While demand seems to be on an uptick for manufacturers especially in the consumer goods industry, an increase in online shopping could also lead to a scarcity in the availability of distribution centers in the near future. This and more, in your Monday supply chain briefing from Arkieva.
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Supply Chain News
Ecommerce Growth Leading to Tighter Distribution Center Availability
Continuing growth in ecommerce is fueling a tight market for distribution and fulfillment centers space, either leased, purchased or through a partner, as companies look to expand their networks to meet growing consumer demand for rapid parcel delivery.
According to commercial real estate firm CBRE, there was 220 million square feet of net absorption of industrial/logistics real estate space in the U.S. in 2015, of which 50% to 75% comprised warehouses. This is compared to 150 million square feet of new supply, making the market the tightest it’s been in years.
And CBRE’s most recent report on the U.S. industrial and logistics space market finds the availability of industrial warehouse space fell to 8.8% in Q2, down from 9% in Q1, marking the 25th straight quarter of decline.
“While the gap is narrowing, demand is still outpacing supply by a lot – it’s out of whack,” said David Egan, head of industrial research, Americas at CBRE. “The reason is primarily ecommerce. Demand has been really good, frankly a lot better than people expected, and the supply side can’t keep up.”
Source: Multichannel Merchant
New Survey Reveals Excess Detention Times Still a Major Issue for Drivers and Carriers
A new survey of 257 carriers and about 50 brokers by DAT Solutions, which provides load board and other information services to the transport sector, finds detention times remain a sticky point for drivers and carriers.
First, what do drivers consider as excess detention? About 85% of the carrier respondents said that excess detention was anything beyond the traditional two-hour grace period to get the loading/unloading done. Another 15% said they defined excess detention differently, and while how those carriers defined it was made not clear, in another question about 10% of respondents said anything beyond a one-hour wait was excessive.
Source: Supply Chain Digest
Supply Chain Strategy
Journal of Supply Chain Management Analyzes the Correlation Between Product Categories, Order Procurement and Fulfilment, and Its Effect on Repurchase Intention in Ecommerce.
The Journal of Supply Chain Management study investigates how the number of product categories moderates the effects of consumers’ satisfaction with order procurement and order fulfillment on their repurchase intention at online retail stores. We collected empirical data from an online rating website and constructed a multi-level dataset at both the transaction level and the store level. Employing hierarchical linear modeling on a sample of 11,554 observations at 146 online retailers, we find significant interaction effects on consumer repurchase intention between product category number and consumer satisfaction with both online order procurement and fulfillment processes, but with different signs. These findings offer guidance to online retailers when allocating their limited resources to procurement-related and fulfillment-related investments.
Source: Journal of Supply Chain Management
A Critical Insight to Successful Supply Chain Planning
In July 1977, having just turned 23 and some graduate classes in operations research and statistics, I joined IBM. Over the next 37 years I had numerous and diverse opportunities to work with pioneers in what is broadly defined these days as analytics – I prefer the term quantitative analysis without borders. In 1977, based on the success of System 360/370 under the leadership of Bob Evans, IBM had attracted and developed an incredible set of talent and was pushing the frontiers of “analytics” at a time when a 128K (yes K, not M) was a large workspace. Software tools such as PL-1, APL, MPSX, GDDM, Graftstat, etc. would be the pioneers for what is now standard practice. Regular availability of SQL and Spreadsheets is a decade away. In the fall of 1977 I was fortunate enough to be assigned Gary Sullivan as a mentor. In 1977 Gary was already an established star with one IBM Outstanding Technical Achievement Award for RET (real time enrollment and training – scheduling and data base application using relational structures and scheduling heuristics) one Division Award for EIN (Executive Information Network). His best work was still to come with LMS (Ed Feigenbaum’s Rise of the Expert Company) and CPE (IBM Engineers Advanced Supply Chain Management Solution for Analog Devices Inc.). Both applications received IBM Outstanding Achievement Awards and were Edelman finalists.
Source: Arkieva Blog
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Image source: Supply Chain Digest