- Foxconn - Beside being a great job growth engine what does this really mean for those in the supply chain? As you probably heard, Foxconn, the mammoth supplier for Apple and other electronics companies has decided to put a large plant in SE Wisconsin. This will clearly generate jobs, will bring sub suppliers to the region and will make the drive from Chicago to Milwaukee a nightmare given the number of trucks that will move from the Chicago intermodal yards North.
But, the real finding here is that the cost of production in the US is starting to come in balance with the equation of foreign manufacturing. The "equation of foreign manufacturing" includes the following components: Cost of MFG + Cost to move to port + cost of ocean / air + Cost to move from Port inland + GLOBAL GEOPOLITICAL RISK + SPEED + INVENTORY CARRYING COST. The last few I have capitalized because these are normally considered "soft costs" (and therefore get ignored by many at their own peril).
More will come and the "heartland" of America is where they will go due to transportation and now labor costs. If you are a cartage company and haul boxes out of the Chicago rail yards, this is a happy day for you! - The Border Adjustment Tax is Dead - This was sold and designed to adjust the cost of goods coming over the borders to be roughly equal to the cost of manufacturing in the US. It was to penalize those companies who move out of the US for the purpose of evading items such as labor laws, environmental laws etc. When it was first proposed the stocks of those supply chain companies benefiting from cross border activity tanked. Well, as they say, if you wait long enough good things will come. The border adjustment tax is dead. If you make your money moving products across borders and from the ports your money is safe.
- ELDs are Dead, No They are Alive, No They Are Dead... This continues to be a back and forth. For the the life of me, I cannot understand why the industry is against this as it will level the playing field between those who cheat and break the law and those who try to run a lawful company. But, alas, it appears a lot of people are against it. Despite 21 Congressman co-sponsoring a bill to delay the mandate for one year, the prevailing wisdom this week is the delay is dead and ELDS will go in as mandated.
- Amazon Files Patent for Underwater Warehouses - I am going to leave this alone and just say nothing amazes me anymore. I will need to have a lot more thought about this and conversation before I fully understand why you would want to put stuff underwater. Is land that expensive? Are the rich going to start moving to offshore locations which will need to be serviced from the sea? Who knows.
- Drivers - Hire Felons? - My guess is when you first saw this you figured I had lost my mind and this is the craziest thing you have heard of. I now ask you to take your emotion hat off and put on your thinking cap. Forget the social arguments, the fact is we have millions of non violent felons in this country who are no longer incarcerated. There is a shortage of almost 200K drivers. The solution seems like a match made in heaven. That courier driver you had who just delivered a package to your door? Today, he could absolutely be a prior felon. Why not allow a non violent felon deliver to a warehouse dock?
A 25 year veteran of the supply chain and logistics industry blogs on all things logistics. Experience in 3PL, automotive and consumer goods logistics help bring a unique insight to this topic
Saturday, July 29, 2017
The Week in Review - ELDs, Amazon (again), Foxconn, Border Adjustment Tax - Dead, and Drivers
Thursday, July 20, 2017
Amazon and Kenmore - A Match Made in Heaven
It is incredible it took this long for the marriage made in heaven to happen. Kenmore is the crown jewel of Sears and Amazon has always wanted to capture appliance sales. But how? The logistics are daunting.
Enter Kenmore and enter Sears Logistics (SLS). I have always said, the best logistics company in the country is "buried" inside Sears. This has been my contention for over 10 years. SLS had perfected final mile, especially final mile for big box items, long before "final mile" was fashionable or an industry.
Ask your parents if you don't believe me. A SLS person delivering to your home has been a staple for years.
Now, combine this with the Amazon order platform and the comfort and reliability of Kenmore and you have a powerhouse.
More to come on this but if Amazon uses SLS they have picked up an incredible scoop. And, soon, they will just buy the Kenmore brand, bring SLS with it and use the few Sears stores left as showrooms.
Sunday, July 9, 2017
Inventories Are Heading in The Right Direction
Recently, a lot has been made about the current measurement decreasing (ever so slightly). As you can see below, they had been going down for most of 2016 and now have stayed steady in 2017:
Inventory to Sales Ratio through June 14, 2017 |
As a supply chain professional I also tend to cringe when I see the contents of this graph. To discuss this, let's ask ourselves why we have inventory in the first place. Two key tenets of supply chain management:
- Inventory at rest is a bad thing: Said a different way, bad things happen to inventory. It can become obsolete, spoil (in the case of food), get lost, stolen or damaged. When inventory rests, you should see opportunity.
- Inventory exists as a buffer for lack of information: In a world where you have perfect information (i.e, perfect forecast, perfect purchase signals, perfect transportation signals) you have little need for inventory. Given this, more inventory relative to your sales indicates your progress in S&OP (Sales and Operations Planning) information accuracy is stalling. You are not improving this information flow, rather, you are making it worse which drives inventory levels.
Friday, June 30, 2017
What A Month May Was For Transportation
- YoY shipments are up 7.1%
- YoY expenditures are up 7.4%