This Week in Logistics News (May 11-15, 2015)

According to a survey of 2,000 office workers conducted by management software developer AtTask and market research firm Harris Interactive, people spend 45 percent of their time at work doing this. Can you guess? Answer at the end of the post.

In this week’s supply chain and logistics news…

E-commerce without logistics is like a bicycle with no wheels: it won’t go anywhere. Much has been written about Amazon’s logistics network and capabilities, but Alibaba is beefing up its capabilities too, especially as the company aims to expand globally. This week Alibaba announced that it has taken a minority stake in Shanghai YTO Express (Logistics) Co., Ltd, one of China’s leading logistics companies. According to MarketWatch:

YTO Express is one of 14 logistics partners that work closely with Cainiao, the logistics affiliate of Alibaba Group. Cainiao and YTO Express will work together to enhance the industry’s logistics management capabilities and international and rural delivery services. This will in turn raise the bar on service quality and user experience for merchants, consumers and logistics companies.

Speaking of e-commerce and logistics, Walmart is reportedly launching a service similar to Amazon Prime, which will offer free, three-day shipping to members for $50 per year (half of the price of Amazon Prime). The yet-to-be-named service, however, will not offer (at least not initially) the other perks Amazon Prime provides, such as free streaming video and music. According to TechCrunch:

The shipping service will be offered to select customers on an invite-only basis starting this summer, offering more than 1 million products for free delivery in three days or fewer.

The idea with this forthcoming Amazon Prime alternative, however, is not necessarily to test whether customers want fast, free delivery (Prime has proven that they do) but whether Walmart could interest them in the option at a lower-price point.

In particular, Walmart is determined to test the theory that what appeals to customers the most is not the speed of Amazon’s service or the newer “same-day” services now gaining traction, but the reliability of these options. That is, you know with Prime your orders will arrive in two days. For half the price (Prime is now $99/year), would customers wait an extra day?

I believe Walmart’s service will appeal to a subset of the market, and having something to compete with Prime is better than having nothing. But as a Prime member who likes to stream a lot of free movies and music, the extra $49 per year is totally worth it for me and I suspect the same is true for many other Prime members. Nonetheless, free shipping remains the core value proposition for consumers, and providing it profitably remains the core challenge for Amazon, Walmart, and other retailers.

The buzz about drones and Amazon continues, with details released this week about the company’s patent filing. Here’s the abstract:

This disclosure describes an unmanned aerial vehicle (“UAV”) configured to autonomously deliver items of inventory to various destinations. The UAV may receive inventory information and a destination location and autonomously retrieve the inventory from a location within a materials handling facility, compute a route from the materials handling facility to a destination and travel to the destination to deliver the inventory.

What grabbed the headlines is the “Bring It To Me” delivery option described in the patent:

In addition to selecting a delivery method, the user may choose a delivery location. With the implementations described herein, a user now has the ability to choose “Bring It To Me”. With this option, the actual location of the user is determined and the UAV delivers the item to the current location of the user. The current location of the user may be based on, for example, a determined location of a portable device (e.g., mobile phone) associated with the user, the location of the network utilized by the user when placing the order, etc. For example, the user may identify their current location by allowing Global Positioning System (“GPS”) data to be provided by their mobile device. Alternatively, if the user is connected through a wireless network (e.g., cellular, Wi-Fi, satellite), the location of the network may be determined and used as the current location of the user.

The bottom line for me: there is no lack of imagination when it comes to drone delivery, just a lot of hurdles to overcome to make it happen. As I and the other panelists at the Transplace conference concluded, 3D printing and driverless trucks will likely have a more immediate impact on supply chain and logistics processes over the next five years than drones. But as history has shown with other tech predictions, we could also be terribly wrong.

In technology news, Manhattan Associates announced “an agreement with Microsoft Corp. that will enable the deployment of many of Manhattan’s industry-leading Supply Chain Commerce solutions in the cloud with support for Microsoft Azure.” Here’s a quote by Jeff Cashman, senior vice president, Manhattan Associates, from the press release (emphasis mine):

“Enterprises in today’s digital world require the ability to achieve scale quickly and make fast, meaningful decisions from point-of-sale in the store to supply chain operations. Manhattan Associates understands business leaders are increasingly prioritizing the cloud to drive efficiencies. The expansion of our relationship with Microsoft is another demonstration of our commitment to provide more options for our customers and meet the demands of a competitive marketplace.”

As I wrote back in February in The Cloud Opportunity Many Are Overlooking, while lower upfront costs and faster time-to-value are real and significant benefits of cloud deployments, there is an even bigger opportunity and value proposition that many users still don’t get, especially when it comes to cloud solutions focused on supply chain, logistics, and other cross-enterprise business processes. Simply put, the big cloud opportunity is less about the software and how it’s paid for and more about the network — that is, the community of companies linked together on a common platform, much like people are on Facebook and LinkedIn, and the business intelligence and analytics possible with all the data flowing through the network.

And with that, have a happy weekend!

Oh, what do we spend 45 percent of our time at work doing? Our primary job duties. We spend the other 55 percent on email, administrative tasks, attending wasteful meetings, and other things.

Song of the Week: “Ship To Wreck” by Florence + The Machine