In his First Thoughts column last week, SCDigest editor Dan Gilmore offered an overall review of the year in supply chain 2015.
As promised in that piece, below we provide the latest edition of our popular timeline of key supply chain news and events of the past year, organized by month.
The US DOT at long last allows Mexican trucking companies to operate in US - some 20 years after NAFTA supposedly gave them that right. The move had been bitterly opposed by trucking and Teamster interests for years. Impact is likely to be modest at best, however, as deadheading concerns likely mean Mexican truckers unlikely to drive too far into US.
Procter & Gamble announces plans for a new factory in West Virginia - just the second new US plant P&G will have opened since 1971. The new plant will be a sort of "factory of the future" - designed to run products across multiple product types and brands in a single facility. The new facility will encompass more than 1 million square feet and employ 700 full-time workers.
Walmart announces it has launched something it calls the Sustainability Leaders Shop, an on-line shopping portal that helps customers identify and purchase products that are produced in what it defines as an environmentally and socially responsible way.
The effort is the customer-facing side of Walmart's supplier Sustainability Index, a program it launched in 2009 to grade suppliers on environmental and other sustainability factors. With this new initiative, Walmart says it will now be designating some 10,000 "best in class" products across 80 categories as Sustainability Leaders. Impact as yet unclear.
Deal is at long last reached between West Coast Longshoreman and the Pacific Maritime Association (PMI), which represents West Coast ports and terminals, after months with no contract and a work slowdown by the union that causes huge delays and gridlock at the ports. Union seems to largely get what it wants, but it takes until May to work off the backlog.
The US Federal Aviation Administration belatedly issues rules for commercial drones, rules which seem to prohibit even testing of the type of delivery drones Amazon and others have in mind, requiring for example that the drone must remain in the line of sight of the operator at all times and has to be flown during the daytime. The line-of-sight requirement is the one that effectively bans drone-based deliveries. Amazon and others warn they may need to go to other countries for their research.
Another "SuperTruck" design as part of the US Dept. of Energy program is unveiled by Daimler Trucks and its US brand Freightliner. Daimler says the new model is delivering freight efficiency improvement of a remarkable 115% in field tests versus a 2009 baseline. The mileage improvements come from a variety of innovations, including much more aerodynamic tractor and trailer designs, low resistance tires, and greater intelligence built into the drive train. But as with other SuperTruck designs, this new truck is made of some components not yet commercially viable.
Amazon enters the "Internet of Things" game with a new service it calls the Dash Replenishment Service. Under the program, manufacturers can install an "order button" on their products that consumers can configure to easily order a consumable from Amazon. Or, the system can be set up to monitor consumable usage and send an order automatically to Amazon when supplies are low. Several major consumer goods companies are on board with the program.
Wisconsin becomes the latest "right to work state," following Michigan and Indiana in recent years, breaking the hold of the South and the West in right to work status.
Data show the number of inbound containers handled by US ports in March - some 1.8 million TEU - finally have again reached levels seen in the peak in 2008. While overall global trade volumes have been slowing, US imports, especially from China, continue to grow.
Amazon holds its first "Amazon Picking Challenge," in which university teams from around the globe compete to design robots for piece picking. The contest involves robotic picking of 12 random items - ranging from a rubber duck to a small package of Oreo cookies - from static shelving. A team from the Technical University of Berlin won the contest using a vacuum-powered robot successfully grabbing 10 out of the 12 items - but it took the machine about 20 minutes to do so.
Target announces aggressive item-level RFID initiative, mostly to achieve high levels of inventory accuracy in store to support store-level fulfillment for ecommerce.
Despite continued severe industry over-capacity, giant Maersk Lines announces it is placing orders for six new giant 20,000-TEU vessels, with options for four more. That about 10% more capacity than the 18,000-TEU ships Maersk had received over the past few years from South Korea's Daewoo Shipbuilding.
Gartner announces its annual top 25 supply chains list. Curiously, Apple and Procter & Gamble were left off the list and instead placed in a separate new category, called "supply chain masters," a sort of hall of fame. The list for 2015 is topped by Amazon.com, followed by number 2 McDonald's, followed by Unilever, Intel, and Inditex (Zara) to round out the top 5.
Walmart sends letter to some 10,000 vendors extending payment terms to 90 days, and saying that it will take 1% discount for "fast payment" even for the 90 day payment cycle. Walmart also says it will begin levying a sort of "handling charge" for vendors whose products move through Walmart DCs. By year's end, it is unclear how successful Walmart has been in executing this program.
