You don't need to be a regular reader of specialized trade journals these days to know that one of the hottest topics in business is radio-frequency identification (RFID) technology. Thanks to mandates delivered to suppliers recently by Wal-Mart and the Pentagon, even general interest news magazines and daily papers are now covering the race among suppliers to meet the Jan. 1, 2005, deadline.
Yet surprisingly, many of those you might expect to find on the front lines say they have yet to feel the pressure to implement RFID technology. Nearly three-quarters of the distribution managers and executives who responded to an e-mail survey sent to 5,000 readers of DC VELOCITY late last year said they remained unaffected. Nonetheless, most have placed themselves on standby alert. Now that Wal-Mart has pushed ahead, they say, they know their time will come.
For now, at least, few have done much more than sit back and watch the show. A majority of those surveyed have not yet begun implementing RFID. Some are still thinking it over—41 percent report that they're still analyzing what steps to take. Others (19 percent) say they've taken no action whatsoever.
And for most, there's no particular hurry. Wal-Mart's mandate to apply RFID tags at the carton and pallet level by next January affects only the retailer's 100 largest suppliers. So it's not surprising that 72 percent of those surveyed say they're not affected by that company's mandate. Yet they're also well aware that industry tends to take its cues from Wal-Mart (and in this case, the Defense Department). A full 60 percent predict that other customers will require some form of RFID tagging within the next two years. "My account is with Proctor & Gamble and it has not affected us yet, but everything is subject to change in this marriage," wrote one respondent.
Exhibits
Exhibit 1
Where will potential RFID improvements come?
Inventory tracking
84%
Shipment status
64%
Cost reduction
40%
Less paperwork
39%
More data for real-time decisions
61%
Greater flow-through velocity
48%
Exhibit 2
Who would be involved in making the decision to invest in RFID technology?*
Mixed signals
Once RFID adoption gets under way, how quickly will the conversion happen? The survey responses suggest it will vary widely by industry. For instance, one respondent pointed out that even bar-code compliance is still spotty in some segments of the food-service industry, indicating that RFID adoption could still be years away. But another respondent, who works for an automotive industry business, was more upbeat. He said he expected to see RFID take hold relatively rapidly, adding that the technology "could be very positive for the industry."
Just how positive? A full 84 percent of the respondents believe RFID technology has the potential to improve their logistics operations in at least one area. Most cited inventory tracking as a likely beneficiary (see Exhibit 1).
But not everyone felt the gains would offset the hefty investment required. In fact, while 60 percent thought the investment would be worthwhile, 40 percent contended it would not. Wrote one respondent, "RFID technology … still tends to be cost prohibitive for most inventory tracking applications. As chip prices go down, you will continue to see growth in the application of RFID. However, as in the case of 2D bar codes, many warehouse and shop floor applications simply don't require this added functionality. The low-cost 1D bar code will likely continue to be the technology of choice for many inventory tracking applications."
It appears that the bar code will be around for years to come. Although some predict RFID will replace the bar code as the primary means of capturing data, a full two-thirds of our survey respondents don't think that will happen anytime soon. "It will happen eventually," wrote one, "but it will take something like 10 years to get to that stage."
Given the investment involved, it's no surprise that a lot of people will have a hand in the decision to go live with RFID.When asked who would be involved in the decisionmaking process, 66 percent of the respondents say that their companies' CEO or presidents will play a role (see Exhibit 2). But they clearly won't be going it alone. Nearly all of the respondents reported that the decision would involve more than one department, with 76 percent saying that logistics would have a voice in the decision.
“While there have been some signs of tightening in consumer spending, September’s numbers show consumers are willing to spend where they see value,” NRF Chief Economist Jack Kleinhenz said in a release. “September sales come amid the recent trend of payroll gains and other positive economic signs. Clearly, consumers continue to carry the economy, and conditions for the retail sector remain favorable as we move into the holiday season.”
The Census Bureau said overall retail sales in September were up 0.4% seasonally adjusted month over month and up 1.7% unadjusted year over year. That compared with increases of 0.1% month over month and 2.2% year over year in August.
Likewise, September’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.7% seasonally adjusted month over month and up 2.4% unadjusted year over year. NRF is now forecasting that 2024 holiday sales will increase between 2.5% and 3.5% over the same time last year.
Despite those upward trends, consumer resilience isn’t a free pass for retailers to underinvest in their stores by overlooking labor, customer experience tech, or digital transformation, several analysts warned.
"The 2024 holiday season offers more ‘normalcy’ for retailers with inflation cooling. Still, there is no doubt that consumers continue to seek value. Promotions in general will play a larger role in the 2024 holiday season. Retailers are dealing with shrinking shopper loyalties, a larger number of competitors across more channels – and, of course, a more dynamic landscape where prices are shifting more frequently to win over consumers who are looking for great deals,” Matt Pavich, senior director of strategy & innovation at pricing optimization solutions provider Revionics, said in an email.
Nikki Baird, VP of strategy & product at retail technology company Aptos, likewise said that retailers need to keep their focus on improving their value proposition and customer experience. “Retailers aren’t just competing with other retailers when it comes to consumers’ discretionary spending. If consumers feel like the shopping experience isn’t worth their time and effort, they are going to spend their money elsewhere. A trip to Italy, a dinner out, catching the latest Blake Lively and Ryan Reynolds films — there is no shortage of ways that consumers can spend their discretionary dollars,” she said.
Editor's note:This article was revised on October 18 to correct the attribution for a quote to Matt Pavich instead of Nikki Baird.
