Kelli Saunders, Author at Morai Logistics Inc.

3 Reasons to be Excited for 2015

https://morailogistics.com/3-reasons-to-be-excited-for-2015/

If you were reading Forbes’ website last week, then you would’ve come across an interesting article concerning predicted trends for the logistics industry in 2015. Sarwant Singh, a Senior Partner in Frost & Sullivan lists a total of 15 likely trends to occur in 2015 with common threads between all of them being Information & Communication technology providing new avenues for production, solutions, and business models; and societal trends transforming the corporate, market, and personal landscapes.

The entire article is excellent and is a must read for anyone curious about the opportunities afforded by the evolving logistics industry. For this blog post, I would like to focus on three key trends listed in the article as, in my opinion; are the biggest deviations from the status quo in the logistics industry.

Moving toward Zero Latency

The world will prepare itself for faster processing speeds and faster response times. The next few years will see a move toward zero latency and human unnoticeable delays providing real-time experiences. This will increasingly be embedded into workflows and other processes.

The collapse in latency times in just the last few years has been astounding. The old expectation of same month delivery from traditional post service evolved to same week. This year saw same-day delivery become the standard for e-commerce companies such as Ebay, Amazon and even Google. However, even this hasn’t been quick enough with Amazon’s same-hour delivery service for its Prime members which it revealed last week.

The move toward zero latency is not only a massive drive for innovation in the logistics industry (such as Amazon’s delivery drones and DHL’s massive pledge of investment into creating more efficient supply chain networks in China), but also a key way in how many supply-side companies are marketing themselves to customers.

Transparency is the New Green

Increasingly pervasive analytics and collaborative platforms would make data and processes more transparent than ever before. Governments, corporations, organizations, communities, supply chains and even individuals will be more accountable and liable for policies, decisions and strategies.

Customer interactions with businesses of years past were very binary for the most part. A customer wanted or required a product, and a business provided it wholly formed. Questions such as where it came from, how it came to be weren’t asked and businesses weren’t forthcoming with the answers. The logistics industry was no different as the levels of supplier tiers, volume of oversee transactions, and technological limitations complicated the matter further for many companies in the industry.

The change in philosophy has been swift and pervasive in the last few years as large international companies such as Starbucks, Levi’s, and even McDonald’s and Amazon have embraced more open business models.

Our post last week focused on this trend, but suffice to say, greater transparency in the industry is good all-around as it offers customers more information, accountability, and ultimately better choices.

Women Focused Strategies

As the policymakers debate and implement policies increasing quota for women in boardrooms in 2015, we will see a lot more women focused strategies across companies in different sectors.

The industry of logistics has long been a “Gentleman’s Club”. As outlined in the Morai Logistics Infographic focusing on women in the logistics industry, compared to other industries women still have some room to catch up at all levels in the logistics and supply chain industry.

However, not only have more women been getting into the industry, but women focused strategies overall has been on the rise.

In a past article we wrote about how companies are realizing the benefits of supplier diversity go beyond the “social good.” We are now at an age where companies are starting to find that supplier diversity programs can be fiscally beneficial through ROI, and lead to bridge-building into the untapped force that is women-owned businesses.

All-in-all, 2015 will be an exciting year for the logistics industry.

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!

Moving From Invisible to Transparent

https://morailogistics.com/moving-from-invisible-to-transparent/

A couple of weeks ago, we talked about The Amazon Effect and how it affects 3PLs. This week, we return to Amazon as the giant online retailer announced its launch of Amazon Elements, “a new line of premium, everyday essentials with transparent origins” in a recent press release.

The press release states that information such as “where items were made, why each ingredient was included, where the ingredients were sourced and much more” will be offered to Amazon Prime members. Furthermore, each package obtained from this new service will contain a unique code that can be scanned through an Amazon shopping app to track its specific ingredients and their origins, its date and place of manufacture, date of delivery, and ‘best by’ date.

