In the bustling world of ecommerce, the efficiency of the last-mile delivery process is often overshadowed by the complexities faced by delivery drivers when reaching the final destination in multi-unit buildings. The struggle to locate the right door amidst towering apartment complexes has become a daunting challenge for couriers, resulting in delayed deliveries and a negative impact on the tenant experience. 

The heart of the issue lies in traditional navigation maps, designed for broad directions instead of the nuanced logistics of multi-unit buildings. New drivers find themselves grappling with unfamiliar layouts, which causes delays in deliveries and packages getting delivered to the wrong addresses.

One of the first logistics solutions we built at PackageX directs this “last-inch” delivery management issue. Our software directs delivery drivers to a central location within the building where employees who are familiar with the building's schematics take over the final leg of the delivery journey. Tenants can also receive notifications and take remote actions such as holding, returning, or forwarding their deliveries.

“Maps were not made for logistics. Maps were made for navigation to get you from approximate point A to approximate point B. The last 100 feet have just been considered a cost of doing business—that you will just deliver three out of four deliveries decently well.” - Akash Agarwal, Founder @ Beans.ai (WSJ)

With success in managing the last-yard delivery process, we expanded our expertise over the years to address broader logistics challenges. From facilitating internal routing at corporate campuses and universities to navigating mixed-use communities, our platform ensures that every hop in the delivery process is managed seamlessly by internal couriers.

In addition to building out our platform, we’ve also learned from our customers — everyone from multi-unit building managers to shipping carriers — what works best for improving the last inch of the delivery process…

1. Implement centralized delivery hubs: Establishing central delivery hubs within multi-unit buildings can significantly streamline last-inch logistics. This allows for efficient coordination between delivery drivers and specialized couriers.

2. Use technology for tenant communication: Provide real-time notifications about package arrivals at central locations and let tenants take immediate action through their smartphones. This not only improves tenant satisfaction but also empowers them with control over their deliveries.

3. Invest in specialized last-inch courier training: Equip last-inch couriers with comprehensive training on the specific layouts and intricacies of the buildings they serve. This specialized knowledge ensures that couriers can navigate complex structures with ease.

The last-inch challenge faced by delivery drivers in multi-unit buildings demands innovative solutions that prioritize accuracy, efficiency, and tenant satisfaction. By embracing new technologies and updating internal operations, delivery drivers and building staff can transform the last inch from a cost of doing business into a means of delighting tenants.

Every year, companies claim that “this year is the year for RFID technology.” Turns out, these are the same companies that sell RFID, a technology initially used by the British during World War II to distinguish enemy aircraft from ally aircraft. 

The system was called Identify Friend or Foe (IFF). Using this system, British planes would transmit  a coded signal to radar towers. If the radar picked up the signal, ground troops would hold their fire. If no signal were read, the sky would be blasted black with flack, and foes would fall from the sky.

This initial use case of RFID presented a simple solution to a serious challenge. Then, after the war, what qualified as “serious” began to change. In the post-war world, commerce became a serious business. Allies resumed regular trade, and enemies slowly became new friends to trade with.

According to the World Trade Organization, world trade volume today is roughly 45 times the level recorded in the early days of the GATT, achieving 4500% growth from 1950 to 2022. (GATT stands for the General Agreement on Tariffs and Trade, an agreement between countries to promote international trade by reducing pre-war trade barriers such as tariffs or quotas.)

When global trade started its massive ascension after the war, research on the barcode began — specifically for retail. Just before global trade achieved hockey stick-like growth in the 1990s, the United States required vendors to use UPC barcodes for inventory management.

The barcode became the de facto technology for achieving affordable, efficient inventory management, which remains true today. However, since there’s more trade and products than ever, the way to acquire data about products and parcels must change.

To address the need for optimal efficiency and accuracy in inventory mangement, major retailers like Walmart started using RFID technology in 2005. Other retailers started using it primarily for theft control. Similar to the IFF use case during World War II, people exiting the store with unpaid-for products would trigger a “foe alarm” at the door.

However, you might have noticed that the door alarms have started disappearing over the years. Or, at best, they have only acquired slow adoption in certain locations for certain retailers. That’s because RFID technology is expensive. Often too expensive to make sense. This is especially true for logistics use cases.

Depending on features and capabilities, RFID tags used in logistics and supply chain management can range from $20 to $50 or more per tag. (source)

This makes computer vision technology that can read barcodes, identify parcels based on shape and size, and instantly acquire other information on parcels like bill of lading slips particularly interesting to retailers. Unlike RFID technology, which requires expensive tags, computer vision technology uses what’s already on the box or product.

However, one technology company is building retail solutions with both computer vision and RFID. Radar is a hardware and software platform that uses RFID and computer vision to locate in-store inventory. Its technology is used in stores across the U.S. and services 500 American Eagle locations. 

Radar pledges to finally live up to the hype of RFID, but for in-store use cases. Their solution doesn’t solve any problems with the movement of goods outside of the store — aka logistics. That’s because solving logistics problems with RFID is (you guessed it) expensive. It would also require everyone across the whole chain to agree to use RFID, from manufacturer to shipper to seller.

A much better approach is visually identifying the item and skipping the expensive RFID step altogether. Retailers can use the inexpensive barcodes they’ve been using and, combined with computer vision, achieve the same magical inventory management experience by feeding data into a pure AI scanning model built for logistics.

We’re not saying RFID isn’t useful technology, but until its price plummets and all supply chain partners agree to adopt it, RFID will continue to be an old dog trying to learn new tricks.

According to a recent Bloomberg article, logistics tech giant Flexport found itself in crisis mode as operational glitches led to skepticism from key clients like Sonos Inc. and Western Digital Corp.

