According to the constantly updating IBM Benchmark Survey:

Thanksgiving Day online sales were up 26 percent compared to a year ago. But the average spend per order on Thursday was $123.45, down from $125.25 a year ago. In 2013 the average total purchase on Thanksgiving Day was $132.  Roughly a third of purchases are being made on mobile devices.

As of mid-day on Black Friday tracking suggested a possible decline in year-to-year online sales.

According to CBRE:

Over the past 35 years, global trade has increased by nearly 600%, propelling the growth of logistics hubs in virtually every country around the world.

These hubs are connected via hub-and-spoke systems centered around 30 global logistics hubs—including the likes of Los Angeles, Chicago, Hong Kong, Tokyo, London and Paris—that form the backbone of today’s global supply chain.

However, as emerging markets grow and new centers of production materialize, 20 emerging markets are on the verge of becoming global logistics hubs over the next decade, including South Florida, Bajio, Busan, Suzhou, Berlin and Amsterdam.

These locations warrant close attention from the marketplace, as logistics hubs are typically home to large clusters of distribution facilities that are highly sought after by major real estate investors and logistics operators.

WUMO by Wulff and Morenthaler

According to the Los Angeles Times:

The neighborhoods of West Los Angeles may have gotten it first, but Google's overnight delivery service, Google Express, is now available to everyone in Southern California, from San Diego to Anaheim to Downtown L.A.

With the expansion of the service, customers across Southern California will have the option to sign up for a $95 annual membership, or pay a fee of $4.99 per eligible order to use the service.

Once registered, customers can browse products from different retailers through the Google Express portal and have those products delivered overnight. Residents in West Los Angeles can have certain items delivered the same day.

Borders, natural or legal or otherwise, complicate supply networks. Reducing time-or-space division is one way of describing the goal of supply chain management.  The sudden emergence of unexpected divisions can be especially disruptive.  But in an open system supply networks will tend to be quickly creative in finding a way around.  According to Marketplace, in response to the Paris attacks and the threat of more several European nations are considering long-term reestablishment of border controls that would significantly impact the supply chain.

Recently I received a copy of a study conducted by UPS on the healthcare supply chain.  A global survey asked, among many other things, about the respondents perceptions of contingency planning.  UPS found the answers disconcerting.  Below is an excerpt from their report.

Last week's passage of a House Transportation bill is important to long-term supply chain efficiency and resilience.  According to Politico:

The House's base bill, which passed in a 363-64 vote, authorizes nearly $340 billion for highway and transit program over six years. The original bill would have paid for just three years of funding, but an amendment adopted at the last minute Thursday could add an additional $40 billion, shoring up funding for the life of the bill.

But according to The Trucker, the political "break-through" may be almost too little, too late in terms of what is really needed.

Marcia Hale, president of Building America’s Future, an organization that promotes infrastructure investment, laid it on the line, reflecting many complaints about the need to address the nation’s highway, bridge and transportation network’s condition.

“Congress has a history of kicking the can down the road with short-term funding bills that make it highly difficult for projects — such as road and bridge maintenance, and transit network repairs — to start or continue,” Hale said. “While we see this long-term bill as a positive sign, we still believe that the funding levels outlined (in the bill) are less than optimal, and will hardly make a dent in the massive infrastructure and transportation funding deficit currently facing our country.”

Big changes in consumer purchasing behavior, increasing population concentration, and the new opportunities presented by the expansion of the Panama Canal -- to mention but a few -- converge to present significant transportation challenges for the next thirty-plus years.

A West Coast colleague pointed me to a fantastic collection of maps for the retail grocery industry at Big Think.  Each one is interesting -- though not entirely accurate according to my understanding.  Taken together the collection helps suggest the sort of retail ecology on which the US population depends. Below is the distribution of Target stores.

The Centers for Disease Control and Prevention has confirmed that what seems like a lot of foodborne disease outbreaks really is happening.  The number has nearly tripled over the last twenty years.  Concentration of production, processing, and distribution serves to amplify the impact of many outbreaks.

