Many supply chain managers think their forecasting problems would be solved if they could only get good point-of-sale (POS) data. But it's not that simple.
The plight of today's supply chain manager could be fairly compared to that of Tantalus from Greek mythology. Trapped in the underworld and parked by a pool overhung with boughs laden with luscious fruit, Tantalus was doomed to spend eternity tortured by hunger and thirst in the midst of plenty. Each time he tried to drink, the pool drained away; each time he reached for a pomegranate or fig, the boughs receded. So it is for the average supply chain or distribution center manager yearning not for a sip of water or a pear, but for accurate data on the actual demand for the goods in his warehouse.
In theory, gathering demand data should be a matter of feeding all sales, tracking and inventory information gathered throughout the supply chain into a great ravening machine that links every party in the supply chain to every other party. But right now, there's a piece missing—the point of sale (POS) information gathered in retail outlets is almost never fed into that machine.
Why not? The main problem is that POS information is some of the least accurate you're likely to come across in the supply chain, answers Mark Johnson, vice president of marketing at G-Log, a vendor of supply chain management software in Shelton, Conn. "It's very nervous data, which is not very good for supply chain operations," he says. "The raw POS data still requires a lot of manual intervention before it can be digested into the supply chain."
Johnson gives this example: If a customer gets to the checkout counter and notices a defect in an item, often the clerk will swipe only the replacement item's bar code, although both items have come off the shelf. Multiply that over thousands of retail outlets over 90 days, and the result is a heavily distorted picture of stock on hand.
The other problem is that even perfect POS data will never be an absolute predictor of future demand. "Customers are notoriously fickle and their past demand patterns are less valuable in an era of rapid change in products, distribution and sales strategies," says John Fontanella, vice president of research at AMR Research in Boston, in a report titled The Demand Driven Supply Network: Striving for Supply Chain Transparency. For that reason, the data gathered as bar-coded items are swiped through the cashier's station will never be more than a part of the picture.
As good as it gets
Yet the fallibility of POS data hasn't discouraged Al Giunchi, director of distribution logistics at pet products manufacturer Hartz Mountain Group in Secaucus, N.J. For 10 years now, he's been extracting sales information from his company's main customer—Wal-Mart—and feeding it back into his own supply chain.
Every day, through the Internet, Hartz receives POS information on its products from thousands of Wal-Mart stores around the country and the 36 distribution centers that serve them. Through that mechanism,Hartz Mountain learns which products are selling, how much inventory is on hand in the individual stores, and what's available to top up the stock from nearby DCs. "We see inventory levels in stores and in the 36 DCs. We see what product needs replenishing and where that product is—on the East Coast or the West Coast.And it's in real time.You're looking at the product come off the shelf and out the store instead of out the DC," says Giunchi.
The Wal-Mart POS information isn't monitored directly by the logistics division. It's in the hands of a customer service team consisting of three people in Secaucus, and three in Bentonville, Ark., where Wal-Mart is headquartered. They, in turn, feed information about fluctuations in inventory levels and demand to the logistics group. When Giunchi wants to look at the data, he goes through a password-protected part of the World Wide Web (a step up from the early days when he used an EDI system).
Wal-Mart's sales forecasts tend to be almost uncannily accurate, says Giunchi. "Their computer system is second only to the government's. They know that a Wal-Mart in the Northeast is not going to need the same items as one in Arkansas. When 9/11 hit, they knew they'd sell more guns in Bentonville, Ark., than in Secaucus, N.J. Plus all of a sudden, there was a spike in gas can sales because people were hoarding gas.Wal-Mart knew all that. All that information started flowing through the system very quickly."
Responding to Wal-Mart's rapidly changing forecasts and constantly monitoring in-store inventory requires a lot of hard work, Giunchi says. "It takes a lot of maintenance, because there might be discontinued items or special promotions or delays for items coming in from, say, Asia or Brazil," he says. Returns, alone, occupy two members of the six-person team monitoring POS information. "The data does need scrutinizing and that's why you need six people looking at screens every day."
Aside from dirty data and shipment delays, the sheer size and nature of the consumer market means POS information is never going to allow anyone to stay exactly abreast of demand. "The problem is the vast number of variables in the system," says Giunchi. "You may think that a particular dog chew is going to knock people's socks off, but it doesn't. Or one product will unexpectedly take off and Wal-Mart will say 'I ordered 5,000 originally, but now I need 45,000 on the same day I wanted the 5,000'—and then the panic starts to set in. Or they order something in September and need it in time for Christmas," Giunchi continues. "So POS information helps maintain the flow to the stores of items that are already there. But it still doesn't help you if you're trying to push an item and you don't know if the customer is going to want it or not. There's no software in the world that's going to smooth that out."
All the same, Giunchi would welcome the opportunity to work with POS information from other major customers, instead of relying on vendor-managed inventory techniques, as Hartz Mountain does with Kmart,Walgreens and Winn-Dixie. Though popular, vendor-managed inventory programs, in which the products' supplier decides how much stock to put in the customer's distribution centers, don't get into the same detail as POS data. "VMI stops at the warehouse," says Giunchi.
