Supply Chain Holiday Bedlam

The holiday bedlam keeps extending way beyond the holidays. During 2013 consumers saw the continued erosion of Black Friday as retailers offered shopping opportunities not only on Thanksgiving day but a few began prior to Thanksgiving Day. Christmas inventories began to appear as early as mid-August in craft stores and late September in some some retail outlets.  A series of articles about shifting patterns were posted:

Which Companies are winning the Online Delivery Race?

Online Shopping Growth Delays Christmas Deliveries from amazon and Parcel Services

UPS, FedEx Scramble to Deliver Delayed Christmas Packages

Now that the Christmas shopping is over late arrivals from online shopping trickle in and returns spawn the reverse supply chain flow. Many consumers are upset over late arrivals of online purchases placing blame on the logistics networks. Who is really to blame for any problems the customer had in completing the purchase during the holiday season?

Holiday Crankiness a Consumer Problem?

Some experts blame the consumer for their behavior; procrastinating, ordering late, and viewing the holiday season in terms of economics and not the nationalistic or spiritual reasons for the holidays. These experts tend to view the holiday season accentuating vanity as gifting becomes outlandish and tempers run high amidst the holiday crowds as people take the seasonal bustle personally. These experts see the world shifting away from nationalistic and spiritual prides towards an economic pride in which status, worth, and esteem are driven by the ability to make purchases and gift to others. Some CEO's reject that notion and view the issue a business problem. They see the model as the consumer is always right then the issue must be within the supply chain and getting the product to the end customer.

Do Supply Chains Compete in the Temporal Domain?

The problem is not logistical routes or the ability to fill the supply chain with goods. Capacity and capability play a major role but there are limitations on the capacity and capabilities too. The problem is more temporal. The gifts did not get there on time. Online retailers are now competing in the time domain. The best reduction in time is walking into a store and making the purchase if the inventory is on hand. The bottom line up front for online retailers is that short of teleportation, there is an minimal time the delivery process takes despite the most lean supply chains. So how do the goods traverse from point A to point B in the amount of time reasonable for the customer that keeps the cost reasonable to the consumer?   A common sense answer is to economically ration the delivery time.

The supply chain cannot make promises without proper compensation to at least break even on the promise and the customer cannot make demands for which they are not willing to pay.  Pure economics 101 is the solution; supply and demand.  The customer should select the solution they are willing to pay for knowing the risk involved. As the holiday date approaches, shipping costs begin to increase in order to ration or guarantee on time delivery. These are typically overnight or expedited deliveries.   Then within a specified time of the holiday ending, the guarantee no longer persists as ordering overnight cannot be delivered Christmas morning. Some online retailers may already be doing this at some level. However, a more accentuated scale would attenuate to demand to something reasonable to manage. Of course, the down side to this is that sales are turned away due to costs or may not be there in time for Christmas. Retailers may need to balance risk and returns in assessing how each online retailer scales this. After all, consumers may recall that last year a company was late and look for another company to fulfill the need.

Of course, the hub and spoke method of forecasting then strategically staging inventory is another solution which runs a risk of overstock and some lengthy delivery times may persist in outlaying areas. So in realistic terms, the best delivery times that can be achieved is overnight for delivery on Christmas Eve. However, the customer must be willing to pay for that service.  Most logistical companies want their staff home with their families. So Christmas Day deliveries most likely will not occur. If that service is offered, I am certain that the customer will most likely pay for it dearly. 

Supply Chain Futures

On a more far out look at the temporal concern is Amazon’s robotic delivery solution which affects capacity and capabilities in which 'drones' or robots will make deliveries in lieu of human operated systems. There are numerous models for this type of service. I want to relate something I saw years ago that has some applications to the Amazon robotic delivery system. In an upscale city in the MidWest, the town’s folks did not want their garbage set out on the curb. They instead, set up a service in which the compactor truck slowly drove down the street while hopper carts raced up into the driveways where a trash receptacle was placed beside most homes. The trash was loaded into the hopper on the cart which then raced to the next home. When the hopper was full the cart pulled up to the compactor truck and dumped its load. Once the compactor truck was full, an empty one would replace it. The activity was a sight to see, as usually anywhere from 4 to 6 hopper carts were buzzing around collecting garbage in a synchronous dance with the compactor truck.  This approach comes to my mind with delivery services. Instead, the visa versa would hold true. Full vehicles would replace the emptied vehicles as the packages are disseminated by robots.

In the Amazon model, the robots may assume traditional logistical routes moving goods in the hub and spoke system between distribution points first. This could be something as simple as unmanned airborne vehicles, UAV’s, that fly dedicated routes dropping off cargo containers then picking up another container to fly to the next distribution point. These UAVs would operate 7/24 moving goods directly to the distribution points. Delivery services such as UPS, FEDEX, USPS, etc… would then humanize the service making personal doorstep deliveries.

Image 1: QuadCopter can be used to deliver packages
Source: Oberwelz Design Projects

Image 2: CL-327 Guardian - Counter rotating rotor heads
Source: Canadian UAV Trials

In a later generation of the robotic system, technologies exist for robotic surface and airborne vehicles to deliver goods to the doorstep as well. Hovering or flying courier vehicles either with quad rotor arrays, Image 1, or counter rotating rotors, Image 2,  could deliver the goods from an airborne or surface mother vehicle centrally stationed somewhat like the compactor trucks using swarm technology.  The actual courier vehicles will be of a different design and size than the example images as well as equipped with robotic arms and/or package grips for drop off in delivery receptacles on homes and businesses.  The advantage of quadcopters is stability. The advantage of a ducted counter rotating rotor design is quieter flight as the rotors are sound canceling.  Thus, 7/24 deliveries could be ongoing. The courier robot would then rejoin the mother vehicle once a delivery is completed for a telemetry download and load of the next package delivery.  Multiple courier robots could operate from a single mother vehicle. 

Full Circle

The supply chain can be leaned out further by having robots operating 7/24 moving goods around or by simply speeding up the supply chain using forecasts and strategic buffers.  Economically rationing delivery guarantees is another way to manage the demands of customers to those willing to pay for the quicker service guarantees. In the end, there may be a combination of solutions.  However, there are costs and temporal limitations to getting the goods in the hands of a buying public and online retailers are close to those limits short of teleporting the goods based on a thought in a buyers mind,

Customer, "Beam it over, Scotty!"  

Scotty, "Aye Captain, I am giving it all she'll take. It just won't go any faster."

This brings the Christmas bedlam full circle to the meaning and reason for the season which is to reflect upon the Judeo-Christian God and his character who is patient and shows temperance.  People should get back to the basics of the season, demonstrate patience and temperance, and all this bedlam can be put to rest. In the meantime, the supply chain will continue to seek ways of compressing the delivery time as that is competition.