From a much longer UPS news release on this year's Peak Season:

UPS expects to deliver more than 630 million packages between Black Friday and New Year’s Eve, an increase of more than 10 percent over holiday deliveries last year. This UPS peak holiday shipping period includes an additional shipping day before Christmas versus 2014.

The company plans to deliver about 36 million packages on Tuesday, Dec. 22, up from 35 million last year, and double the normal daily average of 18 million deliveries. Consumers’ preference for ecommerce, coupled with the industry’s most often selected delivery solutions have driven UPS’s peak volume to all-time highs. The company tallied about 17 million deliveries on its peak delivery day just 10 years ago.

Since Christmas falls on Friday this year UPS plans for high daily residential delivery volume throughout the week. The company expects to make a record number of deliveries to residential addresses during the holiday period, up to 60 percent of all package deliveries, versus an average of 45 percent on a full-year basis

In 2010 Forester predicted US online retail would exceed $250 billion by 2014.  Actual numbers came in at just over $304 billion. In mid-2014 Forrester offered the projections shown above.

Last-mile can often be "golden". For many products long-haul is a commodity business. In today's (and probably tomorrow's) tight market for trucking, fleet management is fundamental. But there is not much need or pay-off for mass customization. A case can even be made that such a strategy is non-scalable (so far).

But within twenty-or-so miles of a supply node, customization is almost constant. As more products are increasingly delivered direct to consumers, the needs and potential pay-offs of effective -- systematic -- customization will grow.

UPS and Fedex have clearly benefited from this trend. USPS as well. Uber is targeting the potential. Last week Baird Equity Research suggested that Amazon is beginning to probe (then adapt, then accelerate) operations as a direct-delivery provider.

According to Baird's analysis:

Our assessment of Amazon's broadening fulfillment ecosystem, internal domain expertise, and early initiatives with Prime Now to offer third-party delivery suggests there is evidence Amazon may ultimately pursue more comprehensive third-party services. Similar to the gradual rollout of AWS, we would expect Amazon to introduce competitive transportation and logistics services on an incremental basis, with a long-term focus. Ideal customers for ATL (Amazon Transportation & Logistics) would range from SMBs to enterprise businesses that lack financial resources, expertise, or technology horsepower to manage fulfillment/logistics internally, and with an offering that raises the competitive bar vs. incumbent service providers. Amazon currently operates >165 fulfillment centers worldwide, and is already testing “last mile”delivery of products not sold via Amazon’s websites.

Amazon's stock soared to a new high today on news of modest profits on strong earnings that far outpaced expectations.  Amazon's sales rose 30% over the same period in 2014.

Which was a bit like a poke in the eye for Walmart which one week ago projected profits falling by as much as twelve percent next year as it invests in ecommerce -- especially supply chain enhancement -- and improved customer service.

Thursday the New York Times published a nice comparison/contrast of Walmart and Amazon.  Nothing not already reported by this blog, but a helpful overview.  The shift to online retail is occurring even faster than many predicted.  Amazon's supply chain is optimized for online purchasing and home delivery.  Walmart's supply chain dominated the supercenter age.  Sears commanded telegraph and railways.

According to the Wall Street Journal:

The biggest landlords in the U.S. are being crushed under a mountain of packages, leading one large apartment operator to stop accepting deliveries and others to experiment with ways to minimize the clutter.

The moves are at the center of two colliding trends: an increase in apartment living and a surge in online shopping. The result is a rising tide of packages with no good place to go.

U.S. online retail sales are expected to swell to $334 billion in 2015, up from $263 billion in 2013, according to Forrester Research Inc., a research and advisory firm. Analysts at Forrester expect that number to increase to $480 billion in 2019.

Just wait until Christmas.

According to the MIT Sloan Management Review:

...access to transparent, accurate data is a prerequisite for effective supply chain collaboration and coordination. Lack of transparency is often born from a lack of trust or confidentiality issues. But we are already seeing progressive companies developing novel solutions to this dilemma — such as data “cleanrooms” and digital marketplaces. 