The article highlights the cautionary tale of tech companies that prioritize user interface (UI) at the expense of data and operational reliability. While Flexport's UI is praised for its aesthetics, logistics professionals are now quicker to choose software that excels at reliability at the expense of a pretty UI.

Jeremiah Pomerleau, a director of logistics and trade with over two years of experience, evaluated Flexport while heading logistics at GoPro and Corsair, a global manufacturer of PC gear. He calls Flexport’s UI “stunning” and “a pleasure” to navigate but ultimately stayed away because he found the cumbersome software he was already using better at keeping track of data.

“I don’t need all these fancy systems,” Pomerleau told Bloomberg, reinforcing his point that he’d choose reliability over ease of use if pressed to select one over the other.

In the current landscape where logistics companies face challenges due to a surge in shipping prices and increased competition, reliability in getting products to customers is critical. It brings attention to the dangers of neglecting operational reliability in pursuit of a sleek UI on a trendy platform.

At PackageX, we pursue a harmonious blend of usability and reliability in our logistics platform. Our measured growth strategy allows us to do this. By avoiding the pitfalls of rapid expansion and excessive reliance on venture capital (Flexport has raised over $2B across 99 institutional investors), we’re able to prioritize what matters most to logistics professionals.

What matters most to you in a logistics platform?

Manifest is here, and this year there are over 250 speakers! Our CEO Farrukh Mahboob is participating in a panel discussion about logistics digitization and, in this category alone, there are 24 different sessions to attend.

At PackageX we believe that digitization is everything. Without digitizing operations in your supply chain, you can’t leverage the latest technology. And without the latest technology, you fail to meet customer expectations. 

Are customer expectations too high? Possibly. But in the meantime they’re here to stay. Customers want faster shipping, free shipping, and immediate resolutions when a package goes missing or a delivery is delayed.

The panel discussion Farrukh is participating in deals directly with this issue, and there are other great panel discussions and presentations about digitization. So our advice is this: instead of trying to attend EVERY speaker track and wear yourself thin (Manifest should be fun!) focus on a specific theme for Manifest and attend sessions around that theme.

There are many themes to choose from — robotics, drones, cybersecurity, safety, sourcing, sustainability, the list goes on! — but if you want to improve digitization, below are some sessions worth attending.

For a full list of sessions in the digitization category, check out our blog post.

Which sessions are you most excited for?

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Sessions About Digitization

How To Solve the Challenges of Visibility and Data Quality

Monday, February 5 @ 3:40 pm | ION Visibility 2.0 | Room 214-216

Achieving visibility and defining data quality remain critical challenges in the supply chain industry. Throughout this discussion, attendees will gain insights into who is responsible for ensuring accurate and reliable data in the supply chain ecosystem and how to stay ahead of the curve with visibility requirements across various modes/geographies. Join us for a thought-provoking session that will make you reflect and plan for the future of your supply chain operation.

• Shradha Balakrishnan, Senior Product Manager @ Uber Freight

• Tyler Hughes, CTO & Co-Founder @ Vizion

• Eric Johnson, Senior Editor @ JOC.com

• Stefan Kalmund, CEO @ Nexxiot

How To Keep Pace With Evolving Customer Expectations

Tuesday, February 6 @ 10:55 am | Track 3 | Room 221-223

CEOs that pay close attention to shipping do so to ensure the overall success and sustainability of their businesses. Four of these CEOs join the stage to take a deep dive into customer experience, cost efficiency, and the partnerships that are enabling agile and responsive supply chains while reducing disruptions and meeting market demands effectively.

• Sarah Barnes-Humphrey, Founder & Host @ Let's Talk Supply Chain

• Peter Coratola Jr, CEO & President @ EASE Logistics

• Farrukh Mahboob, CEO & Founder @ PackageX

• Coby Nilsson, CEO & Co-Founder @ Enveyo

• Itamar Zur, CEO & Co-Founder @ Veho

Orchestration: The Future of Supply Chain Digitalization

Tuesday, February 6 @ 8:50 am | Plenary Stage | Academy Ballroom

Orchestration, the future of supply chain digitalization, is one of the biggest buzzwords in supply chain. And, it can mean different things depending on who you ask. In this session, join DHL Supply Chain Global Digital Transformation Officer and North American CIO Sally Miller as she unpacks the term orchestration and explains the impact on the logistics industry.

• Sally Miller, Global Digital Transformation Officer & CIO North America @ DHL Supply Chain

Navigating the Path to a Digitalized and Climate-Positive Supply Chain

Wednesday, February 7 @ 8:35 am | Plenary Stage | Academy Ballroom

In a pivotal session, one of the top 6 supply chain leaders of 2023 takes the stage to unveil the blueprint for revolutionizing supply chains. With a visionary approach, this luminary illustrates the intricacies of driving long-term and holistic transformation within supply chains while harnessing cutting-edge technology, all while prioritizing the imperative of a climate-positive impact.

• Dirk Holbach, CSVP, CSCO @ Henkel Consumer Brands

Meet the PackageX Team at Manifest

When you need a break from sitting during sessions, come see us at Booth 1009! Obviously we’d love to tell you about our logistics platform, but would love even more to learn more about you and what brings you to Manifest.

In the race for supremacy in the ecommerce landscape, three behemoths—Amazon, Target, and Walmart—employ diverse shipping strategies to meet the burgeoning demand for faster deliveries. Each retailer navigates the shipping battleground with distinct approaches, capitalizing on their unique strengths and resources.

Amazon, the pioneer of fast shipping, focuses on precision and speed. With more than 175 fulfillment centers globally and a network of same-day facilities across 90 metropolitan areas, Amazon has reduced its average delivery time by over 50% since 2018. 

