Supply Chain Trends
As cost savings continue to be the name of the game in retail, supply chain has come under even closer scrutiny as a major expense to be controlled. Chain Store Age talked with George Prest, COO of the Material Handling Industry of America (MHIA), about what lies ahead for the supply chain and global trade, as well as the association’s inaugural trade show MODEX, to be held in early 2012.
What one trend do think will most shape the supply chain in 2012?
There are several supply chain trends we are hearing about from Material Handling Industry of America members and end users. Sustainability is still a hot topic, as well as leveraging labor resources and training. Ergonomics and safety is also big, as well as forklift fleet management and third-party logistics selection.
However, it seems that automation is on top of most agendas right now, whether you’re talking automation equipment or related software, as companies strive to improve the efficiency of their supply chain operations. Within automation, we are hearing a lot about flexible automation, voice, order picking, order fulfillment, mobile computing and visibility solutions.
Will the Panama Canal expansion have an impact on the supply chain dynamic in the United States?
Yes. We see the Panama Canal expansion as a real supply chain game changer. The expansion is certain to have a major impact on the flow of imports into the United States. However, it will also have a major impact on the flow of goods once they get to the U.S., creating new supply chain efficiencies — especially for retailers.
According to Jones Lang LaSalle, 25% of imports currently coming through the West Coast could shift to East Coast ports as a direct result of the canal expansion. By lengthening, widening and deepening the locks, the canal will accommodate much larger ships. In fact, the largest ships today carry just 5,000 twenty-foot equivalent units (TEUs).
When the expansion opens in 2014, that number will jump to as high as 13,000. Most hopes for the canal’s future are for cost savings, which are estimated at $400 per TEU compared with intermodal rates from the West Coast.
JLL cites the Panama Canal as one of the five most compelling change agents in the supply chain going forward. Inland ports are expected to also benefit from the import shift. Of particular note are Atlanta, Chicago and Columbus.
The Ports of Savannah, Charleston, Jacksonville, Miami, Baltimore and Philadelphia have announced projects to enlarge and deepen channels to make way for the larger ships. Hampton Roads and New York/New Jersey ports are already in position to benefit from the shift.
We also expect that more distribution centers will be needed, in the Southeast especially, as a result of this shift. Distribution networks may already be undergoing a significant shift from super distribution centers to a hub-and-spoke model of smaller DCs. The driving force is the high cost of energy and the low efficiency of less-than-truckload shipments typical of the large DC model.
Tell us about your upcoming conference, MODEX 2012.
The inaugural MODEX expo, to be held in Atlanta, Feb. 6 to 9, 2012, is the industry’s newest event to offer end-to-end supply chain solutions for manufacturing and distribution professionals. The event was designed to build out from the material-handling core of MHIA’s successful ProMat event to also showcase solutions for the broader supply chain that may, or may not, be confined to the four walls of a facility.
What kinds of topics will be covered at the conference?
The MODEX 2012 Conference will feature leading-edge topics in manufacturing, distribution and the supply chain, exploring such subjects as the impact of the Panama Canal expansion to sustainability, security and visibility. One of the MODEX keynoters is Alberto Alemán Zubieta of the Panama Canal Authority.
MODEX will also feature keynotes by CSCMP’s Rick Blasgen on the state of logistics and supply chain management, and Georgia Tech’s Donald Ratliff on how supply chain and logistics performance impacts trade.
You can find detailed information on the entire MODEX 2012 expo at MODEXShow.com.
The Mobility Factor
If retailers want to survive in the new economy and volatile marketplace, their focus needs to be on the customer and providing the best service and shopping experience possible. Increasingly, mobile strategies are helping them achieve this goal.
“Consumers looking to connect with retailers, and intimate mobile solutions are helping to revolutionize the retail experience,” said Sanjay Poonen, president of global solutions for SAP, at the SAP Retail Forum 2011, held recently in Chicago. “Overall, [mobility] empowers shoppers as well as store associates, and improves the shopping experience.”
The SAP event made clear that savvy retailers are increasingly leveraging their shoppers’ interest in mobile technology to boost customer service. Besides increasing speed of consumer interaction, mobile solutions enable retailers to create intimacy among shoppers, increasing cross- and up-sells.
REI (Recreational Equipment, Inc.), the Kent, Wash.-based outdoor gear and apparel retailer, has created a two-fold mobile strategy. First, the chain has a mobile app that shoppers can download on iTunes. The free app allows shoppers to search for and purchase merchandise through their mobile phone; scan product bar codes at store-level to learn more information; and even read customer reviews, receive exclusive discounts, access REI membership information, locate stores and reach customer service.
“The app is the top retail app on iTunes, and half of its sales are happening through iPads alone,” reported Bill Baumann, CIO, REI, during a panel discussion at the SAP forum.
The retailer’s second focus is a mobile POS platform. REI added mobile POS in two stores just before the 2010 holiday shopping season. Even though the company still continues to evaluate how to streamline operations such as security tag removal and emailing receipts, “We knew we couldn’t afford to wait,” Baumann said. “We are tracking 25% of sales happening through the devices, and [the solution] is not even operating at 100% yet.”
REI is not alone in its thinking. For example, 65% of retailers reported that mobility was a key focal point in their POS strategies, according to Aberdeen Group’s “Retailers Target POS Mobility for Engagement Interactivity and Revenue” report.
REI continues to evaluate how to create an agile mobile solution.
“We continue to learn from customers’ usage, their behavior and where and how they shop with us,” Baumann said. “And we are learning a lot. And when we work through all issues, we will share it with the world.”
CVS/pharmacy enhances mobile features for greater convenience
WOONSOCKET, R.I. — CVS/pharmacy today announced enhanced shopping and prescription refill functionality for its mobile site, located at m.CVS.com, as well as iPhone and Android apps, enabling shoppers to use mobile devices to manage their ExtraCare Rewards accounts, scan and send prescription refills, and order photo prints from CVS Photo Centers.
Customers accessing CVS/pharmacy’s mobile website can now take advantage of several features of the ExtraCare Rewards Program. This new functionality lets shoppers:
Load select ExtraCare coupons received via email directly to their ExtraCare card through the "Send to Card" digital savings option;
View the available balance of ExtraBucks Rewards;
Check ExtraCare transaction history; and
Order a new ExtraCare Rewards card to replace a missing or lost card.
In addition, CVS/pharmacy launched a set of mCommerce options for shoppers using photo services. Customers using smartphones can now:
View photo albums and slideshows;
Order prints for in-store pickup in about an hour;
Share photos with friends and family.
For customers who have downloaded CVS/pharmacy’s iPhone or Android app, CVS/pharmacy is making it easier to manage prescriptions. Customers with the iPhone or Android app can now use their smartphones to scan and send rapid refills (no sign-in required) to their local CVS/pharmacy for up to six prescriptions at once, just by using the camera in their mobile devices and the CVS/pharmacy app. These refills can be sent by scanning the prescription label directly. The apps also include a quick-response code scanner that customers can use for scanning any QR code at CVS/pharmacy stores or any other retailer.
Beyond the prescription refill functionality, the same ExtraCare Rewards Program management now available through the CVS/pharmacy mobile site has been added to the CVS/pharmacy iPhone and Android apps.
These features are in addition to the already launched features that allow shoppers to spot nearby CVS/pharmacy stores by using their phone’s GPS, check their weekly circular and find MinuteClinic locations and services.