Morai-Logistics-Blog-Nintendo-Switch-Part-2

While modern companies focus on providing exceptional service, Nintendo continues to focus on extraordinary products with a Customer-Centric approach.

In our last post, we began exploring the reasons behind Nintendo’s history of not meeting consumer demand. Many of its gaming consoles, software, peripherals and promotional items in the last 20 years have seen instances of scarcity across its North American and European markets. Limited supply, inflated grey market prices, and angry consumers have been the result.

Nintendo’s latest console, the Switch, launched a few months ago with similar supply shortages. Some customers and press accused the company of intentionally limiting production to drive sales given the familiarity of the situation.

What’s behind the latest supply issues is the company’s customer-centric philosophy, not artificial scarcity.

Artificial Scarcity Isn’t the Problem

On the surface, Nintendo’s selling practices may seem to favour artificial scarcity to drive sales. The problem with this theory, is that artificial scarcity is only ever a short-term solution for luxury products. Artificial scarcity only generates demand because of perceived scarcity. The actual value of the product isn’t considered, meaning that the company doing it has little incentive to innovate the product. After a certain point, and despite a company’s attempts, there will be too much of a product in circulation for it to maintain its price.

Nintendo is a nearly 140-year-old multi-national company, iconic and influential in its industry. If it followed the same strategy as the former Beanie Baby empire, it would’ve folded decades ago.

The ‘problem’ with Nintendo’s management and supply chain strategies, is that they’re very customer-centric.

Customer-Centric: An Old but Effective Model for Nintendo

Newcomers like Amazon, Uber and PayPal have been disruptive to many industries. However, their biggest contribution is the latest trend of customer-focused strategies. Many companies are now trying to streamline their services to better improve the customer experience.

Ken Ramoutar of Avanade Insights, highlights what a customer-centric focus involves:

  • Anticipate your future needs looking at behavioural patterns, market trends, leveraging data from inside and outside the organization
  • A unique and memorable experience; seamless across your interaction channels
  • Analytics to inspect call logs and problem reports to feed changes in supply and production

None of these describe Nintendo’s business practices or product design philosophy. In fact, the company is notorious for being especially conservative in an industry that’s in constant flux.

Nintendo and Unique Gaming Experiences

Nintendo’s focus throughout its long history, is on creating products that provide a unique experience in and of themselves. Unlike its past (Sega) and current competitors (Sony and Microsoft), the company never bothered to chase the latest technological, marketing or business trends. This historically had both good and bad results for the company at different points in its history. However, it has allowed it to remain strong in the face of ever ballooning industry costs. Sony and Microsoft may have millions of dollars to throw behind their development and marketing strategies, but Nintendo has its Blue Ocean Strategy.

That’s it for this week’s post. In the final entry of this three-part series, we’ll describe how Nintendo’s Blue Ocean Strategy and customer-centric approach has led it to continue to be a dominating force within its industry.

If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

Morai-Logistics-Blog-Nintendo-Switch

Beloved entertainment giant Nintendo has a long history of trouble getting their products to the right hands.

Almost two months ago, video game giant Nintendo released its latest console—the Switch. Although it received a lot of positive coverage, a familiar problem has been marring the consumer goodwill; extreme product scarcity.

The company’s sales forecasts were off. They were so off that additional Switch consoles had to be flown to their North American and European distributors. Although Nintendo took a drastic action and its been two months since the launch, the consoles are still hard to find. Some are even claiming that it’s a case of artificial scarcity.

Before we can begin to answer the question of Nintendo’s possible motives, there’s a few basics that need to be gone over.

Make it Rare, Make it Wanted

The scarcity of a commodity or a service is an important element of the business model. If there’s a lack of supply, the price will likely go up. If there’s overproduction, the price will start going down. While scarcity is a natural and fundamental part of a free market, artificial scarcity is not.

Artificial scarcity happens when an individual, company or organization creates a scarcity either through technology, production or law, where there would otherwise be the capacity for an abundance.

A classic example would be the Beanie Babies during the 90s. Ty Warner, the person behind the craze, “would retire specific animals at whim, creating scarcity in the market and inspiring collectors to pay up to $5,000 for a plush toy that originally retailed for $5” writes New York Post contributor, Larry Getlen:

Ty’s website further fueled the phenomenon, as the company used it to make retirement announcements and to speculate on possible retirements, dropping hints that drove collectors to buy or sell different lines. Some sellers even began changing prices throughout the day based on website updates

In the end, the Beanie Baby empire came crashing down. Collectors became overwhelmed by all the new product lines and regular customers got tired of fighting with scalpers. The rise and fall of Beanie Babies is a lesson in how even the hottest products can tank if consumers aren’t respected.

