Category Archives: Supply Chain

U.S. C-store Count Grows as Innovation, Offer Drive Demand

The number of convenience stores in the United States rose to a record 154,958 locations as of Dec. 31, 2017, according to the 2018 NACS/Nielsen Convenience Industry Store Count.

This marks an increase of 0.3 percent, or 423 stores.

“Our continued store growth suggests that the convenience and fuel retailing industry’s core offer of convenience continues to resonate with customers,” said Chris Rapanick, director of business development at NACS, the Association for Convenience & Fuel Retailing. “Convenience stores are the destination of choice for the more than 160 million customers who frequent their community convenience store each day to refresh and refuel, whether it’s to grab a quick snack and a beverage, or a fresh-prepared meal.”

The c-store count is significantly higher than other channels of trade and accounts for 34.4 percent of the brick and mortar retail universe tracked by Nielsen in the U.S. With the exception of the dollar store channel, all other major channels had fewer units at the end of 2017 compared to the end of 2016, according to NACS.

“Convenience stores saw solid growth in 2017 due to an increased focus on innovation, improved customer experience, assortment variation and healthy investments in food services,” said Jeanne Danubio, executive vice president of retail lead markets at Nielsen. “All of these factors have enabled convenience stores to meet the needs of consumers, stretching far beyond the pump.

“This shift must continue to further expand c-store’s relevance in today’s changing retail landscape. As more retailers across channels try to cater to convenience seeking consumers, c-stores will need to continue to innovate and evolve and grow to stay ahead of the curve,” she added.

The number of single-store operators within the c-store retail space also rose 0.14 percent, or 139 units, in 2017. The total number rose from 97,504 stores at the end of 2016 to 97,643 stores at the end of 2017.

Nearly eight in 10 (79.1 percent) of c-stores, or 122,552 stores, sell motor fuels, down 1 percent from 2016, with the single-store motor fuel segment falling by 2015 stores. The drop in the number of c-stores that sell gas reflects the evolution of retail models to focus more on in-store foodservice, new store formats and the establishment of brands in more urban, walk-up locations.

State by state, Texas continues to lead in store count at 15,813 stores, or more than one in 10 stores in the U.S. It is followed by California (11,946), Florida (9,891), New York (8,725), Georgia (6,687), North Carolina (6,235), Ohio (5,686), Michigan (4,962), Pennsylvania (4, 855) and Illinois (4,759). The bottom three states in terms of store count are Alaska (217 stores), Wyoming (355) and Delaware (344).

Over the last three decades, the U.S. c-store count has increased by 55 percent, NACS noted. At the end of 1987, there were 100,200 stores; at the end of 1997 there were 108,800 stores; and at the end of 2017 there were 146,294 stores.


Subway chooses STI for European logistics

STI UK acts as the European control tower, managing the supply chain of the sandwiches across Europe with the exception of STI Sweden.

The contract will be on behalf of STI’s client IPC Europe, an independent purchasing organisation for Subway franchisees.

“Our European network gives us the possibility to serve Subway’s various regional markets quickly and efficiently”, said Roy Evans, business development manager at STI UK. “STI Freight Management’s dedication to quality and the diversity of its available equipment are some of the elements that make the organisation so attractive to IPC Europe.

“Our aim is to be more than just a transport service provider. We see ourselves on the journey to becoming strategic partners, always looking to foresee and offer solutions to IPC Europe’s logistical challenges.”

NetSuite Dives Deeper Into Supply Chain Management

Supply chain management (SCM) has not been Oracle NetSuite’s strongest suit to date, but the cloud ERP company has recently poured significant resources into beefing up this critical business area. NetSuite, which Oracle bought about a year ago, rolled out a slew of tools for managing complex supply chains at the recent SuiteConnect customer conference in San Francisco.

The most notable of NetSuite’s SCM offerings is an umbrella project called the Supply Chain Control Tower. The new offering, described in more detail below, is nearing the end of its extensive customer-test phase, and the company hopes to roll out the first release in February, said Gavin Davidson, director of product marketing for ERP, NetSuite.

The control tower was just one of many announcements at the show, part of the huge Oracle OpenWorld conference. In a global economy, these advanced manufacturing capabilities are particularly important for product companies—distributors, retailers, and manufacturers.