 What we call data “cleanrooms,” often managed by a third party, allow the sharing of sensitive data (for example, consumer demand, product cost breakdown, and asset utilization) in a legal and secure data environment that lets participants better identify and size opportunities for joint value creation.

For a few years now many of us have been talking about how there needs to be a kind of Federal Reserve System for supply chains.  It is sometimes forgotten that the Fed is a sophisticated private-public partnerships.  And especially at the regional level, the private sector is arguably predominant.

What the Fed has done to clarify and manage -- and crucially troubleshoot -- the money supply, another private-public partnership could do for other supplies.

Walmart practically destroyed Sears and transformed the grocery industry by deploying late 20th Century supply chain strategies. It is now competing for the 21st Century strategic high-ground.

On October 14 the Dow Jones Industrials fell over 150 points (and Albertson's held back from its IPO) as Walmart's stock price fell 10 percent and led the retail sector in reporting disappointing results and prospects.  The world's largest retailer has loss 30 percent market value since January.

According to the Wall Street Journal:

For months Wal-Mart executives have subtly made their case that investors should view the company as a growing e-commerce player that happens to be a behemoth. It has asked them to be patient as the retailer, which has half a trillion in annual sales, spends heavily to turn the giant ship around to better compete with Amazon.com Inc. and other faster-growing retailers like Kroger Co. and Costco Wholesale Corp.

Wal-Mart’s “biggest competitor is online and doesn’t care about profits. It’s hard,” said Mr. Yarbrough, referring to Amazon...

Wal-Mart is pitching its stores and massive network of distribution centers as a key strength in its battle with Amazon. In a PowerPoint presentation Wednesday, Mr. McMillon, the CEO, showed investors a slide with pictures of online retailers that have opened brick-and-mortar locations, including Warby Parker and Rent the Runway.

“Here is a key question: Will it be easier for an e-commerce company to build out a massive store network and create a customer-service culture at scale, or are we better able to add digital and supply-chain capabilities and leverage our existing stores?,” he said.

Personal story: Tuesday Amazon did not get me a promised one-day delivery (I am not a Prime member and had paid $60 for the fast service). I complained. Within six minutes I had a seemingly (not really) personalized response and a full refund. I've since received my product. That's a capability that will be very tough to equal. Stand by for a furious fight.

Yossi Sheffi's new book on supply chain resilience should be read by anyone who has ever glanced at this blog. https://mitpress.mit.edu/books/power-resilience

On October 1 Walmart opened a new fulfillment center. According to the company, "The 1.2 million sq. ft. facility in Union City, just south of Atlanta, is the third large-scale e-commerce fulfillment center to open in the U.S. in as many months, and features state-of-the-art automation and warehousing systems."

 According to Reuters:

Competition with online rivals including Amazon.com, which recently surpassed it in market value, has heated up and Wal-Mart has committed as much as $1.5 billion this year to invest in e-commerce. Much of that is going into large-scale warehouses dedicated to fulfilling online orders. It now has five such facilities, from which it says it will be able deliver to 95 percent of country in two days. The facilities - some big enough to house two cruise liners - will enable it to receive, sort and ship packages faster and at a lower cost, Michael Bender, chief operating officer of global e-commerce, said in an interview.

Last week Amazon opened a similar-sized new fulfillment center outside Baltimore.  According to The Sun:

The 1 million-square-foot fulfillment center, which the state and city lured to Baltimore two years ago with an incentive package of more than $43 million, started operations March 30, while still under construction. Now tens of thousands of packages ship to customers each day from the building. The firm also opened a smaller sorting center nearby last October. The bigger building, where Amazon now employs more than 3,000 people, is open 24 hours a day, with staff working in staggered 10-hour, four-day-a-week shifts.

Construction companies for distribution and fulfillment centers say that since the turn of the century the average size of new facilities has tripled to just about 900,000 square feet. As Amazon and Walmart demonstrate, plenty are even larger.

