This Week in Logistics News (September 3-7, 2018)

I joined Snapchat this week. Not because I really wanted to, but because it’s the only way I can communicate with my daughter in college. I tried calling, texting, and emailing her, but she doesn’t respond via those channels. Send her a snap, however, and she gets back to you fairly quickly.

I have to admit, Snapchat is fun to use. However, if you’re not careful, you can easily kill an hour playing around with all the filters. Here I am doing my standard Talking Logistics intro through one of my favorite filters:

How awesome would it be to discuss blockchain or the capacity crunch in transportation using this filter for an entire episode? Anybody want to join me as a guest? I’ll put it on my “Ideas for 2019” list.

In the meantime, here’s the supply chain and logistics news that caught my attention this week:

The New First Moment of Truth: Can We Ship It Profitably?

The first moment of truth in retail, as coined in 2005 by former P&G President and CEO A.G. Lafley, is when a consumer is looking at a product on a store shelf or online. Being out of stock, therefore, prevents this moment from happening and you miss the sale. Even worse, you may drive the consumer to a competing retailer to buy the product or the brand may lose the customer for life if they buy a competing brand and end up preferring it.

In this age of free shipping, it seems that for online orders, there’s a new first moment of truth: can we ship it profitably?

At least that’s the case for Walmart, which according to an article in the Wall Street Journal, “has begun telling online shoppers that some products in its warehouses are ‘out of stock’ after the retailer changed its e-commerce systems to avoid orders deemed too expensive to ship.”

Here are some additional details from the article:

The change means that a bottle of detergent or can of cat food stored too far away from a customer’s shipping address will be unavailable for purchase. Previously, the retailer would ship those items, regardless of distance or shipping cost.

Under the new system, suppliers will have to stock their products at more Walmart warehouses around the country to keep sales steady, according to an executive at a large food company.

The shift is part of a test, Walmart said, to see if it can deliver more products via ground shipping, a cheaper option than air shipping, in two days or less. It also aims to reduce what it calls split shipments — online orders that arrive in multiple packages from different warehouses, according to Ravi Jariwala, a company spokesman.

This is yet another example of how retailers and manufacturers are trying to find the right balance between delivering an enhanced customer experience and finding the optimal mix of inventory, transportation, and labor costs. Walmart’s aim to reduce shipping costs means suppliers have to ship inventory to more locations, which adds cost and complexity to their operations.

One of the big issues is that most fulfillment networks are still designed around shipping pallets and truckloads to stores, which is why retailers and manufacturers (at least the very large ones) are investing heavily to transform their networks. In the meantime, they’ll just kluge things together, like telling customers an item is ‘out of stock’ when it really isn’t; it’s just too far away to ship profitably within two days.

Spark Delivery: Walmart’s Crowd-Sourced Delivery Platform

We want everything delivered to us, whether it’s groceries, a new mattress, or our lunch, and we want it delivered this afternoon or tomorrow at the latest. The only problem is that the traditional delivery companies (FedEx, UPS, USPS) don’t have the capacity or capabilities to keep up with this rising demand, so you have a bunch of startups like Deliv and Postmates filling the void. But even that is not enough, so you have Amazon, Walmart, and Target investing in their own delivery capabilities too.

This week Walmart announced Spark Delivery, “a crowd-sourced delivery platform that allows Walmart to learn even more about the full last-mile delivery process.” Here are some details from the press release:

The pilot uses an in-house platform that provides drivers with the ability to sign up for windows of time that work best for their schedule as well as Grocery Delivery order details, navigation assistance and more. Components of Spark are powered by Bringg, a leading delivery logistics technology platform. Walmart’s team of personal shoppers are an important component of the overall process as they meticulously shop for customers’ orders. Spark Delivery engages the services of independent drivers who partner with Delivery Drivers, Inc, a nationwide firm who specializes in last-mile contractor management, to complete deliveries.

Will the day come when all of us will have a side gig as a delivery driver, getting paid to deliver our own orders to ourselves?

And with that food for thought, have a happy weekend!

Song of the Week: “All My Friends” by The Revivalists