Ocean Freight Rates Increased Ahead of Lunar New Year — But Not By Much

Supply Chain Dive —Dive Brief:

• Ocean shipping rates ticked up ahead of the Lunar New Year. Rates from China to the U.S. West Coast rose to $2,061.50 in January 2019 — a 5% increase over the previous month and a 51% increase over January 2018.

• Rates from China to the U.S. East Coast also rose in January to $3,228 representing a 28% year-over-year increase and 2% increase from December 2018.

• Ports on both U.S. coasts saw some of their highest cargo volumes in 2018, with many breaking all-time records.

Dive Insight:

An ocean freight rate uptick is typical ahead of the Lunar New Year, which fell on Feb. 5 this year. Importers often look to bring in goods from China before factory activity slows during the holiday. This creates heightened demand and squeezed supply, leading to higher freight rates.

For the past few years, ocean rates have followed a pattern of dipping in December, then rising again in January. Rates from China to the West Coast rose 33% from December 2016 to January 2017, and by roughly the same percentage from December 2017 to January 2017.

This season doesn’t appear to be an exception to the pattern, although the rate increase between the two months was significantly lower (5%) compared to previous years.

The reason could be a continued rush by importers to bring in goods before tariffs took effect or increased to higher levels. Lori Fox, vice president of customs at American Global Logistics (AGL), predicted “the train keeps going pretty steadily” rather than slowing as shipping typically does around the Lunar New Year.

That rush led ports to have some of their best months and years yet. Loaded imports on the West Coast reached 1.068 million TEUs in December 2018, the highest since Supply Chain Dive began tracking imports in 2016.
So far, rates for shipping to both coasts are starting to level off in February. It remains to be seen how a tariff hike in March — if it happens — will affect rates and volumes in the coming months.

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Feature Image Source:Supply Chain Dive 

Trade Risks Drive Companies to Stockpile Inventory — Is It a Risky Move?

Supply Chain Dive —Stockpiling chocolate and cookies isn’t uncommon before the holiday season, though in Cadbury’s case, it wasn’t just to ensure there would be enough for Christmas sales. Britain’s exit from the European Union is causing uncertainty for manufacturers like Cadbury who rely on open trade for ingredients and finished goods.

Brexit isn’t the only trade issue leading companies to build up inventory. President Trump’s introduction of tariffs on Chinese goods caused some manufacturers and retailers, including American Global Logistics’ clients, to start stockpiling goods.

The Chinese New Year typically brings a shipping slowdown, said Lori Fox, vice president of customs at American Global Logistics (AGL). But “it could be that the train keeps going pretty steadily … to beat tariff increases if they happen,” she told Supply Chain Dive.

The stockpile before the storm

Most of AGL’s clients sell tires, furniture or home décor and mainly import from countries where the U.S. placed tariffs, anti-dumping and countervailing duties. “There’s always an issue with certain commodities. We have a heads-up on those, when there are investigations going on,” Fox said. And it’s easier to plan for those, compared to the recent tariff increases, which have been “pretty much immediate,” she said.

Some of AGL’s clients’ products imported from China had no tariffs before the recent trade war began. Now they are trying to beat the potential increase in tariffs from 10% to 25%.

Fox’s clients importing from China were originally trying to get goods in ahead of the initial Jan. 1 tariff increase. Now that it’s been delayed to March 2, her clients have a new target date. Some are increasing their order size, and some are just trying to beat the deadline for their regular orders. “We’ll probably go through this again if the tariff increase actually happens in March,” said Fox.

Balancing the balance sheet

Profit is on her clients’ minds, especially as furniture was previously duty-free, said Fox. Importers have had to pay 10% on their goods since Sept. 24, 2018. “They go from zero to possibly millions in extra expense that they didn’t account for in their financial plans. Profits are a huge issue,” she said. “Some say they don’t know if they’ll make it through this trade war. It could put customers out of business.”

