HD Home Depot Inc

By Paul Page 

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Home Depot Inc.'s supply chain chief is telling store operators to get used to "days of inventory, not weeks." The home-improvement giant is joining a growing retail industry drive to slash stocks at stores and in warehouses as companies try to boost sales, improve margins and respond to changes in the marketplace. Companies including Home Depot, Target Corp. and Wal-Mart Stores are trying to figure out how to profitably serve the growing needs of online shoppers even as they make their network of stores less of a financial burden, the WSJ's Paul Ziobro writes. Home Depot calls its plan "Project Sync," which includes a steadier flow of deliveries from suppliers into its network of 18 sorting centers. Instead of being slammed with five trucks twice a week, for instance, Home Depot now wants to have suppliers send two trucks five days a week. Retailer lean-inventory efforts have been roiling the logistics world, with operators reporting fewer goods in distribution channels even as consumer sales tick upward. For retailers, though, that's how supply-chain math is supposed to add up.

EZ Worldwide Express is finding out why tying too much business to a single customer isn't very fashionable in logistics. The New Jersey-based operator is dropping Forever 21 as a customer after saying the retailer's diminishing business pushed the company into bankruptcy protection, the WSJ's Katy Stech reports. The January bankruptcy filing and the decision in recent days to walk away from the service contract point to the changes coursing through the "fast fashion" trade and to the impact the upheaval is having on logistics providers. EZ Worldwide laid off 200 workers and is selling equipment it had used to serve a client that had provided some half of the company's revenue. EZ Worldwide points to sharply declining revenues, a sign of the scale of the toll that changing consumer tastes and the sales shift toward e-commerce are taking on Forever 21.

The world-wide business serving apparel retailers is creating a kind of vast shadow supply chain from castoffs. The business of recycling used clothing stretches from Western stores to sorting shops in India and has built its own logistics eco-system, the WSJ's Eric Bellman reports. It now faces a glut of goods that is so large it is affecting retailers and regional economic policies. The surplus springs from the rise of fast fashion, which has flooded the world with inexpensive clothing, often produced in the same low-wage countries where it later ends up sold or reprocessed into goods like blankets or pillow stuffing. It may seem a virtuous circle, but some clothing makers in emerging markets say the flood of used apparel stifles the growth of local textile industries. And there are signs the global recycling system is having trouble keeping up with the relentless march of new production.

TRANSPORTATION

New U.S. rules on drone operations break new ground on the devices even if they don't go as far as delivery companies would like. The long-awaited regulations the Federal Aviation Administration issued permit low-altitude, daylight flights of unmanned vehicles weighing less than 55 pounds, although the WSJ's Andy Pasztor reports they will continue to stick to requirement that drones can't fly outside the sight of an operator. That puts a heavy lid over studies Amazon.com Inc. and other companies have undertaken on the use of drones to deliver parcels. The FAA rules will open the skies to far more private-sector use of drones, however, and the growing commercial use will likely spur more investment and research on the technology. Setting the industry parameters may open the door to using drones for remote or emergency deliveries, which some parcel carriers believe that they are most likely to fit.

QUOTABLE

IN OTHER NEWS

More British companies are issuing profit warnings as they digest the impact of the U.K. vote to withdraw from the European Union. (WSJ)

Intensifying pressure on the British pound pushed sterling to its lowest level against the dollar in 31 years. (WSJ)

Oakland's city council voted to ban exports of coal from the city's terminals. (WSJ)

The Chinese yuan fell to its lowest level against the dollar since late 2010 after China's central bank acted in response to volatile global currency markets. (WSJ)

The U.S. plans "informal, technical discussions" with the United Arab Emirates and Qatar about Persian Gulf airlines' funding and access to the U.S. market. (WSJ)

The U.S. trade gap widened slightly in May on a small increase in imports. (MarketWatch)

Medical-device maker Medtronic Plc agreed to acquire HeartWare International Inc., adding more heart-failure products to its portfolio. (WSJ)

The Brexit vote may endanger efforts to expand London Heathrow Airport. (The Guardian)

Perdue Farms Inc. is retooling its sourcing to ensure that its chickens are raised in a humane manner. (The New York Times)

English authorities are asking port workers to look for signs of slave labor on ships arriving at terminals. (BBC)

Worldwide raw steel production expanded 3.2% from April to May. (American Machinist)

Amazon,com has the greatest overall web traffic among e-commerce companies in India. (Forbes)

A new report says Canadian retailers are about two years behind U.S. companies in adopting e-commerce technology. (Toronto Star)

China's No. 2 steel maker and a smaller rival are planning a strategic partnership that could lead to a merger. (South China Morning Post)

South Korean shipyard Daewoo Shipbuilding & Marine Engineering must raise $871 million to meet September bond payments. (Splash 24/7)

The head of the U.S. government's Strategic National Stockpile says the program's series of warehouses hold $7 billion in supplies in case of national disaster. (NPR)

ABOUT US

Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @lorettachao, @RWhelanWSJ and @EEPhillips_WSJ, and follow the WSJ Logistics Report on Twitter at @WSJLogistics.

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(END) Dow Jones Newswires

June 28, 2016 06:53 ET (10:53 GMT)

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