Tuesday, September 30, 2014

AMAZON, SUPPLY CHAIN, UPS, FEDEX, 3PLs

New supply chain, as Amazon proves, challenges UPS, FedEx, and traditional 3PLs. Yet another wake up call to many B2B and B2C businesses and to 3PLs.    



Amazon's Grand Plan to Avoid Holiday Delivery Snafus Again


Amazon's Grand Plan to Avoid Holiday Delivery Snafus Again
Photograph by David Paul Morris/Bloomberg
Amazon (AMZN) cleared $25.6 billion in the fourth quarter of 2013. A lot of Christmas wishes were no doubt fulfilled, but that holiday season is likely going to be remembered more for the packages that didn’t ship on time. A surge of demand combined with some inclement weather to overwhelm the operations of Amazon’s largest shipping partner, UPS (UPS), and some customers didn’t receive their gifts by the holiday. It was the cardinal sin of online retailing, and the two companies had to offer apologies and refund shipping fees for disappointed customers.
Now the country’s largest online retailer seems determined not to let the same thing happen again.
Amazon has built 38 new fulfillment centers in North America over the past year and a half and an additional 15 “sortation centers,” a new category of smaller warehouses where packages from the fulfillment centers are sorted by Zip Code. The sortation centers allow Amazon to ship packages directly to customers, rather than to the busy hubs of carrier partners like UPS, FedEx (FDX), and the U.S. Postal Service, Amazon’s partner on Sunday delivery.
That’s according to a new analysis of Amazon’s ever-expanding supply chain by ChannelAdvisor, a North Carolina company that helps retailers manage their online sales. Scot Wingo, the chief executive of ChannelAdvisor, says the sortation centers help Amazon reduce its dependency on the major shippers and work around potential scenarios like the one that ruined Christmas for some customers last year.
“UPS was a single point of failure,” Wingo says. “Amazon was so married to them. Now if they get into a situation where five days into the holidays and UPS says ‘no mas,’ sortation gives them a lot more flexibility than they had last holiday to work around congestion.”
This is only one part of Amazon’s effort to get packages to customers more quickly and at a lower cost. “They are slowly but surely working on more direct delivery, using more shipping vendors, and making faster delivery possible,” Wingo says. “Another output of doing the sortation themselves could be getting them to next-day delivery” for members of its $99-a-year Amazon Prime service.
Amazon has also been deploying its own delivery trucks, particularly in Seattle, Los Angeles, and San Francisco, the three cities where it has so far rolled out its Amazon Fresh grocery service. Recent reports suggest that Amazon has also started hiring for an Amazon Fresh service in the New York City area, where it would compete with companies like FreshDirect.
The ChannelAdvisor analysis shows how and where Amazon is continuing its massive supply-chain expansion. ChannelAdvisor researchers combed tax and property records and news stories about regional job openings to pinpoint the exact location of Amazon’s many new fulfillment centers. A ChannelAdvisor map of North America shows Amazon’s expansion is largely concentrated on the coasts.

Meanwhile, internationally, Amazon’s growth seems to be concentrated in Eastern Europe and India, where Amazon has pledged to invest $2 billion, and where CEO Jeff Bezos is speaking this weekend, as a matter of fact. The company added two new FCs in Poland, one in China, one in South Korea, and apparently five are under development in India.

Overall, Amazon now has 158 fulfillment centers around the world, ChannelAdvisor estimates, and more than 100 million square feet of fulfillment capacity. That should help Santa Claus avoid getting stuck in the snow again this holiday season.
Stone_190
Stone is a senior writer for Bloomberg Businessweek in San Francisco. He is the author of The Everything Store: Jeff Bezos and the Age of Amazon (Little, Brown; October 2013). Follow him on Twitter @BradStone.

