Nothing says “Happy New Year” like a Nor’easter. It’s 1 degree outside (-20 degrees with the wind chill) and 12+ inches of snow cover the ground — and it’s still coming down. So, before I bundle up and head outside to shovel out, let’s go to the news that caught my attention the past two weeks:
- Behind UPS’s Christmas Eve Snafu (WSJ – sub. required)
- Retailers blend stores, e-commerce to snag holiday stragglers (Reuters)
- Macy’s, Inc. to Build Major New Fulfillment Center in Tulsa County, Oklahoma, to Support Omnichannel Growth
- Descartes Acquires Compudata
- Descartes Acquires Impatex
- FAA Authorizes Commercial-Drone Testing (WSJ)
- Rolls-Royce leads drive for drone ships (FT.com – registration required)
- Self-driving cars to be 9 percent of global auto sales in 2035 (Reuters)
By now, you probably already know that UPS failed to deliver numerous packages before Christmas due to a surge in online orders that outstripped its fulfillment capacity, especially air capacity. What was my initial reaction when I read the news? This is what happens when consumer instant gratification meets the physical realities of logistics.
For most online shoppers, logistics is a black box — they click “Buy” on the website, and a day or two later, a box arrives at their house or office with their order. But unlike digital products like e-books and music that you can download instantly, physical products have to be picked, packed, and shipped, and they have to travel on airplanes, trucks, and other transportation modes that move infinitely slower than electrons flowing through the Internet, especially when they encounter storms, traffic jams, accidents, and other real-world disruptions. Simply put, until teleportation is developed and/or 3D printing significantly improves, the process of getting a product from point A to point B will continue to be limited by the laws of space and time — and, occasionally, by Murphy’s Law too.
It’s easy to blame UPS for getting the forecast wrong and not having enough capacity in place to meet demand. But isn’t that a reality of supply chain management: the forecast is always wrong. Retailers also have to accept responsibility for creating ever-more unrealistic expectations. The margin for error is almost zero when you let consumers order by 11 pm December 23rd and promise them next day delivery. And consumers aren’t without fault either. If you wait until the last few days before Christmas to buy a gift, you’re playing with fire if you have it shipped. Just go to a store and buy the gift — or buy it online and pick it up at a nearby store, which many brick-and-mortar retailers are enabling (see Macy’s press release above, as well as the Reuters article).
Moving on to other news, Descartes announced two acquisitions right before Christmas: Compudata, a provider of B2B supply chain integration and e-invoicing solutions based in Switzerland, and Impatex Freight Software Limited, a provider of electronic customs filing and freight forwarding solutions based in the UK. Descartes paid about $17.9 million for Compudata and about $8.3 million for Impatex. Here are some additional details from the press releases:
Compudata brings more than 500 customers to Descartes’ Global Logistic Network, with the majority of these in Switzerland. Compudata’s wider community includes a significant number of retailers and suppliers that will now join Descartes’ logistics community, presenting additional opportunities for trading partners to collect and share logistics data earlier in the business process – from purchase order to loading dock door.
Impatex brings more than 200 freight forwarder customers to Descartes’ Global Logistic Network, with the majority of these in the UK. By combining Impatex’s leading UK customs and forwarding solutions with Descartes’ global community of logistics participants and logistics management solutions, customers now have a single trusted partner to help them manage their shipments across the globe.
These acquisitions are consistent with many others Descartes has made in recent years, as the company continues to expand its Global Logistics Network by buying niche B2B connectivity and global trade management solution providers around the world.
Descartes’ GLN is an example of what I call a Supply Chain Operating Network, and one of my predictions for this year is that Supply Chain Operating Networks will introduce enhanced network-based analytics and social networking capabilities. Generally speaking, the first phase of Supply Chain Operating Networks was about connecting companies and computers together to facilitate the timely and accurate flow of data and documents between trading partners. The next phase is about facilitating communication and collaboration between supply chain and logistics professionals — the people side of supply chain management. And it’s about providing these professionals with network-based business intelligence and analytics to help them make smarter decisions faster.
For related commentary, watch my recent Talking Logistics episode with Chris Jones from Descartes where we discuss Collaboration in the Network: The What, How, and Why.
Drones were a hot topic in 2013, especially after Amazon demonstrated its Amazon Prime Air drones on 60 Minutes last November. Of course, before Amazon or any company can use drones for commercial purposes, the Federal Aviation Administration needs to develop some regulations and guidelines. The FAA took a first step this week by selecting six sites to begin commercial-drone testing: the commerce department of North Dakota; the state of Nevada; a public airport some 250 miles north of New York City; the University of Alaska; Texas A&M University in Corpus Christi; and a partnership between Virginia Tech and Rutgers University. Here are some details from the WSJ article:
Under the six operators chosen by the Federal Aviation Administration, research will be conducted by industry experts and academics on the safe operation of drones, or unmanned aerial vehicles, across a broad array of geographical areas, climates and types of airspace. The work is expected to target everything from federal certification of the safety of commercial drones to the reliability of air-to-ground communication links to verifying a generation of new, lower-cost sensors designed to avoid midair collisions.
The FAA, however, stopped short of committing itself to a specific timetable for permitting widespread use of unmanned commercial aircraft across U.S. skies.
But why should our skies and roads have a monopoly on drones, why not our oceans too? That’s the question the folks at Rolls-Royce are asking. According to a FT.com acticle:
The UK engineering group, one of the world’s largest suppliers to the commercial shipbuilding industry, has called for a public debate on the switch from crewed cargo vessels to autonomous ships as part of a wider drive by industry to use advanced automation technology.
“The idea of a remote-controlled ship is not new, it has been around for decades but the difference is the technology now exists,” said Oskar Levander, head of marine innovation engineering at Rolls-Royce.
It will take at least a decade for robo-ships to hit the seas — if at all — due mostly to regulatory issues. But my prediction is that the robots will keep coming — and faster than we think.
Speaking of robots, shoveling my driveway and sidewalk is one job I wouldn’t mind losing to a robot. But until then, it’s time to put on my hat, coat, and boots and shovel the morning away.
Have a happy weekend!
Song of the Week: “The Walker” by Fitz and The Tantrums