Afternoon Coffee: Services PMI sees 7th straight month of growth; Decentralized distribution of COVID vaccine worries supply chain experts; Retailers’ headaches with online returns

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Economic activity in the services sector continued to grow in December, according to the latest Services ISM Report on Business numbers released last week. The services PMI — formerly known as the Non-Manufacturing NMI — was 57.2% last month, according to the report.

The December number was 1.3% percentage points higher than the November rate of 55.9%. The number represents the seventh straight month of growth after a contraction in the spring because of the COVID-19 crisis.

“In December, a slight uptick in the rate of services-sector growth continued. Respondents' comments are mixed about business conditions and the economy,” said Anthony Nieves, the chair of the ISM Services Business Survey Committee, in a press release. “Various local- and state-level COVID-19 shutdowns continue to negatively impact companies and industries. … Most respondents are cautiously optimistic about business conditions with the recent approval and impending distribution of vaccines.”

Supply chain experts concerned by decentralized distribution plan for COVID-19 vaccine

Supply chain experts are warning of the current and potential challenges to the US rollout of the COVID-19 vaccine with a decentralized distribution plan relying on states and localities handling the last-mile logistics of getting shots into people’s arms, according to the Wall Street Journal.

The US Centers for Disease Control and Prevention said more than 22 million doses were distributed to states and other jurisdictions as of Friday, with 6.7 million people having received their first shot by that point. The figures were short of the US goal of 20 million vaccinated by the end of 2020, the article said.

The US COVID-19 vaccine distribution has been focused on supply. Vaccines are targeted to specific groups, in contrast to high velocity supply chains which are demand-driven.

“If you told states your priority is to vaccinate as many people as possible as fast as they can, they would have run the campaign differently,” Julie Swann, a professor at North Carolina State University, told the WSJ. “But that’s not what they were told.”

Major retailers letting customers keep unwanted merchandise rather than processing online returns

As holiday shopping season shifts to returns season, some major retailers in the US are offering customers the option to keep the refunded merchandise, according to Business Insider.

It makes more logistical and financial sense for large retailers like Walmart, Amazon and Target to process in this way in lieu of the retailer keeping the merchandise. It especially is helpful for small, lower-cost items or ones where it’s likely the item won’t be resold, the article said. Costs of processing and shipping the return can be greater than the cost of the product itself.

Fewer people than ever are heading to physical stores to make returns, the article said. Online returns leaped 70% in 2020. Given the rise in e-commerce sales and returns, major retailers are reconsidering the expense of processing returns that incur shipping costs. Also, many customers like keeping the extra merchandise.

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