SCM systems facilitate the planning, movement, and storage of materials from the earliest stages of procurement through intermediate stages of production to final distribution to customers. Whereas ERP systems focus primarily on the internal operations of the business, SCM looks outward to encompass the activities of suppliers, customers, and partners (including contract manufacturers), as well as internally to the movement and storage of materials within the organization’s operations.

NetSuite also unveiled enhanced global bill of materials (BOM) functionality, a quality management solution coming in November, and an SCM portal that is moving through development and should be launched in around 18 months, Davidson said. In addition to the capabilities discussed below, many more are coming over that 18-month period, he said.

Supply Chain Control Tower
The idea of the Control Tower is to provide the manufacturer with visibility of inventory and movement of material across all supply chain locations, including vendors, subcontractors, and logistics providers. The tower encompasses four areas: The design area now includes, or will soon include, new product introduction and product data management, which includes functionality for engineering change orders and advance BOM features.

The planning area now includes (or soon will include) available-to-promise (ATP) calculations across multiple subsidiaries, along with a planners’ workbench.

The execution area includes (or soon will) functionality for quality management and traceability, along with better support for contract manufacturing. The fourth area, support, includes capabilities to manage product end of life.

Davidson said the Supply Chain Control Tower solutions have come about through extensive collaboration with customers and much feedback. “A lot of these things that we’re working on are solutions that we’ve built for other customers over the years … so it’s productizing some of that stuff,” he said.

Quality Management System
A new quality management system allows companies to define inspection plans that dictate how an item is to be tested, along with acceptable parameters and additional product details. The solution also includes role-specific dashboards for quality managers, engineers, and inspectors, along with a tablet-driven user interface for front-line workers.

The solution provides the ability to establish quality specifications and evaluate vendors against them. Customers can also evaluate and track vendor quality, contract manufacturing quality, and production quality. The response to the quality management solution has been so strong that NetSuite has decided to break it out of the SCM silo and make it available to anyone, said Dave Gustovich, AVP, Global Manufacturing Center of Excellence at Oracle NetSuite.

Bill of Materials Enhanced
NetSuite’s enhanced global bill of materials (BOM) functionality allows users to manage BOMs separately from the items they are associated with, reducing the overhead on engineering teams. Each item can now support multiple BOMs that can be specific to a location, should companies have locations that source components locally. Additionally, each BOM can be attached to multiple end SKUs, enabling manufacturers to sell the same item under different brands without the need to manage redundant BOMs when changes are required.

NetSuite’s new Inbound Shipment Management module allows customers who order large quantities of product—often from multiple vendors—to consolidate multiple purchase orders into a single container to simplify future tracking and status updates. Upon receipt, a single scan can receive all of the items in the container. The tool also includes a streamlined billing process.

The Bottom Line
Supply chain systems are complex, and organizations seeking to implement them often face challenges. A poorly run supply chain means missed order promise dates, inventory in the wrong places, and lost customers. Optimizing the supply chain is a high-payback opportunity for many companies. But SCM is not just a technology challenge. It requires a combination of best business practices, data management, skills development, and technology.

NetSuite is playing catch-up in the competitive SCM space and trying to combine a wide variety of new features into a complex product. If the Supply Chain Control Tower can live up to its promises, it will greatly increase the value of NetSuite’s system to customers in the manufacturing and distribution industries.

Tom Dunlap, Computer Economics

Nordstrom closer to going private as Amazon changes retail universe

The growth of e-commerce and Inc. (Nasdaq: AMZN) has shaken up an already crowded retail sectors.

Some big players such as Best Buy (Nasdaq: BBY), Macy’s (NYSE: M), Target (NYSE: TGT) and Wal-Mart Stores Inc. (NYSE: WMT) have responded by trying to match Amazon’s deliveries and shipping costs.

Another big player — Nordstrom (NYSE: JWN) — is looking to go private.

A breaking story today from CNBC says members of the Nordstrom family are working on a deal with private equity firm Leonard Green & Partners to raise $1 billion as part of a bid to take the department store chain private.

