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Home delivery is not always easy

By David Maloney | February 02, 2016 | 5:43 PM | Categories: Supply Chain, Transportation

I have been playing tag of sorts with my parcel delivery company.

Since I work from home most of the time, my son felt it would be wise to have packages intended for him requiring a signature sent to my home instead of his own. He, of course, is not present when most parcel companies come calling, so this seemed a reasonable request.

However, it has not always worked out. I travel a good bit in my job as chief editor, so I am not always home when the parcels arrive. Also, it appears my delivery driver has weak knuckles, as he claims he knocks on my screen door, but I do not always hear him. I have even tried putting a note on the door to request that he knock loudly enough so that I can hear his bidding even when in my office or another room of the house. I really don’t have time to camp at the front door to await his arrival, which is never at a consistent time.

I even told him to open the screen door and knock on the wooden door itself, but he claims he cannot do that. Once, he said, a customer’s screen door “broke” and he was accused of causing the damage.

I can hardly blame him though. Drivers are often under tremendous pressure to stick to time schedules. They don’t want to spend time knocking on doors. I think they also assume that someone is not home. I know that they never knock if a signature is not required – they simply leave the package on the doorstep.

As a father, I don’t want to disappoint my son. If I fail to hear the parcel carrier’s arrival, then it means he has to try delivery again. After a few attempts at non-delivery, for example if I am traveling several days in a row, the package has to go back to the sender or else I have to drive 45 minutes each way to the distribution center to pick up the parcel or pay for it to be re-delivered the next day. I realize there are alternative programs that parcel companies now offer (usually for a fee) which will wave the signature if no one is at home. But that cannot be done for some items, as either an adult is needed to sign for the product, it has too much value to simply leave it on the doorstep, or the sender requires the signature as definitive proof of delivery.

So, there has to be some alternatives for home delivery. For instance, why doesn’t this parcel company leverage its store franchises when a signature is required? I would gladly pick it up there, but I don’t want to pay the fee for something that is really their convenience, not mine. Another solution would be to install delivery kiosks located in strategic parts of the community, such as a grocery store, mall, department store, etc. This solution has worked well in other parts of the world, but has not yet taken root in the United States for some reason. Picking it up at a kiosk and leaving an electronic signature would be a snap compared to playing hide and seek with the deliveryman.

Kiosks would also eliminate the most expensive part of the delivery - those last few miles getting it to my home. That’s especially important for shippers who are under pressure to offer next day delivery (or soon same day delivery) for free. Maybe some day a kiosk solution or alternative delivery method will save my deliveryman’s knuckles from bruising.

Buggy WMS software hits sneaker retailer with $32 million sales loss

By Ben Ames | January 29, 2016 | 1:14 PM

The next time anyone in your company downplays the importance of supply chain software, pull out a copy of the “Third Quarter Fiscal Year 2016 Results” from The Finish Line, Inc., an Indianapolis-based retailer of athletic shoes, apparel, and accessories.

Earnings reports generally make extremely dull reading, but logistics industry professionals will flip through this one like a spy thriller novel from an airport bookstore.

Skip to the chase scene, and you will discover that the company recently installed a new warehouse and order management system which apparently disrupted its entire supply chain, triggering $32 million in lost sales over a 13-week period, the shuttering of 150 stores (representing one-quarter percent of the company’s branded retail outlets), and the reassignment of the company’s CEO to a seat on a board of directors.

“Our third quarter performance was severely impacted by a disruption in our supply chain following the implementation of our new warehouse and order management system,” outgoing CEO Glenn Lyon said in the Jan. 7 statement. The report covered a period spanning the 13 weeks ending Nov. 28, 2015, and featured a bottom line with consolidated net sales of $382.1 million—a decrease of 3.5 percent over the prior year period—and a slump in comparable store sales of 5.8 percent.

“Specifically, in October, we began experiencing issues flowing fresh inventory into our stores as well as fulfilling online orders as the new system was unable to process freight at volumes necessary to support our sales plans,” Lyon said. “We worked quickly to address the disruption in our system and improve our operating capabilities, increasing technical and operational resources including third party experts… We anticipate that we’ll return to a stable operating environment during the first quarter and we will start leveraging the multiple benefits from our supply chain system enhancements.”

