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Gillan Hawkes is vice president of product management and analytics at 6 River Systems (6RS), where she is responsible for the product roadmap. Prior to joining 6RS, Hawkes worked in finance and management consulting before spending 10+ years building and running e-commerce businesses for large retailers in the U.S. and U.K., such as Tesco, Home Depot, and Staples.
Hawkes has a Bachelor of Arts degree from Princeton University and a Master of Business Administration degree from the London Business School.
David Maloney, Editorial Director, DC Velocity:
How will robots help in filling an avalanche of holiday orders? Is the logistics industry poised for a solid rebound? And how will retailers reach customers in the new normal?
Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast. Hi, I'm Dave Maloney. I'm the editorial director at DC Velocity. Welcome.
Logistics Matters is sponsored by DCV-TV. Five channels of streaming video are yours for the viewing on DCV-TV. Major improvements have recently been made to the DCV-TV platform to enhance the viewing experience, provide greater search capabilities, and to expand the capacity of the video library well beyond the 3000-plus videos that are already in the archive. Be sure to check it all out at DCVTV.com.
As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insight into the top stories of this week. But to begin, how will robots help with an overwhelming demand this peak season? To answer that, here is Ben with today's guest.
Ben.
Ben Ames, Senior News Editor, DC Velocity:
Thanks, Dave. We're glad to have with us today, Gillan Hawkes, who's the vice president of product management and analytics at 6 River Systems, where she's responsible for the product roadmap. Prior to joining 6 Rivers, she had run e-commerce businesses for large retailers in the U.S. and the UK, such as Tesco, Home Depot, and Staples. So, some very familiar names there.
Thank you for being with us today,Gill.
Gillan Hawkes, VP of Product Management and Analytics, 6 River Systems:
It's great to be here, Ben. Thanks for having me.
Ben Ames, Senior News Editor, DC Velocity:
As Dave had mentioned in the lead-in there, I think we're all aware, here, in mid-October that, as we approach the flood of orders that happens every year during the winter holiday peak season, the omnichannel story of fulfilling those orders is often presented from the perspective of the consumer—one's ability to order or purchase more easily from anywhere. How do warehouse robots and automation fit into that story?
Gillan Hawkes, VP of Product Management and Analytics, 6 River Systems:
Yeah, it's a huge challenge for everybody. And I think a great place to start, before I get to kind of the automation piece is, the really fundamental piece of success for any fulfillment during these times is having a great sense of inventory availability. And one pool of inventory, be it in fulfillment warehouses around the country or in stores, is a real key to success. And I think, you know, great quote—and a company who's doing it really well, is Target. And I think a great quote from their chief supply chain and logistics officer is that, you know, a unified inventory strategy is the anchor and the catalyst for successful omnichannel execution and fulfillment. And that's so true. So you got to get the inventory in the right places, and—be it in stores and warehouses.
And that's where the automation comes in. So, in those warehouses, fulfillment can help get products picked and shipped more quickly and efficiently, and back to customers. That's part of the evolution.
And, you know, further than that, is customers saying, Hey, we actually want orders really quickly, but we don't want to come into the stores to do that, and we want to do curbside pickup to help us have a contactless experience. And again, automation and AMRs can come into play there too.
Ben Ames, Senior News Editor, DC Velocity:
Yeah, that idea of one inventory across many pools is really, really clutch to performing that.
And as you mentioned, both workers and consumers are concerned about their health in managing this, either not wanting to come into stores, looking at curbside pickup. How can AMR—autonomous mobile robot—makers help keep warehouse workers safe on the job as they try to meet that challenge?
Gillan Hawkes, VP of Product Management and Analytics, 6 River Systems:
Yeah, it's great that we can all really help in this, in making associates feel safe, be they warehouse associates or or store associates. And I think some very specific things that can be done through automation and AMRs is, you know, simply providing cleaning equipment for users to wipe down the robots between shifts, giving them styluses and pens and things like that to avoid actual contact with the AMRs and the touch screens that are often needed to execute a pick or any kind of warehouse activity.
Another thing that we can do often is, you can look at the navigation patterns in a warehouse, and the AMRs can actually guide pickers away from each other, so that you have less, you know, opportunity for pickers to be exposed to each other. And I guess the final piece is, obviously, AMRs make—are more efficient. And so you need fewer pickers to pick the same number of orders. So there's just fewer pickers exposed if you use AMRs.