Not imPOSsible
Given the number of kinks that have yet to be worked out, it's no surprise that G-Log's Johnson says few companies are currently using POS data well. The ones that have mastered it include computer company Dell Inc. and Tesco, the British supermarket chain. Dell's selling structure, where customers order direct, typing their own information into a Web site, means its POS data are clean. Matters get a bit trickier when it comes to supermarket retail, where there are hundreds of thousands of SKUs to keep track of and more opportunities for mistakes. And it will be tougher yet to attain that level of sophistication in the retail sector.
Johnson says it's clear that feeding POS data into sales and manufacturing decisions works, because it's happening in industries like computer supply. But, in consumer retail, you're talking about adding an extra couple of zeros to the number of transactions, he says. "When you add dirty data, the complexity just takes off," Johnson says. "Transferring that into clean data and then translating it into orders that are digestible in the supply chain is a challenge, but it's not impossible. Absolutely not."
Despite the difficulties, there's still a lot to be said for feeding POS data into the system, Johnson adds. "The better the data you have, spanning the entire supply chain from factory to point of sale, the better you're able to reduce inventory and exposure to damage."
For Giunchi, the benefits of using POS information far outweigh the tribulations. "It gives us more intelligence. Whether we're able to perform with that intelligence is the key, and that's when we come into the real world," he says. "Planning and forecasting is so difficult. The weatherman doesn't get fired if he gets the weather wrong—it's Mother Nature's fault. But we don't have Mother Nature to blame in the world of business."
It’s getting a little easier to find warehouse space in the U.S., as the frantic construction pace of recent years declined to pre-pandemic levels in the fourth quarter of 2024, in line with rising vacancies, according to a report from real estate firm Colliers.
Those trends played out as the gap between new building supply and tenants’ demand narrowed during 2024, the firm said in its “U.S. Industrial Market Outlook Report / Q4 2024.” By the numbers, developers delivered 400 million square feet for the year, 34% below the record 607 million square feet completed in 2023. And net absorption, a key measure of demand, declined by 27%, to 168 million square feet.
Consequently, the U.S. industrial vacancy rate rose by 126 basis points, to 6.8%, as construction activity normalized at year-end to pre-pandemic levels of below 300 million square feet. With supply and demand nearing equilibrium in 2025, the vacancy rate is expected to peak at around 7% before starting to fall again.
Thanks to those market conditions, renters of warehouse space should begin to see some relief from the steep rent hikes they’re seen in recent years. According to Colliers, rent growth decelerated in 2024 after nine consecutive quarters of year-over-year increases surpassing 10%. Average warehouse and distribution rents rose by 5% to $10.12/SF triple net, and rents in some markets actually declined following a period of unprecedented growth when increases often exceeded 25% year-over-year. As the market adjusts, rents are projected to stabilize in 2025, rising between 2% and 5%, in line with historical averages.
In 2024, there were 125 new occupancies of 500,000 square feet or more, led by third-party logistics (3PL) providers, followed by manufacturing companies. Demand peaked in the fourth quarter at 53 million square feet, while the first quarter had the lowest activity at 28 million square feet — the lowest quarterly tally since 2012.
In its economic outlook for the future, Colliers said the U.S. economy remains strong by most measures; with low unemployment, consumer spending surpassing expectations, positive GDP growth, and signs of improvement in manufacturing. However businesses still face challenges including persistent inflation, the lowest hiring rate since 2010, and uncertainties surrounding tariffs, migration, and policies introduced by the new Trump Administration.
Both shippers and carriers feel growing urgency for the logistics industry to agree on a common standard for key performance indicators (KPIs), as the sector’s benchmarks have continued to evolve since the COVID-19 pandemic, according to research from freight brokerage RXO.
The feeling is nearly universal, with 87% of shippers and 90% of carriers agreeing that there should be set KPI industry standards, up from 78% and 74% respectively in 2022, according to results from “The Logistics Professional’s Guide to KPIs,” an RXO research study conducted in collaboration with third-party research firm Qualtrics.
"Managing supply chain data is incredibly important, but it’s not easy. What technology to use, which metrics to track, where to set benchmarks, how to leverage data to drive action – modern logistics professionals grapple with all these challenges,” Ben Steffes, VP of Solutions & Strategy at RXO, said in a release.
Additional results from the survey showed that shippers are more data-driven than they were in the past; 86% of shippers reference their logistics KPIs at least weekly (up from 79% in 2022), and 45% of shippers reference them daily (up from 32% in 2022).
Despite that sharpened focus, performance benchmarks have become slightly more lenient, the survey showed. Industry performance standards for core transportation KPIs—such as on-time performance, payables, and tender acceptance—are generally consistent with 2022, but the underlying data shows a tendency to be a bit more forgiving, RXO said.