▶️ Inside Amazon’s Meticulous Same-Day Delivery Strategy

On the other hand, Target adopts an innovative “stores as fulfillment centers” approach, leveraging its extensive network of physical stores to fulfill 95% of its online orders. By transforming stores into mini-fulfillment hubs, Target optimizes proximity to customers and minimizes shipping costs and delivery times. 

▶️ Inside Target’s Strategy to Beat Amazon and Walmart’s Fast Delivery

Walmart’s strategy is a combo of Amazon’s and Target’s, leveraging automated Market Fulfillment Centers (MFCs) to expedite its delivery processes. These MFCs, attached to Walmart Supercenters, house 6,000 to 8,000 popular products. And with a fleet of more than 175 robots, these centers process 95% of orders in under 12 minutes.

▶️ How AI and Automation Fuel Walmart’s Ultrafast Deliveries

Based on the strategies employed by these major retailers, here are some tips logistics professionals inside other retailers can use to optimize shipping operations in 2024…

1. Prioritize proximity by leveraging existing store networks or strategically located fulfillment centers. This approach significantly reduces delivery times and operational costs.

2. Embrace automation and innovative technologies to streamline fulfillment processes. Automating tasks like order picking and sorting can substantially accelerate delivery times.

3. Integrate online and in-store operations to leverage the advantages of physical retail spaces while catering to the growing demands of ecommerce.

In the relentless pursuit of faster deliveries, these retail giants are reshaping the logistics landscape. By adopting innovative strategies tailored to their strengths, they set a benchmark for the industry while continually evolving to meet customer expectations in the ever-changing ecommerce landscape.

What does your shipping strategy look like for 2024?

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PackageX was recently featured in a New York Tech article that noted how the retail landscape transitioned from a 'just-in-time' to a 'just-in-case' inventory strategy over the past few years.

After the ecommerce boom in 2020 and 2021, retail giants like Target, Walmart, and Macy's grappled with surplus stock that arrived after supply chain disruptions when demand for products was lower. This resulted in a significant amount of markdowns. Even brands like Nike activated heavy discounts to clear out excess inventory.

Inventory management automation reemerged as a pivotal solution to ensure overstocking to this degree never happened again. These automation technologies — everything from logistics software to inventory scanning devices and robots — enabled businesses to more efficiently manage and move the stock they already had and know exactly when to order more.

There was a prevalent concern, however. Would the evolution of this technology replace human labor? 

“The reality is that technology cannot replicate human cognitive abilities, and conversely, humans cannot mimic the precision and consistency of technology. It's a symbiotic relationship, not a replacement scenario.”

This is true whether you’re talking about logistics software that captures and digitizes shipping label data, artificial intelligence that recommends actions based on data, or the robots and machinery that perform the actions. In each case, humans are needed to manage the technology which is a more interesting and layered assignment.

For example, imagine a warehouse worker manually cross-checking inventory against manifests. This is a complex and tedious task, not to mention highly prone to error. Instead, scanning software and devices can be used to aid in monitoring inventory levels, data ingestion, and decision making.

In a tech-driven era, human ingenuity remains pivotal. Businesses shouldn't fear automation but embrace it as a tool to augment human capabilities. By harmonizing human and machine intelligence, we can fortify supply chains that rely more on human creativity and less on rote manual labor.

What’s the sentiment around new logistics technology, artificial intelligence, and robotics in your company?

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The annual dance of holiday season surcharges is in full swing as the 2023 holidays approach. 

This year, carriers are making headlines with varied methods. While some are increasing their fees, others are getting into the holiday spirit with a surcharge-free season.

UPS is charging a demand surcharge of up to $7.50 per package, with additional fees for large, oversized, and hard-to-handle packages. And FedEx is charging variable fees of up to $6.35 for ground and $7.40 for express shipments, with surcharges on oversized and hard-to-handle packages. 

Not all carriers are following the price-hike path though. The U.S. Postal Service, DHL eCommerce, and OSM Worldwide are all riding out the holiday season surcharge-free. 

“The holiday season is the most important time for many of our customers' bottom line. We are proud that we can avoid additional charges on shipments so they have a more profitable quarter." - Gaston Curk, CEO of OSM Worldwide

Navigating the holiday shipping landscape requires strategic planning. Luckily, paying peak season surcharges is not a requirement. There are many ways savvy companies can ensure they stay within their holiday budgets. 

• Utilize carrier marketplaces - Leverage carrier marketplaces with built-in "margin controls" for flexible pricing. Retailers can adjust shipping prices in different ways using these tools. For example, they can pass on shipping savings to customers or keep savings for their own profits.

• Plan strategically - Anticipate peak season surcharges and plan shipments accordingly. Batch your shipments to create fewer pickups, and see if you can schedule pickups at consistent times.

• Diversify your carrier portfolio - Explore alternatives without peak season surcharges, such as DHL eCommerce, or schedule with emerging providers winning contracts over UPS and FedEx, like Veho, AxleHire, and Hailify.
  

Navigating the holiday shipping landscape while keeping the budget and bosses happy is tricky, but there are many tools and strategies available to help.

What’s your plan for staying within your shipping budget this holiday season? 

In Q2 of 2022, supply chain inventory growth averaged 46%. In apparel and ecommerce sectors, that number was considerably higher at 66%. 

The past three years have been a wild ride. 2020 and 2021 brought inventory shortages as consumers rushed to stock up on essential items and the supply chain was disrupted by covid-19.

Then, in 2022, as the average consumer was being rocked by inflation, a wave of inventory that had been stuck on ships during the supply chain crisis hit the American market all at once. 

Suddenly, companies were sitting on a giant pile of merchandise when people were cutting back on everything but essentials, a situation that the managing director of Strategic Resource Group labeled a “retail armageddon.”

