Logistics Viewpoints

A complete analysis of logistics trends, technologies, and services

COVID-19 Disrupts an Efficient Supply Chain

Life Stories | By •

COVID-19There was a time when Mumbai’s dabbawalas (lunchbox carriers) were known for their efficient supply chain and logistics.  But the COVID-19 incursion changed the lives and livelihoods of Mumbai’s dabbawalas.  Their lives can neatly be compartmentalized into BC and AC – before COVID-19 and after COVID-19.

Scenario Before COVID-19

Mumbai’s dabbawala service was legendary for its reliability.  This service was started in 1890 by a Parsi banker who wanted to have home-cooked food in office daily.  The idea caught the fancy of many office-goers and the number of dabbawalas swelled to 100.  Demand and supply were well  matched. There were two categories of migrant labor who exemplified the demand and supply sides:

  • White collar workers: At that time there were no fast food joints or office canteens and as more families migrated to the city to work they needed a service like this
  • Illiterate/semi-literate workers: They had travelled to the cities as the returns from agricultural produce were inconsistent and not sufficient to support their families. Although they lacked education they were willing to work hard

As Mumbai’s population grew, so did the demand for the dabbawalas.  Today, the 5,000 or so dabbawalas in the city have an enviable record; they deliver (and return) over 200,000 lunchboxes throughout Mumbai with hardly any delays or mistakes.  They follow a coding system to identify the destination and recipient – initially it was simple color coding, now it has evolved into alpha numeric characters.  Each dabbawala contributes in kind – two bicycles, a wooden crate, and his own uniform that comprises of white cotton kurta-pyjamas, and the white Gandhi cap.  After collecting and sorting the dabbas into groups they are put into coaches of local trains and handed over to local dabbawalas at the specified station.

The world-class service logistics with almost no technology inputs have baffled global logistics companies and e-commerce giants. Many business schools include their case study as a part of their curriculum.  The success of this business model is proof that with efficient and well-coordinated teamwork the results can be extraordinary.

In the late 90s a documentary was made about them and many articles followed.  At the beginning of this century a full-length documentary was made by the Carnegie Mellon University.  But what got maximum publicity was when Prince Charles interacted with the dabbawalas at the Churchgate station during his official visit to Mumbai in 2003; and two years later two of their office bearers were invited for his wedding.

The supply chain was moving smoothly till mid-March this year, and then came the COVID-19…

After the COVID-19 Onslaught

When the lockdown was announced the dabbawalas panicked because offices were closed and local trains (their commuting lifeline) were suspended.  Suddenly their only source of income was strangulated and many returned to their villages.  Some of them had their agricultural farms to fall back on, but then came Cyclone Nisarga that destroyed their crops.  The lockdown has left them jobless for months and many have not received payment for their services in February and March.  The Mumbai Dabbawala Association says that they are not in a position to restart their work as many have gone to their hometowns and are unable to return.  Although the local train services resumed mid-June, it was meant only for essential staff of the state government.

The dabbawalas stare at a bleak future.  When housing societies are strict about visitors, they will certainly disallow entry for dabbawalas.  Several NGOs, film stars and citizens have come forward to help them with daily rations; and the government distributed ration kits. Although help has been forthcoming it is sporadic and fragmented. The Association has requested the government for financial aid for monthly sustenance.

Appreciating their contribution to daily sustenance, a larger-than-life statue of a dabbawala was installed at Mumbai’s Haji Ali junction in 2017.  The people  who delivered dabbas like clockwork across the city daily are today struggling to feed their own families.  These are the  people who through their resourcefulness and diligence proved that high-quality service can be provided with a  low-cost and simple operating system.  It will be quite some time till we again see the familiar kurta-pyjama clad dabbawalas rushing to catch the local trains.

Editor’s Choice: Retailers: Is Your Transportation Strategy Ready for Peak Season?