Bringing Light to Something that is Already Happening

On the surface, what Amazon Elements is offering isn’t new. Other supply chain dependent companies have been offering similar levels of transparency for years. For example, Switcher, a Swiss textile company, labels each of its products with a code so that its customers can enter at the website to retrieve information about every firm and factory along the supply chain while also looking at the environmental performance certificates.

There’s also the Massachusetts Institute of Technology’s supply chain-friendly tool Sourcemap which is described as “the social network for supply chains” offers a very similar service to Amazon Elements (except it isn’t locked to Prime members and it doesn’t only cover diapers and wipes) as it too offers customers the ability to see the complete supply chain for a product or company. It also has the added benefit to calculate the potential impacts on the entire supply chain in the event of natural disasters or political unrest.

So why then does Amazon’s announcement merit any press interest let alone any from anyone in the logistics industry?
The answer is that unlike the efforts of other companies which have transparency as a value-added part of production, the transparency is the product when it comes to Amazon Elements.

Although supply chain transparency is important as demonstrated in classic case of Upton Sinclair, or the more recent crisis of Lululemon, many companies are still luke-warm on the idea.

This is because historically, both customer and retailer largely didn’t care about the history of an item. They were content that it was reasonably priced for what it is. The production and supply chain behind it was effectively invisible. Even if a business wanted to be transparent with its supply chain, it was incredibly difficult outside of its immediate suppliers due to technological and resource limitations.

Going back to Amazon Elements, Amazon is testing what sort of ROI it will get by selling transparency. The actual diapers themselves are more expensive than those on offer by their competition. However, Amazon has seen the move by supply chains in recent years from invisibility to transparency and its ready see how much it can capitalize from this trend.

Steve New, a writer for The Harvard Business Review puts it best when he describes the opportunities available to firms that make the switch,

As customers take greater interest in the origins and authenticity of the things they buy, providing them with tools to track provenance will become an important part of the marketing mix and will give producers and retailers new ways to capitalize on brand value. A key consideration is how much data to make publicly available, and in what degree of detail. Many firms have made bold assertions about how seriously they manage their supply chains. Transparency, at a granular level, gives credibility to those claims.

How Nearshoring Facilitates PR and Social Media in Supply Chain and Logistics

https://morailogistics.com/how-nearshoring-facilitates-pr-and-social-media-in-supply-chain-and-logistics/

Next week marks the anniversary of one of the most damaging data breaches in recent history. During the Black Friday of last year, retail giant Target Corp.’s had the credit and debit card numbers and personal details of over 40 million of its customers compromised. The public relations nightmare that followed resulted in profits plummeting upwards of 46%, Target shares slumping approximately 8%, and Chief Executive Gregg Steinhafel resigning after over 20 years with the company.

Stories such as these are unfortunately not that unique which is why it is critical for companies and organizations, big and small, to invest strongly in strategic PR. For those in the 3PL market, this means being aware of the ongoings of all suppliers and business associations; once a crisis happens, it can be difficult and costly to identify a problem’s source in the supply chain.

Other than a crack PR team, there are two ways that 3PLs can protect themselves from the toxic fallout of bad publicity.

Keeping your friends close

One of the most frightening things about a damaging PR crisis is that not only can it ruin a company business overnight, but that it can be unrelated to the original brand due to the nature of upstream supply chains. The best way to counter this is to ensure that oversight of all aspects of a supply chain can be conducted with as little lag in communication as possible. It is for this reason that nearshoring has become so essential.

There are a lot of financial and logistical benefits to nearshoring. However, a key benefit that is often overlooked is that by conducting business so relatively close to home, a 3PL company can better establish a strong and resilient social network which at the end of the day “is not really about socializing, but about facilitating people to people communication and collaboration” according to an interesting article on SupplyChain247. The added degree of security because of Mexico’s increasing growing infrastructure and business-friendly economy is also a welcomed factor.

