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Saturday, August 26, 2017

Interesting Supply Chain Events from Week of August 21, 2017

The week is over and some very interesting reads and developments.  Let me get right to them:


  1. The war between Amazon and Walmart heats up with the use of Google Home:  In Kevin O'Marah's great piece in Forbes (Google/Walmart: The Brutal Future of Retail Supply Chains)   he discusses the impact of voice assisted purchasing.  While some thought Amazon had this locked up, Walmart joins forces with Google and given Google's penetration into the virtual personal assistance market this may give Walmart an edge over Amazon.  Other implications of this:
    • Data flows directly from consumer to the manufacturer and could be the device that moves power back to the manufacturer and away from the retailer. 
    • Price discovery by the consumer will be faster and will result in a brutal retail environment. 
    • As Kevin states, if you are on a calendar based S&OP process, you may be too slow to adjust for what will be a rapidly changing consumer.

      This war shows retailing is really a war over efficient supply chains.
        
  2. Lean is almost always in the news however when I see my good friend Robert Martichenko launching a new lean blog I jump up and notice.  It is called "Lessons in Lean: Lessons in Leadership" and I will not repeat everything he is writing here.  Suffice to say, everything Robert reads is worth reading, this blog is no exception and I encourage you to read it directly. Specifically, the post titled: Is Reflection a Lost Art was very impactful for me and I have taken actions in my own personal journey reflecting some of Robert's thoughts.  It is a must read.
  3. More data supporting my previous post about leadership and being on the floor to lead and understand what is truly happening.  In "What CEO's can Learn From Their Frontline Workers", Mark Dohnalek does a nice job outlining why being on the floor and listening is an important trait of CEOS and all leaders.  It still is amazing to me how many CEOs spend more time in meetings than out in their facilities.
  4. CASS reported continued upward pressure on rates for a YoY basis and a MoM basis although the pace is slowing.  I will write more about this however I will say we are still far below 2012 - 2015 and I personally think we are starting to get to a precarious position.  A lot of investments and purchases are being made in anticipation of macro economic activity by the Feds (i.e., tax cuts which they call tax reform).  If this does not happen (which I give about a 50/50 chance) we will find people have gone far in front of their skis.  CCJ reports tonnage leveling out and conditions deteriorating.


    CCJ Report on July Truck Tonnage
    Looking at the Net Income and EPS of the large publicly held carriers and you see that it has, so far, been a "ho hum" year as their income is struggling to keep up with expenses.  Landstar, once again is the outlier and doing a fantastic job.  (See transcript from conference call here: Landstar (LSTR) Q2 Conference Call.
  5. The race for fast delivery of big box products is heating up with rumors of Overstock wanting to take advantage of XPO's incredible final mile delivery network.  While Overstock declined any agreement has been reached, I am just not sure how you execute fast delivery of things such as appliances and furniture without engaging XPO.  Bradley Jacobs, XPO CEO plans on being within 120 miles of 90% of the US population by the end of 2018.  Tough to find another competitor who can do that.
  6. The Inventory to Sales Ratio in the economy was updated last week and while we had been enjoying some good news, you can see it has turned and started to rise again.  This could be due to the holiday inventory stock up, which is being reported as being very robust and then again, it may not be.  More to come on this.  
    Inventory to Sales Raio - Updated August 15, 2017
Well, that ends a pretty exciting week and hope it was profitable and engaging for all.

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