The National Weather Service is forecasting a potentially very strong El Niño Effect for the upcoming Winter and early Spring: "All models surveyed predict El Niño to continue into the Northern Hemisphere spring 2016, and all multi-model averages predict a peak in late fall/early winter."

East Asia and Southern California may experience especially significant effects.  Typhoon Etau's mid-September hit on Japan is seen by many forecasters as a precursor of the potential for extreme outcomes.

A White Paper by one supply chain software firm notes, "The recent flooding from Severe Tropical Storm Etau in Japan is the first significant manifestation of El Niño. It may serve as a wakeup call for CPOs and organizations complacent about the potential El Niño threat to supply chain operations. It is also illustrative of the types of El Niño impacts that organizations can expect and the opportunities for proactive threat mitigation actions moving forward."

Roughly sixty percent of US imports arrive at the Ports of Los Angeles and Long Beach.

Amazon is recruiting 1099-contract drivers to deliver packages within one-hour in a Seattle test-drive. They call the test AmazonFlex. According to Wired:

Flex fits neatly into Amazon’s ultimate goal to own all retail. Over the years, Amazon has built up a massive logistics infrastructure to make convenient deliveries scalable. It’s poured money into building huge fulfillment centers near major metro areas, which has eaten hugely into the company’s bottom line. Now, owning a platform for on-demand workers on top of all that could help the company hammer out streamlined delivery routes using tracking software.

Motley Fool comments, "Amazon.com is constructing massive warehouses in the outskirts of America's biggest cities that could serve as a durable competitive advantage for generations to come."

According to Wired, Amazon aspires to be the dominant set-of-nodes in US (and beyond) retail.  Meanwhile, retail competition caused by Amazon is producing a proliferation of nodes and innovation.  Is the increased system resilience transient?

The founder and CEO of Starbucks was a head-liner at this week's Council of Supply Chain Management Professionals (CSCMP) annual conference.

Reflecting on Starbucks' near-death and strong recovery, DCVelocity reports that Howard Schultz told the crowd, "Growth and success covers up mistakes," At Starbucks this included a supply chain that was mostly unknown. It was an ignorance for which they paid dearly.  Only on the edge of failure did the company finally take its supply chain seriously. Schultz now credits supply chain management as the "primary co-author of our business. You cannot scale a company of any kind without the skills and base of a supply chain."

Schultz continued, "Given the fact that the Internet as we know it today is literally the death of distance, and that distance is getting narrower and narrower in terms of the last ten feet, …that is now being linked to delivery, specifically short-term delivery that could be in an hour or 30 minutes. With all these things going on, it won’t be status quo as we know it today."

In my own experience the biggest impediment to improving supply chain resilience is success. The greater the success, the less time, energy, or inclination remains for the self-critique and perspective that informs resilient choices.

The 2015 annual survey of Third Party Logistics (3pl) is now available.  The Wall Street Journal reports that the survey indicates, "A recent wave of logistics industry mergers and acquisitions is likely to accelerate in the coming year,..The survey found that many chief executive officers of third-party logistics operators, which arrange transportation and logistics services for retailers and manufacturers, expect to see defensive acquisitions growing in the wake of 10 major deals totaling $18 billion signed since early 2014."

Last Thursday (09/24/2015) Coca-Cola announced, "the formation of a new National Product Supply System (“NPSS”) in the United States. The mission of the NPSS will be to facilitate optimal operation of the U.S. product supply system for Coca-Cola bottlers in order to:

• Achieve the lowest optimal manufactured and delivered cost for all bottlers in the Coca-Cola system
• Enable system investment to build sustainable capability and competitive advantage
• Prioritize quality, service and innovation in order to successfully meet and exceed customer and consumer requirements."

If the action and its purpose still strike you as obscure, don't feel alone.  Bureacracies, public or private, tend to all sound alike.  Maybe that's why the stock price barely budged.