Staying social means staying connected

In a similar vein to nearshoring, the power of social media doesn’t end with crisis management. The immediacy of information and two-way discourse between company and customers is essential when handling a crisis. It is for this reason that the benefits that social media provides when it comes to damage control cannot be overstated. From JC Penny to Fontaine Santé, case study after case study shows a demonstrable advantage for companies that are actively engaged and have a focused strategy when it comes to social media.

There are of course many other reasons outside of crisis control for a business to be connected. By effectively utilizing social media, a business can:

Increase traffic to its website
Enhance brand awareness
Contribute to search engine optimization
Position the company as an authoritative voice in its industry
Provide an avenue for improved customer relations by allowing a company to directly engage with individuals interested in their brand or product.

It is through this engagement that companies can tell their commercial journey and invite stakeholders into sharing their own stories.

3 Key Ways the Amazon Effect Has Impacted Third-Party Logistics

https://morailogistics.com/3-key-ways-the-amazon-effect-has-impacted-third-party-logistics/

Amazon Inc. is in the news again. This time, the online retailing giant got press attention for having petitioned the Federal Aviation Administration (FAA) for an exemption from rules prohibiting the use of drones for commercial purposes. This move, along with its recent job posting calling for experienced pilots to fly its drones, indicates that Amazon is serious about moving Prime Air, an ambitious thirty minute delivery program involving unmanned aerial vehicles, from concept into reality.

Although the experimental delivery program may still be a few years away, it is this sort of unorthodox business strategy that has led the company into having a hand in 20 percent of all e-commerce in North America. Other programs that Amazon has implemented over the past several years has also caused stirs in B2B markets, cloud technology, and those in 3PLs in general.

1 – Shifting from to B2C to B2B

Amazon has been selling millions of items annually to thousands of households for several years. However, since 2012, it has been targeting the lucrative wholesale and distribution market through AmazonSupply which itself grew out of years of experience operating Smallparts.com since it was acquired in 2005.

Whereas common items on Amazon’s main site include books, CDs, and Blu rays, many of AmazonSupply’s items are those that would otherwise only be obtained through specialist distributors such as centrifuges, micrometers and air cylinders. And unlike many other businesses that specialize in industrial B2B transaction, Amazon focuses its marketing through digital media assets such as videos, post downloadable, CAD drawings and user reviews.

Although AmazonSupply’s main competitor, the Chicago-based industrial supplies giant W.W Grainger, holds an estimated 6% of the entire B2B market according to a Forbes article. Despite this, AmazonSupply’s future is bright. It already has Grainger’s online inventory beat by almost twice the amount indicating that it may in fact be the major player in the B2B market rather than its current status as only a major player.

2 – The future is in the cloud

The computer infrastructure that Amazon has built for Amazon Web Services (AWS) is considerable. With it, the company has been able make itself felt in the e-commerce business world by dominating the cloud computing industry and “hosting customers from NASA to Pfizer PFE +0.89% and ringing up an estimated $3.2 billion in revenue last year” writes Claire O’Conner of Forbes.

With its control of the cloud computing industry, “Amazon might leverage its investment in cloud technology to become a clearinghouse for a steadily increasing share of e-commerce business” wrote Dr. Robert C.Lieb and Kristin J. Lieb in the Quarter 3 2014 report. As more and more 3PLs move into the digital world, that means that Amazon will continue to be a looming presence as it moves from customer to competitor.

3 – Customer or competitor?

There’s been some discussion as to whether Amazon is in the process of making a committed move into the 3PL market. The company already offers a range of services and benefits to its two millions vendors such as cheaper transporting services, order management, inventory control, delivery and billing–all of which put it into competition with other 3PLs.

Referring back to Lieb & Lieb study, they found “with the continued expansion of the company’s warehousing, distribution services, order fulfillment, and transportation services, Amazon might become a formidable competitor by offering shippers a broad range of services that 3PLs already provide”.