In a separate announcement on Jan. 7, Finish Line said that company president Sam Sato will succeed Lyon as CEO on Feb. 28. In turn, Lyon will remain on the company’s board, but will transition to the role of non-executive chairman of the board beginning Jan. 1, 2017.

Although it plans to cut its line of branded retail stores from 600 to 450, Finish Line will continue its relationship with Macy’s, which allows it to reach a current total of 1,010 Finish Line retail locations, located primarily in U.S. malls and shops inside Macy’s department stores.

In addition to fixing its software SNAFU, the company’s future challenges will include fine-tuning its omnichannel strategy to allow it to keep prices low while delivering goods quickly, according to a Wall Street Journal article on the quirky earnings report.

Neither the Finish Line press release nor the newspaper story cited the specific problem with the WMS or indicated which vendor had sold the faulty system.

March of the robots

By Toby Gooley | January 19, 2016 | 12:41 PM | Categories: Material Handling

I’m definitely not a techie. Just ask the long-suffering co-workers who rescue me when my laptop, smartphone, or various Google products (I’m talking about you, GVoice and Calendar) periodically become “uncooperative.” I grumble about technology all the time. But there is one aspect of technology that never fails to hold my attention and earn my admiration: robotics.

I know little about their inner workings or the nitty-gritty details of the technologies that make them do what they do. Still, they mesmerize me at trade shows, and I can barely tear myself away from watching them while on factory tours.

In the past few weeks, I’ve had several occasions to think about robotics and its impact on supply chains. On recent tours of the factories where The Raymond Corp. and Toyota Industrial Equipment Manufacturing make their forklifts, for example, robotic welders and laser cutters were much in evidence. These machines were unaffected by the intense heat, searingly bright light, and around-the-clock demand for perfect accuracy. And last month, my colleague David Maloney, chief editor of DC Velocity, and I toured a giant, highly automated pharmaceutical distribution facility in Japan. There we saw brawny robotic arms picking up individual packages of medicines and gently, precisely placing them on conveyor belts. At a demonstration center showcasing the latest products developed by Daifuku, the company we visited in Japan, we saw a robot that can pick up, deposit, and locate totes and boxes anywhere on a floor, without racks or storage structures; it can also remove individual items from a tote and place them on a conveyor or in another container.

Without these and the many other types of robots, manufacturing, warehousing, and distribution would be slower and production and shipment volumes diminished. More people would be required to carry out dangerous, exhausting, and mind-numbingly repetitive tasks. In conditions like those, people get hurt, quality inevitably becomes inconsistent, and the need for rework grows. Yet many people still view manufacturing and warehouse robots as competition for jobs.

Last month, Joseph F. Engleberger, a robotics pioneer who developed a robotic arm for use on assembly lines (way back in the 1960s!) that greatly accelerated production in many industries, passed away at the age of 90. Engleberger had an answer to those who charged that robots were taking good jobs away from people. In a 1997 New York Times interview, he asserted that the belief that robots stole jobs was “unjustified.” The robots, he pointed out, “take away subhuman jobs which we assign to people.” Based on what I’ve seen in factories and distribution centers, it’s hard to dispute that argument.

Warming up for the supply chain

By David Maloney | January 12, 2016 | 10:42 PM | Categories: Supply Chain, Transportation, Warehousing

While I am writing this blog posting, my area in Pennsylvania is experiencing the first real snowfall of the year. Just a few inches outside now. This is mid-January already, and to say that we have had a mild winter so far is certainly an understatement.

For the most part, the recent holiday season was a big winner from a transportation and distribution standpoint. Absent were the hiccups parcel carriers experienced in 2013 when many presents arrived too late to go under the tree by Christmas morning. Parcel capacity has expanded over the past two years, which has been the biggest factor in avoiding the nightmares of the Ghosts of Shipping Past.

Yes, volumes were high – about 1.3 billion packages in December alone, but most products got to destinations on time. Retailers also have gotten smarter, which has resulted in making the volume easier to handle. Many online stores began promotions earlier and more often, which helped spread the Black Friday and Cyber Monday deals over several weeks instead of one weekend.

But even with these changes, a lot of credit for a successful shipping season must be given to El Nino, which gave us mild weather that broke records across the nation. The lack of snow meant planes were flying, trains were moving, trucks were not delayed, and products met promised delivery dates. Lower fuel costs were an added benefit. Certainly such mild weather is not something we can expect every year, but at least for this season, we will count our blessings.

