This Week in Logistics News (March 30 – April 3, 2015)

Okay, so Netflix isn’t really developing a show about logistics called D is for Drones, but it does have drones on the brain, as this video the company produced last year for an internal staff meeting shows:

Maybe my post will serve as an inspiration for Netflix to take my original series idea and run with it. Until then, here’s the supply chain and logistics news that caught my attention this week:

There were a lot of press releases issued on April Fools’ Day, but this one was no joke: LLamasoft announced that it acquired IBM’s LogicTools supply chain applications business unit, which includes the LogicNet Plus, the Inventory and Product Flow Analyst and the Transportation Analyst products as well as the related technology and support team. LLamasoft already offers similar, competing products, such as Supply Chain Guru, but this acquisition was more about expanding the company’s customer base and community of supply chain designers than about gaining new software functionality. As LLamasoft’s CEO Don Hicks said in a letter to LogicTools customers:

Supply chain design is a people business, pure and simple. The answers will never be automated. As a designer, you need to have access to other companies, other teams, and other people tackling similar problems. In short, supply chain designers absolutely need a community to support their continued growth and development. We’ve spent years building just such a community. Now it is my pleasure to welcome you [LogicTools customers] as full members to your new global LLamasoft community of supply chain designers.

This acquisition is a win for LogicTools customers. Simply put, they will get more focused attention and support from LLamasoft, which is focused solely on Supply Chain Design, than they have over the past few years from IBM, which had spread itself too thin with various acquisitions and is now in the process of divesting itself of some solutions (see news from last September about Kewill acquiring the IBM® Sterling Transportation Management System).

As expected, LLamasoft said that it will continue to support all LogicTools products and will not force customers to switch to its existing solutions. In fact, the company plans to release new versions and updates for all three LogicTools software products this year, and it expects to preview a LogicNetPlus Version 8 at SummerCon in June. 

Bottom line: If one of my predictions for 2015 comes true — that more companies will start treating Supply Chain Design as a continuous business process instead of a standalone project or a once-a-year exercise — then this acquisition strengthens LLamasoft’s ability to exploit this growing market opportunity.

Amazon introduced Amazon Dash Button this week, which could have been an April Fools’ joke, except it wasn’t. Here’s the video showing what Dash Button is all about:

Is this a solution in search of a problem? What if you prefer to buy private-label products instead of the big brands? Will you bother to replace the batteries in these buttons when they run out? Will the Dash Buttons join the Internet of Lost Things?

You’ll either think Dash Button is a brilliant idea or another of Amazon’s foolish diversions (see my commentary on Why Amazon Dash Won’t Work for My Family). But succeed or fail, it points to a larger trend that is very real: the way we shop is changing, and the list of devices that enable e-commerce transactions will continue to grow, from smartphones, tablets, and kiosks today to appliances in the not-too-distant future. For example, see related Amazon announcement about its Dash Replenishment Service that “enables connected devices [like Whirlpool washers and dryers, Brita water pitchers, and Brother inkjet printers] to order physical goods from Amazon when supplies are running low.” 

Finally, Walmart is looking to cut costs, and not surprising, it’s putting more pressure on suppliers. As reported in the Wall Street Journal:

The retailing behemoth says it has been telling suppliers to forgo investments in joint marketing with the retailer and plow the savings into lower prices instead…While lowering prices by shaving down marketing budgets may help Wal-Mart draw more customers, it gives suppliers less control over how their products are displayed or promoted, and less ability to make them stand out against store brands or other rivals. That is an issue when Wal-Mart and other chains are trumpeting their private-label house brands.

Walmart has always been tough on suppliers, especially about price. It was arguably easier for suppliers to accept the squeeze when Walmart was only their largest customer, but now that the retailer is a growing competitor too with its private-label brands, the situation is a little more tricky and painful. Walmart needs to tread carefully here or it will fall into the same trap others fall into when they become hyper-focused on cost reduction: they achieve short-term benefits on the backs of their suppliers, then see those benefits erode over time as their suppliers cut corners, suffer, and/or fail. For related commentary, see Nothing Easy About Supplier Relationship Management.

Walmart is also ending free home shipping in Canada for orders of less than C$50 ($39.41) before taxes. According to BloombergBusiness:

Home delivery under that price will cost C$4.97. Deliveries to a “Grab & Go” locker at a store or to a post office will remain free, the Bentonville, Arkansas-based retailer said.

“Shipping is very expensive in Canada,” Alex Roberton, Wal-Mart’s director of corporate affairs, said in an e-mail Monday. “As a result of the rapid growth of, we are now at a point where it is necessary to apply variable shipping fees, which we are working to do in a fair and democratic way.”

Guess what? Shipping is never free, and it’s expensive in the U.S. too, which is why many retailers are still experimenting with their shipping and delivery options.

And with that, have a happy weekend!

Song of the Week: “Hold On” by KT Tunstall

Note: LLamasoft is a Talking Logistics sponsor