Supply Chain Gold
Steve Gold, a Managing Director with Alvarez & Marsal and former Chief Supply Chain Officer of PepsiCo, graciously took the time to speak exclusively with Supply Chain Digital on his thoughts on the logistics world as we move deeper into 2012.
Q: Talk to me and my readers about what you specifically did with Pepsi’s supply chain
A: “I was responsible for transforming the entire supply chain at PepsiCo, which included brands like Frito-Lay, Quaker Oats, Gatorade and others. Most of what I did was based around leveraging our scale to take out cost while enhancing our go-to-market strategy with major customers.”
Q: What’s your argument for why supply chain is a top issue for corporate management in 2012?
A: “I’m not an economist, but everyone is predicting flat GDP this year, so the question is really on growth. If GDP is flat and we have a high unemployment rate, the consumer doesn’t have any more money to spend on goods and services. That gives everybody top-line pressure, because they have to grow sales and grow revenue.
“On the flip side of that, you’re going to see a lot of input inflation. Chinese workers’ pay raises are coming through now, and China is seeing major inflation. Those kinds of issues have economists predicting our financial situation to be pretty inflationary. The consumer may not have any room to raise prices, so everyone is going to get squeezed in the middle. At the end of the day, supply chain is going to be looked upon by large companies to reduce those costs and to find new ways to accomplish that.”
Q: What are some of the ways you’re advising customers on cutting supply chain expenses?
A: “There was a time where you could beat up your supplier and get lower rates for transportation or services or whatever just by negotiating better. A lot of companies have picked that fruit, so you’re going to see much more creative supply chain solutions that a lot of our clients weren’t prepared for.
“At PepsiCo, we made plastic bottles. If you go and buy bottled water today, you’ll see the bottle is extremely thin, and the reason for that is the only way left to take cost out was to make the bottle lighter. You’re going to see other corollary business and supply chain strategies that take cost out of the equation more. Whether it’s in heavy manufacturing, sweaters or goods and services, there’s going to have to be a totally different mindset on the logistics process.”
Q: Does a renewed sense of supply chain innovation have to be a focus moving forward?
“Totally. This function has rested on its laurels for a long time, and unfortunately, many supply chain leaders don’t think they have the permission to be creative in their role. They could have a huge input on the model, but right now they’re lacking the ability to really try and be creative.
No one has forced supply chain leaders on how to make this happen. When we did this at PepsiCo, I thought we were pretty sophisticated. A lot of companies don’t behave like that in a supply chain function. There are a lot of leaders that haven’t forced the supply chain to think differently and be creative, and that must change (this year).”
FedEx is Reshaping Last Mile with Autonomous Vehicles
FedEx is embarking on an expanded test of autonomous, driver-less delivery vehicles to develop its last-mile logistics.
The US logistics firm piloted autonomous vehicles from Nuro in April this year, and the pair will now explore that further in a multi-year partnership. Cosimo Leipold, Nuro’s head of partnerships, said the collaboration "will enable innovative, industry-first product offerings that will better everyday life and help make communities safer and greener".
FedEx will explore a variety of on-road use cases for the autonomous fleet, including multi-stop and appointment-based deliveries, going beyond more traditional applications of the technology in single-route movement of goods from A-B. Exponential growth in ecommerce is spurring its broader experimentation in new autonomy solutions, Fed-Ex says, both in-warehouse and on-road.
“FedEx was built on innovation, and it continues to be an integral part of our culture and business strategy,” said Rebecca Yeung, Vice President, Advanced Technology and Innovation, FedEx Corporation. “We are excited to collaborate with an industry leader like Nuro as we continue to explore the use of autonomous technologies within our operations.”
The changing role of couriers
Unlike structured delivery networks, operating under long-term partnerships and contracts, agility is where couriers deliver true value - and their ability to deftly solve last-mile fulfilment has most acutely been felt during the pandemic. For the billions of people around the world forced to stay at home to protect themselves and their communities from the spreading COVID-19 virus, couriers have been a constant. They may have been the only knock at the door some people experienced for weeks or months at a time.
But the last-mile has been uprooted by a boom in ecommerce, a shift that has been most apparent in the UK, US, China and Japan, according to the Global Parcel Delivery Market Insight Report 2021 by Apex Insight. These are markets with dominant economies and populations used to running their lives with a tap of a screen or double-click of a mouse.
“Getting last mile delivery right has long been a challenge for retailers,” says Kees Jacobs, Vice President, Consumer Goods and Retail at Capgemini. “In 2019, 97% of retail organisations felt their last-mile delivery models were not sustainable for full-scale implementation across all locations. Despite increasing demand from customers, companies were struggling to make the last mile profitable and efficient.”
Jacobs says that the pandemic alleviated some of these stresses in the short term. With no other option, consumers were understanding and tolerant, if not entirely happy, with longer delivery times and less transparent tracking. “But, as extremely high delivery demand continues to be normal, customers will expect brands to contract their delivery times,” he adds.
Last mile's role in ESG
Demand and volume weren’t the only things that have changed during the pandemic - businesses looked closer to home and as a result became more sustainable. Bricks and mortar stores were transformed from mini-showrooms to quasi-fulfilment centres. Online retailers and other businesses sought local solutions to ship more faster. In densely populated London, UK alone, Accenture found that delivery van emissions dropped by 17%, while Chicago, USA and Sydney, Australia saw similar emissions savings.