Some customers of Blue Ridge’s supply chain planning software are also stockpiling goods — also known as making investment buys or forward buys, said Rod Daugherty, vice president of product strategy. Blue Ridge’s customers are typically retailers and wholesale distributors.

“Wholesalers and retailers usually borrow money to pay for inventory. Inventory is the most expensive thing they own,” Daugherty told Supply Chain Dive. The goal is often to sell the inventory before they have to pay for it, which helps protect their profit margins.

This requires buyers to determine the right amount to purchase, especially if borrowing to pay for it. Bad purchasing decisions can lead to diminishing returns or a loss.

Companies should forecast how much extra to buy before a risk like tariffs comes up, leading to a price increase, then balancing that with what they can sell, Daugherty said. “If we’re still carrying a lot of inventory after 30 days, we won’t be making the full profit on that.”

Making sure the additional items will sell is important too. “Everybody needs tires,” she said. “Those commodities won’t have a problem selling. But in home décor and furniture, styles change all the time.” If a company brings in more than normal, and the styles don’t sell, that lowers margins.

Stockpiling is also affecting shipping rates. The carriers have been using the situation to their advantage as much as possible, Fox said, decreasing capacity to charge higher rates. “It’s not an easy market right now,” she said. “It’s difficult to overcome the higher spot rates in order to bring in as much product as possible, before tariff increases go into play.”

The downsides to stockpiling

If buying something with a shelf life, it could expire if not sold within the right time frame. “I doubt that people are buying very much from overseas with a short-lived shelf life,” Daugherty said, as shipping overseas requires long lead times and sometimes enough goods to fill a shipping container. In the U.K., however, Brexit is leading some companies to import perishables like chocolate ingredients and cheese to maintain supply and profit.

With stockpiling, supply chain managers need to be realistic about their storage capacity. A company may need to pay for additional storage and labor to keep and move the items. “You can go to an outside facility and rent space or trailers,” Daugherty said. If you need to move them around the yard for unloading, however, logistics costs increase.

It’s not just a matter of cost, though. Industrial real estate space is at its lowest level since 2000, with demand for warehouse space exceeding supply in 2018 by 29 million square feet.

Some of Fox’s clients are trying to optimize their space instead, using vertical space to be more efficient and avoid renting more. Some ways to optimize vertical space are of course, placing pallets higher. But it also includes building racks over docks and over the aisles, with enough clearance for forklifts.

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Optimizing Your Supply Chain for Omnichannel

Total Retail —Fulfilling both in-store and online orders for custom furniture within 30 days is challenging enough. Factor in a 1,500-product catalog and a worldwide sourcing network, and an agile supply chain becomes indispensable.

For one major furniture retailer, a technology-enabled supply chain has been key for keeping up with today’s retail environment. Customers can shop in-store or on the company’s website, customizing their new couch or table to their exact tastes. Within a month, customers receive their finished pieces — a turnaround that demands flawless supply chain planning and execution.

As e-commerce grows alongside customer expectations, many retailers can relate to these types of supply chain challenges. The rise of omnichannel is forcing businesses to juggle demand across brick-and-mortar and online touchpoints, navigate countless paths from production to final destination, and meet accelerated delivery requirements, all while minimizing costs. As a result, traditional just-in-time inventory methods are giving way to a just-in-time delivery approach, with retailers reshaping supply chains to meet changing customer demands efficiently and cost effectively.

Are All Deliveries Now Last-Mile Deliveries?

Online spending now represents 10 percent of total retail sales, with shoppers spending $122 billion online in the third quarter of 2018. Meanwhile, companies like Amazon.com are leading the way on emerging fulfillment models, like same-day delivery and dedicated customer pickup lockers. Even if they’re not expecting same-day delivery, today’s customers won’t wait around for purchases. A Slice Intelligence study found that retailers slashed average e-commerce delivery times from 6.3 days to 3.4 days between 2014 and 2016 alone as they compete to be first to the customer’s doorstep.

