This Week in Logistics News (October 14-18, 2013)

By Adrian Gonzalez

Several years ago, I interviewed CIOs and IT executives from leading third party logistics (3PL) companies, and one of the most interesting findings was that their teams spent a majority of their time fixing and cleansing data. I’m sure if I conducted those interviews again today, the story would still be the same. Therefore, I wasn’t surprised by an article in today’s Wall Street Journal about how faulty data is hindering the HealthCare.gov rollout. Here’s a quote from the article:

“There are some missing data elements that are requiring a lot of research on our part,” said Allan Einboden, [Scott & White Health Plan’s] chief executive. “If we’d received 5,000 [applications] and they all had to be worked, that’s a lot of extra administrative costs,” said Mr. Einboden, who said he expects the problems to be fixed.

Sounds like a typical day in supply chain and logistics to me.

In other news…

The spotlight is starting to shine on home delivery, as retailers and others look for ways to execute on their omni-channel fulfillment and same-day delivery strategies. This week, Descartes Systems Group announced the launch of its updated home delivery solution, which includes Descartes Reservations™ for delivery appointment scheduling; Descartes Route Planner™ for route optimization, dispatch and tracking; Descartes Mobile™ for wireless communications and mobile applications; and Descartes Notifications™ for automated call-outs. According to the press release:

Descartes Route Planner is unique in that it supports same- and next-day delivery, tight delivery time windows and “white glove” services planning for consumers, while offering retailers “profitable choice” home delivery options. “Profitable choice” allows retailers to increase their revenue through premium delivery windows and value-added services, while reducing costs by offering delivery options that reduce delivery route mileage. The solution includes real-time delivery appointment scheduling, route optimization and execution, mobile applications and notification services, and is available in cloud-based or on-premise configurations.

The press release mentions Restoration Hardware as a customer. Another customer is John Lewis Partnership, which is featured in a case study video. The main challenge with home delivery is doing it profitably (see Webvan), while providing customers with delivery options at the point of sale that are reasonable and reliable — unlike the option I was given recently by a delivery company: “We’ll be there on Tuesday between 8:00 am and 5:00 pm,” and when I asked if the driver could call me on Tuesday when he had a better sense of when he would arrive, the answer was no. What are the odds I’ll use them again?

Years from now, when we look back at 2013, we might say this was the year where logistics truly became a strategic weapon for companies. Earlier this week, for example, I commented on the partnership between Amazon and P&G, where Amazon has set up operations inside P&G warehouses to fulfill online orders. And Steve Banker commented on Amazon and Walmart from an omni-channel fulfillment perspective. Also this week, The Detroit News and others reported that “Wal-Mart Stores plans to open more small stores as it links them to its supercenters, which will serve as mini-warehouses for their smaller cousins [emphasis mine].”

Simply put, retailers and others are taking a fresh look at their supply chain networks (and those of their partners) to better balance inventory and transportation costs with service levels that are becoming more stringent. As a result, the answers to “What is a warehouse?” and “What is a transportation provider?” are changing — and if you’re not asking those questions, you’ll likely get left behind.

As the holiday season heats up, some interesting findings related to free shipping and mobile commerce from Shop.org’s eHoliday survey conducted by Prosper Insights & Analytics. Here are some excerpts from the press release:

16.3 percent of retailers will offer their first holiday free shipping offer by the week of October 28; more than one-third (34.9%) say they already offer year-round free shipping, compared to 23.1 percent last year.

Knowing that consumers increasingly use their smartphones and tablets to research and purchase products, retailers have prepared accordingly. More than half (57.4%) have invested in optimizing their mobile websites, nearly four in 10 (38.3%) have invested heavily in the smartphone user experience, and one-quarter (25.5%) say they invested in mobile commerce apps for smartphones.

It’s no secret that many of our roads and bridges are in disrepair, but what impact is that having on your transportation budget? An article in the Wall Street Journal this week provides some insight:

Trucks ship the bulk of the country’s goods. But trucking companies and their customers complain those shipments are being rerouted—sometimes by hundreds of miles—or traveling at lower speeds over deteriorating or traffic-clogged highways. That causes higher costs for fuel, maintenance and other expenses, including drivers.

Donald Maier, senior vice president of global operations for Lancaster, Pa.-based Armstrong World Industries, which makes floor and ceiling tiles… said fully loaded truck trailers traveling to or from its Marietta, Pa., ceiling tile plant will have to use a 25-mile detour, mostly to avoid a two-lane state highway bridge over a tributary of the Susquehanna River that will no longer be rated to accommodate fully loaded heavy-duty trucks. Armstrong projects the additional miles will add about $200,000 to $300,000 a year to the Marietta plant’s transportation costs [emphasis mine].

And these costs will ultimately trickle down to you and me — on top of the increased maintenance and repair costs we’re incurring on our own cars.

Finally, if you’re attending the CSCMP Annual Global Conference in Denver next week, please stop by the sessions I am participating in and say hello. It should be a great week of learning and networking.

Have a happy weekend!

Song of the Week: “If I Can Dream” by Elvis