Here's how Reuters interprets the announcement:

The world's largest soda maker is facing sluggish sales volumes in the U.S.. It has been selling bottling operations, which partly entail getting its products to retailers, to franchisees to shift away from the capital intensive and low-margin business of distribution.

Until now, though, it has not sold production facilities, where its concentrate is combined with other ingredients and bottled up. The sale of the plants, which produce soft drinks like Coke, Sprite and Fanta, is expected to take place between 2016 and 2018, Coca-Cola said.

"By selling production facilities, we expect (Coke) will generate higher return on invested capital as its capital base is reduced, and have incremental cash to reinvest and return to shareholders," said Bonnie Herzog, an analyst at Wells Fargo, in a note

The Wall Street Journal included the following in its report on the deal:

Tom Haynes, an industry consultant and former Coke executive, said he expects the company will sign more deals to divest U.S. manufacturing plants. “Coke’s primary expertise is sales and marketing,’’ said Mr. Haynes, who headed the Coca-Cola Bottlers’ Association from 2002 to 2012.

What I see is another move toward functional disaggregation and strategic concentration.  Supply chains tended to be vertically integrated.  Supply networks tend to be horizontally collaborative.  Each participant in the network seeks to identify and amplify its particular comparative advantage and cooperate with the best-of-class in other areas of functional expertise.

In August the City of Moreno Valley (CA.) approved development of the World Logistics Center for a site on the eastern edge of the Inland Empire jurisdiction.  According to the city:

Generally, the project site is located east of Redlands Boulevard, south of the SR-60, west of Gilman Springs Road, and north of the San Jacinto Wildlife Area. The proposed World Logistics Center (WLC) project area is approximately 3,818 acres and includes a new 2,610 acre Specific Plan area. The project is envisioned to accommodate up to 40.6 million square feet of high cube industrial warehouse distribution development and related uses. (Map above)

In recent years one of the most significant economic engines for the region East of Los Angeles has been the proliferation of warehousing, product sorting, distribution and other supply chain functions. This new project is the largest yet,

There are several legal actions underway to challenge the project. But as far as I know, no one is questioning the seismic sustainability of the site or the resiliency of its construction. Below is another map showing the site's proximity to the San Andreas fault (the red line 18 miles east).  It is even closer to the San Jacinto Fault.

It is amazing how much we are investing in -- and depending on -- areas that we can be sure will be hit hard, even while giving minimal attention to mitigation.

MIT is hosting an October 15 Conference on transportation and the Internet-of-Things (IoT)

According to the widely-circulated invitation:

Our transportation system is not meeting the needs of our changing trade and diverse population. Capacity is shrinking just as our demand is growing. How will the Internet of Things address these increasing challenges? The transportation market has responded with new services and technologies, from IoT to telematics, and mobility to RFID and sensors for asset tracking. Trucks, ships, and trains are already loaded with technologies which continue to be enhanced to improve on time, safety, and cost metrics.

More information and an opportunity to register HERE.

Home Depot has opened its third facility committed entirely to filling online orders.  According to the Toledo Blade:

The first was placed in Georgia near corporate headquarters and the second in California to service the west coast. But the third facility is the largest yet, at 1.6 million square feet.

Northwest Ohio was a perfect fit for what Home Depot was looking for.

"Geographically, this gives us reach to all of our customers zip codes, about 90 percent of the U.S. population within two shipping days." said Scott Spata, Vice President of Home Depot Direct Fulfillment.

This facility is where online orders are sorted and shipped directly to the customers.

While Home Depot stores hold 35,000 items, Online direct services offer one million products to chose from.

According to the Wall Street Journal:

At its hub in Louisville, Ky., United Parcel Service Inc. recently rolled out 100 industrial-grade 3-D printers to make everything from iPhone gizmos to airplane parts.

UPS wants to find out if 3-D printing centers could shorten supply chains and cut into its $58 billion-a-year transportation business—or give it a leg up in a potentially emerging market for local production and delivery.

