Above the Fold: Supply Chain Logistics News (April 14, 2023)

By Adrian Gonzalez

It’s summertime in April.

It was close to 90F yesterday, and it will be in the 80s today.

The birds, trees, and flowers are a bit confused. “Is it really time?” they ask, as they watch me cycle by.

“Time for what?” you ask.

I don’t know. It’s summertime in April.

—

And now, the supply chain and logistics news that caught my attention this week:

Walmart’s Next Generation Supply Chain Will Be Automated

Walmart unveiled its “Next Generation Supply Chain” at its 2023 Investment Community meeting. Here are some of the highlights:

Walmart is reengineering its supply chain to fulfill customer needs with a more intelligent and connected omnichannel network that is enabled by greater use of data, more intelligent software and [robotic] automation.

Stores operate as a place to shop and as fulfillment centers and delivery stations. Distribution and fulfillment centers hold a mix of items, from suppliers and sellers. This allows Walmart to use its existing assets more flexibly and efficiently for new ways of working.

By the end of Fiscal Year 2026, Walmart believes roughly 65% of stores will be serviced by automation, approximately 55% of the fulfillment center volume will move through automated facilities, and unit cost averages could improve by approximately 20%.

As the changes are implemented across the business, one of the outcomes is roles that require less physical labor but have a higher rate of pay. Over time, the company anticipates increased throughput per person, due to the automation while maintaining or even increasing its number of associates as new roles are created.

Be more data-driven in our decision making. Use more software and robots. Leverage our stores as fulfillment centers.

No big surprises here.

I’m still waiting for some company to announce, “We’re going to double our use of Excel spreadsheets, lay off 10% of our staff, and squeeze our suppliers for cost reductions,” as their supply chain strategy going forward.

No big surprises there either.

No Such Thing As Free Returns Either

Nothing in life is free — and this includes free shipping, which has become an albatross around the necks of most retailers and parcel carriers.

I wrote that back in a 2017 post titled, “Free Shipping Is Costing More (As Small Packages Flood Delivery Networks,” and it is still true today — and you can add “free returns” to the list of things that aren’t really free.

As first reported by The Information and also reported by USA Today, “[Amazon] customers living near a free drop-off location who decide to return their package through UPS may have to pay a $1 fee.”

$1 isn’t really a lot, and it won’t surprise me if the fee goes up in the future, but the goal is to encourage customers to bring their returns to Whole Foods, Amazon Fresh, and Kohl’s locations, which presumably enables Amazon to process returns more cost effectively by using its own assets and creating greater density and economies of scale.

Even better, Amazon is trying to prevent returns at the front end of the buying process. As reported earlier, Amazon also recently “introduced the badge [on product listings] with the words ‘frequently returned item,’ which urges shoppers to check the product details and customer reviews on items that have significantly higher return rates in their product category.”

Retailers created this mess by overfeeding us with free shipping and returns; now that we’re fat and happy with it, they have to find ways to wean us off it.

And with that, have a happy weekend!

Song of the Week: “Young & Unafraid” by The Moth & The Flame