It could take as much as $8 billion for the founding family to take Nordstrom private, according to CNBC and MarketWatch. The Nordstrom family owns 31 percent of the retail company, according to CNBC.

Changes in consumer behavior — including e-commerce and bargain hunts — coupled with crowded segments have put pressure on the struggling chains such as Sears (Nasdaq: SHLD) and J.C. Penney (NYSE: JCP) as well as mall and shopping center landlords.

Shares of Nordstrom were up 8.77 percent after hours on the going-private report from CNBC. Nordstrom closed at $45.05 today, according to Google Finance.

The retail stock is down 6 percent so far this year.

The Autonomous and Self-Learning Supply Chain: How AI is Heralding the Next Frontier of Supply

Global supply chains have become even more complex, involving a lot of businesses that must interact to bring us the goods we use and consume.

In the past, businesses had created Supply Chain Control Towers to patch together the different functions and disparate parties in their supply chains. Capgemini Consulting defines a control tower as “a central hub with the required technology, organization and processes to capture and use supply chain data to provide enhanced visibility for short and long-term decision making that is aligned with strategic objectives.” However, new architectures for control towers are going one step further by leveraging innovations in artificial intelligence (AI) technologies to achieve unprecedented levels of performance.
The Evolution of Supply Chain Control Towers

The earliest control towers served as consoles, which provided visibility for managing the supply chain for a given business. In recent years, these early “1.0 Control Towers“ have evolved to include predictive alerts and prescriptive decision-support capability.

Control Tower 2.0 systems took an “inside-out” view of the world. This view placed one’s own business at the center of the control tower, looking out to immediate suppliers and immediate customers, while everyone else was treated as an afterthought. This created several limitations in terms of reduced operational reach, an explosion in point-to-point integrations, decision-support, and the inability to coordinate planning and execution across trading partners.

Control Tower 3.0 took an outside-in perspective, which placed the business and its trading partners as part of a multi-enterprise network, working together to serve the consumer. These true consumer-centric networks provide a digital network platform that brings people, process and technology from multiple independent businesses. More importantly, it allows all to execute together in lock-step around the consumer’s needs and deliver superior performance.

According to Nucleus Research, customers who adopted a customer-centric network realized a 56 percent increase in inventory turns and a 38 percent decrease in safety stock holdings on average. The research also found that customers benefit from greater visibility, better coordination, and superior optimization within their extended supply chain across multiple tiers of trading partners and suppliers.
Control Tower 4.0

Now, AI technology is disrupting the status quo once again by enabling a performance leap that is virtually impossible to achieve with traditional software. These AI-enabled Control Tower 4.0 solutions move beyond just decision-support to include decision-making and autonomous control. The network is predictive, resilient and capable of running itself.

For example, at one retailer, intelligent agents are monitoring consumer purchases at stores to continuously anticipate, sense and respond to real-time changes in buying behavior. Agents automatically adjust replenishments based on supply demand balance, and the company has already seen a 40 percent improvement in forecast accuracy.

Another example involves an e-commerce retailer who was struggling with the supply chain due to its rapid growth. In one quarter alone, the organization saw a five-fold increase in number of products, six-fold increase in number of customers and an eight-fold increase in number of suppliers. Despite this, they were able to maintain 99.5 percent on-time delivery performance without adding headcount to their supply chain team by on-boarding to an intelligent consumer-driven network. By deploying a touch-less fulfillment process, their staff achieved these results by focusing on only the most critical issues and engaging proactively with impacted customers.
A New Functional Architecture

Today, the 3.0 networks act as a System of Engagement (SOE) that orchestrates execution over the many Systems of Record (SOR), people and things to provide joint transaction and execution services in real-time. Unlike traditional enterprise-centric systems, the network becomes a digital platform that AI technologies can leverage to provide scalable and efficient decision-making.

New layers of agent-based systems, called Systems of Intelligence (SOI), have emerged that sit on top of the SOE and add even greater functionality. These systems use trained decision models to make rapid optimized decisions during execution with up-to-the minute information across the network and on-the-ground local context about people and things.