“I think it’s going to be awhile before merchants and executives are really ready to place that bet for a large inventory position. Those conversations were brutal last year. The earnings — they weren’t fun calls, and I don’t think anyone wants to go back to that time.” - Matt Garfield, Managing Director of FTI Consulting

The supply chain is slowly balancing itself out in 2023, but not as fast as many retailers would like. The low to moderate income consumer still has less purchasing power, and inventory is only decreasing gradually, still sitting very high in the manufacturing and wholesale sectors. 

So, how can companies avoid overstocking and excess inventory? 

• Experiment with a just-in-time (JIT) inventory management style - With JIT, you order and receive inventory only as needed, reducing the risk of overstock. This approach helps keep inventory levels lean and minimizes storage costs.

• Track customer insights to stay on top of inventory needs - Stay closely attuned to your customers' needs and preferences. Gather feedback and monitor market trends to help you make informed decisions about what to stock and in what quantities.

• Consider a cloud-based inventory management solution - Cloud software solutions offer real-time inventory management tools that can help you make rapid adjustments to your ordering and inventory levels. Traditional pen and paper management still used by many enterprises cannot achieve this.

We’re still facing many challenges in the modern supply chain. Not all solutions are going to work for everyone. However, there are best practices and technologies that, when combined, can help you navigate choppy waters.

Is there a specific combination you’ve found to help you manage excess inventory?

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Only 36% of supply chain professionals say their organization operates on a single supply chain platform. 

This means almost two-thirds of SCP’s are chasing piecemeal solutions with bolt-on software, a strategy that can quickly grow out of hand since each software comes with its own licensing requirements, service fees, and integration complexities. 

A perfect example of the bolt-on approach is visibility software, or software that integrates with a TMS and ERP to provide tracking and predictive analytics for shipments.

But shouldn’t shipment visibility come from the shipping platform or whichever platform is owning outbound logistics?

In a time when only 6% of companies report total supply chain visibility, the necessity for this inclusion is clear. This lack of insight signals a need for a reevaluation of software already being used, not more software for companies to add to their learning curve. 

"Many supply chains are perfectly suited to the needs that the business had 20 years ago." 

-MIT Professor Jonathan Byrnes

A lot of established companies have built their bolt-on supply chain stacks over years or even decades of being in the market.

Many logistics organizations adopt software to fill immediate needs rather than finding solutions that are capable of aligning with their long-term goals. There are many great solutions on the market for retailers to bring their supply chain under one roof, but it’s important to choose wisely... 

• Seek real-time visibility - Real-time tracking and data updates are essential for logistics. Choose software that offers live updates and multi-party communication on shipments, inventory, and other crucial metrics out-of-the-box — no bolt-on visibility software needed.

• Look for customization options - Every logistics operation is unique. Select software that allows for customization to cater to your specific needs. A mandatory platform feature is a flexible collection of APIs and services to help you meet evolving operational needs and consumer behaviors.

• Consider cloud-based solutions - Cloud software solutions offer flexibility and scalability which are essential for modern logistics operations. It’s tempting to manage an open source of custom-built platform on-premise, but this requires more staff to maintain and scale.

• Solutions that enable automation: Data captured on a piece of paper, spreadsheet, siloed legacy system isn’t going to help you be productive or automate decision making. Find a solution that prioritizes best-in-class data ingestion, so your data sources are clean and accessible.  

Are you able to manage most areas of logistics operations from a single platform?

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In 2016, GameStop turned the retail world on its head by tripling ecommerce inventory with ship-from-store. This omnichannel fulfillment strategy sped up localized shipping and helped GameStop unload excess inventory through ecommerce channels.

But ship-from-store wasn’t without its challenges. GameStop risked the “ghost town” effect inside its stores, leaving shelves stripped bare in favor of e-commerce fulfillment.

After all, this is what happened to Target the year prior…

Target has been investing heavily in its ecommerce site and the ability to ship items directly from stores. It plans to have 450 stores that will act as online fulfillment centers by the end of the year. In doing that, the supply chain has been overextended. - The Detroit News, 2015.

To keep store shelves well-stocked while expanding its ecommerce assortment, GameStop leveraged in-store analytics to track foot traffic and adjust inventory accordingly. The company also prioritized ship-from-store for excess inventory to attract deal seekers without compromising in-store availability for hot items.

For retailers today, there are many tools available to launch ship-from-store fulfillment as successfully as GameStop did years ago.

• Inventory management - Modern systems offer real-time tracking across all locations, alerts for low stock levels, and integration with your POS and online platforms. This lets you monitor stock levels across all locations, allocate inventory effectively, and update availability instantaneously.

• Predictive analytics - By analyzing historical sales data, customer behavior, and market trends, predictive analytics tools can help you anticipate sales spikes and slumps, allowing for better inventory planning.

• Automated replenishment - Once stock levels hit a predefined threshold, the system automatically places orders to restock. Integrating this with your inventory management system and supplier databases facilitates quicker replenishment.

What are some tools you use to prevent stockouts while implementing modern omnichannel fulfillment strategies like ship-from-store?

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According to a recent survey by Freightos, 95% of supply chain professionals think AI will impact logistics but only 7% are actively using it.

Perhaps the largest barrier to entry to adopting AI is reliance on pen and paper, which 50% of companies still use to manage logistics operations.

AI requires large amounts of digitized data to automate tasks. In machine learning, a common rule of thumb is to have 10 times more data samples than parameters. For example, if a dataset for a logistics use case had 10 columns, it would require at least 100 rows of data. AI learning models require even more than this.

The problem is, most data is kept in filing cabinets and lost through analog communication. Therefore, it cannot be used to train AI learning models.

A company could go through great lengths to digitize the data they already have, but AI requires fresh data as well as historical data to work as intended. So, before adopting AI, a company must adopt processes for real-time data capture in digital formats.

