Top 8 ScanData 2019 Takeways
Top 8 ScanData Takeaways from 2019
2019 was a battleground year in the Supply Chain Logistics space with so many new contenders entering the competition and technology ramping up like never before. We are seeing not only the idea of automation, but the adoption of automated vehicles in Last Mile, within the four walls of the warehouse, and in the sky over our head as companies look to smarter ways to deliver packages. Large players are making major moves to create “smart networks,” startups are getting major funding, and retailers are looking at how bigger is not better.
8. We wish we had a dime every time we heard “The Amazon Effect.”
It is synonymous with increased competition, shorter delivery times, web saturation, and razor-thin margins. Truly it has caused more companies to think outside their standard UOM deliveries and think smaller, giving birth to a whole series of startups that cater to micro fulfillment, robots, and automated storage. Nobody can match the investment in hubs, aircraft, and vehicles that Amazon has pushed out at a furious pace, but what they can do is solidify their customer base by continuing to provide excellent customer service and on-time deliveries.
7. More competition = an increase of supply chain costs as compared to retail sales.
According to the “30th Annual State of Logistics Report” authored by A.T. Kearney, online purchases accounted for 14.2% of all retail sales. This has led many companies to develop new warehouse and delivery strategies from dark stores to operating smaller, more focused warehouses closer in to population centers in a hub and spoke model. This has caused construction costs to rise and increase rents in many of the popular distribution areas. Close to the ScanData home in Dallas, Nathan Orbin, executive managing director of Cushman & Wakefield expounded even more on the record year, “Although the market currently has in excess of 28 million square feet under construction, we anticipate demand to remain high and overall vacancy to remain stable. This will contribute to rents escalating in the near term, affected by elevated demand and higher land and construction costs.”
6. Parcel is more popular.
Parcel Carriers saw an 8.7% uptick in revenue to $104.9 billion over 2018. Higher parcel shipping costs have created a need to negotiate favorably for your company with your parcel carriers. Working incentives and looking hard into the data to determine what is planned versus actual and shipping trends could save millions when it comes time to negotiate new rates. It would be bad form if we didn’t mention that now is the time revisit your Parcel Rate Shopping Rules. If you are using a zip code mapping fixed table, then it is time to talk to an expert and look into a mature system.
5. Blockchain is still a thing.
Blockchain is not going away and more companies need to realize it is not just a bunch of technology wonks spouting off about it. But, adoption of this technology is a world away as most companies do not see a fit. The level of security blockchains mathematically validated traceability is outweighed at this time by scale and cost of integration/implementation with other systems.
4. Labor is tight and unemployment is at a record low.
The unemployemnt rate continues to go lower meaning that your employees are now even more valuable to your competition. Skilled labor, especially combined with an automated environment means you can keep headcount low, but that skilled labor has a lot of options. Making significant investments in both your software and your people can maximize your results. The cost to train and replace will be more than keeping an employee that knows your systems.
3. Customer Experience is tied even more to Supply Chain.
With the increasing use of ecommerce over retail for the average consumer, the main point of frustration is wait time and missed deliveries. It is not enough to just improve transparency and delivery. Companies are looking into predictive alerting for customers, especially high-value customers to late deliveries. Automating this process can increase the customer’s trust of your ability to fulfill their order and get them coming back for repeat business. Combine user preferences of alert tracking with your automation to give the customer choice and provide them with the ability to customize their relationship with your company.
2. Last Mile is now the new battleground.
2019 has seen the ermgence of countless startups trying to figure out how to make money in a traditionally high cost space. Of course, the smartest guys in the room wearing blazers and t-shirts will tell you they are shaking up a part of the industry that hasn’t seen change, but in 12 months how many of these will be still around as they burn cash buying up vans and trying to hold on to staff. Using software will help, and even MIT is now helping companies crack this nut. Look to see a lot of mergers and partnerships as Last Mile moves to smart lockers and one company doing many companies drop offs to maximize route planning.
1. Amazon and FedEx part ways.
In a truly breathtaking split, FedEx will no longer be the handbag holder to the Instagram star Amazon while Amazon quietly builds their distribution world. So, while Amazon made up a small part of FedEx’s overall business, (1.3%0, it was taking up a lot of resources. This divestiture/allowing Amazon to go a different direction/pink slip gives FedEx the opportunity to compete for more ecommerce business. On the flip side, Amazon has learned a lot on how to continue growing their private fleet of planes, vans, and soon AGVs. In a recent development, the Wall Street Journal announced it obtained a message from Amazon to all its third-party vendors to stop using FedEx, citing the need for improvements in delivery performance. This breakup will definitely play out all over the news and might even end up in the courts during 2020.
We realize this piece is very high-level, and if you’d like to drill down on any of our topis, reach out to us with questions or comments. We also welcome opportunities to deliberate or dispute our insights and recommendations. No conversation is off limits; you are an expert and we'd love to speak with you.
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