Brian Gibson is the Wilson Family professor at Auburn University’s Raymond J. Harbert College of Business. He is also executive director of the Center for Supply Chain Innovation.
The past four months have been unprecedented in the supply chain world—an understatement you might say! It’s not just that the ongoing global pandemic has laid bare the complexities and vulnerabilities of modern supply chains. There has also been unprecedented media attention paid to supply chain management. For better or worse, now the whole world knows about supply chains. In particular, warehousing and distribution have been brought out of the shadows and into the bright media lights for the critical role they play.
The upcoming edition of the “Logistics 2030” (L-2030) report, sponsored by JLL and CenterPoint, will focus on the growing importance of warehousing and distribution and the strategic direction they will take over the next decade. The annual study is conducted by the Center for Supply Chain Innovation at Auburn University in partnership with the Council of Supply Chain Management Professionals (CSCMP), the National Shippers Strategic Transportation Council (NASSTRAC), and AGiLE Business Media (publisher of DC Velocity and CSCMP’s Supply Chain Quarterly). This year’s report is based on multiple in-depth focus group discussions with leading supply chain executives and survey responses from a wide range of supply chain professionals. The release of the Logistics 2030 warehousing report and a related panel discussion are scheduled for August 20 at the fourth annual Fusion 20/20 Supply Chain Symposium (www.auburnscm.org/events).
The focus group meetings and survey results highlighted a key point: Even before the onset of COVID-19, the role of warehousing and distribution had been in transition from supporting downstream supply chain functions to operating as a frontline service provider to end customers.
This is quite a turn of events. Historically, warehousing and distribution were considered a cost center by business executives—a function that needed to be economized. But this view is now changing. A large majority (80%) of survey respondents in our L-2030 study point to a shift in the way top management in their firms think about warehousing and distribution. They are now recognizing the business value warehousing and distribution can provide. We notice a near consensus among survey respondents (88% agree) that warehousing and distribution will be an organizational priority by 2030. (See Figure 1.)
[Figure1] A changing perspective of warehousing and distribution Enlarge this image
The shift is on
A key trend underlying the new value proposition for warehousing is the ongoing shift in the supply chain structure. Supply chain executives in our focus groups point to the decentralization of supply chains arising from the need to push inventory closer to the customers. As one respondent said, “We’re going to be relocating facilities closer to customers in response to the need for faster deliveries. We’re going to put facilities in multiple places as opposed to just being at the most geographically central place.” Survey results indicate that firms’ push for forward inventory placement will continue into the next decade. The use of retail stores to fulfill e-commerce orders is expected to double. Additionally, 68% of respondents expect to see an increase in the use of local fulfillment centers and a 51% increase in regional distribution facilities by 2030.
Developing a decentralized warehousing and distribution structure requires major investments in infrastructure and technology. A big part of these future investments will be targeted towards expanding firms’ distribution networks. Eight-five percent of survey respondents expects a significant increase in corporate funding to improve warehouse and distribution. These investments will go towards developing key capabilities deemed essential in the coming decade: expanding distribution networks (71% of survey respondents agree), incorporating flexibility in capacity and warehousing operations (68%), leveraging automation for speed (62%), and cutting distribution costs (61%).
Our discussions with focus group executives highlighted a key capability deemed critical in the coming decade – flexibility in adjusting warehousing and distribution capacity. The importance of this capability is rooted in the need to respond to the ever-shifting whims of customers, now and in the future. Firms are investigating ways to be nimble by adjusting their supply chain capacity to match the continually changing demand patterns. “We’re looking at logistics facilities that are flexible in size, construction, and attributes geared towards a cross-dock-like capacity,” explained one respondent Thereby, a necessary capability in warehousing and distribution would be the agility to expand (and shrink) capacity quickly.
Embrace the tech
We asked focus group executives and survey participants how they planned to implement their decentralized distribution strategy. A clear consensus (supported by 93% of survey respondents) is that firms are looking to leverage technology as a catalyst to upgrade their warehousing and distribution processes.
In our study, we noticed a clear change in the conversation around technology that went beyond the typical issues of acquisition costs and implementation pains. We found supply chain executives to be focused more on a broader return on investment (ROI) perspective. One executive highlighted this point as follows: “We know that warehouse labor isn’t going to get any easier to recruit or retain. So as soon as we can justify ROI to replace labor with technology, we’re ready ‘to swing the bat’.”
Another element of this new conversation is the need for execution speed. One executive articulated this point as follows: “So in our [distribution centers] (DCs) we’re investing in ways to unload faster [and] load faster to make fulfillment of things faster so that we can do more with less people.” The cost-benefit analysis for technology solutions is starting to tilt towards a favorable business case for early adoption. “The economics of technology and what you consider in terms of labor availability and how far you’re willing to think about cost escalation or things like healthcare and fringe benefits. I think it’s changed the game in terms of the business ROI,” said one executive.
Our survey results indicate a high use of order management system by 2030 (71% of respondents agree). This software would align inventory and customer orders for fulfillment and shipping across multiple channels. Another big increase is expected in the use of warehouse execution systems (from 16% currently to 61% in 2030) that can provide a real-time coordination of labor and equipment for automated picking, packing, and shipping. Based on the survey results, we project that more firms will start using traditional warehouse management systems (an increase of 67%) by 2030.