Ben Ames, Senior News Editor, DC Velocity:
Yeah, efficiency really is the bottom line there. But, I mean, speaking of efficiency, if we're taking some of those extra steps—like cleaning, like changing navigation patterns to tweak those—what can robot makers do to balance those needs for safety with productivity goals, since a lot of DCs are seeing spikes in demand for products during the pandemic?
Gillan Hawkes, VP of Product Management and Analytics, 6 River Systems:
Yeah, it's a delicate balance, I think, and that's the key to it—you know, safety, yet, maybe making sure that you know that their customer needs are met, and that orders are picked quickly. So, one of the great tools that many, many AMR makers have is simulation, right? So, you can simulate various configurations, between optimizing for productivity and speed of picking versus some of the things we talked about before—for instance, you know, avoiding other workers in the warehouse—which might mean you might take a little less efficient path to pick that product, but you're reducing the exposure risk. So, sending what the right balance between productivity and efficiency and safety is, is a great tool. And achieving that balance with your customer, to make sure that they're comfortable with the balance that you achieve, is critical.
Another very simple one is, AMRs can be shifted around the country or around a warehouse very quickly and easily to avoid hotspots. So you can, you know, shift the demand around the country avoiding hotspots and move your AMRs to those lower-risk areas very quickly, which I think is hugely beneficial, in maintaining safety and productivity.
Ben Ames, Senior News Editor, DC Velocity:
Yeah, that's really interesting, because it's one way in which robotic automation is really different from some other kinds of automation that are part of the building. But you can you can literally move them around to some spots.
Gillan Hawkes, VP of Product Management and Analytics, 6 River Systems:
Yeah, absolutely. Yeah.
Ben Ames, Senior News Editor, DC Velocity:
So we've talked about some of these interesting changes in how warehouse robots are used, but will those changes persist after we find a vaccine, after we achieve a safer level of health within our society and enter some form of a new normal following Covid-19?
Gillan Hawkes, VP of Product Management and Analytics, 6 River Systems:
I mean, all the data says, and all the research says—and, you know, there's a good McKinsey report saying that, you know, consumers definitely have an intention of continuing to use models like buy online, pick up in store, even after the pandemic moves, you know, moves into the rearview mirror. And we know that the shift to online purchasing was already growing rapidly before the pandemic, and there are no signs that that's going to abate. So, the new normal is definitely omnichannel.
And another shift that I think is going to persist in the omnichannel vein is just faster and faster delivery expectations. You know, two days used to be the norm. Now, it's same-day, and, you know, like many retailers are setting the pace with within hours. So that just means that overall, there's going to be a shift to fulfillment having to happen closer to the customer. So that that, you know, one-hour delivery or two-hour delivery, can be met. And so that's presenting challenges to retailers, to third-party logistics companies that automation and AMR companies can help them with.
And, you know, I don't think there is a new normal. I think the normal is that we're all going to see continuous change, both in how consumers want to shop and receive product. And so, I think the good thing is that we've got some great tools within the bucket of automation, and AMRs specifically, that are, that will help us navigate the ever-changing world and demands that, who knows what comes at us? And I think some of the foundational aspects of AMRs is the concept of flexibility. We talked about it earlier: You can move and Mars easily around a warehouse, around the country. And that is fundamental for flexibility within the supply chain for the future. Not only can you move AMRs around, but you can do very quick and easy software upgrades that don't require any kind of in-warehouse presence. So, if the pandemic is still with us, contactless upgrades to add functionality and change functionality is a unique aspect of AMRs that I think will benefit all of us in the new norm, which is coming at us.
You know, other things are, that are unique to AMRs is just the ease of use and the quick training, I think, you know, the feedback that many people say is [?]. It's very easy to transition pickers from, for instance, manual carts to a simple, paced screen that helps them pick quickly and easily, and training can happen within 10, 15 minutes and then the pickers are off going. So, adding pickers to deal with a new influx of e-commerce is is very easy with AMRs, because they are a simple solution. So, lots of tools in our toolbox to help us navigate whatever may come.
Ben Ames, Senior News Editor, DC Velocity:
So interesting, Gillan. And then, to drill a little bit deeper into one of your points there, you're talking about the ease of moving robots around warehouses or around the country. But it seems, to your point about some fulfillment happening within hours instead of days, that some fulfillment we're going to see happen actually outside of traditional DCs. Is that something that you've been seeing as well?
Gillan Hawkes, VP of Product Management and Analytics, 6 River Systems:
Yeah, for sure. I mean, the faster and faster delivery expectations that the consumers are shouting for really can only be achieved through local fulfillment centers. And so the days of all orders being fulfilled from the middle of the country and shipped to, you know, the coasts out within—and hitting that customer expectation of hours is just physically impossible. So we have already seen a big shift with retailers doing in-store picking, from either a live store, which obviously presents some complications, because there are customers in those stores as well. But there are lots of examples of using robots in stores to assist the associates picking with customers, you know, in and around them.