The Annual State of Logistics report is released as usual by CSCMP and Rosalyn Wilson, with the headline news that overall relative US logistics costs were modestly down in 2014, to 8.3% of GDP, versus a revised 8.4% in 2013. All told, US logistics expenses were up 3.1% in 2014, but nominal GDP rose a bit faster than that - thus the fall in the ratio of logistics spend to GDP. In 2007, logistics costs rose to a recent high of 9.9% of GDP, as a comparison.
(Supply Chain Trends and Issues Article - Continued Below)
The MIT Technology Review reports that researchers from the University of Sheffield in the UK may have developed a breakthrough in 3D printing technology. The system replaces the slow and expensive laser system used in 3D printers today with an infrared lamp and an ink-jet print head that could be 10 to 100 times faster than current methods, and that could even be cost competitive with injection molding for making millions of small, complex parts at a time. HP is working on similar technology.
The US Federal Reserve changes its baseline year for measuring US manufacturing output from 2007 to 2012, meaning average production in 2012 is given an index score of 100. Interestingly, 2007 production was actually greater than 2012 levels. With the new baseline, US monthly production of late has been at an average score of about 106, or 6 percent above 2012.
Contract manufacturer Flextronics announces new real-time supply chain dashboard that sets a new standard. Under a solution the company is calling Flex Pulse, Flextronics can deliver a broad range of supply chain data to large interactive touch-screen displays in factories, as well as desktop computers, tablets or mobile devices, including one massive display at its headquarters. The system is meant to be decentralized, putting power in local managers, and features powerful drill down capabilities.
A massive and spectacular explosion and fire occurs at a port complex in Tianjin, China - likely from poorly managed storage at a chemicals warehouse, causing a major supply chain disruption and highlighting yet another form of supply chain risk that needs to be accounted for in mitigation strategies.
After a major investigation, the New York Times publishes article highly critical of the culture at Amazon.com, saying it is cut throat, with employees being asked to work ridiculous amounts of hours and encouraged to call the bosses of peers to complain about a colleague's performance. Also tells stories of employees with health issues basically being run out of the company. Founder Jeff Bezos sends company email saying "this is not the Amazon I know," but promises to investigate.
ERP software company Infor acquires Global Trade Management software provider GT Nexus in a major move that says a lot about Infor's supply chain intentions.
China surprisingly devalues its Yuan currency about 3% against the US dollar, hoping to boost exports in its wobbling economy, sending global markets into turmoil.
Howard Abramson, former publisher and editorial director of the American Trucking Associations' Transport Topics magazine and having a long career covering transportation, accuses the trucking industry of being a deadly one badly in need of regulatory reform in op-ed column in New York Times. Critics note overall truck deaths down sharply over past decade, and that the Abramson figures include many deaths for which the trucker was not at fault.
Rather strangely, news that Walmart is backing off its "Made in USA" program, as letter to company from the Federal Trade Commission notes Walmart has already agreed to mostly end such product labeling. This controversy started earlier in the year when some consumer groups charged that many such designations at Walmart were inaccurate. This issue highlights that there are no real standards for what Made in USA means, and some states have their own rules.
News that sports apparel maker Under Armour is embracing new regional manufacturing strategy that will involve producing products in the US, under a strategy the company calls Project Glory. Producing in the US will "reduce lead times and time in transit so the consumer gets what they want more quickly, more efficiently, and get better products," a company exec says. We'll see.
The US Purchasing Managers Index from the Institute for Supply Manager falls below the 50 mark that separates expansion from contraction for the first time in 35 months, with a score of 48.6. The December scores is also below 50, at 48.2.
With great fanfare, a global climate deal of sorts is reached by nearly 200 nations at the UN climate summit in Paris, with many pledges to reduce CO2 emissions by various amounts in coming years.
But the pledges are voluntary, not legally binding, and will primarily be enforced by "peer pressure" as countries are required to report back on their progress - and potential new reduction targets - every five years.
The US at long last passes new five-year Highway bill. Infrastructure spending rises marginally, basically in line with inflation, far below what many hoped for. Bill does not allow either heavier or long trucks, as many shippers had hoped for. No change either to current gas or diesel taxes, which haven't risen since 1993, and some question whether the money is really there for the new spending. Bill does include reform of the Federal Motor Carrier Safety Administration's Carrier Safety Accountability program, changes much desired by carrier groups.
Amazon reported to be in talks to lease 20 cargo planes from Boeing, with other reports that Amazon is likely behind four air cargo flights leaving daily from the old DHL/Airborne air hub in Wilmington, OH, all towards building its own air cargo capability and lessen dependence on UPS/FedEx/USPS.
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