MAERSK, HAPAG-LLOYD COLLISION AT SUEZ CANAL

Link to a video--
http://www.gulfshipnews.com/News/Boxship-collision-at-mouth-of-Suez-caught-on-camera/3w3c1022.html

EU LATE PAYMENT LAWS & SUPPLY CHAINS

EU late Payment laws – The 3 biggest Impacts on…

- September 22, 2014 2:09 AM
Categories: | Tags: ,
30Max
Trade Financing Matters welcomes a guest post from Gustave Roger, from a large European financial institution
We all agree cash flow is critical to business and that late payment is a major problem in the EU. It is very costly, it distorts competition and impacts the weakest link in Supply Chain i.e. the smaller businesses.
In a nutshell late payments lead to increased prices and reduced competition and ultimately, in the worst case, even to business failure.
The EU Late Payment laws are essentially forcing payment term compliance; from a supply chain perspective this is all very fine and it is simply another rule in the game. That is not in itself a game changer for the Supply Chain Financiers.
However, EU has also allowed countries to go beyond simple compliance enforcement and to drive payment term reduction between the Buyer and the Supplier (e.g. Law for the Modernization of the Economy in France for transportation) and while the media spotlight is on the Supplier/Buyer relationship, one critical actor has been left out in the dark: The financier.
So what are the 3 main impacts the late payment laws will have on the Supply Chain Finance providers such as reverse factoring, dynamic discounting, invoice financing or factoring companies?
  1. The first impact is the reduced opportunity to finance DSOs. Because the potential tenor is simply shorter (payment term reduction) the financing opportunity is reduced. Some SC Financier may find that their less profitable customers are becoming unattractive.
  2. The second impact is the total amount of funds in use at any point in time is smaller because the cycles are shorter. The financial case for the Buyer to consume its own (cheap) credit lines in order to finance its supply chain can become attractive.
Furthermore, the true cost of the supply chain would be pushed even lower than with external SCF solution as an intermediary would be removed from the equation. Because the fund requirement to set up such a SC Financing program is dropping some less cash-rich debtors may even find it feasible to self-fund such programs and stop sharing the profit with their financier.
  1. The third impact is the increased importance of automated invoice processing and approval systems. (This item is particularly relevant for reverse factoring and invoice discounting). A manual approval of invoices over 7 days is acceptable for the financier when payment terms are 75 or 90 days. The same 7 days approval cycle for net 30 days terms is proportionally reducing the financing opportunity for the SC Financier to possibly unacceptable levels.

Of course every financing model will be hit differently; some SC financier may be able to mitigate some consequences thanks to their legal and their financing model but every single one will be hit by this change in the legal environment.
- See more at: http://spendmatters.com/tfmatters/eu-late-payment-laws-the-3-biggest-impacts-on-the-supply-chain-financier-perspective/#sthash.CZKyZJ46.dpuf

FINANCE & RECEIVABLES RISK

What to do when one of your Major Buyers is Distressed

- September 24, 2014 3:45 AM
Categories: | Tags: ,
pDSP1-13265212p275w
In this uncertain economy, every sale to a business carries with it the risk the buyer will not pay. If the buyer goes into bankruptcy, you have your receivables tied up in court. Retailers of course are one sector that sees many companies go into distress, but problems are not limited to retail – think food and beverage, paper and packaging, auto parts, etc.
Receivable puts add another credit risk management option to manage exposure to a sellers’ buyers. Basically what you are doing when you as a seller “buy” a put is that in a credit event scenario, the Receivables Protection Put (RPP) will pay out a pre-agreed level of protection (can be set at 100% of face amount. Of course you pay for that protection. The product is about 10 years old, and enables many Private equity firms who have distressed companies in their portfolio the opportunity to have those companies still purchase goods. If you can’t buy goods, you can’t sell and have enough cash to manage your distress. Sears is a good example today.
When would a company use Receivable Puts?
  • Credit Default swaps do not provide a perfect credit hedge for receivables and CDS settlements typically require the delivery of customer’s bonds (which is not required with the Receivables Put).
  • Trade Insurance contracts may be cancelable, not available for distressed names, and requires deductibles and claims waiting periods.
  • Factoring may not be available for certain names or just may be uneconomical for certain receivables.
This is not a transparent market, so you need to know who are the players. The overall market is currently estimated at $5 billion in notional. The number of players includes Hedge funds as originators and risk underwriters, investment banks, and a few large banks. JP Morgan is a big player. Their Credit Liquidity Solutions team (CLS) delivers this innovative risk mitigation product which also includes other speciality puts like Lease Puts and Alternative Letters of Credit (ALOC). The volatility experienced in the markets over the past few years has prompted many of their clients to broaden their approach to risk management beyond more traditional areas of FX, Rates and Commodities.
Depending on your own views and those of credit rating agencies like S&P & Moodys for corporate defaults, this can be a good tool for corporates to use for risk management. In cases where you face a stressed customer, an RPP allows you to maintain an uninterrupted relationship with that customer on consistent trade terms.
- See more at: http://spendmatters.com/tfmatters/what-to-do-when-one-of-your-major-buyer-is-distressed/#sthash.hZWCG35a.dpuf

