DC Velocity - October 2011

newsworthy

Wary supply chain
players to cut back
on stocks

IN A SIGN THE SUPPLY chain remains cautious about consumer activity heading into the traditional peak preholiday season, a survey of nearly 100 top manufacturers, retailers, and wholesalers found the respondents plan to hold fewer stock-keeping units (SKUs) in inventory during the 2011 peak season than they did a year ago.

According to the survey from supply chain consultancy Tompkins Associates, 34. 8 percent of the respondents said they plan to hold a smaller number of SKUs this peak season than last. About 32. 6 percent said they would either carry more SKUs or stick to about the same levels compared with 2010, the survey said.

In addition, 41. 7 percent of the respondents said they would be holding less inventory this peak season. About 31. 3 percent said they plan to add inventory, while 27. 1 percent said they expect to hold about the same level of stock.

The respondents were polled both through Internet voting and in person at a recent conference in Orlando, Fla., sponsored by Tompkins. They represent a broad swath of industries and are responsible, in aggregate, for billions of dollars of procurement and transportation spending. Retailers and manufacturers accounted for about 73 percent of the respondents, while wholesalers and distributors represented the remainder.

Chris K. Ferrell, a Tompkins analyst who developed the survey, said he was “shocked” by the data pointing to a contraction in number of SKUs carried. “I’ve been involved in the supply chain for 20 years, and in all that time, SKUs have done nothing but go up and up,” he said.

The Tompkins data underscores the wariness among supply chain participants of a muted peak season as anxious consumers hold tight to their pocketbooks. In turn, retailers and manufacturers have kept a tight rein on inventory and order activity. p. 18

Now hiring: Dematic seeks engineers

Yes, Virginia, there are companies in America that are hiring.

Dematic North America, a major manufacturer and integrator of automated material handling systems, has openings for 150 professionals— primarily engineers—for its U.S. operations. That’s in addition to the 200 or so engineers added over the past two years.

John Baysore, Dematic North America’s CEO, says the company enters its 2012 fiscal year, which began Oct. 1, with the deepest backlog in its history. “Our pipeline of opportunities is stronger than it has ever been. It could hardly be more solid right now,” he said in remarks and an interview last month at the company’s annual Material Handling & Logistics Conference in Park City, Utah.

Baysore attributed the strength in capital spending to several factors. He said customers are spending on automation to reduce operating costs and plan to keep investing even in a turbulent economy. He also credited Dematic’s technology advances with giving the company a competitive advantage in its traditional markets as well as in areas where it has not been strong in the past.

Baysore said a few years ago, Dematic re-evaluated its business model and developed what he called the “four walls and two windows” concept—a reference to the four walls of the distribution center with a window looking upstream (at how goods are coming into the DC) and a window looking downstream (at where outbound goods are going, whether to stores or directly to consumers). “All of that affects the solution set inside the four walls,” he said. ;