Inventory Management | By •

Note: Today’s post is part of our “Editor’s Choice” series where we highlight recent posts published by our sponsors that provide supply chain insights and advice. This week, Logitsyx Technologies asks if retailers are ready for peak season.

peak seasonPeak season is always stressful for the retail industry, but the COVID-19 pandemic could create more issues than usual.  Retailers can no longer rely on their usual playbooks, with planning cycles completely upended.  For example, there is currently as much as an eight-month lead time for goods from China, and most companies haven’t placed orders, waiting to see the extent to which the pandemic will subside and economies will stabilize. And even if businesses place orders today, can suppliers fulfill these orders given the disruptions in their own supply chains?

2020 will yield a very different peak season, with retailers firing marketing engines to promote whatever goods they can get their hands on and even re-marketing unsold spring and summer merchandise as the new “it” items for fall and winter.  And will consumers even be willing to shop in-store during peak? Safety and social distancing protocols will remain for the foreseeable future, likely with limits on the number of customers allowed in a store at a given time. It’s conceivable brands will forego big in-store sales to avoid overcrowding and retailers will reduce changing room capacity to enforce social distancing. These shifts in the in-store experience, when combined with anxiety about the virus’s spread, could mean stores of all sizes will experience substantial reductions in foot traffic–and sustained surges in e-commerce orders as a result.

Retailers will have to do their utmost to attract shoppers during this peak season and provide them with a satisfactory buying experience. A key ingredient will be on-time e-commerce order fulfillment, and smart retailers will make sure e-commerce fulfillment operations are scalable and flexible enough to cost-effectively support different order fulfillment processes and satisfy the customer from product discovery to delight.

Now is the right time for retailers to review their transportation strategy and consider the lessons they’re learning during the coronavirus pandemic.  For example, is the transportation strategy flexible? Is it scalable?  Has it met the demands of this unusual environment? Or are changes necessary?

Here are six opportunities for retailers to optimize their transportation strategy to meet 2020’s peak season challenges.

Click HERE to read the full article.

Amazon, FedEx, and UPS Prepare for the Post COVID World

Logistics Technologies | By •

post COVIDOn Monday, my home state of Massachusetts announced the official details regarding the state’s four-phase plan to re-open the economy during the coronavirus pandemic. Phase 1 comes in a two-wave approach, with some business opening immediately and others opening on May 25. One group that found the approach disappointing is retailers. Many Massachusetts retailers see this plan as potentially too little too late. According to the new guidelines, nonessential retail stores will be allowed to open for curbside pickup, as well as remote fulfillment, on May 25. However, opening stores to the general public for browsing will be part of phase 2, which does not have a firm date as of now. With this announcement, e-commerce will continue to be vital for retailers looking to remain open. This will put added strain on Amazon, FedEx, and UPS to keep up with customer demands. But, the last two months, combined with the coming months will help each of these companies to succeed in the post COVID world.

E-Commerce and the Post COVID World

E-commerce is certainly booming right now as many brick and mortar retail locations remain shuttered. Nonessential retailers are beginning to open up across the country, but e-commerce is still seeing a surge. Amazon and Walmart have collectively hired nearly 500,000 employees to meet the growing needs of e-commerce fulfillment, notably in the warehouse and on the road. However, with the increase in e-commerce sales comes concerns over capacity constraints. In turn, many customers have seen long delays in order fulfillment.

These delays can also be attributed to supply chain networks being overwhelmed. The demand is outpacing the supply right now for capacity and picking volumes. Plus, for many retailers, there were planned delays for those items that were considered nonessential. However, now that the country has had a few months to adjust to the new normal, nonessential items are making their way back to the forefront of ordering queues. And companies are preparing for the reality of the post COVID world.

Amazon and the Post COVID World

Amazon saw an uptick in business from the beginning of the coronavirus pandemic. One of the biggest surges for Amazon was in online grocery orders. The demand became so extreme that the company was forced to stop accepting new Whole Foods delivery customers as it simply did not have the capacity to meet the demand.

post COVIDOver the years Amazon has been building out its private logistics network, with a keen eye on moving past a reliance on FedEx and UPS for home deliveries. The coronavirus pandemic has seen the company’s private fleet grow. In fact, it seems that until recently, most of my Amazon orders were delivered by either FedEx or UPS. Now however, every order I get is delivered by an Amazon branded delivery truck, and I see them rolling through my neighborhood all day every day. By comparison, FedEx and UPS trucks have been seen less frequently, at least in my neighborhood that is. One of the concerns with ordering packages has been the social distancing aspect. And for delivery drivers, this is certainly a concern. Rather than collecting a signature or even knocking on my door to give me my package, Amazon drivers have been taking a picture of the item on my doorstep, which is then emailed to me as proof of delivery. For Amazon, and the rest of home deliveries, this seems like it will be a staple of the post COVID world.