Logistics providers could add green links to global supply chain, DHL says

By Ben Ames | January 04, 2016 | 10:48 AM

Imagine delivery trucks that haul used packaging back to warehouse recycling centers as they make their daily routes. Think of consumers who help slash even more consumer waste by choosing reusable packaging for the delivery of their online purchases.

A recent report from global 3PL and supply chain management giant DHL describes these and many other creative logistics initiatives that could help support a greener supply chain.

Of course, logistics managers already apply sustainable business practices in many corners of the supply chain, from using renewable fuels in forklifts and tractor-trailer cabs to paring excess miles off delivery routes and idling unused conveyor belts.

Despite these advances, however, the industry could do much more to support sustainable business practices, according to a November 2015 DHL report titled “Fair and Responsible Logistics.”

Beyond just saving the planet, supply chain firms can use green business practices to create a lasting competitive advantage. By embedding fair and responsible logistics at the core of their business models, these companies can ensure that their profits grow hand in hand with sustainability, says the study developed by the DHL Trend Research team, a unit of Deutsche Post DHL Group.

To blaze the trail for this green shipping initiative, the report identifies 15 potential use cases for fair and responsible logistics in the areas of circular economy, fair access, and fair production and trade.

The report points out that today’s climate of mass production and consumption is causing imbalances in global societies and the environment. In response, the group suggested three potential solutions.

First, logistics providers could establish recycling-friendly trucks that provide the infrastructure for both logistics and recycling. Such a truck would be equipped with a flexible interior that adjusts during delivery, shrinking the delivery area as parcels are offloaded, and growing the collection area as recyclables are collected on the return journey.

A second way to increase recycling volumes and reduce waste would be deploying bio-degradable materials to help cope with burgeoning parcel volumes, allowing consumers to compost the packaging in their gardens. An alternative to this approach is shipping items in reusable containers, just as shoppers increasingly use reusable bags at grocery stores. Known as “logistics unverpackt” in German, the strategy could lead to zero-waste shipping by eliminating the need for online delivery packaging.

In a third twist on standard logistics practices, logistics providers could map out complex end-to-end supply chains for smaller companies. By establishing greater transparency, this practice could expose areas where there are opportunities to improve “fair and responsible business.”

As they experiment with these methods, supply chain practitioners should see the philosophy as a potential profit center, not an additional cost, the report insists. While many companies today are relying on digitalization and technology as key sources of business rejuvenation, they should also listen to the growing expectations of consumers to “go fair.” By following the maxim “doing well comes from doing good,” logistics companies can leverage their position in managing global trade networks to accelerate fair and responsible business in other industries, as well.

“Logistics is a network business with a global reach that can play a key role in helping businesses to ‘go fair’ and in improving transparency across the entire supply chain,” said Markus Kückelhaus, vice president Innovation and Trend Research, DHL Customer Solutions and Innovation. “By placing fair and responsible logistics at the core of our own business, new revenue streams can be generated, as well as new social and environmental value for all stakeholders.”

To read the full report, see www.dhl.com/content/dam/downloads/g0/about_us/logistics_insights/dhl_trendreport_fairresp.pdf.

Retailers tame consumer goods supply chain with e-commerce tools

By Ben Ames | December 04, 2015 | 10:33 AM

Retailers are turning to new technologies to help them manage the logistics of keeping their shelves stocked with consumer packaged goods, driving new demand for e-commerce software, a new study shows.

Consumer packaged Goods (CPG), also known as fast-moving consumer goods (FMCG), include consumable items such as beverages, toiletries, and over-the-counter drugs. Market analysts use this category of low-cost, fast-selling goods to contrast with durable goods, such as kitchen appliances and other high-value, seldom-replaced goods.

With their quick turnover and low profit margin, CPGs can present a challenge for retailers that have not developed a lean, efficient supply chain.

In response to this challenge, retailers are seeking solutions in online shopping and other e-commerce platforms, according to the Fast Moving Consumer Goods (FMCG) Retail Innovation Report, a market study released Thursday by The Center for Advancing Retail & Technology (CART), a Los Angeles-based market research firm.

The five most popular solution areas of interest for retailers in FMCG are:

* online shopping and other e-commerce

* tablet point of sale (POS) & mobile checkout,

* inventory management,

* in-store marketing, and

* mobile workforce management.