Saturday, September 27, 2014

NEW SUPPLY CHAIN, OMNICHANNEL, DISRUPTION

Ominchannel is a disruptor to traditional companies, be they B2B or B2C and to supply chain management.  The standard ways of organizing and performing SCM are changing.  Too many, including 3PLs and other logistics service providers, are discussing it in the standard ways and are missing what is happening.

Read more at http://www.ltdmgmt.com/the-new-supply-chain-paradigm.php








SUPPLY CHAIN RISK

Many supply chain risk discussions do not recognize Incoterms and how they create risk.  Read the best guide on supply chain risk at http://www.ltdmgmt.com/supply-chain-risk-guide.php  


Friday, September 26, 2014

MAERSK, MSC, M2, SEALAND

Maersk hopes MSC alliance can fill the Triple-Es, while SeaLand is set for revival

By Mike Wackett
09.26.2014 · Posted in Loadstar posts, Sea FavoriteLoadingAdd to favorites
maersk
Maersk would appear to need its new alliance partner MSC to help fill its 18,000teu Triple-E containerships.
At the Maersk Group Capital Markets Day on Wednesday, Maersk Line chief executive Soren Skou conceded that without the east-west 2M vessel-sharing agreement (VSA) with MSC, it would have to reduce the number of strings between Asia and Europe.
“Commercially that would be a problem for us,” admitted Mr Skou, giving the first indication of how critical the 2M was to the carrier’s long-term strategy.
Indeed, there is evidence that, in the past year, Maersk has increasingly had to rely on the spot market to fill its ships, with Mr Skou recently indicating that the carrier’s business was now roughly split 50:50 between contract and spot cargo – compared with a 25% share for spot cargo a year ago.
Mr Skou said the 2M VSA would, “hopefully”, gain authority approval and advised that, in line with analyst expectations, Maersk Line should be able to trim $350m a year from its bottom line with the optimisation synergies gained in the co-operation with the Geneva-based carrier. However, in 2015, this was likely to be only around $250m, given the phase-in costs.
Maersk Line has produced nine consecutive quarters of profit after the painful root and branch strategy changes that followed the disastrous $600m loss in the first quarter of 2012, and it is now recording EBIT levels 9% above the industry average. But Mr Skou wanted to dispel the notion that its success was entirely due to the deployment of big ships.
He claimed it was a myth that Maersk Line had adopted an aggressive expansion strategy, and argued that 3% fleet growth over the past two years was a “responsible reaction” to market growth of 7% and stood in contrast to the industry’s 11% capacity increase.
He said the focus would remain on cost reduction, and expected freight rates to remain under pressure for the foreseeable future, with little likelihood of top line revenue growth.
Bunker savings continue to be the main ingredient of the company’s unit cost reduction programme, and the innovation of slow- and super-slow-steaming was constantly being advanced, with “speed equalisation” a further tweak in the fuel-saving strategy.
For example, Mr Skou explained, on the Asia-Europe trade, where the strategy was originally to operate ships at designed service speed on the westbound headhaul and super-slow-steam backhaul, it has been found to be more economic to slow-steam on both legs.
Moreover, Mr Skou said, Maersk had a “vast tool box” of cost-cutting options and still had scope to further improve “container efficiency”.
Subject to regulatory approval of the 2M VSA, the challenge of the east-west trades had largely been met, he said, but in regard to north-south routes he added: “We want to be very clear; we want to defend and grow our north-south trade.”
He said Maersk’s strategy for those routes was cost leadership – using the biggest vessel possible for each particular trade; selling the best product; and having “more boots on the ground” in local markets.
Meanwhile, Mr Skou acknowledged that based on current growth, Maersk Line would need around 425,000 slots of extra capacity by 2017 – some of which could be temporarily covered by attractively priced charters, but in the longer term he saw a need for around 30 newbuilds for delivery between 2017 and 2019.
Given the time frame from planning to receiving a newbuild, he said decisions would have to be reached on its fleet strategy within the next year.
Mr Skou also confirmed reports that Maersk would re-establish the SeaLand brand in the intra-America trades between North and South America, where Maersk Line was currently “underweight”.
Around 250 staff will be employed at the SeaLand headquarters in Florida, from where the company would operate with the same autonomy as its intra-Europe and intra-Asia arms, Seago Line and MCC Transport.