One area of concern for Amazon was the long delivery timeframes customers were experiencing for nonessential items. This stemmed from the demand surge at the beginning of the coronavirus outbreak. However, the company has seen the light at the end of the tunnel in terms of delivery timeframes. Amazon has said that customers can expect the usual one and two-day delivery timeframes to return imminently and service levels will get back to normal. This is good news for both consumers and the company, as more and more consumers were beginning to look elsewhere for items they would normally order from Amazon. The company lifted restrictions on the amount of inventory that suppliers can send to its warehouses indicating that it is back to business as usual.

As part of its long-term post COVID world plans, Amazon showed a glimpse of a virus killing robot it is developing that would roll through grocery stores and distribution centers, using banks of ultraviolet light to kill viruses on surfaces. While the company has indicated that this is something they are working on for the future, it is safe to say that the product would be a welcome one for most retailers and manufacturers. And while the technology already exists, it is not surprising that Amazon is working on its own model.

FedEx and the Post COVID World

post COVIDFedEx is also making plans to succeed in the post COVID world. One way to ensure delivery timeframes is to make sure that the logistics network is not overwhelmed. And sometimes to do this, companies need to pump the brakes. That is exactly what FedEx did recently to make sure it could deliver on customer expectations. As e-commerce demand surged, the company limited the number of items that retailers could ship from certain locations such as stores. These limits were only a temporary order, but they were specifically designed to make sure that the network did not get overwhelmed. It is this type of transparency that can go a long way.

The biggest news for FedEx for the post COVID world is its announcement of a new partnership with Microsoft. Just a few months ago FedEx canceled its partnership with Amazon, Microsoft’s biggest competitor when it comes to cloud services. Now, FedEx is teaming up with Microsoft on a multi-year partnership that combines FedEx’s logistics network with Microsoft’s cloud. The first service, FedEx Surround, will give real-time analytics into the supply chain and delivery. The offering will be available later this year and will collect data through FedEx’s IoT platform. This data will be analyzed using Microsoft’s technology services to help predict potential delivery disruptions due to weather, congestion, or other issues. This enables companies to re-route items and alert customers of potential delays.

FedEx is also hiring drivers to keep with the growing demand of e-commerce. According to FedEx CEO Frederick W. Smith, the company has been hiring about 4,000 drivers per week for its FedEx Ground unit. Assuming that e-commerce does not see a significant drop as brick and mortar retailers re-open, this is a step towards making sure that delivery timeframes can be met in a post COVID world. The bigger question is whether FedEx will have the warehouse capacity to keep up.

UPS and the POST COVID World

post COVIDUPS has taken some steps recently that will align well with the post COVID world as well. As the interest and use cases grow for drone deliveries, UPS set up a program to deliver essential items during the pandemic. UPS will use drones to fill prescriptions for residents of The Villages in Florida, one of the country’s biggest retirement communities. The deliveries will come from a CVS store about a half mile away and will mark the first paid residential deliveries by UPS’s drone unit Flight Forward. The drones will drop the prescriptions to a central location, where a Flight Forward employee will ferry them by golf cart to homes. This program could be a model for future drone deliveries of essential items to at risk communities.

During the current pandemic, UPS has also expanded the use of its UPS My Choice program. UPS My Choice allows business and residential users to manage their delivery schedules by rerouting or rescheduling deliveries, get estimated and confirmed delivery windows, tracking and managing multiple packages at once, receiving real-time alerts, following deliveries on a map, leaving instructions for the driver, and routing packages to a UPS Access Point instead of home delivery. This program helps the consumer to get the package when and how they want in the most socially responsible manner possible.

