Dave Bozeman, vice president of Amazon Transportation Services, says he wakes up every day ready to "go to war for the customer." And he wouldn't have it any other way.
When Dave Bozeman, vice president of Amazon Transportation Services, goes to work each day, there's just one thing on his mind. It's not the competition. Nor is it the latest marketplace innovation. It's the Amazon.com customer. "Everything is about the customer, and anything outside of the customer doesn't matter," he says. "We wake up every day, and we go to war for the customer."
So far, his team appears to be winning both the battle and the war. In less than two decades, the online retail giant has turned the market on its ear, conditioning customers to expect free two-day deliveries, seven-day-a-week service, and in-home and in-car deliveries, to name just a few examples. But Bozeman has no illusions that his job is now done. "Once you've accomplished all that, are the expectations just going to stop?" he asks. "No. There are going to be even bigger expectations."
Bozeman sat down with Mitch Mac Donald, group editorial director of CSCMP's Supply Chain Quarterly for an interview in October, following his opening keynote at the Council of Supply Chain Management Professionals' (CSCMP) Edge 2018 conference. The following is an edited version of the conversation. To see the full interview, go to https://www.supplychainquarterly.com/video.
NAME: Dave Bozeman TITLE: Vice President of Amazon Transportation Services at Amazon EDUCATION: Bachelor of Science in manufacturing technology/mechanical design from Bradley University; Master of Science in engineering management from the Milwaukee School of Engineering PREVIOUS EXPERIENCE: Senior vice president for Caterpillar Inc., responsible for the Caterpillar Enterprise System Group that aligned critical processes and support groups to improve manufacturing and supply chain capabilities worldwide; vice president of advanced manufacturing for Harley-Davidson Motor Company, where he developed and lead the implementation of advanced manufacturing technology LEADERSHIP: Part of The Executive Leadership Council (ELC); member of the board of directors for lumber and forest products company Weyerhaeuser; member of the board of directors for the Society of Manufacturing Engineers Education Foundation; and member of Bradley University's Board of Trustees
Q: You work at a company that continues to enjoy historic growth year after year, with no end in sight. How do you make sure that your supply chain keeps up?
First, it is scale and innovation. You have to have scale and innovation in order to do what we do. But more foundational than that is leadership. Amazon is run off of 14 key leadership principles. I'm not going to talk about all of them here, but they all support what we see as our primary mission: staying focused squarely on the customer, or what I call our "customer obsession." We wake up every day, and we go to war for our customer.
When I tell you everything is about the customer and anything outside of the customer doesn't matter, that's how it is at Amazon, including the supply chain. The supply chain has evolved, it has scaled up, and it's all been for the customer.
As we plan for tomorrow, we keep our eye on three basic elements: quality, cost, and the delivery experience for the customer. "Quality, cost, and delivery" is the obsession we have. We build our supply chain around that obsession. Be it planes, trains, or automobiles, we're going to make sure we have quality and speed. And we're going to make sure we provide an exceptional delivery experience because I know our customers expect nothing less and that's what we are here to do.
Q: Let's talk a little bit about the tactical side. What role have enabling technologies like automation played in the evolution of Amazon's supply chain?
They've been extremely important. Amazon's operations have obviously grown in scale since that day 23 years ago when Jeff [Bezos] put a few books in a box, sealed it up, and took it down to his local post office. We've made millions—even billions—of customers happy since that time, but in order to continue to do that today and tomorrow, things had to continue to evolve and change. At Amazon, we're never satisfied with the status quo. When it comes to serving the customer, there's "divine discontent" here, meaning we're never happy and we're always looking to provide a better experience.
That was the case in our fulfillment operations a few years back. We knew there had to be a better way to fill orders. That ultimately led to the acquisition of Kiva Systems [a robotics company Amazon bought in 2012 and later renamed Amazon Robotics]. We now use robots to bring goods to human order pickers, instead of sending workers out into the aisles in search of items. And what does that do? It only makes quality better. It improves accuracy and obviously boosts speed, and it's going to improve the delivery experience for our customers.