LOGISTICS, ECONOMIC CLUSTER, SINGAPORE, THE NETHERLANDS

Singapore and The Netherlands have proven that logistics is an economic cluster? Why have so many others failed at that? LTD knows.



Thursday, September 25, 2014

DAMCO, MAERSK

Streamlined ‘new’ Damco will emerge from the ashes of a major restructure

By Mike Wackett
09.25.2014 · Posted in Loadstar posts, Supply chain FavoriteLoadingAdd to favorites
Damco
AP Møller Maersk says its troubled forwarder, Damco, is set to return to the black next year following a radical restructure to save $35m in annual costs.
At yesterday’s Maersk Group annual Capital Markets Day, Morten Engelstoft, chief executive of the freshly-named APM Shipping Services business unit, outlined the Damco strategy.
Mr Engelstoft admitted that the $3.2bn annual turnover company had lost its way, haemorrhaging “significant” money in the past 18 months.
He said that there were three major reasons for this: its costs were too high; its growth margin was too low; and it had a limited global standard and insufficient global alignment.
Under an executive restructuring programme dubbed ‘One Damco’, Mr Engelstoft said its current eight regions would be cut to four and 315 operational centres to just 50, thereby offering clients a “single global freight forwarding operating platform”.
Moreover, he said, efficiency would follow from the introduction of “lean management techniques” – and in order to deliver this, the top 100 managers would undertake leadership training.
Despite industry gossip that Maersk had lost patience and was ready to drop the sickly forwarder, there was no indication from the presentation that this was an option and the rebranding of the sector was said to emphasise the importance of the businesses to the group.
In heading up APM Shipping Services (previously known as Services & Other Shipping), Mr Engelstoft has arguably the most challenging role in the group.
The quartet of companies within the group is completed by Maersk Tankers, Maersk Supply Service and Switzer, all of which operate in highly competitive markets.
Mr Engelstoft said his target was to contribute $500m of annual net operating profit to the group by 2016, which, on the basis of the current performance of $300m, will mean a 70% improvement in results.
Earlier, opening the event, chief executive Nil Andersen said the group’s aspiration was to create a “premium conglomerate” which would consist of four “big business units”.
He reiterated the upgrade of the APMM group’s profits this year from $4bn to $4.5bn – with “signature business” Maersk Line having achieved “most if not all of its ambitions” ahead of schedule.

SUPPLY CHAIN MANAGEMENT STAKEHOLDERS

No other part of the company organization has as many stakeholders, both internal and external, as supply chain management. 


Wednesday, September 24, 2014

Tuesday, September 23, 2014

SUPPLY CHAIN PROCESS

Do companies have supply chain processes or are they really just a string of transactions handled by function groups?  And therein lies the problem.