On top of the My Choice program, UPS has also made changes to its signature requirements, which could certainly be the method of the future as well. The company has eased guidelines on the types of packages that need a signature. However, for those deliveries that do still require a signature, UPS is taking a novel approach. Drivers will leave a sticky note on the door before moving back a safe distance. Once the customer has signed the form, the driver will wait for the customer to leave and then retrieve the form. This could certainly be how signatures are handled in the new post COVID world.

Final Thought

The post COVID world will likely look a lot different than what we experienced just a few short months ago. As economies begin to open, restrictions abound and are likely to remain in place until a vaccine is created and administered across the country. In this post COVID world, the supply chain will continue to be a key cog in ensuring that the economy can function, and home deliveries will be the new normal for more and more of our retail needs. To that end, Amazon, FedEx, and UPS have put changes in place to deal with the changing nature of customer demands and interactions. These changes, which include drones, virus killing robots, private fleets, logistics partnerships, and more choices for customers have put each of these companies in a position to continue to thrive in the post COVID world. We will have to wait and see just what that world looks like though.

Transportation in the Time of a Pandemic

Guest Commentary | By •

transportationIn the wake of the COVID-19 pandemic, the long-haul transportation industry has been tested daily. The biggest issue? Fluctuations in supply and demand. Spot loads quadrupled in the last month with outbound tender volumes at their highest since 2018. In April, freight volumes increased from 100,000 loads per weekday to 150,000 loads at its peak, loads remained consistently above 130,000 each day early in the month. Volumes have since cooled; however, volatility prevails as manufacturing in China and the rest of Asia normalizing and we expect to see a surge of supply into the U.S. distribution networks later in 2020.

Although the pandemic amplified the presence of slack or waste in the system, volatility is not new to this market and it is not expected to change. Price and capacity volatility in this market are recurring themes, in late 2017, rates in the trucking industry skyrocketed, with trucking companies not being able to honor contractual rates/commitments resulting in a 30% increase in spot market prices.

2017 witnessed a perfect storm of factors contributing to volatility, exacerbating the ongoing driver shortage, DOT mandated new maximum hours of service (HoS) regulations monitored by ELD (Electronic Logging Devices), and hurricane relief efforts further tightened truck capacity. 2018 saw record levels of freight-hauling demand and driver-pay as tonnage levels reached a 20-year high. Some would argue that tighter capacity and inflated rates were an anomaly, others would consider it to be business as usual.

Volatility is the reality for this highly fragmented market. Shippers, brokers, carriers, and drivers have been slow to adopt enabling technology, perpetuating the lack of transparency and poor collaboration. This technology gap correlates with the prevalent waste in the system.

What is waste in the long-haul trucking industry?

The fundamental tenet of lean is removing any “non-value-adding waste from a process. The types of waste found in the trucking industry are waiting time, unnecessary movement, defects and non-utilized/empty miles.

Waiting: Referred to as detention time, it is defined as all the time drivers spend waiting for their trucks to be loaded and unloaded.

According to drivers, waiting at warehouses for shipments to load or unload is one of the most aggravating parts of their job. A 2018 study revealed that almost 63% of truck drivers experienced waiting times of at least three hours every time they arrived at a shipping dock. Drivers are typically not compensated for this non-value adding time, resulting in a 40% erosion of their earning hours for that day.

‍Unnecessary Movement: Non-revenue generating miles or empty miles equate to unnecessary movement – however, a truck domiciled in one state must return home with or without a return load. Having return loads are huge in this industry as it doubles the revenue generated by the asset.

‍‍Defects: Errors in the documentation and appointment scheduling result in idle time spent waiting for corrective action, e.g. re-printing / issue of documents, yard management or access and availability of resources and Material handling equipment for the off-loading or loading of trucks.

