Walmart Inventory Management

In the article, the author talks about Walmart and how the company is always on the cutting edge of new technology. I thought it was interesting that Walmart doesn’t just ‘sit on its laurels’ and continues to be one of the industry leaders in inventory management. While having a large competitor in the online market (Amazon) is a bad thing for Walmart, it in the end makes them strive to improve themselves. The Author then explains about the Vendor Managed Inventory, where the supplier manages the inventory basically. As well as the different types of inventory that Walmart keeps, one that stood out for me was the buffer inventory which is used in case demand surges and the anticipation inventory where they use historical data to predict rises in demand. For big holidays like Black Friday and Cyber Monday these inventory practices will set Walmart up to succeed.

Walmart also rates there inventory A, B or C based on how important it is, with the C ranking being the lowest. An example of a C type would be cleaning supplies inventory, which isn’t recorded in much detail. The article also goes on to explain about cross docking and the bullwhip effect that we talked about in class. As a result from all of these inventory policies Walmart, the cost of managing inventory is very low.

Link to article: http://panmore.com/walmart-inventory-management

Dick’s Sporting Goods – Technology Insertion

https://www.pressconnects.com/story/money/2019/10/01/dicks-sporting-goods-warehouse-distribution-how-process-orders/3828319002/

I found an article on Dick’s Sporting Good’s where they recently used technology to advance their supply chain. Dick’s Sporting Goods has a Distribution Center in Conklin NY where they were completed about 2,000 online orders a day prior to the technology insertion. The e-commerce hub now completes about 18,000 orders a day with additional capability to meet holiday demand / other spikes in demand. The tech insertion increased their output potential multiple times over.  This was completed in early October.

Another key component of the company’s supply chain was that they vertically integrated by taking over the digital component from a third party about two years ago. This allowed the company to take over a key component of sales in today’s market place (internet sales).

This facility is the company’s first joint fulfillment and distribution center. It services many of the customers on the east coast and in the northeast. Some of the key distribution center characteristics are:

  1. 120 robots that place merchandise into a grid of 97,000 storage totes
    1. Will allow the facility to complete 12 million units a year
  2. Tech Expansion added 250,000 square feet (in addition to the 650,000 square foot facility)
  3. Connected the distribution center and fulfillment center
    1. Employees more than 400 people of which the tech portion added 100 – 150 new full time jobs. 50 of the new hires receives promotions and advancements
    2. Helps connect orders and filling in one location (more efficient)

The opening of the facility has helped the store cut a day and a half of lead time between when a customer orders and receives a product. This helps the company compete with our major players in the e-Commerce community such as Amazon whom offers very short delivery windows.

  1. In August 2019, web sales represented 12% of the company’s sales (up from 11% a year ago)
  2. Total sales at the company were $4.1 billion for the six months ending August 4. E-commerce sales are up 21% from a year ago.

The article has over 40 pictures of the facility. Some of the pictures capture the various types of equipment / robots which include primarily product moving and product sorting equipment. The article doesn’t explicitly state the names of the robotic and other equipment investments that are leading directly to more capability.

Dick’s is making technology work for them to help meet the demand by region through these distribution centers (other locations in Pittsburgh, Atlanta, Indianapolis, and Phoenix). This article demonstrates how a company undergoes initiatives from a supply chain standpoint to remain competitive in the marketplace. A key takeaway is that this center is leading directly shorter delivery times from customer order and will also help meet additional demand as needed.

Circular Economy by 2030

Circular Economy represents the use of certified sourcing partners, encouraging recycling for products, leading green initiatives in the supply chain.

The Take-Make-Dispose system of Linear Economics cannot sustain 3 billion additional consumers by 2030.  The circular economy decouples growth from resource constraints.  There is a huge potential for innovation, job creation and economic growth.

Innovation is being integrated into supply chain process to encourage circular economy.

  1. Products are being intelliigently tracked using RFID and barcodes to determine their lifecycle. (Herman Kay- clothing manufacturer)
  2. Companies are investing in more sustainable means of transporting or moving supplies via air, land , sea or inter modal forms of transport. (UPS, FedEx)
  3. Companies are optimizing delivery routes to have better placement of goods and reduce the environmental pollution caused by heavier  vehicles.(ORION system UPS).
  4. Companies are re-manufacturing products made from discarded parts. (Xerox)
  5. Companies are avoiding waste through recycling or repairing products(Patagonia fleece jackets made from plastic bottles (1993))
  6. Companies are incentivizing reusable packaging based subscription for consumable / perishable materials. (Loop )

References:

http://www3.weforum.org/docs/WEF_ENV_TowardsCircularEconomy_Report_2014.pdf

https://www.weforum.org/agenda/2019/10/heres-how-a-circular-economy-could-change-the-world-by-2030/

https://loopstore.com/how-it-works

 

 

Amazon Sells Clothes from Factories Other Retailers Blacklist

The primary theme of this article is the growing online marketplace and the global supply chain that it involves–primarily with Amazon and their involvement in keeping the blacklisted factories open.