A Glance at Mexico and its Growing Intermodal Demand

https://morailogistics.com/a-glance-at-mexico-and-its-growing-intermodal-demand/

Last week, the Association of American Railroads reported that Mexican intermodal volume reached a high that has not been seen in the last two years. More and more, Mexican shippers have been turning to rail in order to move their goods. In fact, Journal of Commerce claims that Mexico’s intermodal industry is seen as the industry’s quickest-growing sector. Volume of shipments using intermodal transportation has soared about 31% year-over-year to 14,238 units leading up to last week. Carloads for Mexico also increased by approximately 38%, reaching a total carload of 19,745 units.

We’ve mentioned in a previous white paper that nearshoring to Mexico for North American manufacturing has many advantages, one of them being that cross-border logistics to Mexico, through the efforts of governmental intervention and NAFTA, has been improving heavily especially in intermodal transportation requirements. Combine that with rising ocean transport costs, peak season surcharges, and the rising wages in China and you get a prime contender for a tangible, competitive consideration for nearshoring.

One of Mexico’s largest container port, Lazaro Cardenas, has been showing a steady increase in intermodal demand. Efforts to meet the growing demand is shown in the influx of inextments and developments such as the APM Terminal’s deep water terminal which is expected to become operational by 2016.

By the beginning of this month, Mexico contributed to the overall increase in growth for North American intermodal volume. Of the 13 North American railroads, a total of 347,857 units in intermodal volume was reported (a 5.4% increase in volume compared to the same week last year).

Factors that Affect Mexican Intermodal Business

Intermodal rail in Mexico has some great advantages with regards to cross-border logistics, adding more incentive to nearshore as a strategy for North American manufacturing. Below are some facts that show how both incentives from Mexico and the US governments are leveraging their neighbouring border towards a better solution.

With the right documents, clearance can take as little as 30 minutes for a 250-foot container, compared to the two hours it takes for a single-container truck.
BNSF Railway launched its first all-rail US-Mexico service in May to help facilitate faster movement between borders by partnering with Ferromex (a Mexican railroad).
AMP Terminal is currently developing a new deep-water terminal to launch by 2016.

Infographic: The Benefits of Nearshoring – Part 2

https://morailogistics.com/infographics-the-benefits-of-nearshoring-part-2/

This week we’re continuing our infographic series on The Benefits of Nearshoring. We’re focusing more on Mexico and how efforts in both infrastructure have affected how it has developed in recent times. We’ve also taken a look at how the auto industry is ripe for a nearshoring move for American companies.

Mexico and Nearshoring

Mexico has set itself up to being in a good position for the main nearshoring or reshoring target for companies in North and South America, but especially the United States. Companies in the US are in a perfect position, depending on the industry and logistics needs, as Mexico offers an attractive location and cost (due to China’s rising wages) but also more control over manufacturing & delivery schedules when compared to supply chain and logistics operations overseas.

Mexico and the Automotive Industry

Major automotive manufacturers, such as Ford, Chrysler, and General Motors (GM) have already been operating in Mexico since the 1930s. These companies have spearheaded the nearshoring move in the auto industry and other companies like Toyota, Nissan, Honda, BMW, Volkswagen, and Mercedes Benz have followed suit.

Check out our infographic below to see how Mexico is continuing its trend towards being a very real consideration for American manufacturers looking to optimize their supply chain while cutting costs.

Morai-Logistics-Infographic-Nearshoring-Pt-2

Wearable Technology: A Growing Logistics Opportunity?

https://morailogistics.com/wearable-technology-a-growing-logistics-opportunity/

At the beginning of the month, Apple had its annual keynote for the next generation of iPhones and included the official announcement of the latest Apple product: the Apple Watch.

Now, the Apple Watch is by no means innovative as a concept. Since the first digital watch, the Pulsar, was manufactured in 1972 the concept of placing advanced technology in watches was really just a matter of time, and progress in nanotechnology.

Avi Greengart, a consumer device analyst from Current Analysis, claimed 2013 as the Year of the Smartwatch. The reason being that components have gotten small and cheap enough to produce for products to be made for mass distribution at a relatively affordable price point. This year also marked the point where many consumers owned smartphones that were compatible with a wearable device.

