TRADE WAR AND BULLWHIP EFFECT

How long can Supply Chains continue under the stress of the tariff-war, forward-buying Bullwhip Effect on inventory? Retailers. CPG FMCG Manufacturers

RETAIL AND GROCERY--DUALITY AND INTEGRATION FOR CUSTOMERS

Retailers & Grocers. As long as you think stores vs e-commerce, bricks vs clicks, you will struggle with solutions to the new reality. That will involve integration of the two, both in design & practice, & at the same time each part can operate individually. SCM to do duality!

AGILE OR STRATEGY

3PLs and logistics providers. Dealing with the significant disruption, both outside generated and within the industry, is about strategy, direction. Being agile is not strategy. It is code for bandaiding/reacting.

DIGITAL AND LOGISTICS

3PLs and logistics providers.  Digital is not a strategy.

MANUFACTURERS AND THE PERFECT ORDER

Manufacturers, do you know your Perfect Order performance? This is the best company metric. If "yes", is the score high? If not, why? If "no", why do you not know? BTO BTS

SMALLER STORES WILL MEAN FASTER RESTOCKING

The push for smaller retail & grocery stores will require faster restock to avoid customers seeing many inventory stockouts? No matter if it is brick or click, it is now all about Supply Chain Velocity. Is your supply chain designed for & can operate faster?

CPG FMCG MANUFACTURERS, WHAT ARE YOU DOING ABOUT STORE CLOSINGS?

More store closings are already announced than were all last year. E-commerce Order Delivery is going to 1 day. CPG FMCG manufacturers what is your strategy to deal with this? Can your Supply Chains respond to faster e-commerce supply speed? Your e-commerce program & speed?

MORE STORE CLOSINGS AHEAD?

Notice how few retailers have robust e-commerce with 2 day or faster Order Delivery? Amazon. WalMart. A couple others. Why does it say about the potential for more store closings as the standard goes to 1 day & its Customer Convenience?

INVENTORY--THE SUPPLY CHAIN ASSET AND SLEEPER

Retailers. Manufacturers. Grocers. Suppliers. Inventory is both a key & a sleeper when it comes to required velocity . It is central to the Perfect Order or restock & to Order Delivery Velocity. 

Yet, inventory is also a sign of problems while being defined as an asset by accounting/finance. As such, it can be overlooked when measuring Supply Chain velocity performance. CPG FMCG BTO BTS

ONE DAY ORDER DELIVERY WILL GO BEYOND E-COMMERCE

The disruptor effect of 1 day Order Delivery will be bigger than said here. Will cascade into stores. Longer for some to transform, greater the pain. Love articles that fail to understand orders & call it shipping. Retail. CPG FMCG Manufacturer

Amazon's shift to one-day Prime shipping could prove a big challenge to 2 breeds of retailers

Dennis Green

May 11, 2019, 9:12 AM

• Amazon announced in April that it would be shortening its two-day shipping offering to one day for all Prime customers.
• Two-day shipping was transformational and proved e-commerce was a real force in the retail industry, according to Micahel Krakaris, founder of third-party shipping and logistics firm Deliverr.
• One-day shipping has a chance to matter just as much, for different reasons.
• The new speed could completely supplant even more shopping trips, like those for need-it-soon-but-not-right-now essentials from drug or convenience stores
• Two-day shipping was a revolution.
  One-day shipping, which, Amazon announced in April, is starting to roll out to all Prime customers nationwide to replace two-day shipping, has the same potential.
  "Two-day shipping made e-commerce relevant," said Michael Krakaris, founder of Deliverr, a third-party shipping and logistics firm that works with third-party sellers and merchants on platforms like Amazon, Walmart, and Ebay.
  Before, e-commerce orders took a long time, and actual arrival times would often vary greatly. With two-day shipping, customers could predict when they would need or want an item by, and the regularity of Amazon Prime's guarantee meant they could order it to fit their schedule. 
• But even shaving just 24 hours from the time something arrives could have huge psychological benefits for customers who are mentally preparing for when an item is going to come.
  "With one-day, you're changing the game, and now you're changing the framework of how buyers think," Krakaris said. 
• "The way they're now going to think about it is ... should I go to the Walgreens down the street? Or should I just buy it on Amazon?"
  Before, customers could go to drugstores or convenience stores for need-it-now essentials, but a one-day shipping promise changes the calculus.
  "With two-day shipping it was: 'I'm going to go to Walgreens down the street. I'm only going to buy something on Amazon if I can't find it at Walgreens,'" Krakaris said. "Now you're asking yourself, should I really even walk there? Should I even really stay and wait in the checkout line? [It's] going after those convenience stores."
  Should drugstore chains like CVS, Walgreens, and Rite Aid fear the coming of one-day shipping? It's still unclear how the offering will shake out and how customers will respond. 
• But in a best-case scenario, where the 100 million items currently available for Amazon Prime's two-day shipping are migrated to one-day, some sales could certainly be captured by the e-commerce giant.
  An Amazon spokesperson gave Business Insider this statement in response to a request for comment:

  "We focus on customers and innovating and speeding up delivery on their behalf. We've offered increasingly faster shipping options for a number of years — introducing one-day and same-day delivery, as well as one- or two-hour delivery with Prime Now. In addition to the many delivery options we offer today, we have begun to offer free one-day delivery as the default speed. We significantly expanded one-day selection and the delivery areas starting in early April and we aren't done. As we mentioned before, we will keep adding more and more products and expanding our delivery areas to ensure Prime members get their products faster than ever."