Above the SOI is yet another layer called the Systems of Cognition (SOC), whose function is to learn and adapt to the decision models in use by SOI, so the network can get smarter over time. Each of these technology elements serve a valuable function.
System of Engagement

SOEs require a multi-party network as it bridges the physical world with the virtual. Digital twins represent every actor, such as people and things, while physical events and multi-party transactions trigger real-time changes in state in the digital world. Digital models, known as state machines, control the possible activity and process lifecycles.

Multi-party master data management services provide a shared vocabulary across the network. Business social apps and conversational user interfaces provide means for both structured and unstructured data to be gleaned from the physical world, put in context, interpreted and acted upon.

Finally, blockchains, or other permissioned ledger technologies, maintain a secure audit trail of the business transactions across all parties. The SOE provides real-time governance and orchestration of multi-party workflows across the network.
Systems of Intelligence

At the heart of the SOI layer are intelligent agents and a transaction grid. Agents don’t just plan; they execute, and they act independently within a sub-network to perform micro-tasks such as “micro-optimizations” with specialized purpose and goals.

Agents have predictive intelligence and they act very fast and communicate with each other as needed, working directly on transactions. At any given point in time there could be millions of agents “in flight.” It is the job of the transactional grid to manage this.

Supervisory agents operating on the transactional grid orchestrate agent activities. They can rollback and retry agent reactions. The grid can scale horizontally and grow as more companies, items, facilities, and/or orders are added. The cloud network only has to add more servers to scale. This is in stark contrast to traditional planning engines and in-memory computing technologies, which use vertical scaling and max out quickly.

The agent-based grid enables smart decisions, fast, in a highly scalable architecture.
System of Cognition

Finally, a third layer called SOC has emerged, which consists of agents that can learn from experience and modify the behavior of the SOI agents.

These systems use a variety of AI technologies, such as deep neural networks, to perceive patterns, diagnose root causes of anomalies and learn from Big Data to train digital memories.

Learning agents essentially observe the decisions and results from the SOI agents and modify their underlying assumptions and models. Machine learning algorithms improve with data, which is what the SOE network readily provides. The more the network runs, the smarter it gets.

Getting Value from AI

AI is starting to make its presence felt in supply chains, as the benefits realized by early adopters are significant and include the following:

1. Automation—The lowest hanging fruit for AI applications has always been to automate the most routine and mechanical tasks that humans do, so they can be free to focus on higher value tasks. The answer is not necessarily to replace people with robots, but rather to automate some of the tasks in order to get the most effective outcome.

2. Expertise for All—The second and natural by-product of building decision models is that they can identify insights that can help more people to replicate the insights and trade-offs that are uncovered. Known as “institutionalizing knowledge,” this is like having an expert looking


Moody’s: Amazon still far from ruling retail

From Amazon’s Prime membership numbers to its entry into the grocery space to its retail “dominance,” Moody’s analysts led by Charles O’Shea tackled some widespread assumptions about the e-commerce giant’s place in the world in a recent report emailed to Retail Dive. Amazon did not immediately respond to a request for comment.

Analysts with the bond rating agency noted that, though Amazon dominates online sales, those sales account for just 10% of the industry as a whole. As for its recent acquisition of Whole Foods, the analysts wrote, “We believe it’s a big stretch to say — as many in the market have been doing — that Amazon will dominate food retail, and some have said this will happen within two years.” They pointed out that Amazon, even now with Whole Foods in the fold, controls only a $20 billion piece of an $800 billion market for food sales in the U.S.

O’Shea and his fellow analysts also called into question oft-cited estimates of Amazon’s Prime membership at 85 million, which they call “seriously overstated,” “highly improbable” and made “in the absence of any real guidance from the company itself.” Moody’s analysts, based on an evaluation of demographic data, think the figure for Prime members is closer to 50 million, well below Costco’s total of 86.7 million members.

How Retailers Can Stay OFF The Closing List


In April, Swiss brokerage firm Credit Suisse released a report that sent shock waves through the retail universe. It predicted that more than 8600 brick and mortar stores could shutter before the end of 2017. That would make it the worst year on record for store closures. It’s the stuff of nightmares for retailers.

Whether or not you believe the Credit Suisse analysts are right, you can avoid being one of those stores — all it really takes is providing the experiences that today’s consumers demand. Movie theaters in the 1980s faced a similar environment when home video hit big. The industry feared that once people could rent and watch videos at home, nobody would pay to go to a theater and they would all go out of business.

