We are yet to look at the various optimum originating fulfillment centre location possibilities, those points from which merchandise delivery despatches may best occur.  Nor at the optimum moves to bring inventory forward from production source to those locations, but we will get to that in time.
 
Today however, we will touch upon “last-mile delivery” disruptive technologies before we get deeper into our case.  We are advancing the aforementioned in the sequence in order to remove any expectation that mobile app’s & disruption are an essential destination, or feature prominently within our mix of logistical solutions.
 
At a recent transport tech incubator session we attended, the idea of developing apps that might contribute in that enterprise was widely discussed & fervently admired.   While it wasn’t practical to make a detailed case on our position, I recall expressing a note of caution in a number of respects on the obstacles to success for such an undertaking.  While we are concentrating our review on core logistical design and transportation process execution, we do acknowledge the possibilities for the effective employ of mobile apps in solutions.  Indeed, there are many good ones already adding value at the margins.

However, the first obstacle for those seeking to significantly disrupt a large existing transportation market is the likely countervailing political efforts of the three parties likely to be threatened by the disruptive efforts.  Those parties would be:

1. Organised Labour
2. Integrated Transportation Corporations
3. The Disrupted State Tax and/or Franchise-Licence Issuing Authority

 
These three parties will be formidable players in any strong independent state.  If you launch from a global hegemonic state base - with political / lawfare backing in your pocket - and your prioritised markets are weaker subordinate or non-aligned states – then you are in for a scrap & yet might have some prospects of early success.  Otherwise we wish you good luck - but in the real world we wouldn’t take the odds on the likelihood of your success.   
 
The prospects of disruptive success in the US are quite low.  This can be evidenced, in part, by the political heavyweight Fedex’s court case loss in which unions and government both took great interest in the outcome:
 
www.forbes.com/sites/robertwood/2014/08/27/fedex-misclassified-drivers-as-independent-contractors-rules-ninth-circuit/
 
In the cited case, the use of independent contractors can be seen as either an age-old practice or a disruptive one.  This depends on the local legislative record, but often the matter has long been a tug-of-war and a fluid (or hybrid) situation  exists.  Yet the case stated above involved two of our three cited parties facing off against the other in the practical sense (if you discount the unionised integrated transport competitors); imagine if the interests of all three were to align against you?
 
You may have also noted that we inserted the following quote in the comments section against a blog entry highlighting evidence that supports the notion that the quality of business school advice on feasibility doesn't often translate that well in the real world:
 
“The concept is interesting and well-formed, but in order to earn better than a ‘C,’ the idea must be feasible” — A Yale University management professor in response to Fred Smith’s paper proposing reliable overnight delivery service. (Smith went on to found Federal Express Corp.)
 
Yes, it may be the very same company whose disruptive efforts have been dealt a recent legal blow, but in their prime years they have overall been winners.  And the point of difference as we understand it with Smith was that it was his military logistics experience that underwrote the understanding of his opportunity – moreover this in itself may have been enough, given that perhaps it was just urban folklore that commonly held that Smith spent time in Australia (after one of his tours of Vietnam) with Gordon Barton’s IPEC express business before returning to the US.  Barton had started his express interstate operations about a decade ahead of the other two great express entrepreneurs, Larry Hillbloom of DHL, and Smith, who both got traction in the early 1970’s.

And so too, we drew upon our own experience when raising issues relating to the engagement of contract couriers (cross town messengers) in the manner proposed by many developing what they believe will be effective disruptive technologies employed for “last mile deliveries”. 
 
There are two specific examples concerning personnel and process in this sector that we will address.  The first is the three probable reasons that UPS first rose to prominence nearly a century ago as a cross town parcel delivery service in the US.  The first was workforce discipline; the second was the quality of customer facing presentation, and the third the quality of their engineering method (Taylorism).  None of these factors is necessarily addressed (wholly or effectively) by disruptive technologies in-and-of themselves.
 
The second example is our personal experience of working with young sub-contractor couriers, those that were actively supervised by single branded employers who in turn were required to guarantee service quality.  When such young sub-contractors first enter the business, they usually do not know how to budget their vehicle, fuel, or other expenses.  Without experience they do not know how to navigate effectively & economically – and route planning (which can now be aided by tech) is only one part of the equation.  Human negotiation issues and risk avoidance are larger factors.  
 