Nintendo Has a History of Underestimating Demand

While misjudging demand is something many businesses go through, Nintendo is a special case. Pretty much every piece of hardware released by the company has met with supply problems.
Just to list a few, here are some examples:

  • NES Classic Mini. Retailed for $60 USD, now on Ebay for $250+ and climbing.
  • Amiibos, RFID-enabled collectable gaming peripherals originally sold for $12.99. Some of harder to find ones ended up selling on the grey market for over $100 USD.
  • New 3DS XLs were impossible to get a hold in NYC when they released earlier this year according to an article from The Verge.

Just from these examples (there are many more), it’s safe to say that the company has a history of seriously understating the demand for it’s products. Many potential customers are turned-off from buying Nintendo products for this very reason.

Is it a problem with Nintendo’s supply chain or management? What if the problem is intentional, the supply intentionally restricted as many consumers suspect? The answer to these questions require nuance which is why we’ll leave off answering them until the next blog post. Check back again soon for the second part of this two-part topic.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

Morai-Logistics-Blog-international-womens-day-logistics

Yesterday was International Women’s Day (IWD), a celebration and tribute to women’s rights. This year marked the 108th anniversary of IWD.

IWD 2017’s goal is to speed up the timeline in reaching parity between men and women in opportunity, wages and leadership representation. According to the World Economic Forum, it’ll be nearly 170 years before the gender gap is closed. That’s a long time to wait for equality.

Let’s have a look at how far women have come. Both in the workplace and in field of logistics.

Women Internationally

Women have made tremendous progress across the globe in terms of rights and in the workforce. However, the last few years haven’t been as promising.

Despite an additional quarter billion women entering the workforce since 2006, women are a third less likely to participate than a man. In fact, in the ten years between 1995 and 2015, globally, women’s labour force participation dropped over 2%. Representation in administrative roles isn’t much better as women only hold 12% of the world’s board seats according to a report by Deliotte.

The disparity continues in wages. Globally, women earn around a third less than what men earn.

Women in North America

The numbers are a little more optimistic if you narrow the scope to just North America.

In Canada and the U.S for example, the difference between the number of men and women in the workforce was 9.6% and 12.4% respectively.

The two countries show very different numbers when it comes to women in management positions. Women hold around 35% of management and professional roles in Canada, whereas in the U.S, the number goes up to 51%.

Only modest gains have in regards to the number of women serving as Fortune 500 CEO’s. There’s only 24 women (4.8%) in the top levels of these companies. However, Fortune is reporting that the number is increasing to 27 by the end of first quarter 2017. While still low, these numbers are big improvement over 20 years ago, when women were completely absent from these positions.

Women in Logistics

The logistics industry continues to struggle with equality. There are several reasons for this, but a root cause is perception. It’s hard for the industry to escape the perception that it’s all about heavy lifting and moving. This image problem has affected the number of women seeking out a career in logistics.

Currently, around 65% of graduates going into the logistics field are male. Only 35% of graduates are female. The difference is the greatest of any business field. The number drops to 5% when looking at women in logistics holding top level positions.

These figures are troubling not just from an equality perspective, but from a business point of view as well. Financial performance significantly improves if there’s at least 30% women in higher-level leadership positions according to a 2009 report by McKinsey.

Women have come a long way since the first IWD 108 years ago. Organizations are increasingly seeing the value of having qualified women on their teams, from entry-level to CEO positions. The logistics industry especially has a lot of work left. But, we’re confident that as the industry continues to modernize, the number of female leaders will grow as well.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

Morai-Logistics-Blog-eld-mandate-intermodal-logistics

Canada’s Electronic Logging Device (ELD) Mandate is set to affect intermodal transportation favourably in rates, fuel prices and capacity. This is based on the Intermodal Competitive Index (ICI) of the freight transportation forecasting firm FTR.

Earlier this week, the condition of intermodal versus truck was described as ‘moderately favourable’ according to freight transportation forecasting firm FTR. Their Intermodal Competitive Index (ICI) showed a slight increase in November to a level of 5.0.