 

The article starts with the 2013 Bangladesh factory collapse that killed over 1100 people and injured another 2000. After the factory collapse, a majority of the global apparel retail set safety standards that all factories must meet in order to maintain their place in the factory supply chain. The article points out that Amazon did not join this Accord. WSJ states that Amazon receives a “steady stream” of clothing from dozens of Bangladesh factories that were deemed too dangerous to be allowed into the supply chain of major retail brands.

The shirt above was found on Amazon from a New York retailer that was manufactured in Bangladesh that had no fire alarms and had doors that factory managers can lock the workers in until they finished the orders.

Because of the growing eCommerce space that Amazon dominates, supply chain management has changed–especially with 3rd party sellers on the platforms. Because the 3rd party sellers are usually small, independent companies; they do not have the scrutiny of identifying their suppliers as the larger retailers do. Many go with the cheapest manufactures to improve their margins. More than 2/3 of the apparel that were manufactured in a banned factory was sold by an independent seller, but there were several instances where Amazon was selling these items directly. The Amazon spokesman stated, “Amazon doesn’t inspect factories making clothing that it buys from wholesalers or that comes from third-party sellers. Instead, it expects those wholesalers and sellers to adhere to the same safety standards.” WSJ states that the agreement with independent sellers does not state that they must meet those standards.

Amazon removes the items when they become aware that those items do not meet their ethical standards, however, there is no proactive policy on how to deal with these supply chain standards. WSJ reports that it was not just Amazon that sourced from these manufactures. Walmart and Target were both found to have items sourced from the banned list. Both companies removed the items after they became aware. Sears and Kmart resumed relationships with the banned suppliers after bankruptcy.

The article describes the two groups that were formed to blacklist factories that did not provide ethical standards. More than 300 factories were blacklisted after the factory collapse in 2013. WSJ then describes their process of how they tracked the supply chain from the blacklisted factories that were still operational and still blacklisted.

Amazon guides their independent sellers to a section called, “responsible sourcing” where they ask their sellers to continuously monitor their supply chain, but Amazon does not enforce the guidance directly. The article ends with a quote, “Amazon is just a platform. Anyone can sell anything”.

https://www.wsj.com/articles/amazon-sells-clothes-from-factories-other-retailers-shun-as-dangerous-11571845003?mod=searchresults&page=1&pos=1

 

How Would the U.K. Trade After a No-Deal Brexit?

How Would the U.K. Trade After a No-Deal Brexit?

This article discusses the consequences of the UK departing the EU on October 31st with zero trade negotiations with the EU set in place. The EU is the world’s largest trading bloc and world’s second largest economy after the United States. A trading bloc is an intergovernmental agreement where barriers to trade are reduced or eliminated among the participating states. The UK’s decision to leave the EU are coming into effect after a referendum that was passed in 2016. Many people believed that leaving the EU would allow the UK to negotiate new trade policies that were more favorable than the one’s established as a member of the EU.  After the referendum passing, there has been lot of uncertainty about the UK’s ability to create trade relationships with the EU before the departure.

If the UK does not establish new policies with the EU prior to leaving, then UK and EU will revert to the World Trade Policies previously established in 1995. The UK was a member of the EU and WTO prior to 2016. Leaving the EU and not having trade negotiations set in place would cause tariffs in both directions. Both imports and exports to the EU would be taxed. The EU was founded on the principle of free trade among its members. The EU also establishes trade policy of its members with other countries outside of the union. Germany, France, Italy, Spain, and formerly the UK made up 70% of the EU. Obviously, a no-deal “Brexit” would increase costs for UK based international companies as the prices of goods and services would increase as a result of the increased tariffs. Examples of goods that would be taxed would be, automobiles at 10%, clothes and linen at 12%, and tableware and kitchenware 12%. These items would other wise be tax free under the policies in the EU. Another factor to consider is the “channel tunnel”.