As a result, while retailers once moved their goods from factory to warehouse to store, many orders are now skipping the warehouse as they travel to their final destination. Many retailers are trading warehouses for smaller fulfillment centers closer to final shipping destinations, and last-mile delivery reigns supreme.

With these changes come rising costs, such as increased reliance on air freight to get shipments to the right place at the right time. Demand for air cargo grew 9 percent in 2017, more than twice the 3.6 percent growth in 2016. Shelling out for pricey air cargo adds to retailers’ financial pressures, particularly those impacted by the current tariffs. With hundreds of billions in Chinese goods subject to duties, businesses that import everything from electronics to housewares are facing additional costs.

Keeping Up With Omnichannel

For the furniture retailer mentioned above, combining supply chain technology with dedicated supply chain expertise has been invaluable for meeting the demands of omnichannel consumers. With the right technology, processes and industry relationships, other retailers can follow suit by improving lead time planning, end-to-end visibility and flexibility. When optimizing your supply chain for omnichannel, here’s where to start.

Prioritize lead time accuracy, not speed. Trimming lead times to meet tight customer timelines often means relying on more expensive modes. Instead, focus on forecasting demand to anticipate changing customer demands. A centralized supply chain platform puts historical averages at your fingertips, helping you to understand exactly how long it takes goods to move from production to fulfillment.

Make sure you can count on your vendors. All the planning in the world won’t help if your factory keeps missing production deadlines or doesn’t follow customs requirements. A supply chain system acts as a single source of truth for all vendor activity, allowing you to track performance trends and adjust allocations when needed.

Make exceptions your rule. By building your supply chain platform around your business rules, you can focus on what truly needs attention and react more quickly to issues. For example, the furniture retailer developed a “hot” shipment report of orders in transit, which it reviews daily to determine delivery order based on customer requirements.

Ensure customs compliance. With U.S. Customs and Border Protection paying close attention to shipments these days, customs issues can cause serious slowdowns that compromise delivery milestones and customer relationships. An experienced supply chain partner can help streamline the process by ensuring harmonized tariff classifications are up-to-date, managing filing requirements, and even helping retailers apply for C-TPAT certification.

Be flexible on modes and carriers. The right technology system will allow you to see instantly where items are in transit and reroute as needed. Furthermore, a well-connected supply chain partner can help source capacity or identify creative transportation solutions. For the furniture retailer, receiving multiple transit options from its partner for each shipment, based on cost and transit times, allows the company to balance price with speed and make changes quickly.

As the rise of omnichannel transforms the competitive landscape, retailers across the spectrum must adapt or be left behind. By focusing on an agile, technology-enabled supply chain, retailers can better position themselves to meet customer demand across every channel.

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Article written by Jon Slangerup. Jon Slangerup is the chairman and CEO of American Global Logistics, one of the fastest-growing and most respected international supply chain and logistics solutions companies in the world. AGL’s technology solutions extend beyond the walls of ocean, air and domestic transportation services for customers across the globe. Previously, Jon was CEO of the Port of Long Beach, and prior to that he served as president of FedEx Canada.

Cargo Surge Leads to Congestion at Southern California Ports

Supply Chain Dive —Dive Brief:

• An import surge across the country — led by a rush to bring in product before Chinese New Year and a scheduled tariff increase on March 2 — is leading to congestion at the ports of Los Angeles and Long Beach, according to a customer advisory sent by American Global Logistics (AGL).

• As a result, ports are facing chassis shortages, constrained trucker availability, long dwell times for ships at berth and difficulties in scheduling labor to manage all of these. “It just is like a domino effect,” AGL CEO Jon Slangerup told Supply Chain Dive. “In logistics, we suffer from this a lot.”

• The ports are planning to use the slowdown of cargo during Chinese New Year to “work down imports on terminals,” according to statements emailed to Supply Chain Dive.