The ICI looks compares North American intermodal sector and over-the-road trucking. A negative number indicates conditions are unfavourable. The higher the positive number, the better the favourability for the intermodal sector. Factors affecting the level are intermodal rates, fuel prices and truck capacity.

Despite the current state, FTR predicts that the ICI may deteriorate soon because of normal seasonal factors. Thankfully, the ICI is anticipated to start rising again until the end of the year. The rise will be due to the truck Electronic Logging Device (ELD) federal mandate.

“While the new administration’s more restrained philosophy with regard to regulation may have some eventual downstream effects on the trucking environment, we believe that the ELD regulation, which has already been formalized into law, will not be recalled…[]..While the extent and precise timing of the capacity effects of the ELD mandate are open to debate, there seems to be little doubt that its capacity effects will result in some tightening of truck availability which should work to the benefit of intermodal” said Larry Gross, Partner at FTR and principal author of its Intermodal Update, in a statement.

Canada Soon to Implement ELD Mandate

The Canadian Council of Motor Transport Administrators (CCMTA) is expected to have a final rule on its own ELD mandate early this year. A Canadian compliance date will likely occur for early next year.

The mandate received a lot of enthusiasm from the CCMTA as discussions about implementing a ELD mandate in Canada has been ongoing for nearly ten years.

“Though safety and consistency with U.S. guidelines were primary factors behind the change, Canada’s ELD mandate was also motivated by financial considerations as its trucking industry hopes to compete with U.S. carriers who have seen the economic benefit of using electronic logging devices” writes Keep Truckin, a blog about fleet management.

“Canadian fleets who implement and train drivers on ELDs well before the 2018 deadline will be more competitive with U.S. fleets already reaping the benefits, including fewer hours-of-service and form and manner violations and improved Compliance, Safety, and Accountability (CSA) scores.”

Although the Canadian ELD mandate will be a year behind it’s American counterpart, the decision is the right step to improve competitiveness. A high volume of trade is conducted between Canada and the U.S. In fact, the two countries trade around trade $662 billion worth of goods and services with one another annually.

What the ELD Mandate Will Mean for American and Canadian Fleets

Having ELDs be the standard will benefit fleets in a few different ways. For one, the amount of paperwork will be greatly reduced. Secondly, dispatchers will be kept up-to-date with the condition of the drivers, helping them with planning better loads. Thirdly, it will eliminate paper logs and with that, the headache that comes with maintaining it.

The American ELD mandate is only 11 months away, but is already predicted to have a positive impact on the intermodal sector. Canada will follow suit next year. Fleets in both countries will benefit in regards to increased safety, planning and efficiency. The North American Intermodal sector has a lot to look forward this year and the next.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

Outsourcing is business strategy of contracting work out to a third-party. Companies use outsourcing to gain access to cheaper labour, larger specialized labour pools, and/or obtain other benefits through an economy of scale. The term encompasses both the setup of a subsidiary, and the off-site activities of a company.

For decades, companies used outsourcing strategies to meet the needs of their business, but it was not formally identified as business strategy until 1989.

The three main types of outsourcing are: offshoring, nearshoring, and reshoring in the logistics and supply chain industry. The main difference between them is the location of the third-party. Each has its own benefits and costs, but because of the dynamic nature of global political-economy these are always changing.

We created this eBook to kick off 2017 to clarify why companies choose a particular offshoring option over another. This way, you can see how manufacturers think about these strategies.

What is the Difference Between Logistics Oursourcing Options

morai-logistics-ebook-offshoring-nearshoring-reshoring-title-image

Choosing Shoring Options

There are many advantages to outsourcing certain jobs and functions—cost advantage, access to bigger pools of skilled labour, increased efficiency, and saving on infrastructure and technology. However, the biggest advantage is that it allows your business to focus on core areas. Your business will be able to spend more time on building its brand, R&D, and providing higher value added services.

Offshoring, nearshoring and reshoring each have their own distinct advantages and disadvantages. Though, what will work best for your business will depend on its goals and core competencies. Talking to a third-party logistics provider is a very useful way to learn more about sourcing options.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logistics-blog-tips-holiday-peak-season-logistics

November is almost at an end. As December nears, the holiday peak looms for many distribution centers. The season will be the busiest for us in logistics and transportation thanks to Black Friday, Cyber Monday, Christmas Eve, and Boxing Day.