This means digitizing everything from bills of lading and manifests to automatically capturing data on inventory and shipments as it moves through the supply chain.

“The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone. Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it.” - Bill Gates, March 2023

Without question, AI will transform the supply chain and logistics industry. But before companies become part of this evolution, they must adopt technology that existed before AI. Software like warehouse management systems. Hardware like mobile scanning devices. Even RFID tags and drones for larger operations. 

Of course, you don’t have to digitize everything to use AI. It all depends on which use case you want to automate. 

For example, warehouse automation requires data about inventory levels, order volumes, order frequencies, product dimensions, and storage capacities while route optimization requires data on traffic conditions, road closures, real-time location data of vehicles, customer locations, and delivery time windows.

And make no mistake, more money spent on data acquisition and AI means less money spent on employees. In the same Freightos survey, 84% of supply chain professionals said AI will lower headcounts.

What do you think?

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Instead of opening your email to find a written story, you found a New Yorker-style comic about operational challenges at receiving docks…

In the newsletter before this, we poked some fun at WMS software with another comic…

Moving forward, we’ll send you more comics — one every two weeks — about other challenges you might face as a logistics professional.

The goal of these comics is simple: make challenges feel lighter so you can direct them more easily. After each comic, we’ll provide a quick take on how to achieve this.

If you’re facing something particularly challenging right now, let us know about it in the comments and we’ll consider illustrating it for a comic in a future newsletter.

Leave a comment

According to a recent article from USA Today, companies like Target, Walmart, Dollar General, and Home Depot have been sounding the alarm on retail theft. But theft is only one contributor to the broader issue of missing inventory, also called inventory shrinkage.

Another source of inventory shrinkage is process and control failures, which accounts for 26% of shrinkage according to last year’s NRF survey. What are these failures? Well, some are tied to human error, especially at receiving docks.

Often, shipping manifests are sent to a retailer who assumes that everything on the manifest is in the shipping container which is not always true.

Obviously the comic is a dramatic scenario, but it points to the reality that inventory gets lost when moving from one logistics hop to the next. This is fine, mistakes happen. But it’s important to know during which hop inventory went missing. This way, you know which warehouse or logistics provider to go to with questions.

Moving away from blind faith and toward digitized item scanning at receiving docks — whether through scanning tech on conveyor belts or in warehouse workers’ hands — can cut down on shrinkage related to process and control and free up resources to handle the larger issue of theft.

How do you handle inventory receiving processes to reduce and detect shrinkage?

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Long-term storage warehouses may survive by using their WMS as a “system of record” where data is entered hours or days later. But fast-paced distribution warehouses must create “systems of engagement” around their WMS to uphold customer loyalty.

For example, assume a manufacturer has an immediate need for a part. The part supplier’s WMS reads out-of-stock but the supplier received a new shipment of parts earlier that day. Warehouse employees have yet to update the WMS so sales associates cannot fulfill the manufacturer’s desired order.

You can’t ship what you can’t see.

Comic of the week

Even if warehouses have a WMS, many enter information manually and retroactively. That day, that week, or never. It’s a redundant and inefficient process often tasked to a single person (maybe named Steve).

Chart of the week

According to the same MMH survey, the software used the most after WMS software is supply chain management and planning software (SCP) at 34%. Following SCP is transportation management systems (TMS) at 27%, labor management systems (LMS) at 25%, asset tracking software at 22%, and warehouse execution systems (WES) at 19%.

Lower adoption rates (not shown in the chart below) include slotting software at 12%, yard management systems (YMS) at 10%, distributed order management (DOM) at 9%, and robotic control systems at 9%. 

Eight percent of warehouses and distribution centers use none of the software mentioned above.

Quote of the week

If sixty-three percent of warehouses are using a WMS and only half are using it efficiently, what is being used in its place? As we covered in a previous newsletter, over fifty percent of companies still use pen and paper to manage logistics. This was verified by a respondent to the MMH survey…

So it seems there are three ways of managing warehouse operations:

1. WMS software used actively,

2. WMS software used passively,

3. or pen and paper.

Which way do you manage your warehouse operations?

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At PackageX we’re developing an API called “Threads” that uses artificial intelligence and generative AI (GPT) to help suppliers, logistics service providers (LSPs), retailers, and consumers communicate more effectively through 1-to-1 and multi-party conversations.

Traditionally, these parties communicate through phone calls and redundant questions such as:

“What’s your location?”

“What’s your ETA?”

“Which shipments do you have?”

“Where’s my stuff?”

With Threads, AI agents are tasked with asking these questions rather than people. And instead of downloading yet another tracking app, all LSP drivers have to do is answer the questions.

For example, a truck driver can have a natural conversation with an AI agent that discusses their location, estimated arrival time, and other relevant details. The data extracted from these quick conversations is logged in a “thread” that all parties can see and replaces the need for a tracking app. It's also structured in computer readable format, similar to our Scans API.

Tracking trucks without a tracking app

As I mentioned in my previous newsletter, many truck drivers prefer not to be constantly tracked with tracking apps. However, middle-mile recipients such as retail giants like Walmart require accurate information on truck arrival times for efficient docking operations. For this reason, they will have employees in a dispatch center regularly call drivers.

I’m aware that call centers have the highest attrition rate among any other job type and I wouldn’t be surprised if dispatch centers for logistics followed as a close second. The work is repetitive and robotic, making it a perfect use for AI.

AI agents can replace traditional dispatch centers and function as a bridge between drivers and recipients. With periodic calls to drivers about their location, AI can determine a truck’s ETA based on previous arrival times, traffic, and other data points… in seconds.