ALIBABA, SUPPLY CHAINS, OMNICHANNEL

Is it about Alibaba or is it how omnichannel has changed Supply Chains even without Alibaba?



SUPPLY CHAIN SEGMENTATION & DATA ANALYTICS

Data analytics is a great tool to use with supply chain segmentation.  With supply chain scope, it may mean using outside the company data sources.  Good analytics should be able to handle data from multiple sources and in multiple formats.


SUPPLY CHAIN SEGMENTATION APPLICATIONS

Supply chain segmentation is excellent for--
  • Differing markets
  • Product portfolios
  • Customer portfolios
  • Inventory yield
  • Omnichannel sales
  • Global operations
  • Channel partners
  • Customer attrition
  • Suppliers
  • Supply chain risk
Read more at-- http://www.ltdmgmt.com/segmentation-guide.php


Monday, September 22, 2014

SUPPLY CHAIN SEGMENTATION

Supply chain segmentation is THE best practice.  Read more at--- http://www.ltdmgmt.com/segmentation-guide.php



CONTAINER LINES CAUSE SUPPLY CHAIN EROSION

Read about it and what shippers can do at http://www.ltdmgmt.com/impact-from-logistics-partner-actions.php


EUROPEAN SHIPPERS, M2, MAERSK, MSC

European Shippers 'pull alarm bell' over 2M

European Shippers Council tells FMC that Maersk-MSC alliance might damage world trade.