Dive Insight:

When imports surge, port congestion is typically caused by a lack of resources available to handle volume shifts.

“Terminals are having different levels of volume spikes. And so the ability to move container loaders around the different terminals is one problem, combined with the fact at the same time the empties that are waiting to be returned back to market in Asia are also backlogged,” said Slangerup.

Empty containers, meanwhile, are all attached to chassis, which means one less piece of equipment is available to move freight through ports. And the labor required to move equipment around causes another resource allocation issue.
It’s the domino effect Slangerup refers to, and one that requires all actors — from marine terminal operators (MTOs) to the International Longshore and Warehouse Union (ILWU) — to collaborate to fix.

“MTOs, ILWU, shipping lines, truckers and other stakeholders are working hard to manage resources,” Port of Long Beach Executive Director Mario Cordero said in a statement. “The Port is working closely with all of our partners to move containers through the harbor and we thank everyone for their patience.”

Resource allocation is always a challenge before Chinese New Year, but this year it was aggravated by the rush of imports coming into ports before tariffs on billions of dollars worth of Chinese goods rise to 25% on March 2. The ports will need the full week of slowdowns caused by a week of holiday celebrations in China to recover efficiency.

In a statement, the Port of Los Angeles said it will use that time to “aggressively pursue empty containers and chassis returns along with liner company box repositioning back to Asia. These actions will prepare us for the short-term cargo arrivals prior to the March 1 deadline set on the tariff negotiations.”

Though increased volumes have affected all ports, not all are suffering from congestion at the scale of the Southern California ports.

“We’re not hearing about congestion in Oakland,” Mike Zampa, communications director at the Port of Oakland, told Supply Chain Dive in an email. “There have been a few extra night gates and a couple of Saturday gates in the past month to handle the cargo surge, but turn times at terminals are normal.”

Slangerup explained the Port of Los Angeles and Port of Long Beach face the dual burden of being the top gateway for Chinese imports and handling large volumes of empty containers.

But he said the problems in Los Angeles and Long Beach are not as bad as “the perfect storm” that hit in 2014 and 2015, when the ports were gridlocked. “Nothing is gridlocked there. Just there [are] delays getting containers out of the terminals.”

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Feature Image Source: Supply Chain Dive

US Deliveries Hit by Delays as Record Imports Spark West Coast Port Congestion

The Loadstar —US importers are bracing themselves for more delays in the coming weeks, as congestion at the major west coast container gateways worsens, exacerbated by shortages of container chassis and rail cars.

“We’re seeing unprecedented levels of cargo,” said Mario Cordero, executive director of Port of Long Beach. And a spokesperson for the port of Los Angeles added: “We have seen particularly heavy volumes in recent months, warehouse space is at a premium and there have been issues with chassis availability.”

Some logistics companies issued warnings to their clients as early as December about the increased congestion and import flows have not abated since, putting increasing strain on infrastructure.

As The Loadstar reported yesterday, as many as 22 vessels were added by lines in recent weeks to meet demand, and the terminals have struggled to unload them.

American Global Logistics reported that in some cases vessels were waiting two or three shifts after arrival before labour could be allocated to them.

In its weekly update, Flexport warned clients of “extreme congestion” at the Los Angeles/Long Beach port complex, as well as at the New York ports.

The company identified a combination of factors: peak season traffic; the run-up to Chinese New Year; and the prospect of further tariffs on imports from China.

“Spring cargo shipments are up compared with this time last year, mostly due to the tariff situation,” said a spokesman for XPO Logistics. “We believe that’s caused some ripple effects, including an increase in the amount of time containers stay at the ports and the time it takes for a truck to visit.”

The congestion at the terminals has impacted chassis availability, which is, in turn, aggravating the situation further, forwarders say. And according to MIQ Logistics, rail cars have also been in short supply.

Burlington Northern Santa Fe reported it had been “moving strong volumes while confronting challenging conditions in some areas of the network”.