Chinese supply chain service provider JD Logistics today announced plans to double its overseas warehouse space by the end of 2025 as part of the company’s broader global supply chain strategy to meet the growing demand for cross-border logistics solutions.
As part of that effort, the company will also expand its network of bonded and direct-mail warehouses. That would mark a significant expansion since JD Logistics—which is the logistics arm of JD.com and is also known as “JingDong Logistics”—currently operates nearly 100 bonded, direct mail, and overseas warehouses. Those facilities total about 10 million square feet in markets such as the U.S., Germany, the Netherlands, France, the U.K., Vietnam, the UAE, Australia, and Malaysia.
Specifically, JD Logistics said it is focused on expanding its presence in Europe and the U.S., establishing collaborative supply chain networks capable of delivering fulfillment services within 24 hours in several regions. In support of that, the company plans to increase its international cargo flights from China to destinations such as Malaysia, South Korea, Vietnam, the U.S., and Europe to enhance cross-border transportation services. It will also explore the development of self-operated transportation and delivery capabilities overseas.
The market for environmentally friendly logistics services is expected to grow by nearly 8% between now and 2033, reaching a value of $2.8 billion, according to research from Custom Market Insights (CMI), released earlier this year.
The “green logistics services market” encompasses environmentally sustainable logistics practices aimed at reducing carbon emissions, minimizing waste, and improving energy efficiency throughout the supply chain, according to CMI. The market involves the use of eco-friendly transportation methods—such as electric and hybrid vehicles—as well as renewable energy-powered warehouses, and advanced technologies such as the Internet of Things (IoT) and artificial intelligence (AI) for optimizing logistics operations.
“Key components include transportation, warehousing, freight management, and supply chain solutions designed to meet regulatory standards and consumer demand for sustainability,” according to the report. “The market is driven by corporate social responsibility, technological advancements, and the increasing emphasis on achieving carbon neutrality in logistics operations.”
Major industry players include DHL Supply Chain, UPS, FedEx Corp., CEVA Logistics, XPO Logistics, Inc., and others focused on developing more sustainable logistics operations, according to the report.
The research measures the current market value of green logistics services at $1.4 billion, which is projected to rise at a compound annual growth rate (CAGR) of 7.8% through 2033.
The report highlights six underlying factors driving growth:
Regulatory Compliance: Governments worldwide are enforcing stricter environmental regulations, compelling companies to adopt green logistics practices to reduce carbon emissions and meet legal requirements.
Technological Advancements: Innovations in technology, such as IoT, AI, and blockchain, enhance the efficiency and sustainability of logistics operations. These technologies enable better tracking, optimization, and reduced energy consumption.
Consumer Demand for Sustainability: Increasing consumer awareness and preference for eco-friendly products drive companies to implement green logistics to align with market expectations and enhance their brand image.
Corporate Social Responsibility (CSR): Companies are prioritizing sustainability in their CSR strategies, leading to investments in green logistics solutions to reduce environmental impact and fulfill stakeholder expectations.
Expansion into Emerging Markets: There is significant potential for growth in emerging markets where the adoption of green logistics practices is still developing. Companies can capitalize on this by introducing sustainable solutions and technologies.
Development of Renewable Energy Solutions: Investing in renewable energy sources, such as solar-powered warehouses and electric vehicle fleets, presents an opportunity for companies to reduce operational costs and enhance sustainability, driving further market growth.
The clean energy transition continuing to sweep the globe will give companies in every sector the choice to either be disrupted or to capitalize on new opportunities, a sustainability expert from Deloitte said in a session today at a conference in Orlando held by the enterprise resource planning (ERP) firm IFS.
While corporate chief sustainability officers (CSOs) are likely already tracking those impacts, the truth is that they will actually affect every aspect of operations regardless of people’s role in a business, said John O’Brien, managing director of Deloitte’s sustainability and climate practice.
For example, regulatory requirements on carbon emissions are expanding in every region, which means that even if a specific company doesn’t have to change its own practices, it will almost definitely need to flex to accommodate its partners and suppliers as they track scope 3 emissions or supply chain practices.
Likewise, companies are starting to challenge the classic concept of “force majeure” events than can cancel service providers’ contractual duties due to unforeseeable weather events. As the new argument goes, extreme weather patterns increasingly occur in accordance with climate scientists’ forecasts, so those hurricanes and wildfires are in fact foreseeable after all.
But one strategy for coping with the cost of those changes is to mine the power of the data that most companies will soon need to collect as part of their evolution. Instead of simply tracking its trucks to trim their routes and emissions, a transportation company could use the same data to manage their maintenance and fuel consumption.
“The climate management transition is going to be a massive disruption, but with that comes massive opportunity,” O’Brien said from the keynote stage at the “IFS Unleashed” show. “Don’t waste compliance efforts just on compliance, use it to create new value. You’re collecting all that new data, so use it!”
A real-time business is one that uses trusted, real-time data to enable people and systems to make real-time decisions, Peter Weill, the chairman of MIT’s Center for Information Systems Research (CISR), said at the “IFS Unleashed” show in Orlando.
By adopting that strategy, they gain three major capabilities, he said in a session titled “Becoming a Real-Time Business: Unlocking the Transformative Power of Digital, Data, and AI.” They are:
business model agility without needing a change management program to implement it
seamless digital customer journeys via self-service, automated, or assisted multi-product, multichannel experiences
thoughtful employee experiences enabled by technology empowered teams
And according to Weill, MIT’s studies show that adopting that real-time data stance is not restricted just to digital or tech-native businesses. Rather, it can produce successful results for companies in any sector that are able to apply the approach better than their immediate competitors.