In response to our survey question about technologies that have the most potential to disrupt warehousing and distribution, supply chain professionals identified the following: predictive and prescriptive analytics, automated guided vehicles, automated storage and retrieval systems, and automated conveyor systems. It is interesting to note how these technology choices align with automation, capacity expansion, and speed of distribution; all of which support operationalizing the emerging decentralized supply chain structure mentioned above.
In conclusion, warehousing and distribution are marching forward towards fulfilling their new role of a frontline function that drives business growth for firms. As the pendulum swings back to a decentralized supply chain structure, we expect companies to increasingly implement technology in warehousing and distribution in the coming years. To develop the necessary capabilities of speed and flexibility, supply chain executives are strategizing to make the requisite investments in distribution networks, incorporate technology, and engage capable third-party logistics partners to harness the opportunities that lie ahead.
[Authors’ Note: The Auburn University Fusion 20/20 Supply Chain Symposium will be held on August 20th. Register at www.auburnscm.org/events]
The venture-backed fleet telematics technology provider Platform Science will acquire a suite of “global transportation telematics business units” from supply chain technology provider Trimble Inc., the firms said Sunday.
Trimble's other core transportation business units — Enterprise, Maps, Vusion and Transporeon — are not included in the proposed transaction and will remain part of Trimble's Transportation & Logistics segment, with a continued focus on priority growth areas following completion of the proposed transaction.
Terms of the deal were not disclosed but as part of this agreement, Colorado-based Trimble will become a shareholder in Platform Science's expanded business. Specifically, Trimble will have a 32.5% stake in the newly expanded global Platform Science business and will receive a Platform Science board seat. The company joins C.R. England, Cummins, Daimler Truck, PACCAR, Prologis, RyderVentures, and Schneider as a key strategic investor in Platform Science along with financial investors 8VC, Activant Capital, BDT & MSD Partners, Softbank, and NewRoad Capital Partners.
According to San Diego-based Platform Science, the proposed transaction aims to enhance driver experience, fleet safety, efficiency, and compliance by combining two cutting-edge in-cab commercial vehicle ecosystems, which will give customers access to more applications and offerings.
From Trimble customers’ point of view, they will continue to enjoy the benefits of their Trimble solutions, with the added flexibility of the Virtual Vehicle platform from Platform Science. That means Virtual Vehicle-enabled fleets will receive access to the Virtual Vehicle Marketplace, offering hundreds of new and expanded applications, software, and solution providers focused on innovating and improving drivers' quality of life and fleet performance.
Meanwhile, Platform Science customers will enjoy the added choice of Trimble's remaining portfolio of transportation solutions which will be available on the Virtual Vehicle platform, the partners said.
"We believe combining our global transportation telematics portfolio with Platform Science's will further advance fleet mobility and provide our customers with a broader portfolio of solutions to solve industry problems," Rob Painter, president and CEO of Trimble, said in a release. "Increased collaboration between the new Platform Science business and Trimble's remaining transportation businesses will enhance our ability to provide positive outcomes for our global customers of commercial mapping, transportation management, freight procurement, and visibility solutions. This deal will result in significant synergies along with tremendous opportunities for employees to continue to grow in a more-competitive business."
The acquisition comes just five months after Platform Science raised $125 million in growth capital from some of the biggest names in freight trucking, saying the money would help accelerate innovation in the commercial transportation sector.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
Economic activity in the logistics industry expanded in August, though growth slowed slightly from July, according to the most recent Logistics Manager’s Index report (LMI), released this week.
The August LMI registered 56.4, down from July’s reading of 56.6 but consistent with readings over the past four months. The August reading represents nine straight months of growth across the logistics industry.
The LMI is a monthly gauge of economic activity across warehousing, transportation, and logistics markets. An LMI above 50 indicates expansion, and a reading below 50 indicates contraction.
Inventory levels saw a marked change in August, increasing more than six points compared to July and breaking a three-month streak of contraction. The LMI researchers said this suggests that after running inventories down, companies are now building them back up in anticipation of fourth-quarter demand. It also represents a return to more typical growth patterns following the accelerated demand for logistics services during the Covid-19 pandemic and the lows of the recent freight recession.
“This suggests a return to traditional patterns of seasonality that we have not seen since pre-COVID,” the researchers wrote in the monthly LMI report, published Tuesday, adding that the buildup is somewhat tempered by increases in warehousing capacity and transportation capacity.
The LMI report is based on a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
That hiring surge marks a significant jump in relation to the company’s nearly 17,000 current employees across North America, adding 21% more workers.
That increase is necessary because U.S. holiday sales in 2023 increased 3.9% year-over-year as consumer spending grew even amidst uncertain economic times and trends like inflation and consumer price sensitivity. Looking at the coming peak, a similar pattern is projected for this year, with shoppers forecasted to drive a 4.8% increase in holiday retail sales for 2024, Geodis said, citing data from Emarketer.
To attract the extra workforce, Geodis says it will offer competitive wages, peak premium pay incentives, peak and referral bonuses, an expedited payment option, and flexible schedules. And it’s using an AI-powered chatbot named Sophie to serve as a virtual recruiting assistant.
“We acknowledge the immense responsibility we have to our customers to deliver exceptional service every day, and this is especially true during peak season,” Anthony Jordan, GEODIS in Americas Executive Vice President and Chief Operating Officer, said in a release. “Because peak season is the most business-critical sales period of the year for many of our retail clients, expanding our workforce is vital to ensure we have a flexible, dynamic team that can handle anticipated surges in demand.”