Today’s Top Supply Chain and Logistics News From WSJ

 

 

Hiring supply-chain managers is growing more complicated than ever, and it’s no wonder. WSJ Logistics Reports’ Loretta Chao writes that companies from technology giant Cisco Systems Inc. to consumer goods specialist Kimberly-Clark Inc. see a changing distribution and marketing landscape demanding a wider array of skills—and combinations of skills—than companies have traditionally sought in supply chains. Companies say there is a growing premium in two critical areas: comfort with technology, and the use of fast-moving data-driven analytics; and the need to work seamlessly across borders and cultures. It’s part of what Cisco Systems Inc. Senior Vice President of Supply Chain Operations John Kerns says is a “massive talent shift” in supply-chain hiring. The change here is that corporate leaders are consolidating logistics and procurement decision-making under the supply-chain umbrella, and having those managers work more closely than ever with leadership teams on executive decisions. Peter L. O’Brien of executive search firm Russell Reynolds Associates says companies are trying to have departments that once worked independently from each other work as one, an approach far more complicated that simply developing a sales strategy and asking the logistics department to push out the products while keeping inventories lean. Kimberly-Clark Chairman and Chief Executive Thomas Falk says his company for the first time is looking at how to bring together strategies from the sourcing of raw materials to later purchasing of transportation and distribution services “to get the more value out of that combined cost structure.”

Big changes in supply-chain hiring used to come about because of changes in logistics-related innovations and technology, but the drivers that companies now are seeing are coming from a different direction. According to WSJ Logistics Report’s Erica E. Phillips, Office Depot’s distribution chief Rick DiMaio says supply chains are being restructured because of the demands of “far more educated” consumers, who are putting a premium on rapid delivery, transparency and customization in distribution. Those particular demands aren’t new to supply chains, but what’s new is that the information available to consumers and to sales managers is more detailed and available more quickly than ever, and the steady shift of buying from physical stores to online sales is turning basic logistics decisions upside down. What had been accepted and unassailable wisdom—keep distribution steady and predictable, use economies of scale and keep inventories low—doesn’t fit so easily in the e-commerce box. Mr. DiMaio says the long-established view “is in direct conflict with what customers are driving us toward.”

U.S. importers gained some measure of stability with the ratification of a five-year contract by dockworkers at West Coast ports, but stability was probably the least they could hope for. WSJ Logistics Report’s Erica E. Phillips reports the pact that members of the International Longshore & Warehouse Union approved clarifies arbitration procedures and leaves terminal managers and shipping lines to fully cover new health benefits costs. But it’s otherwise little more than a holding pattern until the pact expires in 2019. That’s only a four-year wait, since the contract is retroactive to last year, and that may seem very soon to retailers such as John Deere Inc., which cited the negative impact of delays in West Coast ports cargo handling in its first-quarter earnings report. The contract does not address controversial issues such as the maintenance of chassis—the truck equipment needed to move goods off the port—nor ways to improve the reputation West Coast ports have for poor productivity compared with East Coast facilities. That’s why the ratification received decidedly measured applause. Gene Seroka, executive director of the Port of Los Angeles, said in a statement that port officials now are working on “a series of initiatives that will take cargo efficiency and velocity to the next level here in San Pedro Bay.”

TRADE

U.S. supporters of the Export-Import Bank are gearing up for a final push to renew the charter of the trade finance agency, and the biggest push is coming from Boeing Co. The WSJ’s Nick Timiraos and Kate Davidson write that the aircraft manufacturer is pushing members of Congress from states with a heavy Boeing presence to take unusually dramatic steps to renew the bank ahead of the June 30 charter expiration. That Boeing effort included nearly derailing the fast-track trade bill last week by trying to attach an Ex-Im reauthorization to the measure. Boeing says it’s a critical issue: “Ex-Im is an important competitive issue for us and for all of the workers in our vast U.S. supply chain,” spokesman Tim Neale said. It’s also important to many exporters that depend on Ex-Im financing when private financing won’t step in. Republican leaders in Congress have set aside the objections of the party’s hard-line conservatives but the bank’s supporters may need some sort of last-minute deal to keep the bank alive beyond next month.

QUOTABLE

“All those projects that would’ve gotten done over the winter but got delayed will get done,” – Shawn Hackett, president of Hackett Financial Advisors, to the WSJ’s Tatyana Shumsky on a surge in lumber prices following a strong U.S. housing construction report.

IN OTHER NEWS

Alix Partners chief Fred Crawford says significant restructuring is needed in Asia’s shipping and distribution-related industries. Mr. Crawford tells the WSJ’s Kathy Chu in an interview that optimism around China’s growth led to overcapacity in manufacturing and shipping infrastructure but that a realignment of capital and cost structures will get the region better-positioned to take advantage of improving demand.

Amazon.com Inc. is starting to book its European revenue in the countries where the e-commerce giant makes its sales rather than funneling the revenue through low-tax Luxembourg. The WSJ’s Lisa Fleisher and Sam Schechner write the decision is a sea change for Amazon and will raise the retailer’s tax bill while pressuring other company’s to follow Amazon’s lead.

Germany is trying to do something about the rapid increase in labor walkouts that have hit the country’s industrial sector this year, including job actions against railroads and the German postal business. The WSJ’s Andrea Thomas reports the government believes the walkouts are a result of efforts by smaller trade unions to flex their muscles, and the parliament adopted a law that will give the union with the largest membership at a company the right to negotiate for the entire staff of that company?

Industry groups at the ports of Los Angeles and Long Beach are rallying around California ports’ efforts to reduce congestion through a pooling of the truck chassis that are used to move freight beyond ports. The Long-Beach Press-Telegram reports a port-wide chassis pool by the Harbor Trucking Association will operate separately from a broader pool that private companies formed in their bid to smooth out the often confusing and time-consuming equipment distribution.

Add water to the list of unlikely commodities facing disruption from e-commerce. The WSJ’s Mike Esterl reports Nestlé SA saws its home-delivery business grow at twice the rate of store sales last year, with customized Web orders leading the way.

Wal-Mart Stores’ decision to curb the use of antibiotics from meat and egg suppliers will add more complications to the food supply chain. The WSJ’s Sarah Nassauer reports the new limitations are part of a broader Wal-Mart effort over animal welfare, and puts the world’s largest retailer in line with other large companies that are putting new demands on food suppliers.

China is slashing tariffs on a range of goods starting June 1, but it isn’t necessarily aimed at boosting imports. Instead, the WSJ’s Laurie Burkitt writes, the action affecting shoes, some garments, cosmetics and diapers is an effort to improve sagging consumer sales.

Fashion retailer Michael Kors says the 1-million-square-foot distribution center the company is establishing in Venlo, the Netherlands, is a sign of its commitment to Europe and the Middle East. The retailer tells FashionWorld.com that the location will serve retail, wholesale and, eventually, e-commerce distribution.

Global ocean container spot rates are at their lowest level since the financial crisis, according to an analysis by Drewry Maritime Advisors. The U.K. research firm tells D.C. Velocity that contract rates, which govern the vast majority of cargo movement, are up in some markets but demand on some major trade lanes remains “very patchy.”

 

 

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