The “channel tunnel” is a 50 kilometer rail tunnel linking Britain and France. The UK government estimates that 50-85% of truckers will not have the required paperwork to cross the channel legally. This could have the potential of delaying shipments by up to 2 and a half days. The UK’s Revenue and Customs (tax-collecting agency) estimates that British businesses will spend $19 billing extra per year on paperwork. It would ultimately disrupt the UK’s and EU’s integrated supply chains both financially and time-wise. The channel to France is not the only boarder to consider.

Northern Ireland which is a separate state for the UK, is a member of the EU and is remaining a member. If the UK does not negotiate a trade relations, a hard geographical line would have to be created between the UK and EU. The line would need a barrier and would restrict access via customs agents. The free flow of people between the UK and Northern Ireland has lead spectators to believe 73,000 jobs would be lost. The EU provides freedom of establishment which gives the rights for self employed people & free movement of people with the EU. Cross-border services companies would be forced to hire lawyers and accountants to navigate the complex WTO regulations. It would also limit students from studying abroad.

Businesses are stockpiling goods in case a no deal occurs. Thus, protecting against bottlenecks in just-in-time production. “Brexit” has already increased costs for manufacturers. A “no deal Brexit” will increase costs even higher.

How Aldi, a brutally efficient grocery chain, is beating Walmart on low prices

It doesn’t take long to notice things are different at Aldi than what you’re used to seeing at a grocery store.  Upon arrival, in order to get a cart, you have to “rent” one by depositing a quarter into the cart handle to release it from the cart in front of it.  Right away I thought about how this would cut down on labor costs as the grocery store would not need to employ a person to run around the parking lot corralling grocery carts.

When you enter Aldi, you’ll notice it’s much smaller than most grocery stores in the US.  This cuts down on the amount of space they need to rent and costs associated with running a larger space, such as electricity.  They sell less items at Aldi in comparison to other grocery stores (1,400 at Aldi vs 40,000 at traditional supermarkets).  This cuts down on costs associated with ordering and inventory, but this may also come as a pleasant surprise to some of us who are inundated with the amount of choices we have in simply picking out a bottle of ketchup.

It’s rare to come across brand name products at Aldi.  Again, this keeps their costs down.  They stock the shelves with products in their original cardboard shipping boxes, which saves time on employees stocking shelves.  Many stores don’t publish their phone numbers so employees don’t have to spend time answering phone calls.

The checkout process is extremely speedy.  Their products have 3-4 bar codes on every package which saves time searching for the bar code.  Then, the cashiers don’t bag the groceries.  They quickly scan and then dump them into your cart.  Then after payment has been processed, there is an area where customers take their carts and bag their own groceries (talk about customer involvement) before returning their cart and retrieving their quarter.

Because of all these process improvements and efficiencies, Aldi is able to keep costs low and complete with Walmart and the like.

https://www.cnn.com/interactive/2019/05/business/aldi-walmart-low-food-prices/index.html

Tesla Model Y and Manufacturing Ambitions

I began this quest for a blog post with a notification about Amazon’s new product line and how the products will affect the market. While I did not find an article that seemed appropriate, I landed on an article from Tesla about the new production process that they plan to implement in the Model Y. The Model Y is the new SUV Crossover vehicle that is meant to be marketed to the masses similar to the Model 3.

The author claims that there has not been much talk about the Model Y juxtaposed to launches of previous Tesla models. The author claims that the Model Y is set to revolutionize the manufacturing process for the entire lineup of Tesla vehicles.

One of the updates to the manufacturing process is in the wiring system. One of Tesla’s patents reduced the wiring of the vehicle from 1.5km of wires for the Model 3 down to just 100m. That is about a 93% reduction in wiring. With less wiring, this improves the automation initiatives that the company plans on implementing into the production sequence for all the mass-market vehicles.

Another patent is called, “Multi-Directional Unibody Casting Machine for a Vehicle Frame and Associated Methods”. This patent states that the vehicle body can be cast out of one piece of material. Musk states that decreasing the vehicle body from 70 pieces of material to 1 reduces welds and has a signification reduce of capital expenditures on the robots.

The author claims that the way Tesla is handling the press for the Model Y makes him believe that the Model Y would be the first vehicle in the lineup to utilize these technologies in the production process. Once proven, these technologies can also be used to help produce the future lineup of the Tesla Pickup, Semi, and future roadsters.

These improvements also address the issues Tesla had with the Model 3 productions that are well documented and are predicted as lessons learned. With the new Shanghai factory opening and extending to the Chinese market, Tesla hopes to have a much smoother rollout in China than in the US.

