Market Disruptors

Zupplychain became an associate member of UKWA (United Kingdom Warehousing Association) earlier this year and one of us recently attended its annual conference. With so many fascinating sessions, we thought we’d blog about some of the best, starting with the opening ‘Setting the Scene’ session. Further blogs on other talks at the conference will follow.

UKWA’s CEO, Peter Ward, opened the conference. Peter has been in the post for nearly 2 years and has a wealth of experience within the Logistics Sector. Both Zupplychain’s conversations with Peter and his opening speech indicate his recognition of the pace of change in the warehousing and logistics sectors and the need to for UKWA and others to proactively develop frameworks and policies to address these changes.

Peter started by deconstructing the UKWA acronym, highlighting the lack of breadth of the ‘United Kingdom’ and ‘Warehousing’ elements and setting up a key theme of the day - how the once linear ‘Supply Chain Process’ has been replaced by a multi-paced, multi-channel, consumer driven ‘Global Supply Chain’. E-Commerce has reshaped the retail world as we know it and the logistics industry is playing an integral role in this brave new world: as Peter commented, ‘Logistics is the New Retail.’

As logistics professionals, we have to evaluate the extent to which new technology and innovation presents both risks and opportunities. We have previously blogged on ‘Market Disruptors’ on the transport, distribution and warehouse sectors. Naturally, we regard Zupplychain as an example: looking to solve the old problems of warehouse space and pallet storage with a new online, interactive and user-responsive solution.

Similarly path-breaking is the use of drones in logistics. As the rising demand for next day, same day and even 1 hour deliveries seems no signs of abating, the pressure is on the warehousing and distribution sector to respond to consumer demands, with drones representing the radical answer. As so often, Amazon is leading the field in trialling their use and considering their potential in the widest sense. It has ‘Prime Air’ scheduled to be launched by the end of 2017, with a key advantage being the delivery of parcels and packages weighing less than 3 kilos. DHL has also produced a paper, in 2014, about the implications and use of what they called ‘Unmanned Aerial Vehicles’ in the Logistics Industry. The industry is embracing rapidly the potential of this new technology in many ways – drones picking items from pallets in warehouses is a reality. They can even do stock counts!

Amazon’s purchase of Kiva, a warehousing automation company, in 2012 for $775 million was yet another bold strategic move by the e-com giant, giving it sole use of Kiva’s robots. This really shook up the warehouse sector, with Kiva dominant in the development and supply of robot led warehouse automation. Amazon’s acquisition of Kiva led to restricted supply of warehouse automation to other warehouses for a significant period. There are currently about 30,000 Kiva Robots working in Amazon’s warehouses worldwide and it has been estimated that the robots reduce operating costs by about 20%.

So web-based market disrupters like Zupplychain, drone based picking and delivery and more intensive warehouse automation are themes for the future that the worldwide logistics industry has to tackle head-on. To round out – and exemplify - this theme, the UKWA conference delegates were asked to raise their hands if they had a Nokia phone with them – no surprise: no hands! Nokia missed the opportunity to identify the ‘what next’ for the mobile phone and then failed to keep up with the shift in consumer demand once Steve Jobs and the Apple Phone had. Nokia was at its peak 10-15 years ago – now there are forums and websites dedicated to nostalgic photos and reviews of old Nokia phones and their ringtones. Other examples include Kodak (‘who on earth would want a phone with a camera?’) and Royal Mail, trying to reinvent themselves in the context of new distribution and delivery models created by and responding to the growth of e-commerce.

The message of the conference for the warehouse and distribution industry was very clear: it cannot be a Nokia; ignoring the threat of a competitor, being complacent and not responding to consumer demands. In contrast, it needs to be an Amazon - continually reinventing itself and being driven by what the consumer wants or doesn’t yet know that she wants. The UKWA session on market disrupters closed with an apt quote from John F Kennedy: ‘Change is the law of life. And those who only look to the past or present are certain to miss the future.’

‘Ignore Market Disruptors at your peril’ led us smoothly into the next session of the conference - ‘The Changing Market Place’ - which we’ll be looking at in our next blog on Friday.