CART determined the list by studying the search and related activity of more than 30,000 users representing every state in the U.S., and compiling a proprietary scoring index from the data. The purpose of the study was to provide industry executives with objective insight about the areas of innovation their peers are focused on.

“The eCommerce space is evolving rapidly, and each day that FMCG retailers delay puts them further behind,” CART CEO Gary Hawkins said in a release. “There is an opportunity for brick-and-mortar retailers to learn from digital-only merchant best practices as physical supermarkets move online.”

Shoppers use smartphones to locate brick & mortar stores

By Ben Ames | November 30, 2015 | 7:07 PM

Americans have put down their turkey drumsticks and picked up their smartphones, which means the 2015 holiday shopping season has begun in earnest. But a new survey shows that only four in ten shoppers use their phones to actually make purchases.

To be sure, the smartphone is an indispensable commercial tool, with 78 percent of American consumers planning to use their phones while doing their holiday shopping, up from 72 percent in 2014, according to Deloitte’s 2015 Holiday Survey.

But only 41 percent of survey respondents said they used these powerful pocket computers to make a purchase online.

By far the most popular way that survey respondents used their smartphones while holiday shopping was simply getting store locations (60 percent) to help them visit brick-and-mortar shops.

The next most common uses included: compare prices (55 percent), browse online (50 percent), read reviews (46 percent), get product information (45 percent), get/use coupons (45 percent), check product availability (43 percent), access social networks (39 percent), and scan barcodes to get information (27 percent).

No one can dispute that e-commerce is a fast-growing trend with big implications for fulfillment strategies and distribution center operations, but the results show that brick and mortar retailing is here to stay.

The poll of 4,009 consumers was commissioned by Deloitte and conducted online by an independent research company between September 11–22, 2015. To see the complete survey, visit http://www2.deloitte.com/content/dam/Deloitte/us/Documents/consumer-business/us-2015-holiday-survey-results.pdf

“Shark Tank” startup safeguards home deliveries

By Ben Ames | November 30, 2015 | 7:04 PM

Americans have eagerly leapt into the 2015 holiday shopping binge, with millions of e-commerce purchases already speeding to home addresses around the nation.

Distribution centers are humming with activity to meet the demand, but despite the sheer volume of Christmas and Hanukkah gifts being delivered to doorsteps, one link in the e-commerce chain is still rusty—security.

Shoppers frequently face two frustrations as they try to take possession of their purchases. First, timing the arrival of a valuable item is difficult, since most couriers can provide only a rough estimate of their schedule for delivering a specific parcel at a certain address.

The second persistent challenge in the e-commerce ecosystem is theft. As carriers drop cardboard boxes and pouches at empty homes during working hours, lurking thieves sometimes pluck the deliveries right off the building’s front steps. When the buyer arrives home hours later, he or she assumes the item was never delivered and calls the retailer to complain.

Now a company has sprung up to fix this leak in the flow of e-commerce. myDoorman Inc. is a San Francisco-based startup that got some of its initial startup capital in January 2015 on the TV reality show “Shark Tank.” An additional $1.5 million quickly followed, when a group of venture capital firms stepped up in June 2015.

Promising to bridge the gap between a FedEx or UPS courier delivering a package and the time the consumer actually arrives home, Doorman allows customers to schedule their own deliveries as late as midnight, seven days a week.

For a fee, subscribers simply substitute the nearest Doorman location for their home address, and their online purchases will be delivered to a secure location. Doorman then sends a notification to the buyer’s smartphone app, and the user can schedule a time between 6pm and midnight to have the package delivered to their own home.

In a world where felonious Grinches resort to holiday burglary, it’s good to know there is still a place where Santa can safely deliver a holiday package.

A step closer to better roads

By David Maloney | November 11, 2015 | 7:31 AM | Categories: Trade, Transportation

As an industry that relies on our nation’s roads to move goods from place to place, it is refreshing to see Congress finally acting on behalf of infrastructure improvements.

Last week, the House of Representatives approved a six-year, $325 billion bill to fund our nation’s surface roads. The Senate approved a similar plan in July. The legislation is now before House and Senate conferees to reconcile the two bills. Both chambers will then have to approve the conference version. Hopefully, it will soon be in front of President Obama for his signature.