Customers will be expecting to receive their purchases and gifts with little hassle. This means that for many organizations, the sole focus of the winter peak will be to customer satisfaction. Thanks to the increasing number of people shopping online, the winter peak is especially volatile for orders.

Proper planning for the winter holiday peak should have started months ago. Some businesses go all-hands-on-deck as early as August, or October. While strategic planning is important for a smoother peak, it doesn’t guarantee it. There are several ways the plan can become derailed.

This week we’ve decided to focus on the five ways to help make sure your business stays on track.

1. Clarify Your Expectation to the Staffing Providers

As Deborah Ruriani of Inbound Logistics points out in her article, planning for the holiday peak should have involved your staffing providers. With the winter peak so close, it’s important that the expectations of your relationship are re-communicated. Turnover is likely to be high until the peak is over. Staffing providers need to ensure that new hires are of the same standards as those they are replacing.

2. Audit the Preparedness of Your Organization on All Levels

As the holiday season approaches, it might be tempting to hunker down and only focus on your work until it passes. Doing so puts your organization at risk. Fulfillment centers can only succeed if all its parts are all working smoothly and towards a common goal. Any weakness in the management, operations, support, HR or other departments can lead to a domino effect.

3. Regularly Check the Morale of Your Employees

It’s normal for stress levels to be higher during the holidays. A lot is expected of the staff and they’ll have tight deadlines in which to accomplish these tasks. Stress levels can’t get too high however. Too much stress over too long a period will cause mistakes. Too many mistakes will cause more stress, growing and extending the cycle.

4. Check and Update the 5S Lean or Other Quality Initiatives

The 5S Lean Methodology is a strategy on how companies organize a work space for efficiency and effectiveness by identifying and storing the items used, maintaining the area and items, and sustaining the new order. By this time of year, your company should have a detailed space utilization plan in place. But remember, this time of year is volatile so your plan may need tweaking. You’ll need to check which variables have changed since the plan was drafted and adjust accordingly. Flexibility is crucial in this area.

5. Continue to Audit your Building’s Processes for Best Practice Research

Peak is an important time for many organizations. This is why a record of what worked and what didn’t needs to be kept during and after every peak. Each peak brings with it the opportunity to do things a little bit better.

The winter peak is a stressful time for many of us in the logistics industry. Our customers expect us to deliver so they can have a happy holiday season. It’s because of our customers that we need to ensure that both the planning and execution of peak plans are done with the utmost dedication and care.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logistics-zombies

Zombies are undead creatures, popular in many modern books, movies, television, and as Halloween costumes. They are the monsters that just won’t stay down. No matter what happens to one, it will eventually get up and continue its hungry lurching. Unlike more classic monsters, zombies cannot be waited out or ignored. Every passing hour increases the size of the horde as more people fall and become zombies themselves.

We have our own zombies in the world of logistics. Logistical zombies are issues that just never seem to go away. Like the classic zombie, these zombies can be very hard to put down. Just when you think it’s been taken care of, it rises again. These zombies generally start small. The problem is that like its movie and film counterpart, it will escalate and multiply if ignored, becoming a much bigger problem later on.

The go-to recommendation is to take action. This may just waste resources. Without a strong understanding of the core issue its likely time and effort will be wasted on a symptom and not the true cause. What’s needed is a root cause analysis.

Here are the 3 steps necessary for an effective root cause analysis:

Build Your Root Cause Analysis Diagram

To start, you’ll need a root cause analysis team. With a dedicated and varied team, a better root cause diagram is more likely because of the different perspectives.

Choose which root cause analysis diagram to use. Two popular diagrams are the fishbone or Ishakawa diagram, and the 5 Whys. Both diagrams have their advantages and disadvantages.

It’s important that everyone on the team understands that participation will not result in disciplinary action or peer ridicule. Management must stand by this agreement.

Walkthrough the Story and Verify Observations

Once the diagram is complete, the team needs to run through the diagram from every angle. Conditions and sub-causes need to be checked against verifiable evidence. Unsupported items need to be removed.

The aim is to have a list of actions (5 Whys) or diagram with items within verifiable contexts. A clear and cohesive story needs to come from the team’s diagram that leads to the primary event.

Depending on the resources available to your team, financial or technical constrains may restrict how far they are able to go.