I should note here that the robots aren't replacing people. When they hear about the tens of thousands of robots we've introduced into Amazon's operations, people will say, "Wow, robots! Where are we going with this? What happens to the people element?" Well, during that same time, we have hired over 300,000 more Amazonians. They're just doing different work now. Using the robots allows our people to focus more on quality.
Q:It sounds like a key to Amazon's success is there's never, ever going to be any resting on laurels. So what we did yesterday doesn't matter. Only today matters. Do you think that culture has helped to drive all of this?
Oh, that is our culture. If you go to work at Amazon, you'll be challenged to look at things in a whole new way. I mean, we have a bar—a performance bar—that you have to clear when you're interviewing at Amazon. We have that bar when it comes to what we want to do in growing out and scaling projects, but ultimately we look at the customer. We say, "Hey, what is the next thing that we have to do?" Think about supply chain. Think about where things are going. Right now, people want things faster, but tomorrow, it will be something different.
People have choices now in the supply chain. What are some of those choices? Well, they can choose the day they want their product delivered. And along with choosing when they want it delivered, they can choose where: on this part of the porch or in this milk box or even inside their home or car.
And tomorrow, who knows? You can be somewhere, and we may just fly it to you in a drone. The point is, it's about innovating for the customer through your supply chain and not being apologetic for being divinely discontent.
Q: I'm going to get a little more into the weeds here and ask about Amazon's decision to enter the airfreight business. What made you decide to build your own air fleet? Private truck fleets are very common. Private air fleets not so much. Why go this route rather than simply use the standard commercial air carriers?
I love that you said operating an air fleet is not so common, because at Amazon, we love to hear that what we're doing isn't common or normal. But at the end of the day, you know what I am going to say: Everything we do is ultimately driven by the customer experience and our obsession with our customers. In the case of air, this is what we've had to do to ensure we have the capacity we need.
That said, we have a number of great partners that we've worked with from the beginning and continue to work with—partners like UPS, FedEx, and DHL. But we also know that we have to continue to supplement that capacity in order to make sure we can keep up with our projected growth and ultimately, satisfy our customers as we continue to grow. That's why in 2016, we launched Amazon Air (formerly known as Prime Air) and are continuing to expand the operation. In just two short years, the fleet has grown to 38 planes—767-200s and -300s—that fly millions of packages around the U.S. every day.
Q: It's clear you have a passion for your work at Amazon, so it might be tough for you to give an unbiased answer to this question. But here it goes: Is there another company out there that has achieved the scale that could justify a private air fleet?
Well, that is a good question. But at Amazon, we don't let ourselves be distracted by what others might be doing. We could spend a lot of time talking about competitors. We could spend a lot of time talking about other companies. Instead, we take all of that energy and talk about the customer.
What we want for our customers is speed, lower costs, and an exceptional delivery experience. Concentrating on that—and not on the competition—allows us to maintain a laser focus on what we have to do. That enables us to be clear on the decisions we have to make, be it building an air fleet or automating our operations or going into drones. Those are things that we do with our customer in mind, not the competition.
Q: Do you see anything on the horizon—for instance, the shortage of labor we hear so much about—that could disrupt your growth and momentum?
The macros of the world are the macros of the world, right? We will deal with those things as they come, and we'll solve them. Take the labor shortage you mentioned. Unemployment is obviously at a low right now and the labor market is tight, but we feel really good about the number of Amazonians that we have and the number of Amazonians that we bring on. Why? Because we feel we are a great company to work for.
The real challenge—the thing I personally look at—is the challenge of customer satisfaction. Customers are always going to have something they want and in some cases, they're going to be dissatisfied. But how and why? You have to think about it—that is the key. How do we identify and address the problem before the customer becomes dissatisfied? And along those same lines, how do we anticipate the customer's future needs? Those are the things we think about at Amazon each day.
Q: Do you have any final advice for our readers?
Stay close to the front lines—the people who are out there doing the work. We have over 550,000 Amazonians out there working for us, and I appreciate every one of them for the work they do every day. As a leader, you have to stay close to that because those people know how important our customers are.