Communicating with drivers and building rapport

With Threads, AI agents generate prompts or questions through generative AI models that are converted into voice using text-to-speech AI. These prompts are delivered to the driver through a phone call initiated by Twilio, a suite of communication APIs.

When the driver responds, their voice is converted back into text using speech-to-text AI, enabling the AI agent to comprehend and generate suitable responses. This conversation loop continues until the desired information is obtained.

After each conversation, we analyze the sentiment of the entire interaction using sentiment analysis AI. This analysis helps PackageX determine if the conversation was positive or negative and enables recipients to retain or replace the AI agent accordingly as each agent can have a different “personality”.

With our AI-powered Threads API, we plan on revolutionizing logistics communication with conversational AI agents that bridge communication gaps between suppliers, drivers, and recipients in an unobtrusive way.

The scope of the Threads API cuts across the logistics mile working as a communication and collaboration layer across systems, including post-transaction communication with consumers via email, text, and other notification types with the ability to respond to a specific logistics activity or event.

This adoption of consumer-grade tech for B2B use cases is at the heart of PackageX.

If you’re interested in beta testing Threads, we’d love to hear from you.

Computers and data thrive on structured information but the real world is inherently unstructured. To address this disparity, our company uses AI to bridge the gap between the two realms.

In addition to weaving AI into our logistics cloud, we also use it to more efficiently run our business and serve our customers. 

I wrote about how Amazon is using AI to streamline warehousing in a previous newsletter. I also mentioned the importance of differentiating AI from other technologies and focusing on practical use cases. In that spirit, I want to share how we’re using AI at PackageX, and how we plan to use it.

Optical character recognition

One of the key areas where we utilize AI is in optical character recognition (OCR) for package labels and logistics documents. While OCR itself is not new, we take it a step further by employing AI models to understand the scanned content accurately. Whether it's identifying shipping labels, bills of lading, or purchase orders, the AI system analyzes the data and extracts relevant information.

More specifically, OCR is combined with Natural Language Processing (NLP) and deep-learning based information extraction to understand what scanned characters mean. Here we also apply machine learning and deep learning models. The application of all of this technology creates the AI system.

These capabilities are available on PackageX Logistics Cloud as an API or via Vision SDK that can convert any smartphone or tablet to an OCR, barcode, and QR code scanner.

PackageX Scans API in action: We can use smartphones to better understand the physical world of logistics instead of expensive, dedicated hardware.

App-free truck tracking

Traditionally, there has been a disconnect between suppliers, drivers, and recipients, leading to communication gaps and inefficiencies in logistics. Because of this, we’ve decided to develop an AI solution that enables all parties to communicate about a commercial shipment in a single thread.

I’ll talk about this solution more in next week’s newsletter, but one of the key features is app- and GPS-free truck tracking. We estimate that approximately 50% of truck drivers are small-scale operators who resist constant tracking. However, recipients like massive retailers require accurate, timely tracking information to plan their logistics effectively. 

Our solution involves AI agents engaging in conversations with drivers, employing text-to-speech and speech-to-text models to understand driver locations while preserving privacy. This innovative approach transforms analog communications into a connected logistics strategy that allows for more efficient communication among all parties involved.

Customer support and actions

With AI-powered support, we can quickly address and resolve common questions from customers without human intervention. This frees up our customer support team to create new documentation and address more nuanced questions from customers that require answers that haven’t been documented yet.

Soon, we also want AI to facilitate customer actions like package forwarding. For example, instead of logging into the PackageX platform to forward a package, a customer could reply to an automated email. In their own writing style, they could say they want the package forwarded to a specific address by a specific time. AI would structure this writing into data that the platform could use to forward the package, choose the right address, and choose the best shipping option.

AI will also change how customers gather logistics insights. Instead of searching the PackageX platform, customers can ask the platform a GPT-like question about what's happening with a shipment. AI can also inform the next best action in case of any exceptions — for example, to route or reroute, or to order more or order less. 

Of course, these AI-powered actions require digitized data and connected logistics systems which PackageX has supported since its inception as a package receiving software.

Developer experience

We have solid documentation but developers often have questions about specific tasks or require assistance in integrating API functionalities — and they don’t want to search or wait for an answer. Like our customer support use case, AI helps us offer simple, fast answers to common questions from them. 

AI also goes a step further in providing more nuanced explanations for complex scenarios. For example, if a developer at a prospective company wanted to build a custom solution with our APIs, they could explain their use case and we could provide a solution in their preferred coding language in a matter of seconds. 

This is also quite groundbreaking in terms of sales enablement and solution engineering for software companies like our own.

In today's globalized economy, businesses are constantly exploring strategies to optimize their supply chains. One such approach gaining significant traction is nearshoring. Unlike offshoring, which involves moving operations to distant countries, nearshoring brings manufacturing closer to the end consumer. 

With Mexico emerging as a prime nearshoring destination, companies are reaping the benefits of reduced costs, faster shipping, and supply chain resilience.

Since nearshoring is becoming somewhat of a buzzword, I wanted to use this newsletter to explore the key components of the practice to help you determine if this is something worth keeping your eye on, especially if you work with manufacturers and suppliers in China.

Mexico: A favored nearshoring destination

According to the U.S. Census Bureau, Mexico recently surpassed China as the United States' primary trade partner, accounting for 16.1% of total trade. This shift reflects the growing preference for nearshoring operations in Mexico.

The country's proximity to the U.S. market provides several advantages. For instance, once a truck crosses the border, it can reach any point within the U.S. in just four to five days. For direct-to-consumer companies with manufacturing operations in Asia, this is a game-changer in terms of simplifying supply chains and lowering logistics costs. They could even ship products to consumers directly from manufacturing sites.

Less overstocking, faster shipping

By manufacturing products nearby, companies can eliminate the need for expensive warehouse chains and excess inventory. Nearshoring enables a more agile manufacturing process known as "manufacturing on demand." 