In April, Swiss brokerage firm Credit Suisse released a report that sent shock waves through the retail universe. It predicted that more than 8600 brick and mortar stores could shutter before the end of 2017. That would make it the worst year on record for store closures. It’s the stuff of nightmares for retailers.

Whether or not you believe the Credit Suisse analysts are right, you can avoid being one of those stores — all it really takes is providing the experiences that today’s consumers demand. Movie theaters in the 1980s faced a similar environment when home video hit big. The industry feared that once people could rent and watch videos at home, nobody would pay to go to a theater and they would all go out of business.

Integrate Ecommerce and POS inventory
Omnichannel shoppers see no difference between your ecommerce and POS offerings and neither should you. Make every store’s inventory visible to online shoppers so that you can take advantage of the “buy online, pick-up in store” model. Integrated ecommerce and POS inventory management systems show real-time availability so consumers do not face unexpected out-of-stocks at brick and mortar locations. If an item is not available at the customer’s selected store, provide fast and free transfer from another store.

Use brick and mortar stores as fulfillment centers
Every physical store should also double as a fulfillment center for web orders. This opens up every item in inventory to sales from any channel and reduces time in transit for ecommerce orders. Orders that are automatically routed to locations closest to customers can reach front doors faster than from a central warehouse, often overnight or within two days without incurring express shipping charges.

Go mobile
It’s official — mobile internet usage has surpassed desktop traffic. If your website does not display properly on mobile devices, you’re missing out on a huge number of consumers. But just displaying properly is no longer enough. Navigation, inventory visibility and checkout must all be optimized for mobile users. This has massive benefits for brick and mortar as well when customers on the go can locate items in your stores; they may even make purchases from inside a competitor’s location.

Automate ordering with vendors
The long-time promise of just in time inventory management finally eliminated worries about out-of-stocks. Set minimum and maximum thresholds for SKUs and let your retail management platform automatically order the right amount of inventory from suppliers at the exact right moment. When you know every product you sell will be automatically replenished before it sells through, you do not have to keep as much inventory on hand and can open up shelf space for additional offerings likely to attract customers. You also don’t have to worry anymore about selling out on popular items and sending frustrated customers home empty handed.

Empower every employee as a checkout
One of the worst things that can happen in a store is when customers with intent to purchase leave upon seeing long checkout lines, or can’t find anyone to take their money. The in-store experience must be as smooth and easy as it is online — consumers are no longer willing to wait. Arm every employee with a tablet loaded with mobile POS software so they can complete transactions, look up inventory, and place customer orders from anywhere in the store.

Personalize direct marketing to customers
Target individual customer segments with the offers most likely to appeal to them through marketing automation. Integrate online and POS customer data to segment personas effectively and send promotions that are personalized to known preferences and likely to bring customers into stores. Specific behaviors should trigger customized messages, and look for opportunities to leverage ecommerce and in-store offerings. For example, an abandoned shopping cart may trigger a reminder message that could also include a note like, “this item is also available at your nearest store, would you like us to hold it for you?”

Expand inventory exponentially with drop shipping
Drop shipping today does not resemble what it looked like 15 years ago. Many vendors offer drop shipping that can use your branding and fulfill lightning fast. Offering items for sale that you do not have hold in inventory opens up your website to endless opportunities and it can also be integrated into “buy online, pick up in store.” Give customers the option of having the item sent to their homes or to their nearest store with no shipping charges. If they select a store, simply have the vendor pack the item along with your next regular order.

The next time you see a headline about a retailer closing stores, refer back to this list. It will become clear that one of the major reasons the merchant is in trouble is because it is not responding quickly enough to the changing demands of modern consumers. Provide the experiences today’s empowered shoppers expect and you will have much less to fear from predictions of impending doom.

Zim ship first to pass under raised bridge at NY-NJ port

The arrival of the Zim Antwerp, heading under the bridge for Maher Terminals, will open a new era at the East Coast’s largest port.

Larger ships than expected traversing new Panama Canal
The long-anticipated sea change in trans-Pacific shipping networks is well underway a year after the Panama Canal opened its expanded lock system.