‍‍Non-utilized Talent: Utilizing resources to their full capacity is key to an optimized environment. The capacity constraints in the transportation market are defined by the truck capacity, miles traveled per day and hours of service available to a driver.  Utilizing these three factors to their optimum is key to enabling the best revenue opportunity for drivers

It is no surprise that fluctuating capacity and cost are forcing the industry to adapt and change with the demands of our times. The players that survive and thrive through and after this pandemic will be the ones who embrace enabling technology.

Technology that unifies discrete elements of the shipping process

Digital freight networks

Digital freight networks offer open, fully connected freight marketplaces that use machine learning, automation, and other software services that connect shippers and carriers efficiently. A solution like SemiCab, which delivers a freight capacity optimization, creates net-new shared value by creating round trips that virtually eliminates empty miles from long-haul transportation. Today, 25% or more of the miles driven annually are empty, resulting in $100 billion of lost value. Enabling access to capacity for shippers – that would have been empty – at lower costs, results in conversion of empty miles into revenue generating miles.

The time to act is now

The extreme demand volatility we are experiencing amidst the Covid-19 pandemic may appear anomalous but historical data will prove that it is not an outlier. The volatility is characteristic of the transportation industry and it won’t fade away with the pandemic.

The American Transport Research Institute (ATRI) publish an annual report on the operational costs of trucking, in the 2018 report, ATRI found that trucking companies traveled over 9.4 billion miles in 2017 of which 20.7 percent were empty, at an operational cost of $1.69 per mile, that equates to $3.3 billion in empty miles traveled!

SemiCab is focused on eliminating waste from the industry by eliminating empty miles traveled, creating $50 billion in new economic value, eliminating the addition of 30 million metric tons of CO2 to the environment, and improving the quality of life for carriers and drivers. Leveraging their unique digital freight ecosystem,  SemiCab will introduce total visibility into supply and demand and build fully loaded round trips, every time; reducing waiting time, eliminating empty miles, replacing archaic solutions, and letting drivers do what they do best, drive.

The benefits of a Digital Freight Ecosystem

The freight ecosystem will benefit from digitization as new technology enables them to optimize its supply chain. Using digital freight ecosystems, shippers and carriers will find their balance and eliminate empty miles from long haul transportation. Scalable prediction and optimization capabilities will improve the revenue generating miles traveled and will reduce the US Greenhouse gas emissions of which 28% – according to the EPA – are attributed to the transportation sector.

SemiCab offers a digital freight ecosystem using AI/ML predictions and proprietary optimization models, built with the scalability required to predict and optimize millions of fully loaded roundtrips. Leveraging network effects and advances in technology, unique distribution model reduces shipper freight costs by up to 10% and provides shippers with access to a large pool of carrier capacity who will be earning higher profits for the reduction of non-revenue generating miles.

ElMarie is an accomplished industry and supply chain leader with extensive experience in supply chain orchestration, contract logistics/3PL and 4PL.  Prior to Blue Yonder, Elmarie was the Director of Supply Chain Excellence at Johnson Controls and held many leadership roles at DSV/UTi Integrated Logistics, and Barloworld Logistics. She has extensive experience working across multiple regions with Pharmaceutical, Automotive and Retail clients, supporting Manufacturers to define their Go to Market Strategies and advising both public and private sector how to secure product in market.  Given her unique experience, she is well positioned to provide go-to market and thought leadership.  She is focused on the 3PL, Distribution and Pharmaceutical / Life Sciences segments with a keen interest in Luminate Control Tower and the value this will unlock in Supply Chain Orchestration.

Blue Yonder ICON: Supply Chains Can Save the World

Learning & Leadership | By •

Blue Yonder ICONAs an analyst at ARC Advisory Group, this is normally my busy travel time of the year. Along with my colleagues Steve Banker and Clint Reiser, I am usually attending a number of industry and customer events across the country. However, this year things are very different; coronavirus is pushing these events to online virtual affairs. Yesterday, I attended Day 1 of Blue Yonder ICON and DEVCON, the company’s virtual user conference initially scheduled to be held in Denver, CO. The theme for the conference was “Supply Chains Can Save the World.” Given everything that is going on today, it is a very apt theme.