Businesses are cautiously optimistic as peak holiday shipping season draws near, with many anticipating year-over-year sales increases as they continue to battle challenging supply chain conditions.
That’s according to the DHL 2024 Peak Season Shipping Survey, released today by express shipping service provider DHL Express U.S. The company surveyed small and medium-sized enterprises (SMEs) to gauge their holiday business outlook compared to last year and found that a mix of optimism and “strategic caution” prevail ahead of this year’s peak.
Nearly half (48%) of the SMEs surveyed said they expect higher holiday sales compared to 2023, while 44% said they expect sales to remain on par with last year, and just 8% said they foresee a decline. Respondents said the main challenges to hitting those goals are supply chain problems (35%), inflation and fluctuating consumer demand (34%), staffing (16%), and inventory challenges (14%).
But respondents said they have strategies in place to tackle those issues. Many said they began preparing for holiday season earlier this year—with 45% saying they started planning in Q2 or earlier, up from 39% last year. Other strategies include expanding into international markets (35%) and leveraging holiday discounts (32%).
Sixty percent of respondents said they will prioritize personalized customer service as a way to enhance customer interactions and loyalty this year. Still others said they will invest in enhanced web and mobile experiences (23%) and eco-friendly practices (13%) to draw customers this holiday season.
The practice consists of 5,000 professionals from Accenture and from Avanade—the consulting firm’s joint venture with Microsoft. They will be supported by Microsoft product specialists who will work closely with the Accenture Center for Advanced AI. Together, that group will collaborate on AI and Copilot agent templates, extensions, plugins, and connectors to help organizations leverage their data and gen AI to reduce costs, improve efficiencies and drive growth, they said on Thursday.
Accenture and Avanade say they have already developed some AI tools for these applications. For example, a supplier discovery and risk agent can deliver real-time market insights, agile supply chain responses, and better vendor selection, which could result in up to 15% cost savings. And a procure-to-pay agent could improve efficiency by up to 40% and enhance vendor relations and satisfaction by addressing urgent payment requirements and avoiding disruptions of key services
Likewise, they have also built solutions for clients using Microsoft 365 Copilot technology. For example, they have created Copilots for a variety of industries and functions including finance, manufacturing, supply chain, retail, and consumer goods and healthcare.
Another part of the new practice will be educating clients how to use the technology, using an “Azure Generative AI Engineer Nanodegree program” to teach users how to design, build, and operationalize AI-driven applications on Azure, Microsoft’s cloud computing platform. The online classes will teach learners how to use AI models to solve real-world problems through automation, data insights, and generative AI solutions, the firms said.
“We are pleased to deepen our collaboration with Accenture to help our mutual customers develop AI-first business processes responsibly and securely, while helping them drive market differentiation,” Judson Althoff, executive vice president and chief commercial officer at Microsoft, said in a release. “By bringing together Copilots and human ambition, paired with the autonomous capabilities of an agent, we can accelerate AI transformation for organizations across industries and help them realize successful business outcomes through pragmatic innovation.”
Census data showed that overall retail sales in October were up 0.4% seasonally adjusted month over month and up 2.8% unadjusted year over year. That compared with increases of 0.8% month over month and 2% year over year in September.
October’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were unchanged seasonally adjusted month over month but up 5.4% unadjusted year over year.
Core sales were up 3.5% year over year for the first 10 months of the year, in line with NRF’s forecast for 2024 retail sales to grow between 2.5% and 3.5% over 2023. NRF is forecasting that 2024 holiday sales during November and December will also increase between 2.5% and 3.5% over the same time last year.
“October’s pickup in retail sales shows a healthy pace of spending as many consumers got an early start on holiday shopping,” NRF Chief Economist Jack Kleinhenz said in a release. “October sales were a good early step forward into the holiday shopping season, which is now fully underway. Falling energy prices have likely provided extra dollars for household spending on retail merchandise.”