The European Shippers Council has written to the Federal Maritime Commission to express concern about the planned 2M agreement between Maersk and MSC.
In a letter to the FMC dated September 15, ESC Chairman Denis Choumert noted the proposed vessel-sharing agreement “goes in the direction of the current maritime history. Indeed, ship owners are very fond of cooperation agreements to cut costs and try to improve a sector plagued by overcapacity.
“However, following to the submission of the project to FMC, shippers would like to pull the alarm bell about the excesses that could cause such VSA. Operators might set up an extremely damaging situation to world trade.”
Choumert continued, “We are facing here a partnership whose only objective is to increase profit but not improve service. 2M should not be seen as a downgrade of the P3 (and thus considered positively), but as a huge upgrade of the individual ship-owner position. The gathering of the two first ship operators will create a huge player that will be in a position to have such a power that they can distort the market for the purpose of price increase.”
Maersk, when it announced its 2015 East-West Network last week, said shippers will "benefit from an expanded scope of stable, flexible and direct services delivering you a consistent experience made possible through improved network efficiencies driven by superior vessel utilisation and economies of scale.
Choumert sees things differently.
“Allowing these two operators to discuss and agree on some core parameters of the services can lead to a decrease of the competitive environment of the trade concerned by this agreement. Indeed, it will lead to a decrease in the number of direct call, a decrease of service quality and surely an increase of price," he wrote.
Concerns raised in the ESC letter include:
  • Authorization of Maersk and MSC to discuss and agree on the allocation of terminal costs giving them the “freedom to increase relevant surcharges with harmonization of pricing as consequence.”
  • The ability of the carriers to skip weekly voyages — so called “blank sailings.” He said this “can clearly be seen as market manipulation to restore freight rate if needed (by playing on the supply side).” However, Maersk said last week in its announcement, "Due to overlaps in port coverage, our new network will minimize disruptive effects on customers of blank sailings."
  • The fact that exchange of commercially sensitive information between the carriers is forbidden except if they are “strictly necessary.” ESC, Choumert wrote, “would like to have a much more precise definition of the scope of this ‘necessity’.”
  • The ability of operators to discuss and agree on administrative matters and implementation, which ESC said has “a potential negative impact on differences and the service levels of both carriers. It will lead to less competition and more harmonization between the carriers.”
Choumert said ESC “would be very supportive to the creation of a control system held by FMC that will monitor the link between the capacity available on the trade and the freight rates (as well as the creation of surcharges). Advance notification for any service modification (either in capacity or any other) should be required from the operators.”
He suggested that “an observatory of the service quality should be created.”
He continued, "The risks of 'extremism' in rationalization will lead to reducing the number of direct called ports, to the detriment of shippers. Limiting transshipment ensures shorter transit time more economical freight rates and greater security for the goods. FMC’s proposal regarding the P3 could be used for this situation, and for all new alliances in maritime transport."
Maersk said that on Friday, that Søren Skou, the chief executive officer of Maersk Line, met with Shang Ming, Director-General of China’s Ministry of Commerce (MOFCOM), to update the government on its plans to form the 2M VSA.
The company said that it had arranged the meeting at its own initiative. In view of MOFCOM's decision in June to block its earlier plan to form the three-way P3 alliance with MSC and CMA CGM, Maersk said, “We found it natural to provide an update on our future plans.”
The carrier continued, “We fully understand MOFCOM's decision, which is why we have decided to engage in a traditional VSA with MSC, similar to the many other VSA arrangements in our industry. We are filing our VSA with the relevant authorities as per regulatory requirements."
A week earlier, Maersk and MSC executives visited Washington and met with members of the FMC to discuss their agreement that they filed on Aug. 27. Such agreements go into effect in 45 days, on Oct. 10, unless the FMC asks for additional information
FMC Commissioners William P. Doyle and Richard A. Lidinsky, Jr., both said they plan to “stop the clock” by submitting written questions to Maersk and MSC about their planned VSA.
Doyle said he raised a number of these questions when he met with representative Anders Boenaes, a vice president at Maersk, and Caroline Becquart, a senior vice president for MSC, on Sept. 12, but would want to receive written responses for the record.
Maersk and MSC can take as long as they like to respond to those questions, but then the agreement will come into effect after another 45 days waiting period, unless the FMC seeks to block it through a court injunction, which would be unprecedented.
Lidinsky said that he will also have some questions for the two carriers, commenting that the two companies have been engaged in a “publicity blitz” for the alliance and are speaking to three audiences — regulators, shippers and the press — which, he said, sometimes results in “mixed messages.”
He continued, “I saw a quote from somebody at Maersk saying, 'They should have no problem approving 2M because they approved P3,' which is not a proper and logical way to go about this." Lidinsky was the only one of the five FMC commissioners to vote against the P3.
He said he has “five or six areas of concern, which I will spell out in the record, but it is not a simple ‘press the ATM’ approval process.”
While Maersk and MSC would control a smaller percentage of the world fleet than the P3 would have, he said the agency needs to look at “vessel control and deployment,” the impact of the agreement on “the entire supply chain,” and the membership of the two carriers in the Transpacific Stabilization Agreement, the discussion agreement for the transpacific trade.
Lidinsky said FMC Chairman Mario Cordero has mentioned to him that regardless of how the FMC rules on the 2M or recently announced plans by CMA CGM, United Arab Shipping Co. and China Shipping to form the Ocean Three agreement, there may be a need for a second "summit conference" between U.S., European and Chinese Maritime regulators, similar to a meeting that was held at the FMC headquarters last December.
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SEGMENTING CASH FOR SUPPLY CHAINS