Blue Yonder CEO Girish Rishi kicked things off with an opening keynote that touched upon the double meaning of how supply chains can save the world. Rishi noted that we are facing two major issues:

  • The issue of year: COVID-19
  • The issue of the decade: sustainability of our planet

Blue Yonder ICON: COVID-19

Blue Yonder ICONWhen it comes to the issue of the year, Rishi pointed out that when he speaks with customers, they have noted a dynamic shift in their business due to COVID-19. Generally, there was an old way of thinking which has changed dramatically over the past few months. There were two changes that jumped out immediately to me. First, the old way of thinking was that we lived in a buyers’ market. This means that consumers could buy what they wanted, when they wanted, and how they wanted. However, there has been a shift now to a sellers’ market. To this point, according to a Blue Yonder survey of 1,000 consumers, inventory availability now supersedes brand loyalty. The results showed that 89 percent have experienced more out-of-stocks during their most recent grocery shopping experience; 75 percent were more likely to buy the same product from a different retailer if a product was out of stock; and 78 percent were more likely to buy a different brand of a product from the same retailer if their desired brand of that product is out-of-stock.

The second change was the role of e-commerce. According Rishi, Blue Yonder’s customers view of e-commerce has gone from an auxiliary role to a necessity. With less people shopping in stores, e-commerce is growing by leaps and bounds. Rishi identified a number of key innovations that the company is implementing to help with the new nature of global business. Blue Yonder launched its Luminate platform in 2018 and has continued to make enhancements. Rishi announced the company is developing Industry Cloud, which delivers industry specific pre-configured enablement. The Luminate platform runs on Microsoft Azure and Industry Cloud sits on top of the platform. It has specific use cases for different industries, including CPG, High Tech Manufacturing, and Grocery. The portfolio of applications, APIs, and partners are all designed for the specific industry.

Industry Cloud will be available to scale and deploy on one platform. The one I found the most interesting, and most relevant to changing nature of e-commerce, is Luminate Warehouse Tasking. As Rishi pointed out, warehouses see disruptions on a daily and even hourly basis. Luminate Warehouse Tasking overlays on top of the company’s WMS, studies data of disruptions, and builds a machine learning model to autonomously respond to these disruptions. The disruptions could be that a truck is arriving early or late to the warehouse, or a new order comes in that needs to be expedited. This allows for rapid changes to be made and the warehouse to be more agile and efficient.

Another session that spoke to the changing nature of commerce was Plan and Pivot with a Modern, Synchronous Supply Chain Platform. This session featured Desikan Madhavanur, EVP and Chief Product Officer. In his session, Madhavanur highlighted the four themes that are driving the modern supply chain:

  • Cognitive Intelligence with Artificial Intelligence / Machine Learning
  • Responsive Planning
  • Digital Fulfillment
  • Synchronous Supply Chain Platform

Digital Fulfillment was the one that jumped out to me. There are four key initiatives for digital fulfillment. The first initiative is real-time inventory management capabilities. This ensures that organizations are able to look at inventory across the entire network with complete accuracy. The second is order orchestration. Order orchestration starts with figuring out what demand is going to show up and use available inventory to ship accordingly. This matches with real-time inventory to optimally fulfill order from the best location, looking at shipping time and cost associated with the shipping location. The third initiative is WMS for digital flow. This is used to serve new use cases for fulfillment, including pop-up distribution centers, smaller scale urban distribution centers, dark stores, or ship from store scenarios. The final initiative is dynamic logistics. This covers how TMS, last mile, and freight marketplaces all play a role to fulfill the digital requirements for e-commerce fulfillment.

Blue Yonder ICON: Sustainability

The second issue that was discussed at length is what Rishi called the issue of the decade: sustainability. Rishi made it clear that Blue Yonder’s response is to reduce the waste, energy, and costs required to power global commerce. A digital transformation strategy and a new way of thinking are key components to a sustainability strategy. Two customer presentations touched on these components: Lenzing AG and Albertsons.

