Above the Fold: Supply Chain Logistics News (May 8, 2020)

Are you a two-spacer?

More than seven years ago I wrote about the countless number of double spaces after periods that I’ve had to delete as an editor over the years. I pointed readers to a 2011 Slate article titled, “Space Invaders: Why You Should Never, Ever Use Two Spaces After a Period.”

“If you are guilty of this writing crime,” I pleaded, “please read the article, and in the spirit of Lean and continuous improvement, stop adding that extra space.”

I still come across two-spacers. But now, thanks to Microsoft, we have a potential cure for this ailment. According to The Verge

Microsoft has settled the great space debate, and sided with everyone who believes one space after a period is correct, not two. The software giant has started to update Microsoft Word to highlight two spaces after a period (a full stop for you Brits) as an error, and to offer a correction to one space. 

Now we just need Google Docs to do the same and maybe we’ll finally eradicate this bad habit of adding an extra space where none is needed. #PetPeeveSolved 

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

Coronavirus: A Thorn in Buyer-Supplier Relationships

The apparel industry is among the hardest hit by the COVID-19 pandemic, with most clothing stores closed over the past few weeks. Therefore, it’s not surprising that buyer-supplier relationships have started to fray. As Jon Emont reports in the Wall Street Journal:

A Bangladeshi manufacturer expected to be paid shortly after it shipped in February more than $400,000 of jeans to Los Angeles to fulfil an order by a western apparel company.

Nearly three months later, the clothes maker still hasn’t received its money and doesn’t know where the jeans are.

Disputes like these have exploded across the garment industry as payments are delayed and orders are canceled by retailers dealing with closed stores and plunging sales. Factories in Asia that have paid raw-material, labor and other costs are reeling, and many of them are realizing they have little recourse as apparel contracts have shifted to give importers more flexibility.

Similar tensions are starting to arise between U.S. manufacturers and suppliers in Mexico. “U.S. manufacturers preparing to resume production after a month of lockdowns are returning to work without a reliable supply of parts from plants in Mexico, a majority of which remain idled by restrictions there to slow the spread of the coronavirus,” write Bob Tita and Santiago Pérez in the Wall Street Journal. “Repairing the frayed supply chains will be an early test for the revised version of a free-trade agreement between the U.S., Mexico and Canada, which is set to take effect in July.”

As I wrote recently in “The Great Lockdown: Will You Keep Bullying Or Help Your Suppliers?,” is it time for every company to fend for itself or is it time to apply the “We’re in this together” mantra to how you work with your suppliers and other trading partners? 

Deliv: Reduced to Technology Assets

“Due to a confluence of events over the past few months, Deliv will unfortunately be winding down our operations over the next 90 days. The last day of service will be on or before August 4th, 2020,” Deliv’s founder and Chief Executive Daphne Carmeli wrote in an email sent to its delivery workers Wednesday (as reported by the Wall Street Journal).

Soon after, news came out that Target was acquiring “technology assets” from Deliv. According to TechCrunch:

The retailer is characterizing the deal as more of an R&D type of acquisition and not one that will have an immediate consumer-facing impact. Deal terms were not disclosed, but we understand the deal price is nowhere near Shipt’s $550 million ballpark [which Target acquired several years ago], as it’s not an outright acquisition of Deliv’s business. 

Target already had some exposure to Deliv’s technology, as it had been working with the delivery service provider in small tests in 2019 and early 2020. The retailer believes there’s long-term potential with regard to Deliv’s technology, which smartly batches orders together that are going to the same area — something its prior acquisitions of Shipt and Grand Junction in 2017 didn’t offer.

However, Target isn’t planning to integrate Deliv technology immediately into [its] operations. Instead, it will research and test how the tech could aid its supply chain at scale. 

I don’t know the specifics of why Deliv had to wind down its operations, but it likely had to do with a longstanding truth in the industry: it ain’t easy making money in home delivery. The main challenge is getting enough delivery density to minimize transportation costs — which makes a big difference especially in low-margin businesses like grocery — and providing customers with delivery options at the point of sale that are reasonable, affordable, and reliable. See my April 2014 post “Webvan 2.0: If At First You Don’t Succeed…” for related commentary.

There’s also an open question in the industry: Will retailers, restaurants, and other brands opt to keep control of delivery instead of outsourcing to third parties? I addressed this question last year in “Domino’s Pizza And Panera: Keeping Control Of Delivery.” Back then I asked, “Will DoorDash, GrubHub, and UberEats simply become food ordering websites over time, leaving the responsibility for delivery to its chain restaurant customers?” This came true in the case of Deliv: it was ultimately reduced to “technology assets” to help Target further control (and differentiate itself via) its own delivery operations.

And with that, have a happy weekend!

Song of the Week: “Forgotten Years” by Midnight Oil