Operators are looking to the Chinese New Year holiday, which starts on 5 February, to ease the pressure and allow them to get back on top of things.

“Chinese New Year should provide a breather and allow the supply chain to recover a bit before cargo flows resume in earnest. The port is working closely with all our partners to move containers through the harbour and we thank everyone for their patience,” said Long Beach’s Mr Cordero.

The wild card in this scenario is the question of whether the US and China will make progress towards resolving the trade dispute and avert further tariffs. Flexport and MIQ Logistics have advised customers delays are likely to continue into mid- or late February.

“We see these stronger cargo volumes continuing for the next few weeks due to the uncertainty surrounding tariffs,” the XPO spokesperson said.

Vessel activity looks set to shrink significantly after Chinese New Year. Nerijus Poskus, vice-president and global head of ocean freight of Flexport, noted that the container lines had announced more than 40 blank sailings on the transpacific eastbound sector for February, along with nine or so Far East westbound.

Capacity will likely be tight then, he warned.

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Feature Image Source: The Loadstar

Shippers Have the Upper Hand in 2019. Here’s What That Means:

Freightwaves —Shippers are in the driver’s seat heading into the early days of 2019.

The rapid growth of the freight market through 2017 and 2018 is over, thereby reducing pressure on shippers and stoking the fire under carriers.

Thanks to the oversupply of transport capacity, particularly trucking capacity, manufacturers and retailers have their choice of freight carrier when it comes time to move their goods to market.

So what does that mean for the freight market as a whole in 2019?

For one, digitization will play a key role as companies seek to optimize their supply chain processes.

With shippers in charge of the freight market, analysts expect them to pressure carriers to adopt technology at a faster pace in order to move freight more reliably and quickly — or face the consequences.

Most experts agree that current weaknesses in the supply chains can be traced back to “silos,” with many discrete components that are unable to communicate with one another. By removing the walls between each step of the supply chain, digitization will create a network that is more resilient and responsive to change.

But digitization is merely a means to an end, and that end is greater visibility along all steps of the supply chain. Jeff Tucker, the CEO of Tucker Company Worldwide, said that his goal as a freight broker is to electronically track 100 percent of his loads by the end of the calendar year.

Because of the high number of carriers competing for loads, Tucker said that his team will begin turning down carriers who will not agree to tracking. That tracking is necessary for freight brokers as competition increases to win business from shippers.

Tracking data, along with other info gleaned from electronic logging devices, must become shared among carriers, shippers and brokers to truly increase efficiency, said Kevin Perry, owner of The Domestic Transportation Consultant.

Once the data is shared, brokers and others can forecast supply and demand trends to reduce wasted time and money.

Accurate forecasting and analytics will require “tight, close-knit relationships with customer service and the supply team,” Perry said.
Both shippers and carriers have been dissuaded from pursuing supply chain digitization due to the cost of the investments in the necessary technology. However, major shippers are spending $50 billion in 2019 to update the technology involved in their supply chains, said Jon Slangerup, executive chairman and CEO of American Global Logistics (AGL).

“In our industry, I see billions if not trillions in reductions of overall costs [thanks to the investments in technology],” he said.
While come carriers may be willing to accept digitization as part of the cost of doing business, other 2019 trends will be harder to swallow.
2018 saw the rise of compliance fees — fines which occur when shippers fail to deliver loads on time — imposed by big-box retailers to match increasing consumer demand, and those are likely to continue rising in 2019.

These fees occur when deliveries are missed, rescheduled, or overall service is poor. Fees can range from 2-3 percent of invoices to hundreds of dollars per load. According to Tucker, 2018 was the most disruptive year for compliance fees. The rise of Amazon is increasing pressure on retailers (and the transportation companies that service them) to increase performance and efficiency in order to meet consumer demand for on-time deliveries.