Robert van de Kerkhof, Chief Commercial Officer at Lenzing AG, a producer of fibers for the textile industry, spoke about the importance of sustainability. He dubbed this time as an era of VUCA: volatility, uncertainty, complexity, and ambiguity. We are dealing with trade wars, climate change, economic uncertainty, imbalanced supply and demand, tougher environmental regulations, and natural disasters. This new normal is creating a difficult position for the textile industry but van de Kerkhof identified what needs to come from leadership during this time:

  • End to end thinking: the focus is on recycling. Today, they are recycling plastic bottles into fibers, but they need to be able to recycle fibers into fibers.
  • Increased commitment to sustainability: corporate goals for reduced carbon emissions and using sustainable energy sources.
  • Transparent and responsive supply chain: many of the top 100 brands are pledging for 100 percent sustainable fibers by 2025; however, most brands do not have enough visibility into sourcing. Luminate control tower provides real-time visibility and potential supply chain impacts for accurate decision making.
  • Partnering for systematic change: the company is focusing on blockchain to increase transparency with consumers and partnering with technology companies to minimize waste from inefficient order patterns.

The second customer presentation that talked about sustainability was from Rucha Nanavati, GVP, IT at Albertsons. In her session, Nanavati identified two components to the company’s sustainability plans: products and planets. On the product side, Albertsons has made the push for its own line of organic food. The O Organics brand has surpassed $1 billion in sales, featuring 1,500 certified organic items. She also said that 100 percent of its O Organics and Open Nature eggs are cage-free. The company has generated more than $2 million for community development from the sale of its organic brands since 2014.

Nanavati also highlighted sustainability plans for the planet. In the company’s more than 500 stores and warehouses, it has completed more than 800 energy efficient projects. Albertsons has recycled more than 705 million pounds of cardboard and 22 million pounds of plastic film, and 100 percent of its private fleet are EPA SmartWay certified for being cleaner and fuel-efficient. It sees Blue Yonder as a key partner moving forward with its sustainability plans.

Blue Yonder ICON: Day 2

Today kicks Day 2 of the Blue Yonder ICON virtual user conference. The theme around the event is “Supply Chains Can Save the World.” Yesterday, this theme rang true from the opening keynote and throughout, as speakers looked at the new reality of commerce and fulfillment in the age of COVID-19. The event also took a look at the longer-term ramifications that come with a sustainability plan to protect the planet. Between the two issues, Blue Yonder showed just how supply chains really can save the world. Tune in for more coverage in the coming days and weeks.

Conflicting Realities in the Face of COVID-19

Logistics Trends | By •

COVID-19The future remains uncertain as the country continues to combat COVID-19. A big question facing the nation is when and how to re-open the economy. While some states are pushing to re-open their economy (or beaches, in the case of Florida), others are cautioning that doing so too early would be socially irresponsible and bad for the economy. The ongoing pandemic has put added strain on the global supply chain, with companies exploring new fulfillment models and business operations. And while some have suggested a leap forward in the future of fulfillment, others have seen unsustainable business practices put in place. In the end, we are seeing a lot of conflicting realities in the face of COVID-19.

The Changing Nature of Fulfillment

One of the most common themes I have seen throughout the coronavirus pandemic is that the advancement of fulfillment technology is occurring at a rapid pace. In the face of COVID-19, companies are relying more on automation and micro-fulfillment centers to get goods to people as quick as possible. As my colleague Clint Reiser pointed out last week, many of the fulfillment effects from the Covid-19 pandemic will remain after the spread subsides.

One area that especially jumps out in is the grocery fulfillment space. As Clint mentions, “the current increase in grocery delivery is occurring at the same time that many restaurants are closed, and most residents are confined to their homes. So, it is likely that overall grocery demand is currently expanding – not just demand for grocery delivery.”

I agree with his last statement, and think that once the economy bounces back, the demand for grocery delivery will see a decrease. One reason for this is that many people like to make their own decisions while grocery shopping when it comes to the produce or meat they will buy. Or, if the store is out of a certain product or brand, they want to make the decision on an appropriate substitute. For this reason, I do not see grocery delivery making a dent on the brick and mortar grocery experience, at least not in the immediate re-opening of grocery stores. Plus, with lines 80-100 people deep to get into grocery stores now, the on-premise demand is clearly there.

