Afternoon Coffee: October PMI registers 59.3%, sixth month of growth; Walmart shies away from automation in inventory; Demand volatility was the biggest supply chain disrupter this year

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Economic activity in the manufacturing sector continued to grow in October, according to the latest Manufacturing ISM Report on Business numbers released on Monday. The October PMI registered 59.3%, indicating an expansion in the overall U.S. economy, according to a press release issued by the Institute for Supply Management.

October’s number counts an expansion in the overall economy for the sixth consecutive month after a contraction in April because of the COVID-19 pandemic. October’s PMI was up 3.9 percentage points from September’s reading of 55.4%. October also counted the highest since September 2018 — which was 59.3%.

"The manufacturing economy continued its recovery in October,” said Timothy R. Fiore, Chair of the Institute for Supply Management Manufacturing Business Survey Committee. “Survey Committee members reported that their companies and suppliers continue to operate in reconfigured factories; with every month, they are becoming more proficient at expanding output. Panel sentiment was optimistic (two positive comments for every cautious comment), a slight decrease compared to September.”

Walmart cancels robotics deal and put humans back in stores to monitor inventory

Walmart announced it will end its contract with Bossa Nova Robotics Inc., which had supplied the retailer with roving robots used in store aisles to track inventory, according to the Wall Street Journal.

The announcement ends a yearslong push to automate the task with six-foot-tall inventory-scanning machines. Walmart had made the robots a hot topic of conversation for years within the media, saying the technology could reduce labor costs and increase sales to make sure products are kept in stock. But, the retailer recently found that humans can get similar results, the article said.

While more shoppers turned to online sales or pickup options because of the COVID-19 disruption, human Walmart employees walked the aisles frequently to collect online orders, helping to glean new data on inventory problems.

“We learned a lot about how technology can assist associates, make jobs easier and provide a better customer experience,” a Walmart spokeswoman told the WSJ. “We will continue testing new technologies and investing in our own processes and apps to best understand and track our inventory and help move products to our shelves as quickly as we can.”

Supply chain disruptions in 2020 come from demand volatility, not supply

Procurement professionals began bracing for supply chain issues starting in February of this year, but by June, 51% of supply chain leaders reported demand was their top concern, according to Supply Chain Dive. Demand volatility is the biggest issue in supply chain disruption for 2020.

Behavioral shifts from consumers shifted patterns and shredded established production plans. In response, supply chain managers converted their production lines from bulk SKUs to family sized. Some closed factories and furloughed workers, the article reported. Others, like retailers, opened new warehouses to handle huge explosions in online orders.

Supply Chain Dive compiled a bunch of stories from this past year showing how supply chains responded to the strange changes in demand this year.

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