Targets Manure to Reduce CO2



Amazingly, that is how many brick and mortar grocery stores Amazon is considering opening in coming years, depending on several tests of various retail formats. Those tests include a new Amazon Go store launched this week in Seattle, which comes in at just 1800 square feet. The Go store uses artificial intelligence-powered technology that eliminates checkouts, cash registers and lines. Instead, customers scan their phone on a kiosk as they walk in, and Amazon automatically determines what items customers take from the shelves. After leaving the store, Amazon charges their account for the items and sends a receipt. Two drive-through prototype locations, which don't offer an in-store shopping option, are also slated to open within the next few weeks in Seattle, according to the Wall Street Journal. In November, Amazon's technology team approved a proposal to open large, multifunction stores with curbside pickup capability, clearing the way to start hiring and planning for them. The perpetual motion machine at Amazon continues on, and other retailers must be very scared indeed.




That's by how much consumer packaged goods giant Unilever tried to raise prices to UK grocers such as Tesco last month on many items, including the popular Marmite spread. Unilever cited the sharp fall in the value of the British pound since the Brexit vote to leave the European Union in June as the cause of the increase, with the currency down about 16% against the US dollar since then. But Tesco maintained that the ingredients used in many of the Unilever products were sourced within the UK, meaning they should be unaffected by the currency decline. The grocer responded by taking a number of Unilever products off its shelves in October, forcing Unilever to back off the price increase in the show down. Last week, Tesco CEO Dave Lewis, who worked at Unilever for 28 years, noted that "We buy virtually everything for our own label, so there isn't an ingredient or a commodity out there that we don't have very good insight into," saying the chain would simply not accept " illegitimate" price increases. This sort of battle between large grocers and vendors over pricing has actually been going on for several years now in the UK in quite entertaining fashion.

That's by much pork producing giant Smithfield Foods - acquired by a Chinese company in 2016 - plans to reduce its greenhouse gas emissions from its entire supply chain over the next eight years. The announcement is noteworthy in part because the meat industry generally has been slow to adopting sustainability efforts and been a major target of criticism from environmental groups. Livestock is responsible for 14.5% of human-induced greenhouse gas emissions, with meat and dairy production accounting for the bulk of it, according to a 2013 United Nations report. The company says that to reach its goal it will reduce use of fertilizer used to grow grain for pig feed, install systems to extract natural gas from manure, improve transportation routing and more. The large manure pools associated with pig farms are a major focus, with plans to cover the pools and add systems called anaerobic digesters that convert the methane they produce into electricity or natural gas. Now you know. Smithfield says it hopes to reduce operating costs and bolster its brand perception from the efforts.


87 Million

Incredibly, that is the level of population that Japan is predicted to fall to by 2060, down dramatically from around 127 million currently. That according to an article in the UK's Independent newspaper this week, citing projections from Futoshi Ishii, director of population dynamics at the National Institute of Population and Social Security Research in Japan. In fact, Ishii says that Japan's population decline will break a new record every year from now until the 2060s. The obvious cause: a very low birth rate. Japan has one of the lowest birth rates in the world, with just 8.4 children being born per 1,000 inhabitants over the last five years, likely to head still lower. That compares to a rate of about 12.5 in the US. While the situation in Japan is especially acute, there are falling population issues all over the world, in fact almost everywhere but Africa. This demographic tsunami will have profound impact on supply chains - and society.