This year’s Consumer Electronics Show (CES) showcased a large number of new smartwatches. Later in the year even more were showcased at Google I/O, introducing the LG G Watch and the Samsung Gear Live. Earlier this month one of the most recent releases, the Moto 360 was announced.

These most recent iterations of smartwatches are only one aspect of wearable technology. Many other devices exist today that consumers are very interested in playing with, such as Google Glass and Pivothead. And interesting new technology devices such as Thalmic Labs’ Myo, a gesture control armband that you can calibrate to do many things with.

The Demand for Wearable Tech on a Steady Rise

GlobalWebIndex released some interesting statistics on consumer trends for wearable devices. The most intereting of which are follows:

71% of 16- to 24-year-olds want to own some form of wearable technology (i.e. Smart watch, smart band, or Google Glass)
Worldwide, 64% of internet users have worn a piece of wearable tech already or are “keen to do so in the future.”
Between the genders, men sit at 69%, while women are marginally lower at just over half (56%) in terms of wantring to own a wearable tech device

What Does this Mean for Logistics?

Despite the slow growth, this demand in wearable technology means more business and demand for logistics services. It will be interesting to see how much wearable technology will affect the overall growth in logistics in the coming years.

Tech analysts from Canalys have predicted that smart bracelets, such as Intel’s Mica smart bracelet for example, which monitors health and sleep patterns as well as providing purchasing capabilities, are going to be a big hit. Smart band sales are predicted to increase 129% in sales next year. More than 42 million of these smart band devices are predicted to be sold globally.

Tech-based start-ups are now seeing real value in investing into projects that are tangible as opposed to web- or app- related services. An exciting trend for both consumers and those responsible for moving the goods.

White Paper: How NAFTA and Changes in Mexico Have Primed Companies for a Nearshoring Move

https://morailogistics.com/white-paper-how-nafta-and-changes-in-mexico-have-primed-companies-for-a-nearshoring-move/

We’re at the latter half of 2014 and geopolitical changes, and factors such as rising fuel costs, are starting to match the prediction let by many logistics professionals. China’s wages are getting close and closer to $6 USD; the point at which researchers at AlixPartners determine will no longer make China cheaper than Mexico’s flat wages.

This week, we’re featuring a white paper that explores Mexico, but this time the focus is on the build-up to what makes Mexico a prime nearshoring option. Mexico has historically been set up to be a prime nearshoring option. We argue that NAFTA was a big part of this change as developments in Mexico to lower trade tariffs has initiated solid cross-border logistics developments within North America. Furthermore, geopolitical developments in Mexico has been setting North American manufacturing up for prime logistics operations there as opposed to China.

White Paper: How NAFTA and Changes in Mexico Have Primed Companies for a Nearshoring Move

A Logistics Summer Post: Seafood, Coconuts, and Cashews

https://morailogistics.com/a-logistics-summer-post-seafood-coconuts-and-cashews/

We hope you have been enjoying this summer so far! As we are now in the latter half of the warmest and sunniest of seasons, we would like to take the time to focus on some summer-themed logistics and supply chain related news.

Nova Scotia Aims to Modernize Seafood Industry Trading

Daily Business Buzz recently released an article on how Ocean Executive, a Bridgewater, Nova Scotia based company, is developing an online platform aimed at improving supply chain efficiency for the seafood industry. Ocean Executive has received a $100k seed investment from Innovacorp, a Nova Scotia based venture capital organization to fuel the idea and help it come to fruition.

Mikel Budreski notes that the platform will help streamline the sales and marketing process for a wide range of seafood companies worldwide. Ocean Executive’s platform seeks to allows users, be it buyers or sellers, to connect directly to each other and their respective products and services in real-time via a an auction marketplace (a function that can be either public or private). This allows users to receive live pricing and market data for more efficient and transparent trading practices:

All players in the supply chain stand to benefit from true and fair market pricing, whether it’s fishermen, processors, wholesalers, distributors, traders, brokers, retailers or large restaurant chains.
– Mikel Budreski, President of Ocean Executive

Greg Phipps of Innovacorp notes that the seafood industry is still using outdated an inefficient processes to buy and sell products and that this technology being developed by Ocean Executive has the potential to modernize this dated trading system. This is indeed a trend that is happening with regards to the logistics and supply chain industry as a whole; combining technology and the Internet of Things (IoT) to help optimize the industry is indeed proving to be a strategy that is here to stay.