It would be appropriate to point out that Tesla CEO, Elon Musk, is known for extremely ambitious timelines that extend to all of his companies. It would also be important to convey that these patents may not address possible safety issues that can arise with the finished product. The author seemed to be extremely excited about the technology and did not address the testing that may still need to take place before the technology is operational.

The Model Y is an understated Trojan Horse for Tesla’s manufacturing ambitions

Smart Infrastructure Becoming More Pervasive in the Workspace

Siemens is embracing new technology called “smart infrastructure” in use of its new app called “Comfy”. It’s a one-stop approach that pulls some previous capabilities and many new ones under one easily accessible location. It’s not the only company.

These new technologies are leading the way into an integrated approach at increasing office productivity with offerings for individual office workers, management tools, infrastructure controls & customer engagement.

Individuals workers can now regulate office temperature, workspace lighting, find building food options & menus, and place/track maintenance requests.

Management will want to take advantage of infrared tracking technologies to monitor & assess effective building space usage, traffic maps (where are my customers visiting in my consumer space?) & evaluation of queuing wait times.

Customers can be engaged with proximity sensors leading to better CSR efforts and white glove handling of VIPs. In-store analytics can be helpful with shopping decisions, sales alerts or coupons.

Infrastructure controls will make it easier to adjust building-wide lighting for cloudy/bright days (a huge productivity booster according to research), monitor inventory and equipment, which is something that would be very productive in an environment like hospitals.

The insurance realm has already seen the smart infrastructure approach take root. Already, customers are using smart infrastructure technologies in auto insurance. That approach may expand further into healthcare, both from preventative approaches and warning systems. You even have ideas sure as ‘smart toothbrushes’ that can alert your dental insurance that you aren’t brushing enough. Smart infrastructure is just another tool for insurance providers to reward their best customers and weed out the high-risk pools.

Obviously one can imagine both the benefits and privacy concerns that will need to be addressed as these technologies weave themselves into our workplace, our devices, and even our daily routines at home.

https://www.economist.com/technology-quarterly/2019/09/12/companies-are-taking-advantage-of-their-new-ability-to-track-their-workers

E-Commerce Platform Shopify Buys Warehouse-Robot Startup

If you are an online retail company, shipment delivery speed is utmost important parameter to stay in the business. Amazon.com Inc. cannibalized the market with its innovative ways to improve delivery speed and it has become now sort of expectations for customers to get the goods in couple of days. Online retailers are doing everything they can to stay in competition with Amazon.com Inc. In June this year, Shopify Inc., an E-commerce technology company, started offering their customers an access to a network of dedicated fulfillment centers to store and ship goods for online orders. The increased network of delivery centers was aimed to keep inventory across distributed network within reach of major population. This move helped retailers to compete with retail giant Amazon on the basis of delivery speed.

Shopify announced on 9/9/2019 that it is buying warehouse robot-maker company 6 River Systems, Inc. for approximately $450 million. This strategic decision will further strengthen Shopify’s commitment to optimize its warehouse operations. These robots are also called as collaborative robots because they work alongside human staffers, while human staffers work on activities which cannot be automated by robots.

These robots boost productivity, throughput, and reduce operations time as they can slash number of steps workers take to fulfill an order. It is believed that the collaborative robots are more efficient and cheaper than the conventional automation systems such as conveyor belts. This is just an example of how technological innovation is helping drive operational excellence.

Sources:

https://www.wsj.com/articles/e-commerce-platform-shopify-buys-warehouse-robot-startup-11568069287

https://www.wsj.com/articles/PR-CO-20190909-908888

https://www.wsj.com/articles/a-robot-can-be-a-warehouse-workers-best-friend-1501752600?mod=article_inline

 

 

Apple unveils the new I-Phone 11

Congratulations I-Phone lovers!! Apple is only a few hours from unveiling it’s newest gadget. The newly invented I-Phone 11. Although there are many phone options, Apple has continued to raise the bar for excellence each year. According to BGR journalist, Chris Smith, this device isn’t a total secret. The new gadget has new multi-lens camera modules, and will come in 64GB, 128GB, and 256GB capacities. A great selling point is the added storage capacity that these phones can accomodate, along with the solid quality of owning an Apple product. As far as specs are involved, the phones will feature triple 12-megapixel rear cameras, along with reverse wireless charging. Even though your “Old” I-phone 8 may still seem new, Apple is definitely keeping the trend of cutting edge technology, and quality based innovation at the top of the charts for decades to come. You can read the full article at the link below.

 

The iPhone 11’s pricing and storage capacities might’ve just leaked, and there’s a huge surprise