When this happens, TechRepublic advises “… there are two possible solutions. First, the team can identify another point at which they can improve or implement a control. The goal is to arrive at the desired probability of occurrence with a combination of changes instead of a single root cause remediation.”

Consider Implementation and Create Action Plans

With the root causes analysis diagram complete, now it’s time for a formal action plan. List the tasks necessary to reduce the likelihood of the issue or increase your organization’s ability to detect the issue.

For each task, the plan should list the resources assigned and expected completion date. Don’t forget to assign someone to own and manage the plan!

Film and TV zombies may rise again, but by using root cause analysis your company/team will be able to put down logistical zombies permanently!

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logistics-blog-corporate-culture

An adaptive corporate culture is an important part of any organization’s long-term success. Yes, managers and C-level personnel set the standards for how business is run, but it’s the values and practices shared by the employees that will guide the hundreds of decisions they make on their own every day.

Why Culture Matters

As Frances Frei and Anne Morriss write in this article for the Harvard Business Review, “Culture tells us what to do when the CEO isn’t in the room, which is of course most of the time”. These seemingly small decisions add up. For example, some studies show that companies with adaptive cultures successfully aligned to its business goals outperform their competitors by 200% or more.

Companies that deal with supply chains or are in the business of running supply chains need to take extra precaution for these reasons. With so many stakeholders and moving parts in a supply chain, it is easy to forget about fostering a healthy culture, and instead leaving ignoring the issue until it becomes toxic. However, if left unchecked a toxic corporate culture can not only severely injure a company’s reputation, but the reputation of an entire industry if it becomes the norm.

5 Steps to Implementing and Measuring Culture

Culture is at its core, a structured system, is something that can be purposefully implemented and evaluated through these five steps:

1. Define Core Values

Well defined core values reflect the priorities your business holds. They’ll inform how your employees behave and act with each other and the professional tone of the work place. Without a well-defined and meaningful set of core values, attitudes and expectations become confused. This could lead to situations of mediocrity, laziness, lack of accountability and general unprofessionalism.

2. Align Core Values

Core values need to apply to everyone. They need to start at the top levels of leadership, and radiate across all levels of the organizations from the top down. Leadership needs to be both an example of the values in action, and a facilitator that reinforces these same values in the behaviours of their staff. Higher productivity and increased job satisfaction can only come about with the involvement of manages ensuring that workplace attitudes, work ethic, and daily routines matches the company’s core values.

3. Reinforce Core Values

Core values can be reinforced through recognition of outstanding team members, encouragement of new ideas, and standardizing employee and manager reactions to conflict. Reinforcement also needs to extend outside the organization to potential clients, partners, and vendors.

“It is important to choose an outsourcing partner or client whose values align with your own and who can integrate easily from a culture standpoint. This improves communication, cooperation, and efficiency, and results in enhanced performance and reduced costs” writes Ron Cain from Inbound Logistics.

4. Measure the Integration

Like with any other aspect of a business, accountability and transparency needs to also be factored into culture. For this reason, a careful and deliberate cultural assessment needs to be conducted of the organization to measure how well your company integrates core values into cultural variables.

Getting a second opinion in this area may also be a good idea so hiring a culture auditor should also be considered if the budget is available and time is a factor.

5. Build Action Plans

A detailed plan with defined expectations, attitudes, accountability, and metrics is necessary if it is to succeed. Leadership also needs to be in regular communication with employees to issue and track performance. By doing so, your organization will be able to affect a change in culture in a stable, measureable, and lasting way.

By having a well-defined company culture your organization won’t just have a better bottom line, and improved morale, but also a better chance for success in the long-term for years to come.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logsitics-ar-supply-chain

If you’ve been to any public places the last two weeks, then you’ve seen children and adults wandering around pointing and swiping at their phones. This is because of the new app Pokémon Go, an augmented reality game where people hunt, capture, and battle adorable creatures that they can find just by walking outside. The app has been out a short awhile, but has already reached meteoric levels of popularity as, just a day after it was available, it was already installed on more US Android phones than Tinder.

The application of augmented reality (AR) technology isn’t limited to gaming. Aeronautics and automotive manufacturers have been implementing AR with heads-up displays for years. Although, it is only now that the technology is seeing more commercial use as wearable AR technology is becoming more affordable. In fact, AR is predicted to become a $90 billion industry by 2020.