For Atlanta-based UPS, the difference could be existential. It doesn’t want 3-D printing to disrupt its business the way the Internet pulled the rug out from overnight document deliveries more than a decade ago. MORE.

Over the weekend I was talking to a leading transportation specialist who, while drinking at the time, soberly said, "Transportation policy in this nation does not currently exist. There are putative policy notions. There is no extant policy, sustainable funding, or credible vision for policy or funding."

According to The Hill:

Even as they maintain that they want to strike a major deal in the next few months, House Republicans still face a number of obstacles in reaching an agreement with a skeptical Senate before the end of 2015.

Lawmakers currently have an Oct. 29 deadline for extending highway programs, and had been under the impression that the Highway Trust Fund could easily be replenished through mid-December.

If the House is unable to make progress on both its international tax plan and highway policy in the coming months, the chamber could be forced to accept a Senate highway bill passed this summer that House leaders have repeatedly said is riddled with deficiencies. The Senate bill authorizes six years worth of highway policy, but only includes funding for three years.

Already, the House Transportation Committee has had to put off its plans to consider a six-year highway bill, and have not announced a timeline for when it will take up a measure — raising the chances that the House will be unable to pass its own long-term bill and then hash out a compromise with the Senate by the October deadline.

Last month Politico published a special edition on transportation (that I just noticed).  See The Agenda: Transportation.

This weekend I am trying to get through some accumulated reading, including an August White Paper entitled "Food Industry Logistics: Trends that Matter".  A couple of quotes:

THEN: Logistics networks have been designed with mindsets relevant to a prior era. Production and distribution efficiencies commonly drive product and placement. The infrastructure and apparatus are built around a high proportion of (and preference for) heavily processed foods with extended shelf life. Large manufacturing plants and distribution centers are prevalent, and efficiencies have been built around bulk shipments, which have often driven product assortment decisions. Lastly, outbound distribution models have been designed by large players to maximize their bottom line relying on fairly predictable demand rather than to respond optimally to consumer on-the-go needs.

NOW: Growing consumer expectations for freshness require shorter farm-to-fork times and distances. There has been major growth in small-footprint urban retail locations, as well as substantial growth in home delivery from online channels (e.g., Blue Apron). “Uber-type” on-demand deliveries in a one- to four-hour timeframe have also come to market... There is growth in nontraditional retail and foodservice channels (e.g., limited-assortment and fresh-format stores, specialized chains). Convenience retailers are actively working to deliver a broader, fresher and better variety of prepared foods to customers. Emerging channels like food trucks and farmers markets with unique offerings are also developing; many are harnessing the power of social media to reach consumers.

IMPLICATIONS: This will radically impact food industry logistics.... The increasing need to be closer to customers necessitates additional brick-and-mortar facilities (e.g., distribution centers, cross docks). To speed up cycle time even further, robots, automation and advanced technologies will be required.

I agree this is happening.  I agree it could be important in a whole host of ways including enhanced network resilience.  The proportional impact of these trends is not yet clear to me.

The September issue of Supermarket News compares mobile options in the Big Apple.  It can be a bit confusing.  Not exactly apples and oranges.  More like comparing priced-by-the-ounce or by the quart or bushel.

Above is one 2014 effort to map Amazon fulfillment centers

According to the Wall Street Journal:

A Cuisinart warehoused in California may no longer qualify for two-day shipping to a Prime member in Vermont. That’s the idea behind a new program Amazon is testing with some independent merchants.

The program, nicknamed Ship by Region, lets certain sellers designate where they’re willing to ship goods in two days or less to Prime members.

The merchants may limit how far they will ship some items – large-screen televisions, for example – with the two-day guarantee under Prime. If a Prime customer is outside that region, shipping may take longer.

Physics is still a factor. Time can be compressed. Space can be bent. But the energy required is better spent on dense, proximate concentrations.

Did you see, by the way, the Amazon patent application for their particular use of public transit for deliveries? Here it is.