This was a relatively quiet week for supply chain and logistics news, which is typical for August, so let’s go straight to it:
- Macy’s expands same day delivery to 17 cities as it challenges Amazon (Reuters)
- New Capabilities in JDA Flowcasting Attack the Toughest Retail Forecasting Challenges
- Cargo Chief Cracks the Code on Transportation Capacity
- Freight Startups Attract Silicon Valley’s Attention (WSJ – sub. req’d)
- XPO Logistics Announces Second Quarter 2015 Results
Same-day delivery makes the news again. Last week, the big news was that eBay shut down its same-day delivery service eBay Now. This week the big news is that Macy’s is expanding its same-day delivery service to nine additional markets (for a total of 17 markets) for products purchased online at macys.com, bloomingdales.com and on both brands’ mobile-enabled websites. According to the press release:
“When we piloted same-day delivery in eight markets initially last fall, we learned that our customers appreciate the additional option of having their purchase brought to their home or office in a matter of hours. It is an important part of our value proposition as an omnichannel retailer serving customers who shop our stores and websites whenever, wherever and however they prefer,” said R.B. Harrison, Macy’s, Inc. chief omnichannel officer. “Our ability to expand same-day delivery is rooted in local merchandise inventories at Macy’s stores, as well as a newly expanded delivery footprint of our partners at Deliv [emphasis mine].”
Same-day deliveries to customers are powered by Deliv, a rapidly growing crowdsourced delivery provider, in collaboration with major mall owners, including General Growth Properties, Macerich, PREIT, Simon Property Group, Taubman Centers and Westfield Corporation.
The charge for same-day delivery from macys.com or bloomingdales.com is a flat $5 above standard ground shipping fees.
Sounds easy, doesn’t it? But the ripple effect of same-day delivery on inventory management, store operations, and IT is anything but trivial. To make same-day delivery work, Macy’s needs to have accurate, real-time visibility to store-level inventory; it needs to develop efficient pick, pack, and staging processes at its stores; it needs to train its store associates on these new processes; and it needs to communicate and collaborate effectively with Deliv, which has its own set of challenges related to creating efficient, reliable, and profitable delivery routes.
Apparently, the results of the pilot program were encouraging enough to justify a broader roll-out, but I’m not convinced Macy’s or any other retailer has fully figured out yet how to make same-day delivery a profitable service, at least beyond large metropolitan areas — and in this case, the onus for profitability falls heavily on Deliv. In other words, as Deliv goes, so goes the success of Macy’s same-day delivery service.
In technology news, JDA Software announced new capabilities in JDA® Flowcasting™ that were developed “to drive enhanced forecasting accuracy and ultimately improve profit margins in today’s omni-channel selling environment.” The enhancements include new guided resolution workflows that support fast action for exceptions; improved promotion forecasting and replenishment accuracy; and more precise forecasting for slow-moving products. The press release includes more details, but the following quote by Fred Baumann, group vice president at JDA, sums up the value proposition:
“Retail forecasting and analysis teams are faced with many challenges in the current omni-channel selling environment. They need to precisely estimate the demand for fast-moving promotional items, while also accurately predicting sales trends for slow moving SKUs, quickly identify and attack the root cause of forecasting exception errors, so that profitable stocking levels can be achieved going forward. Recognizing that forecasting and analysis teams don’t have a lot of time on their hands, JDA has significantly invested in new capabilities in JDA Flowcasting that directly address these challenges.”
Finally, the list of startups looking to disrupt the freight brokerage and freight forwarding markets continues to grow. For example, there’s Cargo Chief, which issued a press release this week on how it is “cracking the code on transportation capacity.” From the press release:
[Cargo Chief’s] proprietary technology leverages its vast network of 500,000 available trucks/carriers to locate hard-to-source capacity for shippers from an aggregated carrier search on www.cargochief.com.
Cargo Chief’s patented technology accurately identifies the optimal carrier for each specific load and determines capacity opportunities for truckload, less-than-truckload, flatbed, intermodal, and refrigerated freight. As well, Cargo Chief locates cost-saving empty—or partially empty—available backhaul from in-service carriers.
Meanwhile, Erica Phillips at the Wall Street Journal wrote an article this week on how “investors are funding dozens of startups with plans to take the low-tech business of arranging cargo shipments online, in a race to become the Expedia of freight forwarding.” Examples include Flexport, which recently received $20 million in funding, and Freightos, which has received $9 million in venture funding.
No doubt, the freight forwarding industry can use a technology upgrade, but as history has shown, it takes more than technology to disrupt the transportation industry — there also needs to be a mindshift by all stakeholders, especially shippers, to move away from “the way we’ve always done things.”
And with that, have a happy weekend!
Note: Talking Logistics is going on holiday and will not publish next week. We’ll be back on August 17.
Song of the Week: “Holy Dove” by Civil Twilight