“Never in the 60 years we’ve been in business has customer service and on-time service been as important as today,” said Tucker. “In an environment of compliance fees, some companies are seeing hundreds of thousands in fees every year.”

Tucker also said that while big carriers are still growing, the number of small carriers (companies with fleets between one and 100 trucks) has grown much faster. The number of drivers for hire has increased as well.

The supply chain in 2019 will also likely see the rise of new competitors and changing ground rules in the freight market, said Slangerup.
“We’re probably at a time of the greatest disruption I’ve seen,” said Slangerup. “The top of the list is the uncertainty around the world because of Washington… changes in relationships since the current administration took power. It’s affecting trade relationship and business relationships.”

As transportation companies become more technologically integrated, tech-focused companies are taking note and expanding into logistics operations, Slangerup said.

He singled out Flexport, a Silicon Valley-based freight forwarder as a polar opposite to AGL, which itself is a logistics company moving into technology.

“It’s a new competitive dynamic,” said Slangerup, though he noted that AGL is making adjustments in anticipation of new competitors.

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Feature Image Source: Freightwaves

In Order to Scale, Tech Solutions Need to be Adaptive

Freightwaves —Overall supply chain and logistics tech spending will rise to $87.8 billion over the next three years. That’s according to new research from Logistics Trends & Insights, LLC and American Global Logistics (AGL). The study shows that U.S. companies will spend more than $2.5 billion in disruptive logistics and supply chain technologies by 2022. The report, “Supply Chain Technology Investment Outlook,” explores the rapid growth in supply chain IT investment and which technologies are likely to take the lead in the next five years.

In transportation and logistics it can be hard to predict what’s coming up. We saw a peak in market volumes and extremely tight capacity in July 2018, and then unpredictable softening in September, which few would have predicted. When SONAR data is studied it verifies current industry thinking regarding volumes and tech trends. Will things be soft or not? There are trends and seasonality but who knows about interest rates and tariffs for instance?

Bending the corner into 2019, there is a wide variety of interesting technology coming out. But it’s really only interesting if you can get people to play (and pay!). There’s so much fragmentation on the capacity side of the equation. It’s impossible to get all those companies to adopt a single technology, and if you can’t get to that tipping point a broker’s always going to be able to find a better price. It’s hard to get distribution and change the way a lot of companies do things. There are tens of thousands of truckers that actually value the relationship, and if someone’s getting them down the road and making things connect, then they’re going to value that. If a driver wants to use his TMS, he or she can do that. If someone wants to go online and automate, that can be done. The industry is extremely diverse, and you have to deploy to many levels. A slick tech solution might solve issues for one small niche of the market, but will it ever be widely adopted?

Predictive analytics can play their part, but sometimes the buzzwords get overused. Everyone wants to talk about artificial intelligence (AI) and blockchain and there are uses for both, but neither (or anything else) is a cure-all, end-all. If a company is really scaling you have to use analytics to improve service, processes, price discovery, and margins. It’s all about applying mathematics to the situation. According to Ginni Rometty, chief executive officer of IBM, “One of the reasons why some people say they haven’t gotten as much value from AI is that the workflow didn’t change. You have to reimagine the kind of work and how it should be done for this to work the best.”

Off-the-shelf solutions will work for a small company getting started, but the complexity of processes increases as a company grows. If a company’s workflow has to be adapted to someone else’s tech, you’re out of luck. Will small brokers be able to reap the benefits of the tech and get to the critical mass to use the technology? Probably not. You need a large marketplace, high ratings for service, and the ability to automate.

Massively configurable technology is what you want. Those who have built to scale and have processes and automated it are likely more competitive and successful. You have to be fairly clever with how you develop it on the back-end and make it configurable on the front-end to do what the customer wants to do.