One solution is to be a shipper-of-choice for your chosen carriers. That strategy can enable better rates and more capacity, as RXO found 95% of carriers said inefficient shipping practices impact the rates they give to shippers, and 99% of carriers take a shipper’s KPI expectations into account before agreeing to move a shipment.
“KPIs are essential for effective supply chain management and continuous improvement, and they’re always evolving,” Steffes said. “Shifts in consumer demand and an influx of technology are driving this change, in combination with the dynamic and fragmented nature of the freight market. To optimize performance, businesses need consistent measurement and reporting. We released this study to help shippers and carriers benchmark their standards against how their peers approach KPIs today.”
Supply chain technology firm Manhattan Associates, which is known for its “tier one” warehouse, transportation, and labor management software products, says that CEO Eddie Capel will retire tomorrow after 25 total years at the California company, including 12 as its top executive.
Capel originally joined Manhattan in 2000, and, after serving in various operations and technology roles, became its chief operating officer (COO) in 2011 and its president and CEO in 2013.
He will continue to serve Manhattan in the role of Executive Vice-Chairman of the Board, assisting with the CEO transition and special projects. Capel will be succeeded in the corner officer by Eric Clark, who has been serving as CEO of NTT Data North America, the U.S. arm of the Japan-based tech services firm.
Texas-based NTT Data North America says its services include business and technology consulting, data and artificial intelligence, and industry solutions, as well as the development, implementation and management of applications, infrastructure, and connectivity.
Clark comes to his new role after joining NTT in 2018 and becoming CEO in 2022. Earlier in his career, he had held senior leadership positions with ServiceNow, Dell, Hewlett Packard Enterprise, Arthur Andersen Business Consulting, Ernst & Young and Bank of America.
“This is an ideal time for a CEO transition,” Capel said in a release. “Our company is in an exceptionally strong position strategically, competitively, operationally and financially. I want to thank our management team and our entire workforce, which is second to none, for their hard work and dedication to our mission of advancing global commerce through advanced technology. I look forward to working closely with Eric and continuing to contribute to our product vision, interacting with our customers and partners, and ensuring the growth and success of Manhattan Associates.”
The Japanese logistics company SG Holdings today announced its acquisition of Morrison Express, a Taipei, Taiwan-based global freight forwarding and logistics service provider specializing in semiconductor and high-tech logistics.
The deal will “significantly” expand SG’s Asian market presence and strengthen its position in specialized logistics services, the Kyoto-based company said.
According to SG, there is minimal overlap between the two firms, as Morrison Express’ strength in air freight and high-tech verticals in its freight forwarding business will be complementary with SG’s freight forwarding arm, EFL Global, which focuses on ocean freight forwarding and commercial verticals like apparel and daily sundries.
In addition, the combined entity offers an expanded geographic reach, which will support closer proximity to customers and ensure more responsive support and service delivery. SG said its customers will benefit from end-to-end supply chain solutions spanning air, ocean, rail, and road freight, complemented by tailored solutions that leverage Morrison's strong supplier and partner relationships in the technology sector.
The growth of electric vehicles (EVs) is likely to stagnate in 2025 due to headwinds created by uncertainty about the future of federal EV incentives, possible tariffs on both EV and gasoline-powered vehicles, relaxed federal emissions and mileage standards, and ongoing challenges with the public charging network, according to a report from J.D. Power.
Specifically, J.D. Power projects that total EV retail share will hold steady in 2025 at 9.1% of the market, or 1.2 million vehicles sold. Longer term, the new forecast calls for the EV market to reach 26% retail share by 2030, which is approximately half of the market share the Biden administration targeted in its climate agenda.
A major reason for that flat result will be the Trump Administration’s intention to end the $7,500 federal Clean Vehicle Tax Credit, which has played a major role in incentivizing current EV owners to purchase or lease an EV, J.D. Power says.
Even as EV manufacturers and consumers adjust to those new dynamics, the electric car market will continue to change under their feet. Whereas the early days of the EV market were defined by premium segment vehicles, that growth trend has now shifted to the mass market segment where franchise EV sales rose 58% in 2024, reaching a total of 376,000 units. That success came after mainstream franchise EV sales accounted for just 0.8% of total EV market share in 2021. In 2024, that number rose to 2.9%, as EVs from the likes of Chevrolet, Ford, Honda, Hyundai and Kia surged in popularity, the report said.
This growth in the mass market segment—along with federal and state incentives—has also helped make EVs cheaper than comparable gas-powered vehicles, J.D. Power found. On average, at the end of 2024, the average cost of a battery-electric vehicle (BEV) was $44,400, which is $1,000 less than a comparable gas-powered vehicle, inclusive of hybrids and plugin hybrids. While that balance may change if federal tax incentives are removed, the trend toward EVs being a lower cost option has correlated with increases in sales, which will be an important factor for manufacturers to consider as they confront the current marketplace.