But also, you know, if space and/or their store congestion is a problem, there's the great opportunity of abstracting the software that helps picking happen efficiently and putting it on a simple handheld, so that the pickers can use the power of the smart software on their handheld—no robot needed, just a shopping cart, or just their hands, to go and pick low levels of orders in a live store and quickly ship it to the customer, which hopefully is a couple miles away, or even make it available for curbside pickup. So that concept of live-store picking, or, in a case where sometimes, unfortunately, you know, retail stores are closing, and we've seen an acceleration in that trend. But I don't think that spells you know, disaster. There are many retailers who are shifting their live stores to dark stores. So, no customers in those stores, but a great pocket of valuable inventory close to the customer. And AMRs can help associates in those dark stores pick e-commerce orders quickly and safely too. So you know, turning really lemonade—or lemons into lemonade, I should say, lots of opportunity to help with that.
Ben Ames, Senior News Editor, DC Velocity:
Such interesting tech trends going on here. We really appreciate your coming on the show today to walk us through them and to describe how we might see some of these things develop, both as consumers and as members of this industry here, Gillan, thank you very much for joining us.
Gillan Hawkes, VP of Product Management and Analytics, 6 River Systems:
And it's been a pleasure. Thanks. Have a great weekend.
Ben Ames, Senior News Editor, DC Velocity:
Appreciate it. We've had—our guest today was Gillan Hawkes, vice president of product management and analytics at 6 River Systems. Thanks a lot.
Back to you, Dave.
Gillan Hawkes, VP of Product Management and Analytics, 6 River Systems:
Thank you, Gillan and Ben.
Now let's take a look at some of the other supply chain news from the week. Victoria, you regularly track the Logistics Managers' Index for us, and this past month, there have been some rather healthy gains. First, can you tell us what the index represents and then share the latest results?
Victoria Kickham, Senior Editor, DC Velocity:
Sure, Dave, happy to. Thanks for for having me. The Logistics Managers' Index, or the LMI, as we call it, it tracks growth across the industry, measuring inventory, warehousing, and transportation activity. It's a monthly report released by researchers from Arizona State University, Colorado State University, the Rochester Institute of Technology, Rutgers, and the University of Nevada-Reno in conjunction with the Council of Supply Chain Management Professionals. So essentially, it's like I said, a monthly index, and a reading above 50 indicates growth in the industry; a reading below 50 indicates contraction.
So, what we saw here in September, which is the most recent report released, is the LMI surged to a reading of 70.5. And that's a level not seen in about two years, and up considerably from a year ago. A year ago, the index had sort of settled into a mid- to low 50s range, which really indicates that the economic activity across the logistics sector was slow and steady, really on a slow and steady growth curve. And it had been really experiencing accelerated growth for the two years prior, so—or four years prior, I should say. So basically, it's been on an upward trajectory since May, when it rebounded from an all-time low of about 51.3 in April. What all this means is that business is picking up fast in logistics right now, and it's driven by a couple of key factors, really echoing what Ben and Gillan were just talking about, and that's a surge in e-commerce activity, which requires logistics-intensive services, as we know, and also inventory restocking, as retailers ready for peak-season shipping. So that's, those two things are kind of converging to make for a really, really busy time right now.
David Maloney, Editorial Director, DC Velocity:
Victoria, what does this mean for us, then, heading into the peak shipping season?
Victoria Kickham, Senior Editor, DC Velocity:
Yeah, that's a really good question, and what the LMI researchers tell me, and they've been for the last couple of months, actually, is it's really a story about warehousing and transportation. Warehousing utilization is way up, capacity is down, and pricing is up. And it's pretty much the same story for transportation. So that situation is expected to hold steady through the rest of the year, driving what the research and many others, as we've all been hearing are, you know, calling sort of an unprecedented peak holiday season right now.
So many retailers and supply chain companies are saying that they're already dealing with peak levels now, and that a spike in demand over the next few months will really test their supply chains. One interesting thing that the researchers said this month, in particular, is that the data they're seeing now, really throughout the third quarter, is what they'd expect to see in Q4. So, looking ahead, you know, it's going to be really, really busy, obviously. And, you know, some—they've also pointed to some issues, like Amazon Prime Day, which I believe is next week, and sort of other retailers having sales in conjunction with that, are sort of aimed at really spreading out and sort of elongating this shopping season to kind of help deal with that demand and keep service levels where they want to be.