How Companies Segment Cash to invest in Supply Chains

- September 17, 2014 2:41 AM
Categories: , | Tags:
Cash-is-King-300x225
With all the talk about how much cash corporations have to fund their supply chain, I thought it would be a good idea to examine how companies view their cash.
Here are three things to keep in mind about a companies cash:
  • First companies segment cash into distinct pools.
    1. Operating cash to meet daily cash needs – this has a term of 1 to 30 days and generally is very secure, invested in bank time deposits, high grade commercial paper, and money market funds.
    2. Liquid cash to meet projected and unexpected cash needs over 1 to 12 month time horizon. Here safety of principal, liquidity and yield are balanced. For example, companies may have a 3 year maximum maturity with 1.5 year average duration and the worse credit quality asset may be A- with an average of AA
    3. Strategic cash with no forecasted cash flows
  • Second, to manage cash, companies may use outside managers to leverage investment expertise and to be cost effective. Building inhouse capabilities is expensive (investment banker types aint cheap). Outside managers can help set proper risk tolerances.
  • Third, companies have investment guidelines which aid in their asset selection. For example, can they trade receivables of other companies? How low a rating can they go to deposit funds into a bank for term deposits?
So with early pay programs, bear in mind that these dollars to fund a supply chain come from somewhere and are not necessarily idle sitting not invested.
Now on a company’s balance sheet this all looks the same – it comes off as Cash & Cash Equivalents (“C&CE”). The accounting rules are really tight around what that means. But some companies have so much cash lets say they turn into an investment company because they are sitting on so much.
Many investment advisors are trying to come up with creative ways to help companies deploy this cash. The biggest challenge they find is how much is categorized as C&CE. Generally it is 90 days and shorter, and liquid and once you step out of that range you don’t have to meet that Boards definition of C&CE and their investment policies. Once companies move into other investments, it would move to Short Term Investments or Securities Held for Sale, and there is a whole bunch of accounting treatment that must go on.
This is big business, and one investment advisors, lawyer, banks, accountants, etc. are actively trying to find product solutions with better return/risk tradeoffs. The challenge is finding product to invest. Companies are certainly waking up to investing in their own supply chains.
- See more at: http://spendmatters.com/tfmatters/how-companies-segment-cash-to-invest-in-supply-chains/#sthash.q36MYymL.dpuf

Sunday, September 21, 2014

SUPPLY CHAIN METRICS / KPIs

The best supply chain metrics are ones that are aligned with the company strategy and direction. Functional KPIs isolate the supply chain.







Friday, September 19, 2014

SUPPLY CHAIN RISK MITIGATION

Supply chain risk mitigation first requires identification, validation, and assessment.
http://www.ltdmgmt.com/supply-chain-risk-guide.php



FREIGHT COSTS, INVENTORY, SUPPLY CHAINS

High freight / transport costs or too much inventory are often symptoms of bigger problems. They are not supply chain problems by themselves.



 

Thursday, September 18, 2014

UPS, EVOLVING ECOMMERCE, NEW SUPPLY CHAIN

UPS facing challenges with evolving e-commerce. Surprise to those who fail to understand new supply chain. Read


CHINA LOGISTICS ACTIVITY

What does this really mean? A warning indicator?

Saturday, 06 September 2014 10:41

China logistics activity growth loses speed

Written by
(0 votes)
China logistics activity growth loses speed
The growth of China's logistics activities slowed in August amid downward pressure in the economic recovery, according to the China Federation of Logistics and Purchasing.
The logistics performance index (LPI) for August came in at 54.1 per cent, down 2.7 percentage points from a month earlier. A reading above 50 per cent indicates expansion from the previous month, while a reading below indicates contraction. In breakdown, the index for new orders stood at 54.2 per cent, retreating 1.8 percentage points from that in July.
He Hui, deputy director of the China Logistics Information Center, said the indices showed the economy is stable but there is downward pressure.

SUPPLY CHAIN RISK GUIDE

Read the best guide on Supply Chain Risk at http://www.ltdmgmt.com/supply-chain-risk-guide.php  

Wednesday, September 17, 2014

LEADERS & BEST SUPPLY CHAINS

Supply chain leaders know they must blend cost containment, enhanced service, and best practices.  Too many firms incorrectly look just at costs.  Others look at service because they have a problem.  The best know it takes all three to build competitive advantage for the company.



HONG KONG & BUSIEST AIR CARGO AIRPORTS

Hong Kong tops ACI cargo rankings

The airports in Hong Kong and Memphis stand as the busiest cargo airports in the world, according to a new report.

