“Logistics” in fashion’s complex ecosystem relates to a very a tangled web of operations. It involves getting raw materials sourced and turned into textiles; then getting garments sewn and flown, shipped and trucked across international and local borders to warehouses and distribution centers; and ultimately getting DTC and wholesale orders picked, packed and delivered into stores and consumers’ hands; then dealing with their reverse logistics when consumers send them back. It’s a global labyrinth involving hundreds of steps and thousands of people.
The questions remain: How can logistics be streamlined and simplified for the most ROI and agility, not to mention the least environmental impact? And where is the money coming from?
According to Deloitte Consulting LLP’s 2023 MHI Annual Industry Report, nearly 78 percent of supply chain leaders surveyed indicated that their digital transformation accelerated due to the pandemic, and 64 percent increased their digital supply chain investments.
Not surprisingly, technology innovation is driving most investment in the form of automation, supply chain visibility, data analytics and AI, with emerging technologies—like the 3D printing of spare parts and increasingly efficient warehouse robotics—proving the future is now.
Reverse logistics is another growth area for investment, helping brands and retailers manage both returns and consumer satisfaction in the age of e-commerce. “There have been many investments in improving conversions and customer experience on the forward and outbound side, but technology enablement for a better returns experience is finally catching up,” said Brian Bourke, global chief commercial officer at Seko Logistics, which recently partnered with Happy Returns to offer in-person, brick-and-mortar drop-offs—an alternative to mailed returns.
Just don’t expect all those clean vehicles to drive themselves just yet as autonomous vehicles (AV) has been hampered by many regulatory hurdles. But when they do pick up, expect more of an “AV/EV handoff” hybrid model where a human still drives locally for the final mile.
Clean energy is another investment, with heavy focus on minimizing emissions from delivery vehicles. The U.S. Postal Service (USPS) will spend $9.6 billion on 106,000 new trucks over the next five years, with 75 percent of them being EVs. After 2026, the USPS plans to exclusively purchase EVs. Meanwhile, shipper UPS committed to 10,000 zero-emissions delivery vans from U.K.-based EV manufacturer Arrival by 2024.
Even so, an “outdated” 1917 tax law on heavy-duty commercial vehicles—the Federal Excise Tax (FET), which is up to 12 percent today—is hampering the switch to greener technologies in 2023. “If Congress is serious about safety, the environment and jobs, then repealing the FET should be a front-burner,” said American Trucking Associations president and CEO Chris Spear. “It’s time to shelve this World War I-era tax and start putting the best equipment on our roads.”
The key to improving logistics, the industry agrees, is thinking about it differently. AI-powered logistics company Gently, created by a pair of Harvard Business School classmates, is setting out to disrupt Amazon’s stranglehold with “nano-fulfillment” centers in California, with a clear focus on urban delivery. Co-founders Elian Gurwits and Anas Aljumaily aim to “create a fully decentralized supply chain in America by 2040,” that can better guard against disruptions.
“We hope to be in a position to provide an alternative [to Amazon] because, unfortunately, today there is no alternative, and that’s the main challenge that we see in the market,” Gurwits said. “When we look at Amazon’s competitive advantage, it’s very much driven by data analytics, being able to predictably demand those products, request those products from vendors and allocate them across the supply chain infrastructure to the point that is closest to cater to the consumer.”
But all advancement isn’t hampered by regulations; much of the logjam can be attributed to insular mindsets that are too focused on the “shiny new thing” instead of seeing how new developments fit into the overall picture. The problem, according to Wing CEO Adam Woodworth, is that “everybody’s trying to solve one piece” of the delivery equation.
Nitin Gupta, co-founder and CEO at location intelligence provider, Beans.ai, which bills itself as a full-stack location solution used by FedEx and Instacart, said his company provides an “edge quotient” to assess if potential users are truly ready to adopt the platform and get meaningful value out of it.
As the logistics landscape continues to get more complex, Sourcing Journal is here to be your guide. Download our first dedicated Logistics Report, which takes both a broad view perspective on the key trends shaping the landscape, as well as a closer look at some of the companies and systems paving the way.