This Week in Logistics News (April 20-24, 2015)

By Adrian Gonzalez

Lots of supply chain and logistics news this week, so let’s go straight to the items that caught my attention:

Why not get packages delivered straight to the trunk of your car? Somebody asked that question at Amazon, DHL, and/or Audi and the three companies are testing it out. According to USA Today:

Beginning next month in Munich, Audi owners can use their cars’ onboard infotainment Connect system to allow temporary authorization to DHL personnel to deliver items ordered through Amazon Prime via one-time keyless access to a vehicle’s trunk.

By saying OK to GPS-based tracking during a specific delivery time frame, you trigger a digital access code for the DHL driver that unlocks the participating Audi’s luggage compartment. Once the parcel is deposited in a customer’s car and the trunk is shut, entry is no longer granted.

The burden of making this delivery option feasible — that is, executable in a cost neutral or profitable manner — ultimately falls on DHL. The company will have to know in advance where the car will be located on the specified delivery date so that it can incorporate the location in its routing plan for the day.

Nonetheless, when it comes to e-commerce delivery, the ideas and experimentation continues. However, I keep wondering: Are these all solutions in search of a problem?

In other Amazon news, the company for the first time reported revenues for its Amazon Web Services (AWS) business: $4.6 billion in 2014 and sales are expected to reach $6.23 billion by the end of this year. AWS revenues grew 49 percent in Q1 2015 compared to Q1 2014, while the rest of its North America business grew 22 percent. And the business is profitable. “These numbers are important,” writes Cade Metz in Wired. “Though Amazon made its name selling consumer goods, its retail operation is covered in red ink. In the cloud, on the other hand, Amazon is both powerful and profitable. In the future, Amazon may be a cloud company with a retail site rather than the other way around.”

If you’re looking for something to analyze and discuss at your next team meeting, how about this quote from Amazon CEO Jeff Bezos:

“Born a decade ago, AWS is a good example of how we approach ideas and risk-taking at Amazon. We strive to focus relentlessly on the customer, innovate rapidly, and drive operational excellence. We manage by two seemingly contradictory traits: impatience to deliver faster and a willingness to think long term.”

Focus Relentlessly. Customer. Innovate Rapidly. Operational Excellence. Impatience. Deliver Faster. Think Long Term. Those are the pieces of Amazon’s puzzle. Are they in yours?

On the drones front, UPS announced that it participated in a multi-state study on the use of drones for humanitarian disaster relief operations. According to the press release:

UPS assessed different scenarios where drones could be utilized for delivery to difficult-to-reach locations, as well as potential deployment considerations of such usage, regulatory implications and safety protocols….UPS examined data obtained under different test scenarios during a drone demonstration in Disaster City, Texas, facilitated by Texas A&M University on March 26, 2015. The demonstration evaluated drone platforms for key operating characteristics, ranges and payloads, while simulating various relief and flight scenarios.

Simply put, while there’s a lot of hype and buzz about the potential use of drones for e-commerce deliveries, the more realistic and near-term applications for drones will be in developing countries (where roads do not exist or are flooded or impassable half the time), and in specialized situations such as disaster relief. For related commentary, see Drones – The Birth of a New Transportation Mode.

In the warehouse automation realm, Swisslog announced that it has acquired FORTE Industries, a warehouse automation system integrator based in Mason, Ohio. According to the press release:

FORTE plans, designs and implements material handling automation systems with its warehouse execution software (WES) as the core of each solution.

FORTE’s expertise in conveyor systems, case and piece picking, and sortation solutions, particularly in the e-commerce and multichannel retail segment, will strengthen Swisslog’s offering in North America. The FORTE customer base extends across multiple vertical industries and will enhance Swisslog’s offering to both E-Commerce and Pharmaceutical segments.

Finally, JDA developed a Supply Chain For Dummies® e-book that “provides basic supply chain definitions and offers an overview of the manufacturing, distribution and retailing functions. It also discusses timely topics such as the emergence of the omni-channel marketplace and its impact on the end-to-end supply chain.” You can download the book for free for a limited time, which I just did and plan to read on my way to JDA FOCUS 2015 this weekend.

What is the shelf life of a supply chain management book? I’ve been asking executives that question for the past few years and the general consensus is about two years. Sure, there are certain fundamentals of supply chain management that are timeless, but when you consider the rapid and ongoing changes in technology, business models, economic conditions, government regulations, and a variety of other factors, it’s clear that “the book on supply chain management” is constantly being revised, with new chapters being written all the time.

Nonetheless, I applaud all efforts aimed at educating students and professionals about supply chain management, and I look forward to reading this book and discussing it next week with the conference attendees.

And with that, have a happy weekend!

Song of the Week: “Heaven” by The Psychedelic Furs