sc digest
March 2, 2018 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Supply Chain Predictions for 2018 from Gartner and IDC bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet New Cartoon Caption Contest Begins bullet Trivia      bullet Feedback
bullet Expert Insight Column bullet New On Demand Videocast



Recent Bulletin Articles

The State of Retailer-Vendor Supply Chain Relationships 2018 Part 2
Retail Vendor Performance Management News Round Up for February 2018
Compliance Networks Corner: BOPIS will Force Retailers to Reduce Vendor Shipment Variability
Retail Vendor Performance Management News Round Up for January 2018
The State of Retailer-Vendor Supply Chain Relationships 2018

first thought


Supply Chain Graphic of the Week
How Much Do US Plant Managers Make?


What will Happen if US Puts Big Tariffs on Steel Imports

UPS and Teamsters Starting PR Battle on New Contract Negotiations
Amazon Paying Big Bucks for Smart Doorbell Technology
Great Times for Truckers


February 27, 2018 Contest

See Full-Sized Cartoon and Send in Your Entry Today!

Holste's Blog: Automatic Conveyor Speed Control - Speed Varies to Accommodate Carton Flow


Weekly On-Target Newsletter:
February 28, 2018 Edition

New Cartoon! Machine Learning in the DC, Mnf'g Wages, TL Results, VOCs and more

The Retail Vendor Performance Management Bulletin

February 2018 Issue

Global Trade Management Looks to the Future
by Ty Bordner
Vice President,
Solutions Consulting
Amber Road

Changing the Status Quo to Stay Ahead of the Amazon Effect

by Henry Canitz
Product Marketing & Business Development Director



What has been the peak year for US manufacturing output? Was it 2017?

Answer Found at the
Bottom of the Page

Supply Chain Predictions for 2018 from Gartner and IDC

Over recent weeks, we've run highlights of the excellent supply chain predictions from our virtual panel of supply chain gurus. You will find those hereand here.

We also summarized one set of predictions from the analysts at Gartner, found here.

I am here with one final column summarizing additional 2018 supply chain predictions from Gartner and fellow analyst firm IDC Manufacturing Insights.


I will note there are a number of different types of robots for distribution which can be classified into 4-5 main categories, which I promise to do sometime soon.


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Along with offering a series of more general supply chain predictions, the analyst are Gartner again this year offered a set of prognostications specifically for chief supply chain officers (and supply chain executives in general, by extension).

Let's start with this: Gartner says that supply chain leaders estimate that the percentage of revenue driven at their companies by digital business offerings will grow on average from 38% today to 55% within the next two years.

Now of course, that is most relevant if we understand what "driven by digital business" means, and unfortunately that is not really defined. Is it primarily related to orders coming in from the web mobile?

Not sure, but Gartner does offer some interesting examples. One of those is when a business transforms from selling a product with a traditional warranty and service contract to selling it as a consumption-based service, usually in conjunction with Internet of Things monitoring.

In some cases, Gartner notes, this means hardware is essentially free, as it is included for use in the price of the digital offering. In these instances, the focus is on managing the equipment once installed as well as accounting for cost of maintenance/upgrades and, ultimately, repurposing of that hardware after the contract for services is up or the hardware is returned for replacement.

As a result of this and other possibilities, "Supply chain operating models must shift their focus from physical product manufacturing and delivery to integrated physical and digital offerings as the revenue mix moves more toward digital," Gartner says.

This is a huge opportunity for CSCOs, Gartner adds, observing that "CSCOs that plan and execute supply chain roadmaps that include the capabilities required to support digital business will raise the stature of their organizations and themselves. They will become enablers of growth."

As I have written before, who really owns these digital offerings (supply chain, IT, marketing) is tricky, and may involve joint offering ownership across two or more of these functions to make it work - or embrace a whole new cross functional model.

Gartner also predicts that supply chain leaders will be driving other organizational changes, predicting that "By 2023, 30% of companies in Gartner's Supply Chain Top 25 will pursue a flatter supply chain planning organization where the roles of a traditional planner and supply chain manager are combined."

I personally think the point Garter is trying to make would have been better delivered by not connecting it to its top 25 list, but that's a minor complaint.

Gartner believes that aggressively adopting intelligent process automation (often using AI) can result in flattening the planning organization, combining the role of the traditional frontline planner (often a firefighting role) with the middle manager.