David Maloney, Editorial Director, DC Velocity:
Yeah, so we encourage listeners to definitely do their holiday shopping early. We hope a good, strong fourth quarter will hopefully also set the tone for a healthy recovery in 2021. Thank you, Victoria.
Victoria Kickham, Senior Editor, DC Velocity:
You're welcome.
David Maloney, Editorial Director, DC Velocity:
Ben, you reported on a trend we're seeing on how retailers are reaching their customers during this pandemic. Can you tell us more about your report?
Ben Ames, Senior News Editor, DC Velocity:
Yeah, glad to Dave. And this really dovetails neatly with what Victoria was just talking about, some of the rise in the LMI index, and some retailers seeing really fourth-quarter volumes already in the third quarter. Particularly, she mentioned that magic word, which is "Amazon." And throughout the pandemic, we've heard various statistics showing that the volume of e-commerce shopping has jumped, since people are working and learning from home and ordering goods instead of walking into stores.
But from the new survey that we got this week, the results showed that 46% of American companies now rely on online marketplaces as the channel for those e-commerce sales, as opposed to selling the goods over their own corporate retail websites. So, "online marketplaces" is the generic industry term for third-party e-commerce sites like Amazon, as well as Walmart, eBay, Rakuten—there are a handful of them. So that demand has pushed those marketplaces to have a higher market share. It was 28%, before the pandemic, now 38% during the pandemic. So before the crisis, those retailers had been making 34% of their sales online, but that included 28% in marketplaces and just 6% on their own websites. So you can see that they really rely on those online marketplaces. The survey, by the way, comes from the French logistics operator Geodis Group and from Accenture, the consulting firm. So they had explained that the reason for that imbalance between selling on online marketplaces and private websites is that a majority of the companies felt that their e-commerce potential is limited by their logistical capabilities. So they use the marketplaces to compensate for that lack of resources and logistical infrastructure.
David Maloney, Editorial Director, DC Velocity:
Ben do those retailers have any plans to build up their own logistics capabilities and to sell their goods over their own sites?
Ben Ames, Senior News Editor, DC Velocity:
They do, yeah. Geodis and Accenture said that the survey did show that. Most of the brands surveyed believed that their over-reliance on those online marketplaces is not sustainable, and that they want to shift more of the balance back toward their own e-commerce channels. So nearly two-thirds of them stated that reducing their dependence on marketplaces is their first or second priority for the next six months, which is really striking considering some of the challenges that all businesses are dealing with during the recession and the pandemic. And within three years, 77% of American companies said they want to sell directly to consumers via their own websites. So they have high hopes, for sure.
But it won't be easy, because the survey showed that retailers suffer from a lack of real-time supply chain inventory visibility. Visibility is something that we talk about very often, and retailers really need to find ways to integrate their stores with their e-commerce networks to serve as order-processing centers, which also touches on an important point that Gillan had made about having one inventory. And retailers will also be looking at having more diverse collection points, shipping facilities, fulfillment centers. So the goal is to optimize their logistics cost for each order, all while delivering that super-fast customer satisfaction.
David Maloney, Editorial Director, DC Velocity:
Well, it does seem that online selling marketplaces do seem to have an advantage. It'll be interesting to see how companies can convert to their own sites and see how those developments are affected during the holiday season. Thank you, Ben.
We encourage listeners to go to DCVelocity.com for more on these and other supply chain stories. Go there to check it all out. Thank you, Ben and Victoria, for sharing highlights of the news this week.
Ben Ames, Senior News Editor, DC Velocity:
Thanks, Dave. It's always fun.
Victoria Kickham, Senior Editor, DC Velocity:
Yeah, my pleasure.
David Maloney, Editorial Director, DC Velocity:
And thanks again also to Gillan Hawkes of 6 River Systems for being with us today. We encourage your feedback on this topic, and our other stories. You can email us at podcast@dcvelocity.com.
And a reminder that Logistics Matters is sponsored by DCV-TV. Be sure to check out the latest videos on DCVTV.com, the largest and best source of videos for the supply chain industry, including DCV-TV Channel 4. This viewer-contributed channel includes hundreds of videos that DC Velocity's readers and industry suppliers have uploaded directly to the channel. Stop by often to see the latest uploads. Go to DCVTV.com to view them.
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We'll be back again next week with another edition of Logistics Matters, when our guests will be Yossi Sheffi, a professor at MIT who will share about his latest book, The New (Ab)Normal. Be sure to join us. Until then, please stay safe and have a great week.
