Supply Chain Now Radio Episode 253


The Supply Chain Buzz Series
Sponsored by The Effective Syndicate:

In this week’s episode of the Supply Chain Buzz, Scott Luton discusses the top things to know in supply chain in 15 minutes or less!

[00:00:05] Hey, good morning, Scott Luton here with you liable Supply Chain Now Radio, welcome back to the show. In today’s show, we’re continuing our Supply chain Buzz series, a brief weekly look at some of the top news and trends across the global India in Supply chain community. All in 50 minutes or less. Today’s episode, The Supply chain Buzz on Supply Chain Now Radio is brought to you by the Effective syndicate, a leading coaching and consulting firm that helps companies win by optimizing process and developing winning cultures.


[00:00:36] Unlike many consulting firms, the been there done that Pros. Over the Effective syndicate work side by side with all levels of the organization from the frontline to the C-suite. All in order to drive sustainable improvement that enables profitable growth. To learn more, check them out at the effective syndicate It’s Monday, January 6, 2020. An exciting new year lays before so many opportunities. But for now, let’s get to the buzz in our first story this morning, coming to us from The Wall Street Journal. Let’s talk about new labor laws that stand to impact over a million workers in the United States in 2020. And those workers compensation for the first time in 15 years, the U.S. federal government has overhauled overtime regulations. The U.S. Labor Department has stated that an additional 1.3 million workers are expected to be eligible for overtime pay in 2020. As many of our listeners may know, when when most hourly workers work more than 40 hours in a single week, they qualify for overtime pay. Overtime pays workers an additional 50 percent of their hourly rate for all hours, over 40 in the same week since 2000. And for overtime, pay has been limited to workers that earn below twenty three thousand six hundred sixty dollars per year. Now for 2020, that annual figure is thirty five thousand five hundred sixty eight dollars. Some groups, including the U.S.


[00:02:13] Chamber of Commerce, are comfortable with the adjustment, acknowledging the inflation that has occurred since 2004. Other groups, such as worker advocates, say the new rule could harm employees. Kathryn Rockwell’s Illes, general counsel for the National Employment Law Project, an advocacy group, was quoted in the story stating, quote, The workers who will not get overtime protection because of this rule are precisely the workers who most need the protection. She also said the changes won’t help, quote, a disproportionate number of women and people of color. Endquote, referring to low level managers and stores, restaurants and warehouses. Some states that aren’t satisfied with the new income levels are seeking to set their own limits. For example, California and New York have already set higher thresholds. Washington State is looking to set a gradual increase to eighty three thousand three hundred fifty six dollars in 2028. Pennsylvania is also looking increase through the threshold by twenty twenty two to forty five thousand five hundred dollars a point to consider. The Bureau of Labor Statistics claims at today’s 2020, prices are thirty six point one six percent higher than they were in 2004. Thus, one hundred dollars in 2004 is equivalent to about $136 in 2020. Danielle to Deploy is owner of Century Wire Products Corp., a small manufacturing company in Wind Gap, Pennsylvania, a town of about 3000 people located roughly 90 miles north of Philadelphia in the state’s slate belt.


[00:03:58] She stated that her company doesn’t have employees who are affected by the federal change, but that a higher state threshold would make additional century wire workers eligible for overtime. Mr. Mr Poy said that the company would likely respond to a state change by increasing annual pay for several workers. In our second story here on the Supply chain Buzz, let’s talk good news in the automotive industry in particular. Tesla Motors, according to reports from both the AP and Reuters. Things are beginning to turnaround for Elon Musk and Tesla. For starters, the company beat Wall Street estimates for vehicle deliveries in fourth quarter. One hundred thousand hundred twelve thousand vehicles were delivered in the three month period. The street had projected about one hundred five thousand for the year, approximately three hundred sixty seven thousand five hundred cars were delivered in twenty nineteen, meaning Tesla hit the lower end of. Own target, which was 360000 to 400000 vehicles being delivered. Analysts point to the demand for Tesla. Tesla’s model three sedans, especially in overseas markets, as a big reason for the boost in activity. Speaking of overseas markets, Tesla plans to build 500000 vehicles a year at a planned factory just outside Berlin in the town of Greene. Had the plant would be Tesla’s fourth Gigafactory and the company would like to begin operation in July 2021.


[00:05:35] The current Gigafactory is located in Nevada, New York and China. All right. Third story here on the Supply chain Buzz today. Let’s switch gears a bit and talk retail. According to a story over at Supply chain Digest, which includes reporting by The Wall Street Journal’s Sarah a.r retail behemoth, Wal-Mart is making a few strategic adjustments. The company is reportedly looking to make its large supercenters a core component to its growth strategy. As we all know, Wal-Mart has been making gains in the e-commerce space for years, but there’s still something to be said for valuable foot traffic, even in the Amazon age. And an acronym that many of our listeners may have heard, a Tom or Ten is Bumpus, which stands for Buy Online Pickup in store. The massive Wal-Mart supercenters plan to Rod the BOPE is way for as long as it’ll go. Wal-Mart CEO Doug McMillon, in fact, has told certain company managers that the supercenters will serve as critical hubs, connecting and serving consumers with all the company’s offerings. And there appears to be a greater emphasis on profitability in Wal-Mart leadership circles. One former Wal-Mart executive told The Wall Street Journal that, quote, In the beginning, it was all about growth. How can you win share away from Amazon? Now it’s about profit in quote. The retailer is reportedly looking at a variety of options at creating more profitable revenue, including leveraging the massive troves of customer data that Wal-Mart accumulates.


