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The Logistics of Online Holiday Shopping

By APICS Staff | 12 | 24 | December 18, 2012

In order to make sure online purchases and store pickups are in the right place in time for the holidays, Toys “R” Us is relying on the skills of a former logistics officer for the US Army, reports the Wall Street Journal. Marie Robinson once ensured that food and ammunition was in the hands of soldiers during the first Gulf War. Now, she oversees the movement of toys from ports to stores, and also directly to customers’ doors. She also reports that she spends a lot of time “breaking down the silos” that exist between the company’s outlets. 

As Toys “R” Us faces increasingly steep competition from online entities such as Amazon, it feels pressure to improve delivery speeds and reduce prices, author Ann Zimmerman writes. Part of this transition this year includes an effort to create online fulfillment centers out of its stores, whereby toys are pulled directly from shelves and sent to customers. 

CEO Jerry Storch says the future of retail exists both in brick-and-mortar stores as well as online portals with capacity for in-store pickup. Retail chains such as Walmart and Macy’s are embarking on similar models. “Soon, internet-only companies will be physical or they will have service problems,” Storch says.

Walmart to Create Tighter Controls at Overseas Suppliers 

After last month’s devastating fire at the Tazreen clothing factory in Bangladesh, Walmart says it needs to tighten controls on its supply chain and ensure it uses only authorized manufacturers, Reuters reports. Rajan Kamalanathan, Walmart’s vice president of ethical sourcing, says that current controls are not enough to prevent unapproved factories from making its clothes. “If a supplier or an agent chooses to subcontract without informing us, then that is a problem,” he says.

Kamalanathan notes that the lack of supply chain controls are a challenge for the entire industry. Since 1992, Walmart has had a factory certification program in place to improve standards for foreign labor. However, independent agents that act as intermediaries between Walmart and factories can make it difficult to ensure compliance. “We have a contract with the supplier and that’s where our control is and where our relationship is,” Kamalanathan says.

Apple Needs More Agile Supply Chain

Are Apple’s share prices falling because people dislike their products, or is it because the company is struggling to manufacture products fast enough? As BBC News reports, Apple’s supply chain actually resembles that of the fashion industry. “You have to get in there and make your product very quickly before it becomes stale,” says Paul Gray, director of European TV research at NPD Displaysearch, a computer screen supply chain data company. 

One major supply chain challenge for Apple and many technology manufacturers is securing the sophisticated displays used in many modern smartphones and tablets. This makes many companies nervous about supply chain weaknesses, especially in light of the earthquake and tsunami that hit Japan and led to major disruptions last year, Gray says.

Technology manufacturers should follow the lead of the fashion industry and put in place plans to switch manufacturing sources quickly, Gray says. Not only does this better prepare organizations for unexpected events, it makes them better able to respond to trends. “The retailers and manufacturers who are smart at spotting those trends are the ones that will have greater profitability,” Gray says.

Same-Day Delivery a Gamble for Retailers

This holiday season, several online retailers are testing out same-day delivery models. However, some supply chain experts say this is a gamble that will not pay off, USA Today reports. For one, although companies are not releasing their data from test markets, it seems customers just aren’t that interested, says Jim Brownell, vice president of retail industry at GT Nexus, a supply chain automation firm. “Some of the concern is the price,” Brownell says, which tends to be between $5 and $10 per shipment, with additional fees for additional items.

One company experimenting with same-day delivery is eBay, which is going one step further by sending out its own delivery people in as little as one hour. However, Chris Merrit, vice president at supply chain management firm Ryder, says that average delivery time and free shipping is a bigger enticement to customers than same-day delivery. “Most customers will order enough to get a free shipping promotion,” he says, adding that same-day delivery won’t be enough to significantly affect businesses.

Making Manufacturing Interesting Through Social Media

Today’s manufacturing industry is high-tech, interesting, innovative, requires skill, and contributes to society, but it struggles with selling this image, reports the New Hampshire Business Review. David DeWitt, a retired mechanical engineer and manufacturing company owner,is seeking to change this. He has created a social media business called Manufacturing Stories to promote manufacturing, especially to younger people. 

DeWitt’s goals for the social media business__which features a Facebook page, videos, and manufacturing-based articles__include strengthening the link between manufacturing and education, particularly in science, technology, engineering, and math (commonly referred to as STEM). 

“The primary focus is to be there for parents, students, and educators, because there’s a lot of other websites out there about manufacturing that are more technical,” DeWitt says. He wants this information to be accessible to those who need it most.

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1 Comment

  1. 1 samysteav 08 Apr
    That was a nice article and online shopping of logistic is the great concept.

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