When you dig down into what Gartner is saying here, it is that computers will simply by able to do a lot of things that people do today, as we have been hearing from many quarters for several years now.

Gartner, for example, cites the case of a leading industrial manufacturer currently uses machine learning and optimization to automate demand forecasting and inventory optimization decisions. In addition to I assume reducing costs by getting rid of some of the staff that used to do this work, Gartner says the company also improved service levels and reduced in inventory.

The machines are coming for all our jobs, I'm afraid. Gartner says that "As intelligent process automation proliferates, planners that used to be consumed with operational responsibilities will now have more bandwidth for higher-order tasks and initiatives."

Of course, that's what they always say. My guess is that many of them will also simply be let go, as Gartner late notes as well, saying new roles in the company will need to be created for many of those whose current jobs are automated away.

We also like to review the predictions each year from Simon Ellis and the analysts at IDC, which provides its partially overlapping views for supply chain generally and also for manufacturing.

IDC begins by predicting that "2018 will be a year of transition for the supply chain as old, analog processes give way to the new, digital ones," and mirrors many of the observations also made by rival Gartner, as noted above.

Among its 10 supply chain predictions, IDC says that "By 2019, robots will be in use in 50% of fulfillment centers, resulting in gains of up 30% and helping drive down the cost of operations and offset an increasing shortage of labor."

In fact, IDC says that "Deploying these devices [mobile robots] in the fulfillment center can be looked at as "low-hanging fruit." That is a very different perspective than we have traditionally had for DC automation.

IDC then says that the reason for labeling DC robotics as low-hanging fruit is the fact that one of the biggest sources of waste in the fulfillment process is travel time.

"Traditionally, humans walk throughout the fulfillment center to various pick locations when they are picking an order. The walking from location to location is wasted movement that can be eliminated by the deployment of mobile robots that will take up this step in the process, which allows humans to reduce the amount of physical exertion," IDC says. What's more, the use of robots in the fulfillment process frees up a significant amount of time that would otherwise be spent walking to allow fulfillment center labor to take on new job functions within the process.

Cost reduction is one driver of this interest in robotics in distribution, but IDC notes that the trouble companies are having finding DC labor is just as important.

I will note there are a number of different types of robots for distribution which can be classified into 4-5 main categories, which I promise to do sometime soon.

Another IDC 2018 prediction is this one: "Smart postponement techniques and additive (3D) manufacturing will have been deployed by one-third of manufacturers by 2020, thus reducing delivery latency by up to 50%."

I am interested in this because I am still a bit on the fence regarding the ability of 3D printing to upend traditional processes outside of extremely slow moving parts due to cost per unit issues - but then I also remind myself that as a digital technology, 3D printing should be evolving rapidly roughly according to Moore's law.

IDC recognizes the potential cost issues with 3D printing, but says that "with increased demand for higher levels of uniqueness and the [growing] ability to cost effectively manufacture individualized products, manufacturing organizations are in a position to rethink, redesign, and retool their operation to become more flexible and still meet accelerated demands on fulfillment" without placement of inventory all over the network.

IDC'S advice: "Rethink the art of the possible." The approach to product design and manufacturing "are being drastically altered as 3D printing enables organizations to build products in ways that traditional manufacturing simply cannot."

All good stuff.

I of course have only scratch the surface of all the predictions these fine analysts offered. Will summarize some more of the manufacturing-specific predictions from IDC in our OnTarget newsletter next week.

Any reaction to these predictions from Gartner and IDC? What are some of your 2018 supply chain predictions? Let us know your thoughts at the Feedback button below.


New On Demand Videocast:

Reducing Costs through Automated Inventory Replenishment & Analytics

How Motor City Industrial Taps into Data Visualization to Help Customers Identify Waste, Reduce Inventory

This videocast discusses how to connect people, processes and technology across commerce and supply chain operations to achieve unified commerce.

Featuring Dan Gilmore, Editor along with Joseph Stephens, CEO, Motor City Industrial, Jay Fielder, Supply Chain Technology Manager, Motor City Industrial and Mike Wills, Chief Revenue Officer, Apex Supply Chain Technologies.

Now Available On Demand

On Demand Videocast:

Yes, Retailers and Distributors Can Survive and Thrive by Unifying Commerce and Supply Chain

Integrated Approach will Improve Customer Experience as Smart Retailers Move Beyond Omnichannel

This videocast discusses how to connect people, processes and technology across commerce and supply chain operations to achieve unified commerce.