[00:07:12] Stay tuned is certainly going to be interesting to see how the still the largest American retailer continues to evolve. OK. Let’s stick with retail for store number four here on The Buzz. According the core site research data via NBC News, a record number of retailers closed stores in twenty nineteen. In fact, over nine thousand three hundred store closures were reported a whopping 63 percent, more than twenty eighteen and even much higher than the last record year, which was twenty seventeen, which had about eight thousand store closings. The closures have impacted just about every sector and industry. And one of the bigger root causes you ask. Company bankruptcies, for example, Payless Shoe Source filed for bankruptcy in February. Twenty nineteen for a second time nonetheless, and the company shut down about twenty five hundred stores in North America alone. Interestingly enough, interestingly enough, while retail store traffic is down across the board, the average transaction in stores is up about 3 percent. Retailers continue to see more and more consumers conducting online research and then coming into the store to make the purchase. In fact, this trend is prompting some brick and mortar retailers to upgrade their in-store sales teams. Looking ahead, according to UBS, online sales are expected to rise to 25 percent by 2026. That’s up from 16 percent now.


[00:08:48] Analysts look at these numbers and project that about 75000 more retail stores would need to close by 2026. But some say it’s not all that bad. Lauren Betar, a retail consultant with the analytics firm Retail Next, told NBC News, quote, It’s really having the right number. Not every retailer needs 100 stores. It’s about the industry right sizing rather than about a retail apocalypse in quote. For a fifth and final story here on today’s Supply chain Buzz, we’re moving over to the manufacturing industry. According to the ISAM index, as reported by CBS MarketWatch, the U.S. manufacturing industry continues to slump and the numbers say that things got even worse in December, according to the Institute for Supply Management, a.k.a. I-S M. Its research showed its monthly manufacturing index sliding to forty seven point two percent in December twenty nineteen. Not only does that make five straight months of manufacturing industry contraction, according to AYSON data. But the forty seven point two percent reading is the lowest since June 2000. And non keep in mind for the ISAM index. Any reading below 50 percent constitutes contraction instead of growth. Some of the factors cited for the really soft December number. Number one, Boeing suspending production, of course, of the 737 max jetliner. Number two, the hangover from the General Motors labor strikes. And thirdly, the ongoing trade war with China.


[00:10:30] Even as we’re starting to see some breakthrough here, which is great news, and here’s some more good news related to the U.S. and China trade tensions. To Timothy Fior, chairman of the survey, the ESM survey stated, quote, Global trade remains the most significant cross industry issue. But there are signs that several industry sectors will improve as a result of the Phase 1 trade agreement between the U.S. and China. End quote. Hey, that’s something, right? But what are your predictions? What do you see in the manufacturing industry? Feel free to drop us a line with a few thoughts. And you can send that to Amanda at supply chain. Now radio dot com. And there you have it. That’s a wrap for today’s episode. Several of the leading Supply chain news stories, developments and trends right here on the Supply chain Buzz on Supply Chain Now Radio. You’ll find links to each of the stories that we featured today on the show, notes for your convenience, including a few additional resources. Big thanks to today’s sponsor of the Supply chain Buzz. The Effective syndicate. Be sure to check them out at the Effective syndicate dot com. To our listeners everywhere, from Tybee Island, Georgia to Las Sareena, Chile to Latour, India and all points in between. Thank you for joining us. And on behalf of the entire Supply Chain Now Radio team. This is Scott Luton.


[00:11:54] We wish you all a very successful week ahead. The happiest of New Years to you and your families. Appreciate, everybody. Have a great week.

Scott W. Luton is the founder & CEO of Supply Chain Now Radio. He has worked extensively in the end-to-end Supply Chain industry for more than 15 years, appearing in publications such as The Wall Street Journal, Dice and Quality Progress Magazine. Scott was named a 2019 Pro to Know in Supply Chain by Supply & Demand Executive and was named a “2019 Supply Chain & Logistics Expert to Follow” by RateLinx. He founded the 2019 Atlanta Supply Chain Awards and also served on the 2018 Georgia Logistics Summit Executive Committee. He is a certified Lean Six Sigma Green Belt and holds the APICS Certified Supply Chain Professional (CSCP) credential. A Veteran of the United States Air Force, Scott volunteers on the Business Pillar for VETLANTA and has served on the boards for APICS Atlanta and the Georgia Manufacturing Alliance. He also serves as an advisor with TalentStream, a leading recruiting & staffing firm based in the Southeast. Follow Scott Luton on Twitter at @ScottWLuton and learn more about SCNR here:

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