Above the Fold: Supply Chain Logistics News (February 28, 2020)

Have you ever been up all night because you couldn’t sleep?

That was me last night. I don’t know why. I tossed and turned in bed, then went downstairs to the living room couch, and tossed and turned there.

I must have fallen asleep for a brief period of time because I remember seeing two cats coming down our chimney, one of them dirty and rabid and hissing at me. Had to be a dream, right?

Anyway, needless to say, I’m operating on fumes this morning. So while I’m still awake, here’s the supply chain and logistics news that caught my attention this week.

Novel Coronavirus (COVID-19) Outbreak: Ongoing Supply Chain Impacts

The novel coronavirus (COVID-19) outbreak has dominated the headlines the past few weeks, and until there’s a downturn in the number of new cases and deaths, it will continue to capture the headlines — and impact global supply chains.

“Businesses from apparel brands to makers of toys, cars and electronics say sourcing problems in China are hampering production and could delay shipments of some goods into the second quarter of this year,” writes Jennifer Smith in the Wall Street Journal. She adds:

Quarantines, half-staffed factories and logistical bottlenecks inside China are affecting the movement of both finished goods such as footwear and raw materials from Chinese vendors that supply manufacturers elsewhere.

The slowdown has sent volumes plummeting this month at the Port of Los Angeles, the largest U.S. gateway for seaborne imports from China, and is expected to “drive sustained weakness” in demand for domestic trucking and intermodal service moving freight long distances by truck and rail, Credit Suisse Group AG analyst Allison Landry said in a Feb. 26 research note.

As I’ve said in the past, the reality is that there is relatively little companies can do right now to minimize the impact of these disruptions. Either you have been preparing for this type of disruption all along, taking the lessons learned from past disasters and building a resilient enterprise, or you have taken your chances and haven’t prepared effectively, believing that lightning won’t strike twice. The least impacted companies will be those that have been (among other things)…

  • Sourcing critical parts from multiple suppliers, manufactured in multiple factories, located in multiple geographic regions;
  • Using widely-available, standard components instead of proprietary, custom-built parts;
  • Keeping excess manufacturing capacity in their factories;
  • Designing and equipping their factories to build a wide portfolio of products;
  • Implementing redundant IT systems and data centers;
  • Using multiple modes of transportation, and working with multiple logistics partners.

Once this outbreak is over — hopefully sooner rather than later — it will be interesting to see how many companies make changes to their supply chains (such as the actions above) in preparation for the next outbreak or acute disruption.

Walmart Becomes A Third-Party Logistics Provider (3PL)

The lines between third-party logistics providers, technology companies, and consultants have been blurring for many years. And thanks to Amazon with its Fulfillment by Amazon service and foray into freight brokerage, as well as Target’s acquisition of Shipt, the lines between 3PLs and retailers have been blurring too.

Now add Walmart to the mix. As reported by CNBC, “Walmart is launching a new service that allows third-party vendors to hire the retailer to store, pack and ship items for customers, a move that could better position the big-box retailer to compete against Amazon.”

It will also position Walmart to compete against 3PLs that are looking to grow their e-commerce fulfillment business, especially in the small and mid-sized business (SMB) market.

The next line to blur: Google and Facebook getting into the logistics business.

3Gtms and Descartes: Acquisitions Continue in Logistics Technology Market

Having strong parcel capabilities in a transportation management system (TMS) is becoming increasingly important as parcel becomes a larger and more critical mode for companies across many industries. That was part of the driving force behind 3Gtms’s (a Talking Logistics sponsor) acquisition of Pacejet, a provider of enterprise cloud-based, multi-carrier shipping software. According to the press release:

Sumeru Equity Partners (“SEP”) invested in 3Gtms nearly one year ago—a period in which 3Gtms has experienced strong success in growing the business, adding to its team and scaling operations. Sumeru’s further investment in Pacejet and its innovative cloud-based global shipping software will extend the 3G-TM platform to access more market channels and to more comprehensively serve customers’ complex parcel shipping needs.

While the addition of Pacejet will strengthen 3Gtms’s parcel capabilities and open new opportunities for the company in the small and mid-size market, Pacejet’s customers will gain access to truckload and more advanced TMS capabilities — a growing requirement for them as their transportation operations become more complex.

For now, Pacejet will operate as a division of 3Gtms. 

Also this week, Descartes Systems Group (a Talking Logistics sponsor) announced that it has acquired Peoplevox, a leading provider of cloud-based ecommerce warehouse management solutions (“eWMS”). Here are some details from the press release:

Headquartered in the UK, Peoplevox serves direct-to-consumer ecommerce customers around the world. Peoplevox’s web-based eWMS and ecommerce fulfilment solutions help customers seamlessly connect to webshop front ends, translate order information into a mobile-driven pick and pack process within the warehouse and then feed parcel delivery systems for shipment execution. The company’s customers include direct-to-consumer brands, ecommerce retailers and traditional retailers with physical stores looking to enhance their online presence to meet the need for omni-channel deliveries to consumers.   

Over the past few years, Descartes has been adding WMS capabilities through various acquisitions, such as pixi. The company has been very particular in where it wants to compete in the WMS space — that is, WMS tightly linked with e-commerce fulfillment and shipping. Peoplevox extends Descartes’ footprint and capabilities in this area.

And with that, have a happy weekend!

Song of the Week: “Spent the Day in Bed” by Morrissey