Toy R US is trying a new retail module this year by opening smaller mall stores rather than the long term big outlet type stores.  The stores will be temporary (3 to 4 month) and exist only during the core retail months (October to January).

First, lets look at the non-supply chain benefits since the supply chain organization and cost are probably the biggest issues.    So, why is this a great concept in our poor economy?

1. Low Rents: The malls are begging for new stores, full-time or part-time, to lower vacancy.  The high the vacancy, the lower the cost per sq foot.   Toy R Us can score a great deal on low rents.
2. More Foot Traffic: The malls have more foot traffic.  Having Toys R Us in your mall is symbiotic relationship.   Customer will have more one-stop shopping and Toys R Us will gain in high sales.
3. Branding: Toys R Us is widely known, regardless if you like them or not.  Having a big name toy store in your mall will surely bring in more traffic
4. Low Short Term Risk:  Toys R Us can close poor retail stores and move to better locations.  Since the stores are relatively small, the cost and time to close up shop would be far easier than its larger stores.

So where are the cons?  It’s in the supply chain side.   I’m sure there are more cons but I can see the supply chain being the biggest hurdle to overcome.   Why?

1. Increase in Shipping Points:  The stores will be located in multiple locations in the same geographic footprint.   This means that trucks will have to coordinate shipments from the main distribution center to many locations instead of 1 or 2.
2. More Truck Carriers:  The smaller truck volumes means there will be more carriers involved with negotiating shipping points.   An optimizing tool can help minimize the shipping costs but I doubt the increase in cost can be eliminated.
3. More LTL  shipments:   Cost usually go up when shipping with Less Than Truck Loads. True, you can postpone delivery to fill a truck but I doubt Toys R Us will delay shipments around the retail season.

Toys R Us has come up with a great new business model, although the devil is in the details.  There is a potential for Toy R  Us to fully profit from their new process or they suffer from  supply chain costs and delays.  I’m going to stay positive and say they can be successful.  They would be more successful if they utilized our shipping strategy since we excel in business models like Toys R Us.

The fight continues between U.S. and Mexico trade as yet another tariff increase is imposed on the U.S.  Mexico is now increase tariffs on 99 products which is 10 more than the 89 proposed in March.  The projects affected by the tariffs include fruits, water, pork, dairy products and ketchup.

If you remember, the fight began back in 2001 when the bush administration agreed to close the boards to Mexico.  Progress was made in 2007 when a new pilot program was created which opened 20 mile restriction zone to Mexico truckers but tensions have since increased.

In Washington, the 20% tariff increase has affected the apple growers as the price of exports has increased from $20 a box of apples to $24.  The increase may not seem like a lot but if you multiple the $4 increase to the 10 million boxes exported per year, you will understand the severity of the tariff.

You can read more about the tariff and impacts to apple growers at the following site:

Local News | Wash. apple growers expect new tariff to hurt | Seattle Times Newspaper

“The plan was developed under a $95,000 federal block grant by a consultant, Tom French of Supply Chain Coach in Dublin, CA, and the commission’s transportation committee, chaired by Rene Van Wingerden, owner of Ocean Breeze International in Carpinteria, CA.” — The Produce News

http://www.producenews.com/StoryNews.cfm?ID=9766

Yes, we can toot our own horn at times and it may as well be now.  We made the news recently by reducing supply chain costs for the California growers.   It was not easy but we can claim success.  The most interesting piece in the puzzle was keeping the flowers at a certain temperature starting at the cutting till they ended at the markets.  You would be surprised how many points a failure a flower can go through.

Twenty years ago, a typical product company had the supply chain organization reporting to manufacturing, with responsibility mainly for inbound materials management and outbound shipping. Now new data shows supply chain reports to manufacturing in only 6% of companies, while in 61% of companies, the head of supply chain position reports directly into the CEO, general manager or president of the business. It’s clear supply chain has grown up, with the business taking notice.  –  Gartner

http://www.gartner.com/DisplayDocument?ref=clientFriendlyUrl&id=1379613

Having dealt with several companies on the list, I can confirm that their supply chain management is top notch.   I have not seen all the reporting from the backend systems but their forecasting reports are very comprehensive.

Layered Technologies recently announced that they will partner with JDA to provide hosting, storage, virtualization and managed services.   There are many articles presenting pro’s and con’s to using hosting services but I believe this could be a great benefit for large and small companies to increase their supply chain solutions footprint.  Even if your company is using an existing enterprise warehouse solution (i.e. SAP), you could benefit from using Layered Technologies experience to jump start a demand planning or replenishment solution.  True, most large companies like to bring solutions in-house but I believe many underestimate the cost and added resources needed to implement a solution.

 http://bit.ly/bkIink

I’m always surprised how companies with infinite number of parts are able to complete the finished product on time.  My experience with Make to Order involves 10 components, tops.  Even with the 10 raw materials, we have delays or inaccurate demand planning which leads to an incredible frustrating delay of goods.  It seems that Boeing, who as a most impressive supply chain model, is not immune to basic market conditions.  

Article from the Wall Street Journal:

http://bit.ly/chkFQ7

Machine to Machine communication continues to add value by adding real time tracking of cargo.  I can see this field continue to take off as the technology grows.  Its seems that ATT rules the market in this area but I would expect others, such as T-Mobile, make headlines in this area.

http://www.tradingmarkets.com/news/stock-alert/t_american-security-logistics-selects-at-amp-t-for-wireless-location-based-tracking-devices-871356.html

The supply chain software industry has been growing at 7% per year before 2009 but that growth has slowed to 2-3% for 2009 and maybe 2010.  Sure, 2-3% sounds bad but in our current economy it not that bad.

I stumbled across a really good article, albeit a bit old, but highlights some trends for supply chain software.  I myself would love to see more mobile solutions integrating with our backend supply chain systems.

http://www.logisticsmgmt.com/article/452054-Logistics_technology_SAP_sees_signs_of_a_recovery_in_supply_chain_management_software.php

Judging by the increased shipping traffic on daily bike commute route, I can only assume the economy is getting better.  The question becomes, can Seattle’s port handle the increased container traffic or can our rail system transport the increase in containers? 

Based on data from the ports website, Seattle handled 1.7 million contains last year and can handle double that amount and still operate efficiently.  The rail system on the other hand may be the sticking point.  There are multiple routes out of Seattle but the most popular being Stampede Pass does not allow double stacking containers.  This limitation is our new logistics bottleneck in the northwest.  Yes, there have been debates on using other routes, such as Stevens Pass or Vancouver, but my understanding that demand on those lines is already high. 

Will Stampede Pass retrofit the tunnel for double stacking?

This is a brand new blog.