Even for just next year, the value of AR is estimated to be over $6 billion with industrial sector (manufacturing, distribution, and logistics) seeing the largest utilization of the technology.

What is augmented reality technology?

“VR is complete immersion in a virtual world – with no outside stimulus. VR is much more common and is mostly used in gaming and entertainment. AR is technology that alters what the wearer sees in his/her reality” writes blogger Kristi Montgomery in this TalkingLogistics post. The alterations to what a user perceives can be made to motivate towards a behaviour, such as with Zombie, Run!, a phone app that turns real-world running into a game, or it can provide useful information real-time like in the case of DHL’s successful pilot project which tested smart glasses and augmented reality in a warehouse in the Netherlands.

AR in Action

DHL recently published its results for the pilot program it conducted in collaboration Ricoh and Ubimax which had staff in a Netherlands warehouse be guided by graphics displayed on a smart glass.

The aim of ‘vision picking’ was to reduce errors and increase efficiency which the project did very successfully as it resulted in 25% efficiency increase during the picking process. Because picking tasks accounting for 55% to 65% of the total cost of warehousing operations, the potential value of that the efficiency adds to picking is huge.

Given the value that AR can add to a supply chain, it is no surprise that DHL is not the only logistics company that is trialing the technology. The AIMIA Institute described another example in this post “In the middle of last year, Active Ants reported similar results from when they equipped their stock pickers with Google Glass. Active Ants used Google Glass with a custom-built app and they saw an efficiency increase of 15%”.

There are still several barriers to the wide-spread implementation of AR technology in logistics to be sure, but it is clear that there is also lot of potential value in it as well. As the cost and efficiency of the technology evolves, so will the innovative changes that VR can offer to supply chains.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

morai-logistics-blog-omni-channel-fulfillment

With so much discussion over omni-channel fulfillment being the future, it is interesting then that only 19% of the top 250 retailers are currently fulfilling omni-channel demand profitably, according to a new the third annual Sands Future of Retail Report.

Despite such a small percentage of top retailers making a profit from omni-channel fulfillment, the service is in high demand by customers and growing.

For example, for nine out of ten consumers, free shipping was reported as the top incentive to shop more online. This number has grown to become the top consideration. One-day shipping (69%) and free returns (68%) also continue to be top drivers.

The Future of Retail and Logistics

There were other key findings of note in the study:

  • Nearly a third of consumers (31%) now shop online at least once a week, an increase of 41% from two years ago.
  • Only 9% of consumers have used same-day shipping in the past year, but almost half (49%) say same-day shipping would make them shop more online if it were offered more frequently.
  • 40% of consumers expect to receive their first drone-delivered package in the next two years or less. Less than a third (31%) think it will take more than five years.
  • Among consumers who don’t trust drones to deliver packages, theft and damaged packages are the top concerns (72% each), but safety (68%) and privacy (60%) seem less risky than they were a year ago.

A theme throughout the study from customers was the expectation of greater and greater speed of the supply chain. This can be seen by the finding that consumers who shop online more than twice a week are twice as likely to be persuaded by same-day shipping as consumers who shop online only a few times a year (63% vs. 32%).

The main reason that so few top retailers are yet to make a profit from omni-channel fulfillment is simply that they have yet to figure out how.

According to the 2015 Third-Party Logistics Study, fully one-third of all respondents (nearly 800 manufacturers, retailers and 3PLs) say they’re not currently prepared to handle omni-channel fulfillment.

Tim Foster, managing director, Asia-Pacific, with supply chain consulting firm Chainalytics weighed in on the discussion.

“Forester believes manufacturers and retailers will address this market transformation by eliminating non-value-adding activities within the supply chain. He cites the example of pharmaceutical distribution, where the traditional supply chain flow from manufacturer to wholesaler to retail pharmacy is being replaced by either a direct flow from manufacturer to retailer, or a loop with the 3PL in the center” summarizes Material Handling and Logistics News in this article.

3PLs have some time to catch up to customer demand. Privacy and security concerns are hampering the demand for omni-channel distribution in the areas of mobile phone payment. “This could explain why adoption has essentially remained flat year over year, with about a third of consumers having used these applications. Still, U.S. mobile payment transactions are expected triple in 2016 to $27 billion, a sign that a few eager early adopters and the growth of Apple Pay could eventually force more widespread changes in consumer behavior” concludes the article.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.