Coconut Water Affecting the Coconut Supply Chain

You see it in almost every grocery store; some places even have a whole section dedicated to the number of variations, flavours, and brands. We’re talking of course about coconut water! Whether you love it or hate it, this product has made our way into store shelves globally.

Tessa Riley of The Guardian gives the scoop on the coconut water craze and how it affect s the supply chain. This spur in popularity is largely facilitated by North America, now the biggest global market for coconut water. Originally seen as a useless byproduct by coconut farmers, and normally reserved for exotic holidays, the North American market has really taken coconut water to the next level. From the sales report of the top three most popular brands going from almost nothing in 2004 to a whopping $400 million dollar industry in just under a decade (i.e. 2013).

For a bit of history on coconut farming, traditionally coconuts were harvested for their ‘copra,’ or meat, which is then used to extract coconut oil. Coconut water is notorious for being hard to preserve as it starts decomposing as soon as the coconut water is cut. Thus, coconut farmers see it as a useless byproduct. Since the leap in demand though, initiatives have been taken to allow coconut farmers to consider the production of more diverse economic return like coconut water, which has a much higher return on investment per coconut for the farmers. Lack of technology and limited knowledge is the biggest wall for the coconut farmer though, despite the UN Food and Agricultural Organisation promoting best practices on small-scale production of bottled coconut water.

This gap between the coconut farmer and the consumer along the supply chain is growing and if the coconut water industry intends to stay sustainable, there needs to be some way to bridge the gap that would allow coconut farmers to leverage knowledge and technology to allow them to produce the great demand for coconut water.

Cashew Juice? Not Just a Nuts Idea

PepsiCo has started an initiative to test out the market for a new line of products in order to solve the dilemma of a major issue in the extraction and production of cashew nuts: heaps of agricultural waste. Leon Kaye of Triple Pundit gives us an insight into what Pepsi has planned to alleviate this waste problem.

When extracting nuts from cashew plants farmers usually throw away the fruit attached to the nut. Known as the ‘cashew apple,’ this nut is full of Vitamin C as well as other essential nutrients. It also has many other potential uses such as: being another form of meat substitute, used for the production of alcohol, or animal feed.

PepsiCo has started work in India to collaborate with farmers to source cashew apples and use it to create the next iteration of specialty juices, along the same lines of coconut water, pomegranate juice, and hazelnut milk. This comes with a new set of logistics challenges though, mainly that of storage, transport, and shelf life. The fruits are fleshy and must be collected from the ground (not the trees), and must be processed within 24 hours (if the nut is removed before collection, then the time frame is shortened to a mere six hours). Temperature is also important; they must be stored in containers that do not get cooler than 5 degrees. Furthermore, the intended market for where Pepsi wants to sell is about 3000 km from the growers’ sourcing stores (i.e. Sao Paulo and Rio de Janeiro).

Testing it out in both the South American and Indian market to start, PepsiCo hopes to eventually expand it other markets across the globe.

Infographic: The Benefits of Nearshoring – Part 1

https://morailogistics.com/infographic-the-benefits-of-nearshoring-part-1/

A couple of weeks ago we wrote about statistics that we’ve found that suggest that Mexico is a prime nearshoring choice for North America. We found this to be really interesting and decided to flesh it out further so we’ve decided to make this our feature inforgaphic for this month!

As you may know, China and Mexico have been battling to be the prime hub spot for logistics operations in North America for the last couple of years. China has their already established work force and prime manufacturing facilities. Mexico on the other hand is starting to develop their own logistics hub in the Golden Triangle and is starting to become an attractive, and very real, consideration due to cost and time savings.