Instead of producing goods in anticipation of demand, companies can produce goods when an order is placed. This approach reduces inventory costs and eliminates the risk of overstocking, ultimately leading to improved profit margins.

While nearshoring does not eliminate the manufacturing time required to fulfill an order, it significantly reduces shipping time. Customers benefit from shorter wait times due to the proximity of manufacturing facilities. Compared to waiting weeks for products to arrive from overseas (those of us who have ordered furniture know this story), nearshoring ensures that the shipping process is faster and more reliable.

Easier returns, more resilience

If a product is damaged and needs repaired and restocked, nearshoring eliminates the need for a lengthy and costly voyage across the seas. Instead, returns can be processed and resolved locally, minimizing the time and expense associated with international shipping. This streamlined approach not only enhances customer satisfaction but also reduces costs for businesses.

It also creates more resilient and flexible supply chains. Nearshoring reduces reliance on distant suppliers and mitigates disruptions caused by global events. By moving production closer to the end market, companies can respond swiftly to changes in demand and reduce lead times.

Friendshoring vs nearshoring

A fun concept called “friendshoring” was presented in this article. 

While friendshoring and nearshoring both aim to optimize supply chains, friendshoring focuses on sourcing from trusted suppliers regardless of their location. For example, if you found a supplier in China that created similar quality products as a supplier in Mexico but the China supplier was referred to you, more reliable, and less expensive, the benefits of nearshoring in Mexico might not outweigh the benefits of having a trusted supplier in a distant land.

In contrast, nearshoring emphasizes the physical proximity of manufacturing facilities to the end market. According to a 2019 survey, 75% of companies expressed interest in nearshoring, recognizing the value of bringing production closer to their customers.

The nearshoring trend which originated in the 1990s continues to gain momentum. However, new US-Asia trade pacts being signed that exclude China could convince U.S. companies to give Asian countries a second chance. The question is: can the benefits of doing business in Asia outweigh the benefits of nearshoring?

In 2017, long before omnichannel fulfillment became trendy, Nordstrom dove head-first into localized fulfillment with its aptly named spin-off Nordstrom Local. Harnessing the power of fulfillment methods like buy online pickup in-store (BOPIS), Nordstrom unlocked new levels of convenience.

Nordstrom’s logistical switch-up: going small to win big

Taking a more grassroots approach to retail and logistics allowed Nordstrom to offer fulfillment methods customers actually wanted. After the launch of Nordstrom Local in 2017, Nordstrom’s fulfillment options included…

• BOPIS: Customers can pick up their purchases at Nordstrom Local on the same day, if ordered before 2pm.

• Same-Day Delivery: Parcels are delivered directly to a customer's home on the same day, if ordered by 2pm.

• Curbside Pickup: Orders can be hand-delivered to a customer's car via a designated curbside at Nordstrom Local.

• Easy Returns: Customers can make returns at Nordstrom Local from Nordstrom stores, Nordstrom.com, and Trunk Club.

Convenience is the game, loyalty the aim

These fulfillment methods were just the beginning of Nordstrom's quest to provide convenient shopping experiences. They also connected them with their online experiences in a seamless way in an effort to drive customer loyalty.

For example, online shoppers can filter category pages and search results pages to show items with free local pickup. Also, customers get an email or app notification when their order is ready for collection, letting them know where to go inside the store.

Nordstrom has worked out that the more convenient and cost-effective it makes fulfillment, the happier customers are and the more likely they’ll return. Which aligns with the sentiment of shoppers at large: 96% of shoppers say a positive delivery experience encourages them to shop with a retailer again.

Hybrid fulfillment supports Nordstrom success

In addition to having flourishing internal logistics operations, Nordstrom partners with logistics partners like DCL and XPO that must meet rigorous performance metrics to make the cut. 

Nordstrom measures them on cargo claims, on-time service, delivery accuracy, billing accuracy, data integrity, and overall customer service. The result is a robust supply chain that powers the seamless shopping experience Nordstrom customers have come to know and love.

This partnership approach also hints that hybrid fulfillment setups are the future, and the stats back it up: 48% of businesses are already mixing in-house and external logistics solutions.

Oiling up the supply chain for bigger wins

Deloitte discovered that 79% of companies with superior supply chain capabilities achieve above-average revenue growth. So it's easy to see why supply chain optimization is a key priority for Nordstrom this year under its “Closer to You” strategy. 

In an interview with Supply Chain Dive, Nordstrom’s CEO revealed that fine tuning its inventory accuracy is also on the to-do list. Challenges like inventory data inaccuracies are making it difficult to locate products inside Rack stores, leading to a treasure hunt-like search in stores and order cancellations. Then there’s the profitability issue when fulfilling lower-priced items under the Rack label.  

Judging from the kinds of issues Nordstrom is experiencing, they’ll likely need to upgrade their tech solutions to support supply chain optimization initiatives. This sentiment was echoed in a 2021 press release in which Nordstrom outlined its plans to increase digital velocity.

“Our supply chain optimization work streams drove efficiency and lowered the per unit cost of moving product through our system, while also delivering an improved customer experience and faster order fulfillment.’’ - Erik Nordstrom, CEO @ Nordstrom

Clearly Nordstrom is on the case and has made a concerted effort to iron out any supply chain kinks and increase profitability of Rack purchases. Later last year, they slowed store-based fulfillment at Rack stores and increased the minimum order amount to receive free ship-to-store delivery. This seems like a smart move given the discounted nature of items and that 58% of consumers will add more items to their cart to qualify for free shipping.

Meanwhile, the brand just keeps getting stronger with successful long-term initiatives like Nordstrom Local and newer initiatives like robotics-powered distribution, increasing links between digital and physical assets, and improving visibility on customer, product, and inventory data. 

