The Friday Report: February 14th, 2020

Quick wrap up of a few hot topic newsworthy stories in the supply chain logistics industry

How Macy’s Plans to Change Its Old, Siloed Supply Chain Model

Before the advent of ecommerce, Macy’s viewed the supply chain as transactional.  This meant that its primary focus was in moving goods from point to point while optimizing costs at each point along the way.  This was effective in the old retail model, however the transactional supply chain model lacks the flexibility needed for the ecommerce omnichannel model.

The transactional model is one that operates on the basis of siloed management for each delivery channel with individual channel transportation plans and technology stacks.  Incremental costs add up quickly.

Macy’s announced that it will eliminate 2000 employees and 125 underperforming stores and will relocate and consolidate offices to decrease operating costs and enhance profit margins.  With its transformation plan, Macy’s anticipates generating $500 million in savings the first year and a total of $900 million by 2022.  Additionally, the transformation plan will centralize the supply chain organization from sourcing to sustainability including moving from a two warehouse network model to one centralized model.

How Manufacturers Are Getting Ready for the Next Recession

Hedging their bets against what many believe may be an upcoming recession, 51% manufacturers surveyed in a BDO report indicated that their companies were working to ramp up production efficiency as a safeguard against a future recession.  42% of manufacturers surveyed reported that they are monitoring the financial health of their suppliers.

Manufacturers are also turning to automation and digitization to increase production efficiency.  IoT, cloud and other technology tools have decreased in cost, making their use more affordable.

How Logistics Companies Lose $6B Due to Inaccurate Maps

A fascinating report by Swedish map platform Mapillary identifies the cost of inaccurate street maps and the impact on logistics companies and it is staggering:

  • $611 million is wasted on gas annually
  • $2.5 billion is wasted by misdirection of drivers to the wrong location

Loss of time equates to higher labor costs:

  • 7 million minutes are wasted trying to find the drop-off location
  • 96% of drivers waste between 15 and 60 minutes daily waiting for the appropriate delivery window. This is due to miscalculation of travel time due to map inaccuracy.

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