Featuring Dan Gilmore, Editor and enVista CEO Jim Barnes, a highly recognized industry expert on retail and distribution.

Now Available On Demand

On Demand Videocast:

The State of Retail-Vendor Supply Chain Relationships 2017

Results from SCDigest's Second Biannual Benchmark Study of Retailers and Their Vendors - and SCDigest's New Index to Measure State of the Relationships

These findings are being presented in a live panel discussion with interactive questions from audience members throughout.

Featuring Dan Gilmore, President & Editor-in-Chief of Supply Chain Digest plus Greg Holder, CEO, Compliance Networks, Kim Zablocky, President, RVCF (Retail Value Chain Federation)
and Victor Engesser, Retail Executive Advisor, RVCFP.

Now Available On Demand


Here are some additional emails stemming from Gilmore's First Thoughts column on The End of the Fossil Fuel Era?

Feedback on The End of the Fossil Fuel Era?


First of all you seem to be using the term Peak Oil in a couple of different ways – Peak oil in the sense that the output of a given well will peak early in its life and drop off at a predictable rate. Extending this to an oil field works in that the area with a bunch of wells I guess will behave in a similar manner.

Then you try to use this to talk about global peak production but that not only depends on the production of existing wells and fields but also on new exploration - the end of oil production from all the existing fields in the world would only give you an estimate of Peak production if no new production was developed. Global Peak production needs to take into consideration new production from new wells / fields and getting more out of existing fields by techniques like fracking.

The third use of Peak Oil comes in when you start talking about price - if production is slowed to barely meet demand ( thank you OPEC) then the price will go up. So a higher price may not be because production capability has peaked only because actual production has peaked.

The other major issue that I feel is lacking in the article is the fact that not all oil is used for transportation. While it is a major player some is used for electrical generation and some is used for manufacturing of things (plastic is likely the largest user so I will just use plastic for this area). While developing economies may get electric transportation something still needs to generate the electricity and if the price of oil falls because less is used in transportation people are likely to start using it to create electricity which will be in high demand from the electrical transportation and other uses in the developing countries. Developing countries will also be purchasing more things like refrigerators which need plastic and electricity thus more use of the oil.

So the article is asking will the demand for oil peak, without a detailed analysis on all of the factors it is hard to say - my gut feel is that if demand peaks the drop off will not be fast giving companies and countries time to react to the changes.

Mike Entner
Global Service Quality Assurance Manager
The Dow Chemical Company



Editor's Note:

Thanks for feedback - I love the debate.

Just couple of quick comments:

1. It's not me but Peak Oil theory that applies it at multiple levels. Originator Hubbert in fact was the one who applied observations from individual wells to nations and ultimately globally.

2. There is no question that new sources - e.g., fracking - have upset the Peak Oil model. Hubbert did not envision this. But I can just say from my research Peak Oil is really of little concern to oil companies/countries today, its Peak Demand. I am not making such a prediction myself, but look at the chart - Royal Dutch Shell, an oil company, say Peak Demand will occur in 2025-2030. Others push it out further, but agree it is coming.

3. I agree fossil fuels - largely natural gas - will probably be used to generate electricity for some time - though solar is making gains much faster than expected. To be clear, I am no fan of solar subsidies and am hardly an anti-fossil fuel person. I also recognize the use of oil/nat gas in making chemicals/fertilizer/plastics, etc. which may continue for decades or forever. But I think as electric cars will become common, it will start to feel like the end of the fossil fuel era, which will accelerate changes in other areas, such as more solar.

As I wrote, we're not at the end of course, but maybe not far from an inflection point that marks the beginning of the end, which we might agree is reaching Peak Demand.

And on top of all that, it's good to be a bit provocative to stir the debate.

We'll know a lot more before long!

Thanks again.

Dan Gilmore


I think you are quite right that electric cars and trucks are going to come on much faster than  many realize, and that this will result in a great drop in demand for oil.

This will then start the beginning of the end for oil energy domination, though of course oil may still be used in applications such as plastics.

Also a fossil fuel, natural gas' future in industrial and utility applications is much brighter, and should be around for decades.

Martin Wise

Ft. Thomas, KY





Q: What has been the peak year for US manufacturing output? Was it 2017?

A: No, the peak production year was 2007.

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