ACI found that worldwide cargo traffic rose in 2013. In a newly released report, Airports Council International found that worldwide cargo traffic, as reported by airports, rose by 0.9 percent in 2013.
Hong Kong International Airport and Memphis International Airport are the two busiest airports, and ACI reported the airports saw cargo volumes of 4.17 million tons and 4.14 million, respectively, in 2013. Hong Kong’s number represents a 2.5 percent rise of 2012, and Memphis experienced a 2.9-percent, year-over-year, increase.
Memphis took the top spot regarding traffic volumes destined for domestic locations, with the Louisville and Beijing airports rounding out the top three. Hong Kong is the busiest international cargo airport, with the airports in Dubai and Incheon ranking second and third, respectively.
ACI reported that airports in the Asia-Pacific region saw the most cargo on a regional basis.

CONTAINER LINES, ULTRA LARGE SHIPS, MEGA SHIPS

Are container lines that are buying ultra large ships falling further behind lines with mega ships?


Tuesday, September 16, 2014

SUPPLY CHAIN DATA ANALYTICS

Much supply chain data analytics involves outside data. Do not forget about the time and cost to scrub the data.


ASEAN LOGISTICS HUB, MALAYSIA, THAILAND, MALAYSIA

There is much talk about the ASEAN logistics hub.  What must Malaysia and Thailand do to overcome the dominance of Singapore with logistics and supply chains?  LTD Management understands the situation and what is required for competitive differentiation.

From World Bank Logistics Performance Index--


World Bank
LPI
2007
Score/Rank
2010 
Score/Rank
2012
Score/Rank
2014
Score/Rank
Malaysia
3.48/27
3.44/29
3.49/29
3.59/25
Thailand
3.31/31
3.29/35
3.18.38
3.43/35
Singapore
4.19/1
4.09/2
4.13/1
5.00/5



BUYING TRADE FINANCE AND TRADE CREDIT ASSETS

Options to Buy Trade Finance and Trade Credit Assets are…

- September 11, 2014 4:30 AM
Categories: , |
The disruption occurring around working capital business banking is in the early days, but between “information advantaged” finance models and more expensive bank equity, start-ups today can be major threats tomorrow.
For trade credit, or what banks call open account, the largest potential threat to banks is not other banks, but third-party funding models. This definition of third-party funding can apply to a number of early pay techniques, including:
  • Bank Approved Trade Payable programs (or Bank Supply Chain Finance)
  • Factoring
  • Dynamic discounting / early pay techniques
  • Pcards
A lot of this can be understood by the following formula:
Big networks + lots of data + new underwriting models + zero short term interest rates = huge interest by non banks
Networks have valuable data. For example, the combination of a purchase order, invoice and invoice approval and payment history provides a combination of invaluable information to a lender. Networks also have data on dilution, and as they tie in payments, payment history as well.
Networks can increase the time invoices can be financed – The time period that receivables can be financed is limited today by current paper A/P processes, but networks can improve that by up to 50 percent.
At the moment, partnering propositions are going after the low hanging fruit of “Buyer Approved Invoices.” Recent examples of banking/funding/payment providers partnering or buying platforms include:
  • Demica / JRJ Group
  • Nipendo / Integrated Finance
  • Crossflow / Eaglewood (and others)
  • Tungsten / OB10
  • Mastercard / Basware
  • Orbian Capital Markets program
  • PrimeRevenue / Electronic Draft program
  • Taulia’s TED program
  • Tradeshift / CapitalAid
To read more about the above list, see additional articles below.
These “adhoc, on demand, online factoring” models are leveraging the above formula. While it is still early days for many models, these are exciting times. For banks trying to take trade finance assets off their books, working with pension funds, insurers, etc., the work effort is hard, complex and lacks transparency. For non banks playing in the above space, they “get” the new digital world. While there will be hiccups along the way, and there is still much for many of these propositions to understand given they are moving into new areas – credit markets, capital markets, regulatory and compliance, accounting, etc., the horse has left the barn on market adoption.
We can be thankful for trailblazers like TheReceivablesExchange, PrimeRevenue and Orbian that developed innovative supply chain finance and auction models that helped pave the way for future solutions.
- See more at: http://spendmatters.com/tfmatters/options-to-buy-trade-finance-and-trade-credit-assets-are-growing-part-2/#sthash.BWZsxWdj.dpuf

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