Supply Chain Briefing

According to the Journal of Commerce, the top importers were impacted by e-commerce and that trend is expected to continue.  Imports grew by 8% last year (2.2 million TEU) whereas exports grew by 3% (just under a million TEU).  The rankings are showing signs of a shakeup with the surge in e-commerce and Amazon.  In 2016, Walmart rated #1, Target #2 and then Home Depot and Lowe’s as #3 and 4.

For example, the retail industry woes are highlighted by Sears and Walmart.  Sears sales slid by almost 10% whereas Macy’s slid almost 4% and Payless filed for Chapter 11 protection (all top 100 importers) while Amazon increased 27%.  Last year, e-commerce accounted for 8.1% of retail sales and it’s expected to increase by 10% by 2022.  Walmart fared a bit better but spent several billions to purchase  And, Target is also testing next day deliveries.  Small orders delivered rapidly is the future!  

Not to leave exporters out of the mix, as a matter of interest, the top exported product is wastepaper with beef products also high on the list.  5 of the top 6 relate to paper and packaging such as Koch Industries with the holdout being an animal feed/ grain exporter.

What Should We Consider and/or What Impacts Could Arise?

Clearly, we must pay attention to what our customers are communicating – they want small orders more frequently – with rapid deliveries.  How will we accomplish this goal?  We can certainly outsource the capability or, if we see it as a strategic aspect of the business going forward, perhaps we should think about how to incorporate into our strategic capabilities.

From a sales and customer perspective, start looking at e-commerce capabilities.  24/7 access is a must with the ease of doing business built into the process.  You’ll need to integrate into your ERP system or find a way to work collaboratively from a process and systems perspective one way or another to maintain high service levels at reasonable efficiency levels.

From a warehousing perspective, handling e-commerce is quite opposite of handling pallets and bulk shipments.  Think about them as two separate warehousing functions.  There is quite a bit of automated equipment and technology that can help you automate and increase efficiency.  But don’t just jump in and sink.  Start researching, ask experts and build a plan.   There is no time to waste!

June 1, 2017