Supply Chain by the Numbers

- May 28, 2015 -

  Supply Chain by the Numbers for Week of May 28, 2015

Chief Procurement Officers Living Large; Nat Gas Trucks and Methane Leaks; Walmart Sources Local Big Time - in China; DC Costs as a Percent of Sales



That's was the average total compensation for chief procurement officers in 2014, according to a recent survey from CAPS Research, an arm of the Institute for Supply Management at Arizona State University. You get to that nice number from an average of $287,151 in salary and an average bonus of $180,002. Pretty good money if you can get it. CPOs in the consumer goods sector topped the total compensation list, averaging a whopping $750,000. Poor CPOs of utilities companies had to make due with a mere $332,000. To make you more jealous, the average CPO had stock options worth $774,000. These CPO compensation levels have been rising about 5% annually since 2008, roughly double the rate of inflation.



6.3 Million

That's about how many metric tons of methane escaped into the atmosphere in the product and distribution of natural gas, according to the Environmental Protection Agency's latest Greenhouse Gas Inventory Report. That data point came up in a just released article by the Environmental Defense Fund (EDF) and Columbia University's Lenfest Center for Renewable Energy, the main theme of which is that the reduced CO2 emissions from natural gas trucks (about 30% less than diesel per mile) are in fact outweighed by this release of methane, a much more impactful greenhouse gas. This may be another hurdle for natural gas truck proponents to overcome, as sales of natural gas powered trucks continue to disappoint (currently about 3% of all heavy duty truck sales).


That is the share of goods Walmart sells in its 412 retail stores in China that are made in that country, according to the retail giant's Chinese web site. That data point came up as a result of news last week that Walmart will be cutting back its use of Hong Kong-based sourcing firm Li & Fung and work directly with Asian suppliers, rather than using the famous middleman as its agent. Li & Fung's revenues have been flat or modestly down over the past three years, as some of its customers - now including Walmart - look to reduce costs and take more control of their supply chains by going direct. However, Li & Fung’s CEO says global supply chains are becoming more complex, which will increase its business. Despite Walmart's recent Buy American initiative, we are quite sure the percent of goods its sells in US stores made domestically is a long, long way from 95%.



That was the median level of distribution costs – not including transportation - as a percent of a company's sales in 2014, according to the latest annual DC Metrics report from Dr. Karl Manrodt, now at Georgia College and State University, and the Warehouse Education and Research Council (WERC). That sounds a little high to us, but that's what the data from 450 respondents said. The top 20% of companies, however, had DC costs of 2.04% of sales or less. The worst quintile, meanwhile, endures distribution costs of more than 11.2% of sales. Of course, DC costs vary dramatically by industry sector and order profile - e.g., pallet in, pallet out versus heavy piece picking, which this data doesn't capture.