Supply Chain by the Numbers

- July 124 2014 -

  Supply Chain by the Numbers for Week of July 24, 2014

Kent International Returns to US after "Bike Trip" Across Globe; UK Companies Lack Visibility to Lower Supply Tiers; US Truckload Prices on the Rise; Meat Scandal in China Dings McDonald's, KFC


$5 Billion

Approximate annual sales of Aurora, Illinois-based OSI Group, a provider of food products worldwide. OSI moved into the news this week when Chinese television showed video at a meat processing plant at one of its subsidiaries - Shanghai Husi Food Co. - which was upsetting to say the least. The video showed workers picking up meat from a factory floor, as well as mixing meat beyond its expiration date with fresh meat. That means PR trouble for McDonald's and KFC in China, which were both sourcing from that plant. This is the second time in recent years, in fact, that KFC has had meat quality issues there, with a scandal about excess antibiotics in its chicken in 2012 that causes sales to plummet.




Number of consecutive months that the Cass Truckload Linehaul Index - which measures per mile costs for shippers, before fuel, accessorials, etc., has risen more than 5% year over year. That with the just out June number, which shows a 5.2% rise versus the same month in 2013. That follows year over year increases of 6%, 5.7%, and 5.8% in March through May, respectively. Cass notes that "As demand continues to increase while capacity exits the marketplace, this year’s procurement events and contract negotiations have not, in general, been ending favorably for shippers." As we said in June, expect logistics costs as a percent of GDP to rise this year, after falling slightly in 2013, according to the State of Logistics report.


The number of countries from which bike company Kent International has sourced from since the 1950s, always on the hunt for lower labor costs. Initially, that low cost labor plus capabilities were actually in Europe, though Kent later more recently production to Asian countries, mostly China and Taiwan. But now the company is building a factory in Manning, SC to produce bikes for Walmart, as part of the retail giant's Made in America sourcing program. The factory is scheduled to open in October and will hit full capacity in 2016, churning out some 500,000 bikes annually, and employing 175 workers, according to a recent Wall Street Journal article. CEO Arnold Kamler says Kent should be able to build a bike for the same cost in the US as it could buy from China by 2017.



Approximate number of respondents surveyed by the Chartered Institute of Purchasing and Supply in the UK who said that they had "zero visibility" on the earlier stages of their supply chains. That of course could lead to many problems, including, the accompanying report said, the use of "slave labor" in their early tier supply chains. We're not so sure slave labor is a big worry, but as Apple, Nike and many others have found out, there are plenty of other risks from such a lack of understanding. That includes poor labor conditions, product quality issues and more, as the UK found out two years ago when horse meat crept into the supply chains of leading grocers and food manufacturers for what was supposed to be beef.