Despite that positive trend, market watchers cautioned that retailers still need to offer competitive value propositions and customer experience in order to succeed in the holiday season. “The American consumer has been more resilient than anyone could have expected. But that isn’t a free pass for retailers to under invest in their stores,” Nikki Baird, VP of strategy & product at Aptos, a solutions provider of unified retail technology based out of Alpharetta, Georgia, said in a statement. “They need to make investments in labor, customer experience tech, and digital transformation. It has been too easy to kick the can down the road until you suddenly realize there’s no road left.”
A similar message came from Chip West, a retail and consumer behavior expert at the marketing, packaging, print and supply chain solutions provider RRD. “October’s increase proved to be slightly better than projections and was likely boosted by lower fuel prices. As inflation slowed for a number of months, prices in several categories have stabilized, with some even showing declines, offering further relief to consumers,” West said. “The data also looks to be a positive sign as we kick off the holiday shopping season. Promotions and discounts will play a prominent role in holiday shopping behavior as they are key influencers in consumer’s purchasing decisions.”
Third-party logistics (3PL) providers’ share of large real estate leases across the U.S. rose significantly through the third quarter of 2024 compared to the same time last year, as more retailers and wholesalers have been outsourcing their warehouse and distribution operations to 3PLs, according to a report from real estate firm CBRE.
Specifically, 3PLs’ share of bulk industrial leasing activity—covering leases of 100,000 square feet or more—rose to 34.1% through Q3 of this year from 30.6% through Q3 last year. By raw numbers, 3PLs have accounted for 498 bulk leases so far this year, up by 9% from the 457 at this time last year.
By category, 3PLs’ share of 34.1% ranked above other occupier types such as: general retail and wholesale (26.6), food and beverage (9.0), automobiles, tires, and parts (7.9), manufacturing (6.2), building materials and construction (5.6), e-commerce only (5.6), medical (2.7), and undisclosed (2.3).
On a quarterly basis, bulk leasing by 3PLs has steadily increased this year, reversing the steadily decreasing trend of 2023. CBRE pointed to three main reasons for that resurgence:
Import Flexibility. Labor disruptions, extreme weather patterns, and geopolitical uncertainty have led many companies to diversify their import locations. Using 3PLs allows for more inventory flexibility, a key component to retailer success in times of uncertainty.
Capital Allocation/Preservation. Warehousing and distribution of goods is expensive, draining capital resources for transportation costs, rent, or labor. But outsourcing to 3PLs provides companies with more flexibility to increase or decrease their inventories without any risk of signing their own lease commitments. And using a 3PL also allows companies to switch supply chain costs from capital to operational expenses.
Focus on Core Competency. Outsourcing their logistics operations to 3PLs allows companies to focus on core business competencies that drive revenue, such as product development, sales, and customer service.
Looking into the future, these same trends will continue to drive 3PL warehouse demand, CBRE said. Economic, geopolitical and supply chain uncertainty will remain prevalent in the coming quarters but will not diminish the need to effectively manage inventory levels.
That result came from the company’s “GEP Global Supply Chain Volatility Index,” an indicator tracking demand conditions, shortages, transportation costs, inventories, and backlogs based on a monthly survey of 27,000 businesses. The October index number was -0.39, which was up only slightly from its level of -0.43 in September.
Researchers found a steep rise in slack across North American supply chains due to declining factory activity in the U.S. In fact, purchasing managers at U.S. manufacturers made their strongest cutbacks to buying volumes in nearly a year and a half, indicating that factories in the world's largest economy are preparing for lower production volumes, GEP said.
Elsewhere, suppliers feeding Asia also reported spare capacity in October, albeit to a lesser degree than seen in Western markets. Europe's industrial plight remained a key feature of the data in October, as vendor capacity was significantly underutilized, reflecting a continuation of subdued demand in key manufacturing hubs across the continent.
"We're in a buyers' market. October is the fourth straight month that suppliers worldwide reported spare capacity, with notable contractions in factory demand across North America and Europe, underscoring the challenging outlook for Western manufacturers," Todd Bremer, vice president, GEP, said in a release. "President-elect Trump inherits U.S. manufacturers with plenty of spare capacity while in contrast, China's modest rebound and strong expansion in India demonstrate greater resilience in Asia."