One of the significant measures in the House bill is a National Highway Freight Network that will provide funds and structure for connections to ports and intermodal facilities. This is an important piece considering that these connections are vital to logistics operations.

Another key provision is the requirement that the Department of Transportation set up a program to investigate granting modified commercial driving licenses to what it terms “novice licensed drivers.” These would be drivers between 19 years, 6 months and 21 years of age. Currently commercial licenses are available only for drivers over 21. This potentially opens the doors to a pool of drivers before they begin other careers and should help to fill the ranks where shortages have been persistent for years. Personally, I feel this should extend to drivers 18 and up, but this is a step in the right direction.

Unfortunately, the House also killed a provision that would have raised the weight limit for trucks from the current 80,000 pounds to 91,000 pounds. This is despite evidence that shows such a raise would better utilize existing capacity without compromising safety. It would reduce miles driven, energy consumed, and the total number of vehicles on our highways. Hopefully such a measure will be considered again in the future.

On the whole, it was a good week for transportation advocates.

The Echo chamber

By Mark Solomon | November 06, 2015 | 2:09 PM | Categories: Transportation

 

Doug Waggoner chuckled as he answered the question the only way he legally could. The chairman and CEO of Chicago-based freight broker Echo Global Logistics Inc. was asked at an Armstrong & Associates Inc. 3PL conference last month, in the wake of UPS Inc.’s $1.8 billion acquisition of hometown rival Coyote Logistics LLC, had Echo been approached by a possible buyer that wanted the same type of skills that UPS had identified in Coyote, namely the ability to fill UPS’ underutilized trucks and reduce its network variability?

As the head of a publicly traded company, Waggoner said he couldn’t answer that question under any circumstances. But Waggoner did applaud UPS and Coyote for agreeing to a deal he said makes perfect sense for both.

These days, Waggoner can afford to be jovial and magnanimous. His company is in excellent shape, with solid positions in truckload, less-than-truckload, and intermodal brokerage to accompany Echo’s footprint in managed transportation. From its start in 2005 as an LTL broker, Echo has penetrated the exponentially larger truckload market with much success. And it closed June 1 on its $420 million purchase of rival Command Transportation, a broker that focuses exclusively on the non-contract, or spot, market and is strong in the East Coast and Southeast, balancing Echo’s well-entrenched positions in the upper Midwest and West Coast.

Like other brokerage executives, Waggoner has preached the mantras of geographic coverage and shipment density. Echo’s third-quarter numbers bear out that strategy. Its third-quarter gross revenue increased 40 percent year-over-year to $450 million. Net revenue increased by 50 percent to $87 million from the third quarter of 2014, numbers that included 8 percent organic growth. Net transport margins rose to 19.4 percent, up year-over-year and sequentially. Earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 46 percent. Truckload volume increased by 134 percent over the third quarter of 2014, results that were boosted by Command’s contribution. The tailwind from Command notwithstanding, these were very good numbers in an otherwise subpar macro environment.

While Command’s volume growth was stunted by a spot market that’s been weak virtually all year, its value will show through if and when capacity tightens again. Meanwhile, Echo’s organic truckload growth in the quarter surged 24 percent. That’s the beauty of the model: It is a designed to work in all market conditions. It can also be effectively cross-sold by Echo’s sales force. These positive traits should significantly boost the top line, if estimates are accurate. Investment firm BB&T Capital forecast $2.09 billion in gross revenue next year and $2.73 billion in 2017, up from a 2015 estimate of $1.53 billion.

Despite all this, the market value of Echo equity was cut by more than half from peak to through, dropping from $34.35 in late June to $16.56 a share in late October; it has since climbed to $24.31 a share in the wake of the strong third-quarter numbers. 

As of the Nov. 7 close, Echo’s market cap sits at a little more than $752 million. Its enterprise value, which is often referred to as a business’ “takeover” price because it includes the amount of debt and cash an acquirer would assume, is $842 million.

That begs the question: If UPS can take out Coyote for $1 billion or so more than Echo’s market cap and enterprise value—to be sure, Coyote went for a healthy premium, but with a market cap of $94 billion, what UPS shelled out was a rounding error—what’s to stop FedEx Corp., a large truckload carrier, or anyone with similar deep pockets, from pursuing a strong business like Echo? 

The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

Thoughts from our editors.



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