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Just Delivered 11/20/21

If you're a retail supply chain executive, you may be too burned out to enjoy the fact that your world is suddenly sexy, and your profession is on the tip of everyones' tongues.

You also know that technology investment isn't a quick fix for the current crisis, but making the retail supply chain more efficient and resilient is mandatory in order to prevent future crises. 

That's where Shoptalk comes in. As the retail and e-commerce industry's leading innovation event, Shoptalk has a special ability to match leading supply chain technology vendors with the executives that are making change happen. Whether in person at Shoptalk (March 27-30) or online during Shoptalk Supply Chain Meetup (April 26-28), Shoptalk is pleased to bring the retail community the content and connections you need to soar.  Leading up to those events, please be on the lookout for this newsletter bringing you news and factoids from the supply chain frontier as well as event content updates. 

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Supply Chain Jeopardy: First Mile Edition

The last mile has gotten all the love for years with tech like RF, AI and GPS making things more efficient. But what about the first mile—is that the next area ripe for transformation? 

  • The first mile is defined as the first 120 days of the supply chain.
  • The first mile is often where delays occur due to shortages of labor or materials.
  • Combined, the first and last mile delivery market is expected to grow at CAGR above 14% by 2026 or USD $642.2 million by 2027.
  • Number of stages in the first mile delivery: Four – Raw Materials | Work in Progress Materials | Consumable Materials | Finished Goods Materials.
  • Number of businesses and departments involved in the first mile delivery: the average purchase orders touch six separate business entities and at least nine departments (e.g., sourcing, planning, procurement, and distribution).
  • The first mile delivery process is manual and involves little technology (for now!). First mile tech includes: phone calls, paperwork, email, and spreadsheets.

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Attention Full Price Shoppers!

The supply chain issues reverberate down to discount chain stores and outlets. Stores like Burlington, Ross and T.J. Maxx buy premium brand apparel when there is a glut in the market. However, as high-end brands face choked-off supply chains, they're now selling much more of their products through their own stores, websites, and factory stores at full price with little excess inventory.

Steve Madden CEO Edward Rosenfeld noted on a November 3rd earnings call that the company would no longer send as much of its premium footwear to discount chains due to low supplies for their own outlets. He said, “Our first priority is always feeding full-price channels.”

Premium retailers are even finding that their own factory or outlet stores have less products available to sell. Outdoor retailer REI has reported that a strong demand for their goods means fewer products to sell at REI outlet stores. 

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Our look at the companies, business models and processes that have not advanced technologically to make elements of the supply chain innovative, efficient, and nimble.

A Chassis! A Chassis! My Kingdom for a Chassis!

With the news media focused on the continuing supply chain gridlock, more in-depth reporting is exposing the core issues that have the U.S. supply chain stuck in reverse. One revelation is the ongoing shortage of chassis. Chassis are the trailers that trucks use to transport the containers from port terminals.

As imports flood the Port of Los Angeles, these simple metal frames on four wheels have become scarce. Trucking companies and carriers move the loaded shipping containers from port to  distribution points. Commenting on the situation at the Port of Los Angeles, the Harbor Trucking Association that represents these truckers commented, “It should be noted that thousands of empty containers sitting in motor carrier yards on top of chassis are unable to be returned into the port complex because of overly restrictive appointment requirements.”

The associations statement continued, “For instance, if truckers can’t secure an appointment to return an empty container, they can’t free up the chassis to move an import off dock.”

The chassis then end up abandoned in nearby streets and adjacent parking lots. This has proven to be a very inefficient element within the supply chain. According to Matt Shrap, chief executive of the Harbor Trucking Association, “The chassis are the biggest issue.”

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Our weekly look at innovations, startups and business models that have the potential to transform aspects of the supply chain. This week we look at tech disrupting the middle and last mile delivery.

Zoomo – This Australian startup builds electric bikes and is offering subscriptions to gig workers and couriers. Zoomo’s goal is to incent companies to relook at the last mile delivery and go with a low-tech option – setting them up for direct competition with companies like electric truck manufacturer Rivian or other robotic delivery services (see Refraction AI below). The company’s CEO and co-founder Mina Nada stated that “We think that it doesn’t make sense for 90% of deliveries in the United States of two-kilogram burgers to be done in 2-ton vehicles. And we really think that’s going to change fundamentally to being Zoomo vehicles in the future.”

Zoomo announced a $60 million Series B round of funding to continue their work.

Walmart and Gatik – Walmart has been testing fully autonomous trucks to make middle-mile deliveries This collaboration with Silicon Valley-based Gatik has been operating fully driverless delivery trucks since August 2021. These vehicles follow a fixed route between a Walmart fulfillment center and a Walmart Neighborhood Market in Bentonville, Arkansas. The AI-enabled trucks operate multiple times a day, seven days a week. Gatik founded in 2017 and has achieved a 100% safety record. Gatik has formed partnerships with Walmart, Isuzu, and Canadian grocery chain, Loblaw.

Refraction AI – This last mile delivery company builds and operates robotic platforms for use in urban areas. The Ann Arbor-based company’s driverless robotic vehicle, known as the RV-1 picks up packages from pharmacies, restaurants. and grocery stores delivering directly to a consumer’s house. Refraction AI’s robotic vehicles operate in both bike and car lanes and in any kind of weather. Consumers get text notifications when to expect the RV-1 delivery and receive a code to open the robot to get their package. Total funding for the startup is around $8.4M according to Crunchbase.

 

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