We recently discovered one such company with nVision Global. Their Impact TMS provides the visibility and management of global shipments from creation through delivery. A company can now, in effect, integrate all the features one demands in a TMS solution with nVision Global’s other technologies, such as Freight Audit and Payment, Freight Claims, and Business Analytics. They are one of the few providers we have found that can offer these solutions in a single package and still offer a configurable TMS solution that meets a user’s exact needs and specifications.

While some get swept away by the hype, success will mean being able to build tech and relationships. Yes, relationships still matter. Whether amongst each other or your customers. That’s what life revolves around. That being said, tech makes people and companies more efficient, and that’s the differentiator.

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Feature Image Source: Freightwaves

Supply Chain Optimization Slowly Gains Traction at Retail’s Big Show

Supply Chain Dive —The growing importance of the supply chain in retail operations was a strong undercurrent at the National Retail Federation’s “Retail’s Big Show” in New York City.

NRF itself knows it, hosting its first ever Supply Chain Workshop concurrent with the Big Show this year. The show’s keynote speaker Lowe’s CEO Marvin Ellison knows it — he’s been preaching supply chain excellence as a key part of Lowe’s comeback since his first day on the job back in July. But based on panel discussions and conversations on the expo floor, not all players have realized it yet.

Retail supply chain experts said the sooner retailers embrace the supply chain as a fundamental part of their customer satisfaction, the sooner they can leverage emerging tools and technologies to better serve shoppers and boost profitability. These takeaways demonstrate how modern retailers can leverage their supply chains to either delight or disappoint customers.

Warehouse tools move in-store

Twas the season of BOSS, BOPIS and any other fulfillment strategies that can be made into acronyms in peak season 2018. In the dim light of January, retailers are doing the math on how they made out.

According to Scott Fenwick, director of product strategy at Manhattan Associates, some are suffering from a bit of sticker shock. Some are pulling back alternative fulfillment options, while others are trying to change the equations on the back end to balance labor and inventory for better profitability.

“What we’ve found is that if a fulfillment objective fails, it’s for one of two reasons: They didn’t plan properly and get the right products in place to make it a positive experience, or they didn’t run the cost models well to understand what it is really going to cost to execute. Sometimes it’s just not profitable,” said Fenwick.

What makes the difference is data and planning, he said. “If they’re not putting in the right effective tools, then the customer is not going to have a good experience when they show up to pick up that merchandise.”

A starting point is good visibility of the inventory in the network, followed by optimizing labor in the store. For some retailers, that means moving warehouse fulfillment tools like “pick-path optimization” into the store to gain efficiency and fulfill orders faster.

Fulfillment is a marketing opportunity

A growing sentiment among supply chain managers is that they work for the consumer. It’s a new frame of mind for work that for decades was kept separate from seemingly related tasks like demand planning and even procurement. Amit Sharma, founder CEO of Narvar, a tech company focused on the “post-purchase experience,” said some retailers are catching on.

“A select few progressive [retailers] understand that every touch point is a consumer touch point. A vast majority are still in the mindset that the supply chain is a cost center — not a consumer engagement opportunity or a marketing opportunity,” Sharma said.

Sharma emphasized that since the consumer holds the retailer responsible for the entire transaction, every element of that delivery is part of its brand.

Robots are on the payroll

On a panel with Badger Technologies and Giant Food on the subject of robots in stores, the moderator asked Tim Rowland, CEO of Badger Technologies, which makes inventory robots in wide-use in Giant stores, about cost. He answered, “The robot’s salary is… ”

Consumers, so far, love seeing robots in store, but the value of robotics versus the benefit can be difficult to parse because robots don’t directly replace humans in most operations. But giving them a wage simplifies the math much more so than Rowland’s other question: “What is it worth to know that you’re out of stock as soon as you are?”

Another robotics company, Locus Robotics, which makes warehouse robots that help with picking in fulfillment warehouses, uses a robots-as-a-service model. Locus also talked about what the robots “make,” this time in an hourly figure. It’s a surprisingly simple way to think about robot ROI.