There is also the very real possibility that as the gig economy rebounds, there will be less capacity for grocery deliveries. With ride sharing services (Uber and Lyft) seeing ridership levels rapidly decline, these drivers can shift gears and move towards grocery delivery. However, when stay home orders are lifted and people are traveling and moving about more, the demand for drivers will increase, possibly at the expense of grocery deliveries.

Looking at retail in general, over the last few years3 warehouse labor has been harder and more expensive to find, train, and retain. Now, however, even with the economy in recession, large companies such as Amazon and Walmart are hiring tens of thousands of warehouse workers. With unemployment rates rising rapidly, there is now adequate supply to meet demand for warehouse workers. With more warehouse personnel, output can increase. For those companies that are thriving in the online environment, this means they can churn out more orders on a daily basis.

However, once the economy does rebound, that could all change. As more employment opportunities open up, it will be harder for companies to keep warehouse employees. And as more brick and mortar retailers re-open, the demand for e-commerce fulfillment may change.

E-Commerce is Booming

E-commerce is growing by leaps and bounds and has been for quite some time. With the coronavirus pandemic’s impact on brick and mortar retail, e-commerce is especially booming right now. Amazon and Walmart have hired over 200,000 employees to help meet growing demand. But even as e-commerce is growing, the supply chain is becoming more difficult to navigate. Companies have begun halting shipments of non-essential items. Fluctuating air freight capacity has resulted in huge shipment timeframe discrepancies. Available delivery windows for customers are shrinking. Many items ordered online are taking three or four times as long as normal to be delivered. Many products are simply not available due to surges in demand. Price gouging is occurring on marketplaces for household essentials. And the list goes on.

Add to all of this the impact on brick and mortar retail, and the story becomes murkier. Plenty of retailers are trying to whether the storm and are turning dark stores into online fulfillment centers, but this will only last so long. The retail industry should be preparing for its busy season – back to school through the holidays. However, the 2020 back to school season is in jeopardy due to plunging imports at American ports. According to a report by the National Retail Federation (NRF) and Hackett Associates, imports at container ports for major American retailers fell to the lowest level in five years in March. Then again, the thought of back to school has taken on a whole new meaning. Yesterday, my home state of Massachusetts ordered all public and private schools to remain closed for the remainder of the school year, joining 34 other states that have either ordered or recommended the same. There is a lot of uncertainty as to whether the school year will start virtually in the fall.

Alcohol Sales are Soaring

Another area where sales are booming is alcohol. Liquor stores were deemed an essential business and allowed to remain open across the country. In the third week of March, alcohol sales shot up 55 percent compared to the same timeframe in 2019. Ready to drink cocktails and spiked seltzers and lemonades saw the largest surge, with sales up 106 percent. This was not surprising, as the timeframe coincides with many stay home orders across the country. It should also be noted that bars and restaurants were closing for sit-down service, so retail alcohol purchases were likely to feel a bump.

But one area that is being overlooked is craft breweries. While beer sales at liquor stores increased during this timeframe as well, the craft beer industry is facing an uphill battle. Many have looked at new ways to fulfill orders, including curbside pickup and home delivery. In Massachusetts, these were two options that I certainly did not consider a possibility a few months ago given our strict alcohol laws. But now, many breweries are hoping that these fulfillment services can keep them afloat. The problem is that the majority of craft breweries rely on their tap rooms for the majority of their sales. With tap rooms closed, the industry is facing a scary time. According to one survey I saw earlier this week, up to 60 percent of craft breweries could close in the next few months. That is a sobering thought.

Final Thought

As COVID-19 keeps a grip on our supply chain and economy, the news alternates from bad to less bad, and most often, somewhere in between. There are conflicting realities for what the future holds. While fulfillment advances are happening, will they remain in place once we move beyond coronavirus? E-commerce is booming and more consumers are turning to the web than ever before. However, this is not entirely a choice, as many businesses considered non-essential have been forced to close. Will they re-open, and if they do, will the customers come back? These questions apply to many industries and only time will give us the answers. Hopefully that time comes sooner rather later.

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