This Week in Logistics News (September 24-28, 2018)

Since I’ll be speaking in three sessions at next week’s CSCMP Edge 2018 conference, I’ll be busy today finalizing my preparations. It’s also the end of the month and the end of the quarter, which means I need to put on my finance and payroll hats later today to complete those administrative tasks.

And it’s dark and raining outside.

So, without further delay, here’s the supply chain and logistics news that caught my attention this week:

Walmart and Sam’s Club Suppliers: Thou Shalt Use Blockchain

When you’re an 800-lb gorilla in the industry, you get to dictate. It doesn’t mean that you should or that it’s right, it just means that you can. Except for the RFID mandate almost twenty years ago, when Walmart mandates something, suppliers have little choice but to comply.

As reported by Bloomberg this week, “starting in September 2019, Walmart and its Sam’s Club division will require suppliers of fresh, leafy greens to implement real-time, end-to-end traceability of products back to the farm using a digital ledger developed by [IBM]. The world’s largest retailer plans similar mandates for other fresh fruit and vegetable providers within the next year, according to Frank Yiannas, vice president of food safety.”

“It’s becoming a business requirement, it’s a part of our supplier agreements,” Yiannas said in an interview. The goal is to speed up response times in case of food-borne illnesses and recalls.

There’s a strong business case, for both retailers and suppliers, for using blockchain for food safety and traceability (see the outbreak of E. coli connected to romaine lettuce earlier this year that led to five deaths and over 200 people getting sick). So this mandate might be easier to swallow for suppliers.

This is a big win for IBM. This mandate will force more than 100 companies to use its blockchain platform, with more on the horizon as Walmart expands the mandate to suppliers of other food categories. In essence, blockchain is a network model, so the more trading partners on the network, the more valuable it becomes for everyone connected to it.

But you know what’s going to happen: Amazon will choose a different blockchain platform, Target will choose yet another one, and suppliers will ultimately have to connect with multiple, different blockchain networks. So even though blockchain is a new technology, you end up with the same challenge as always: enabling interoperability between networks, which means coming up with standards (that everyone is going to tweak and bastardize anyway).

One step forward, one step back.

Home Depot: “Delivery is helping us to make stronger customer relationships.”

Back in June, I wrote about how companies are transforming their physical supply chain networks to adequately meet the more demanding challenges of this new market where speed of delivery and inventory reduction are paramount.

Home Depot was one of the examples I cited. At the Descartes Evolution 2018 Conference in March, Mark Holifield, Home Depot’s Executive Vice President of Supply Chain and Product Development, discussed how the retailer is investing $1.2 billion over five years to redesign its distribution and delivery network to “create the fastest, most efficient delivery in home improvement.”

It looks like Home Depot is making progress on this effort. As reported by Bloomberg, “Home Depot Inc. has started same-day delivery across the U.S. to help it stay relevant with consumers’ need-it-yesterday mentality.” Here are more details from the article:

The home-improvement chain had already been using trucks to deliver large items such as building materials from stores in a day or so. Now, aided by startups Roadie Inc. and Deliv Inc. in its top 35 metro markets, online orders made before noon of about 20,000 products — everything from Halloween decorations to power tools — can arrive by van or car the same day, starting at a cost of $8.99.

Home Depot’s Holifield said the retail giant isn’t passing all of the delivery expense to customers. Thanks to its size — $100 billion in annual revenue and rising — the company can afford to subsidize some of it […] “Delivery can be expensive,” Holifield said. “What we look at is delivery helping us to make stronger customer relationships [emphasis mine].”

I love that quote by Holifield because it’s underscores one of the key findings from research I conducted earlier this year: that competing on customer experience is driving supply chain innovation for high-performing companies.

Coincidently, I participated in a webinar yesterday organized by Descartes (a Talking Logistics sponsor) on how “Delivery is the New Moment of Truth.” I’ll share some highlights in a future post, but in the meantime, you can watch the recording on demand.

And with that, have a great weekend!

Song of the Week: “Can I Sit Next to You” by Spoon