The Friday Report: March 6th, 2020

Cost and Complexity Still Plague Retail Industry

Retail logistics is mired by inefficiencies and unnecessary costs.  Today, ground transportation, fulfillment and retail logistics are all being reconfigured to better serve the retail industry.  Last mile delivery remains a significant challenge for shipping carriers, retailers and brands.  With the simple fact that consumers equate fast, free delivery with brand satisfaction, modern supply chains are flummoxed and are still struggling to find effective solutions.

According to research conducted by Honeywell, last mile delivery comprises 50 percent of all logistical costs. Inefficiencies including hard to find locations, incorrect delivery addresses, traffic congestion and damage to goods being shipped wastes both time and money.

The American Transportation Research Institute has been studying the problem and reports a significant escalation in the level of complexity in the logistics delivery model.  Once linear and relatively simplistic, today omnichannel retailing has morphed this into a “complicated, multidimensional logistics model”.  The retail industry has reportedly had tremendous difficulty in adapting to consumer-driven changes and business models and has remained concentrated on centralized distribution networks.

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Bumble Bee Develops a Taste for Plant-Based Good Catch Foods

Tuna giant Bumble Bee Foods will be partnering with plant-based seafood brand Good Catch to bring new plant-based food products to consumers internationally.  Using its sales, distribution and logistics expertise, Bumble Bee will help make the Good Catch products more affordable for consumers.  This partnership is unusual and will enable Bumble Bee to contribute to ocean-inspired food offerings.

Bumble Bee had filed for bankruptcy in November and was purchased in January by Taiwan-based FCF Fishery.  The company had pled guilty in a tuna price-fixing case in 2017 and was hit with a $25 million fine. Related civil lawsuits and a decline in canned tuna sales propelled the profitability downward.

By partnering with Good Catch, Bumble Bee can now focus on helping consumers find new sustainable and innovative food products, potentially exposing it to a new target audience.

U.S. Ports and Supply Chain Suffering Slump Due to Coronavirus Outbreak

In recent years, one of the major trends has been a shift toward just-in-time manufacturing.  This strategy has been leveraged in order to increase efficiency and reduce waste by receiving goods on an as needed basis for the production process, decreasing inventory costs.  For just-in-time to succeed strategically, accurate forecasting is required.  The uncertainty surrounding the COVID-19 outbreak is taking its toll on manufacturers worldwide and is starting to affect U.S. ports as well.

West coast ports have had the greatest exposure to negative impacts.  When compared to the Sars outbreak nearly 20 years ago, the impact on the shipping industry appears to be notably worse.  Citi analysts have forecast that extended disruptions to Chinese manufacturing are likely and would prove “crippling” to global supply chains.

Some companies have noted concerns about potential damage to earnings.  Companies that have reported disruption include:

• Deere
• Columbia Sportswear
• Adient
• Wayfair