The shipping and delivery service industry is getting crowded
The market for on-demand delivery services is growing rapidly, and we are seeing a proliferation of start-ups trying to meet the instant gratification consumers are seeking. The “I want it now” culture is being propelled in part by the millennial generation, which has proven to be much less loyal to legacy brands compared to previous generations. The lack of brand loyalty, increased expectations and explosion of connected devices has led to increased competition in the delivery service industry.
Well established companies such as FedEx and UPS may soon experience acceleration in competition with the likes of Amazon, Google and Uber. Google, for example, has been testing an online shopping and shipping service for months, which promises same-day-delivery. Uber is also testing a service that would deliver products through its 200,000 active drivers, and of course Amazon has been making headlines for its proposed drone delivery system.
To read more about the latest developments in this dynamic market, click here.
Teaming up to tackle sustainability
It was announced this week that Cargill and PricewaterhouseCoopers (PwC) are teaming up to support organizations in their quest to align supply chain processes with sustainability objectives. The two companies recently launched the Responsible Supply Chain advisory service which aims to help other firms improve margins, reduce risks and meet social and environmental goals and requirements. This new service provides clients with two half-day sessions during which cross-functional teams work together to identify quick wins to improve supply chain efficiencies.
These types of partnerships have become more common in recent years with companies turning to the public sector, academic institutions and non-profit organizations in order to address sustainability challenges. Cargill, for example, also teamed up with Dow in the past to create a corn-based plastic, but this project is now wholly owned by Cargill.
To read more about the Responsible Supply Chain advisory service, click here.
Big sales, big profits, big supply chain costs
One would think that the announcement of a 21% increase in sales plus an 11% profit jump is a good thing. Despite these positive quarterly reports, H&M shares experienced a 2% drop after investors took a closer look at the most recent earnings reports. One reason for concern is the company’s supply chain, which is heavily dependent on suppliers in Asia. The company sources the majority of its clothes from this region and uses the dollar to complete the transactions. As the dollar grows stronger, H&M incurs higher costs along the supply chain, a fact that has investors on edge at the moment.
Zara, one of H&M’s top competitors, sources its clothing close to home in Spain. This centralized and short supply chain appears to be serving the company well as it is less exposed to market volatility. This story once again highlights the importance of the supply chain function within an organization.
To read more on H&M’s latest quarterly report, click here.
Have a nice weekend!