Clean data is a good place to start

The NRF Big Show floor is covered with tech vendors, and most will explain that the first challenge when working with a new retailer is essentially getting to zero.

Before using data to glean insights and drive efficiency, retailers need to be tracking meaningful indicators with reasonable fidelity. John Slangerup, CEO of American Global Logistics (AGL), told Supply Chain Dive many retailers are swimming in an ocean of data that may not be accurate or usable.

“There is a tsunami of data, but how much is meaningful information?” he said.

Jeanette Barlow, vice president of product management for Watson Supply Chain at IBM, told Supply Chain Dive that getting real, accurate data coming in is the first stage of her work with any client.
“Their homegrown solutions are outdated and just don’t have the sophistication to have the flexibility for all the models they need,” said Barlow. Working with retailers to bring in better data is the first step before she can offer better visibility and then, optimization.

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Feature Image Source: Supply Chain Dive

Afternoon Coffee: Brexit Deal Faces Deadly Vote; When Do Retailers Seek Supply Chain Visibility?

Spend Matters —With the latest Brexit plan facing a tough vote Tuesday, British Prime Minister Theresa May is seeking support for the deal, Bloomberg News reports.

If the plan dies as expected, she’ll have some time to formulate a Plan B. See the graphic that lays out the options, and read about the details dragging down this deal.

Big Losses, Mad Bosses
Retailers know the supply chain has the potential to deliver big losses or big gains, but seeking more visibility into it often occurs only after a big problem occurs, Supply Chain Dive reports.

“Usually it’s a major disruption like what has been happening the last two years. … Whenever something happens that causes you to miss your goals, lose money and cause your boss to be mad at you, then suddenly it becomes a problem,” Jon Slangerup, chairman and CEO of American Global Logistics (AGL), told Supply Chain Dive, which looks at the motivations for retail companies to seek technology that helps them see into their supply chains.

Slangerup also said the high numbers of retailers pursuing supply chain visibility (72%) is indicative of the size of the task ahead and not progress already made.

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What drives retailers to seek supply chain visibility?

Retail Dive —Retailers are quickly learning that supply chains are the place where profits are earned and lost, but motivation to achieve real-time visibility differs based on the size of the retailers, according to experts at the National Retail Federation’s Big Show in New York City.

The second and mid-tier companies that Jon Slangerup, chairman and CEO of American Global Logistics, works with tend to wait for a problem before considering doing the work of achieving full supply chain visibility. They’ve had their pick of calamities recently, from tight trucking capacity to tariffs.

“Usually it’s a major disruption like what has been happening the last two years … Whenever something happens that causes you to miss your goals, lose money and cause your boss to be mad at you, then suddenly it becomes a problem,” he told sister publication Supply Chain Dive.

Jeanette Barlow, vice president of product management for Watson Supply Chain at IBM, is more likely to be working on digital supply chain visibility solutions with top-tier retailers. She told Supply Chain Dive a sense of untapped opportunity is often driving the adoption of technology that allows for greater supply chain visibility.

“A lot of the panic that stores are dead seems to have gotten behind us, and now they’re asking, ‘How can I leverage the fact that I have stores?’ Then it becomes much more critical to have a view of where things are and the capacity and the productivity that you have,” Barlow said. In order to manage a more complicated omnichannel network, retailers need a better handle on where inventory is and how it’s moving, she said.

No matter the motivation, the majority of retailers appear to have gotten the message that visibility is a must whether trying to withstand new tariffs or exploring new fulfillment models.

According to Zebra Technologies most recent Retail Vision Study report, 72% of retailers are working on digitizing their supply chains in order to achieve real-time visibility. This includes investing in myriad new tools, new tech implementations and new ways of thinking to gain that visibility.

Slangerup added that the high numbers of retailers pursuing supply chain visibility is indicative of the size of the task ahead and not progress already made. “When it comes to mapping their supply chains, most haven’t got a clue,” he said.

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