AI has become a buzzword in various industries, and logistics is no exception. When we talk about AI in logistics, we often think of advanced technologies and futuristic applications. But it's important to understand the specific use cases of AI and how they differ from other related technologies.

When someone asks me about the data and technology that powers AI in logistics and other industries, I like to explain it in terms of the human sensory anatomy: Natural Language Processing (NLP) is the tongue of AI, Computer Vision (CV) is its eyes, Machine Learning (ML) is its brain, and large datasets are its ears. Each component plays an important role in supporting AI-powered applications. 

Computer vision, for instance, provides Amazon with the datasets to identify damaged goods in its warehouses. By training AI models with this data (photos of undamaged and damaged items), the company achieved a 3x effectiveness in identifying damaged items during the picking/packing process compared to human workers. This significantly speeds up warehouse operations, improves customer loyalty, and makes employees who fulfill orders more successful at their job.

The AI checks items during the picking and packing process. Goods are picked for individual orders and placed into bins that move through an imaging station, where they are checked to confirm the right products have been selected. That imaging station will now also evaluate whether any items are damaged.

This real-world application showcases the potential of AI in optimizing logistics operations at the warehouse level, but not everything labeled as AI in logistics is truly AI. Many use cases like logistics planning, supply planning, and demand anticipation actually run on traditional data science. In other words, a human is crunching numbers and making decisions rather than an AI model and workflow. Maybe some ML is being used to reduce manual, error-prone number crunching, but without automated decision making, AI is absent.

To truly understand AI in logistics, we need to be specific and differentiate it from other technologies and trends in the field. For example, many people use the term “automated warehousing” when they’re actually referring to robotics. Robotic systems can power AI but they are not intrinsically AI.

Another example is Augmented Reality (AR) technology. Imagine an inventory manager using their smartphone camera to point at a warehouse shelf. When the camera is aligned correctly, the AR display on the screen turns green, indicating that the desired item is present on that shelf. This AR application is powered by computer vision and AI models, much like the Amazon use case. 

Here, we are calling technology what it is. We’re not calling everything AI, a dirty habit that leads some people to caution against the hype surrounding AI in logistics. 

This logistics reporter recently drew parallels to the blockchain frenzy in the past, arguing that companies are using AI as “shareholder-magic-dust,” pledging to implement AI without clear near-term practical applications. As I wrote about in a previous newsletter, this happened with the Blockchain in Transportation Alliance (BiTA) that 450 companies joined in 2017. Three years later, the alliance died along with the blockchain hype.

While AI undoubtedly holds immense potential for logistics applications, we must focus on tangible and realistic use cases that bring measurable benefits. This is what we’re doing at PackageX as we work toward using AI to power smart chatbots that answer customer questions as quickly as possible (great for API docs). We’re also using AI to build new features that streamline communications between shippers, transporters, and receivers without requiring truckers to be tracked.

I’ll cover these use cases more in a few weeks. In the meantime, avoid the hype of AI and focus on practical and achievable goals in the logistics industry. That’s what we’ll be doing.

Around the same time BOPIS originally emerged in 2017, Amazon partnered with Kohl’s to let its customers return Amazon purchases at their local Kohl’s store. Amazon won by making returns more convenient and driving customer loyalty; Kohl’s won by getting extra foot traffic and adding two million new customers from the partnership by 2021.

Now, retailers like H&M, Zara, and Abercrombie & Fitch are making “buy online, return in store” (BORIS) part of their own returns process — not to increase foot traffic, but to decrease reverse logistics costs while driving customer loyalty through optionality. 

Giving customers the option to return items in-store is more important than ever as 45% of retailers have started charging for mail-in returns within the last 12 months. 

For example, H&M charges $5.99 for mail-in returns to customers who are not members of the company’s free loyalty program. And members and non-members alike must wait up to two weeks for return credit to post to their account. This is not a great experience. To make matters worse, customers must make a special trip to a UPS store to return items.

With all these caveats to mail-in returns, BORIS becomes a feature of convenience. And for retailers with good inventory technology, it can significantly reduce reverse logistics costs. Instead of shipping returned items back to a distant warehouse, retailers can immediately restock returned items in the store where the return was made.

Faster refunds for customers, lower logistics costs for retailers, and less impact on the environment. This makes BORIS an all-around win. It’s also not surprising that 47% of retailers reported an increase in BORIS within the last 12 months.

Soon, mail-in returns will become the exception rather than the rule, especially as retailers apply learnings from local fulfillment options like BOPIS and curbside pickup to local returns. 

While covering BOPIS last week I discovered that waiting in line is the leading turn-off for customers that use BOPIS. I expect the same is true for customers who use BORIS and why retailers like Target are getting in front of this with curbside returns. 

“Our journey to expand our fulfillment options starts with making it easier for our guests to shop with us. That’s why we’re launching Drive Up Returns. Allowing our guests to process a return from the comfort of their car underscores our commitment to helping our guests shop — and return — however they choose.” - Mark Schindele, Chief Stores Officer @ Target

This is a cost-savings play as well. Target already offers BOPIS, curbside pickup, same-day delivery, and ground shipping on its website. This points to a backend made up of connected logistics and inventory technology that could support local restocking. Again, instead of sending items back to a central warehouse, Target can restock many returned items at the store to cut reverse logistics costs.

The ideal state for retailers is no returns, which is why investments in augmented reality and frontend ecommerce technologies continue to be made. However, there’s a chance for retailers to work toward decreasing returns while accepting the reality that they will always exist. The retailers that do this will create a full-circle omnichannel experience.

If Target can bring your favorite Starbucks drink to your car when you’re making a return, anything is possible.