  
  

https://www.businessinsider.com/amazon-prime-one-day-shipping-compete-drug-convenience-stores-2019-5

TECHNOLOGY, LOGISTICS, SUPPLY CHAIN MANAGEMENT AND DOMAIN EXPERTISE

Undiscussed topic with blockchain, digital, & other technology disruptors in Logistics & Supply Chain Management. The need for 2 domain expertises to collaborate--tech & logistics providers, tech & end-to-end Supply Chain experts. Otherwise there is weakness/flaw in effort. 

WHAT ARE CPG FMCG MANUFACTURERS DOING ABOUT RETAILER PROBLEMS?

CPG FMCG manufacturers & suppliers, as retailers continue to struggle with omnichannel, what are you doing to fill the sales loss & void? Where is your strong e-commerce driven by the New Supply Chain?

IT IS ALL ABOUT SUPPLY CHAIN MANAGEMENT

Amazon revolutionized retail & e-commerce with 2-day Order Delivery. They elevated Supply Chain Management to do it. Now they are disrupting with 1-day order delivery. Again with SCM. Could the message be any clearer? Yet retailers & CPG FMCG manufacturers do not transform.

INVENTORY--WEAKER ROI, ROA

Manufacturers. Suppliers. Retailers. Grocers. Within the velocity topic is inventory—inventory rich, turns, working capital, return on assets, & yield maximization. Key issue to assessing problems is with inventory—too much, slow turns, stock outs, and lack of velocity.  All this means a lesser return for funding. It can also affect revenue through yield maximization which also is a weaker ROI and ROA. 

ADIDAS, AIR FREIGHT, AND INVENTORY

Adidas. Now about the inventory Bull Whip effect that LTD has been discussing. Versus end-to-end Supply Chain Velocity.

Adidas opts for air freight – 'a temporary setback' – to avoid supply chain shortfall

By Alexander Whiteman

08/05/2019

Cheaper air rates and a dearth of warehouse capacity may be sending shippers to the skies: Adidas plans to increase its use of air cargo to offset supply chain shortages.

Chief financial officer Harm Ohlmeyer told investors during a Q1 earning call today Adidas would be increasing its airfreight operations after product shortages had dented revenue.

He said: “Please bear in mind it has been too short of a notice to have significant impact on flying-in products for Q1, but it will be more significant in Q2 and, to some degree, in Q3.”

And while chief executive Kasper Rorsted believed this “would” iron out the shortages by the end of the year, he noted it would come at “substantial” cost over the next two quarters.

Blame for the shortage is due to political tensions affecting the US and Europe, according to UK policy director at the FTA, Elizabeth de Jong.

“Some of the operators we have spoken to have talked about stockpiling in anticipation of the Brexit outcome,” she told The Loadstar. “One poll we undertook suggests 19% of operators are stockpiling, with 5% purchasing extra warehousing space and 15% renting more space.

“So, it is certainly possible that there could be a link between this – and tariffs in the US – and the shortage of available warehouse capacity.”

Mr Rorsted said he was expecting Adidas’s supply chain shortages to have an impact of between €200m ($224m) and €400m over the year. Much of this, he said, would occur between the second and third quarters, with the North American market “bearing the brunt of the storm before skies clear”.

He added: “For the mid-term, that means as of 2020, we have contracts in place that ensure  a temporary setback – as supply chainwe will have no supply constraint.”

And Mr Ohlmeyer said that, going into next year, Adidas would “have better transparency” on the timing of supply chain shortages.

However, Mr Rorsted re-emphasised that in the short-term there would be shocks the company would have to weather, describing having to use air freight as a “temporary setback”.

https://theloadstar.com/adidas-opts-for-air-freight-a-temporary-setback-to-avoid-supply-chain-shortfall/

Nestle. Cutting DTS Direct To Store. Now shipping to a warehouse. From a Supply Chain view are they trading Last Mile delivery costs for carrying more inventory in warehouses and potentially delay deliveries? Treating inventory as a asset instead of service performance metric?

Nestle's U.S. Unit Will Slice 4,000 Jobs in Delivery Change

By

Deena Shanker

May 7, 2019, 1:13 PM EDT Updated on May 8, 2019, 3:22 AM EDT

• Will stop shipping frozen pizza, ice cream direct to stores
• Staff cuts will bring one-time costs of about $500 million

Nestle SA’s U.S. unit will dismiss about 4,000 workers as it stops delivering frozen pizza and ice cream directly to stores and transitions to a warehouse model that’s becoming an industry standard for Big Food companies looking to trim costs.

The company said Tuesday that it’s shutting down its direct-to-store delivery network for products like DiGiorno and Skinny Cow beginning in the third quarter. The change, announced at a shareholder event in Arlington, Virginia, means the elimination of an operation that now includes 230 facilities, 1,400 trucks and 2,000 different routes.

https://www.bloomberg.com/news/articles/2019-05-07/nestle-s-u-s-unit-will-cut-4-000-jobs-in-delivery-network-shift