So while there are many new entrants into the sector, there is a massive drop-off rate.  In a situation where disruptive tech apps put individual deliveries out-to-bid, it is highly likely that under-pricing will be the norm; turnover of staff will be greater, and service quality will be lower, despite any required-for-payment milestone derived attempts at discipline attempted by e-commerce masters.  As many cross-town courier radio operators said, back in the day, “it’s like running a kindergarten!” 
 
The last and most important factor in creating effective mass transportation process is the avoidance of what we call “clunkiness”.  In short, clunky transactional process costs far more than a smoothly geared one.  The bidding of individual transportation transactions through a mobile application will usually add process compared to an integrated delivery-route or technology-suite operation.   If the job bid-offer-response engagement is employed – there will likely be fracturing of optimal pick up or delivery runs.  This will result in lower density in comparison to a driver who turns up at a single dock, and has an expectation of picking up many shipments for delivery (or alternately one who has a standard pick up route); and subsequently sets about his or her transactional delivery work on a single plan whole-of-run basis.  
 
Engaging with occasional E-commerce customers, those often most likely to look to employ easily accessible disruptive mobile apps, creates less efficient hand-overs than regular business customers, and hence bad transactional economics for contractors in comparison. 
 
The difference in the cost of picking up one delivery versus many deliveries sourced at the one pick-up location is great.  If it is a bid-price based system – the complication and time spent bidding & accepting must be contemplated.  Can the mobile app have equal performance to a carrier drivers’ device?   Are the mobile scanning / labelling features comparable in quality and efficiency?

Capturing transportation sector business with disruptive tech apps & under-trained independent staff that bid too low can be no panacea if they are likely to under-perform over time in both consumer and E-tailer eyes.  It is also a different style of engagement in comparison to a taxi driver substitute who in practice is actively supervised by the customer for the duration from ride acceptance, and in the main is doing one task at-a-time.
 
We also recall a decade or so ago reviewing one such clunky tech-based centralised system being employed for emergency response transport services in the Service Parts Logistics (SPL) sector.  The service was primarily based upon employing mobile text message based bids & responses with active milestone supervision.  In our experience, the level of intervention required to supervise such multi-party & multi function transactions would be best described as ugly in logistical terms.  And in reality, over time, on the ground, it often ended up not being individual contractors responding to engagements, but rather local quartermaster styled operators that distributed work behind the scenes.  In these instances additional clunky process is simply disguised. 

Clunky process design may at times create a series of windows for greater active supervision and intervention in the transportation world, but it is incompatible with today's price ascendancy in the E-Commerce world.  

And yet there are several other transportation network models we can draw upon for possible components in our solution frameworks, and we will look at those next time.

Besides the derisory view of the practice known as “channel stuffing”, there are many other commercial practices that create “lumpy” inventory challenges for logistics and transport professionals.

We already touched upon this matter of “lumpiness” in respect of gramophone records (the production run / peak demand issues).  However, we can also extract a little more from the new agricultural machinery market scenario in this respect.

It may be self-evident to many, but we were once surprised ourselves to discover just how inflexible complex equipment manufacturers in the agricultural sector professed that it was necessary to be, in respect of their directly translating their long-range forecasts into actual shipping order volumes.

Even so, for a global agricultural manufacturer, if demand was down in one market and had risen in another, we were informed that they were likely to be able to recast their order book if common equipment was being manufactured. They may even have been able to tweak orders and specifications before hard milestones / deadlines during the manufacturing process.  But the reality, as we saw it in the agricultural equipment market, was often that the long-range forecast order quantity of units usually actually shipped years later, in spite of severe market demand rise & fall in the intervening period.

A more regularly encountered instance of induced shipping order lumpiness, one  that bemuses transport people the world over, is the end-of-month, end-of-quarter, or end-of-financial year shipping push ritual.  Be it driven by an enterprise’s regular accounting / budget / earning / reporting practices, or the sales commission incentives put in behind them; or even by multinationals that play pass-the-parcel (of unsold inventory to related / inter-company parties at tax appropriate prices); the facts on the ground are that these periodic shipping pushes-and-pulls have long created extreme lumpiness in logistics and transportation channels.

How we have best responded to all these cited examples of lumpiness in the past is naturally our best leaping-off-point for the design of solutions, when similar lumpy features arise in the on-line commerce age.

And when we say that specific innovative logistical solutions should be crafted from a wide base of understanding, perhaps the Latin may help annotate the proposition:  nanos gigantum humeris insidentes (we are but dwarfs standing on the shoulders of giants).




From this point onward, however, we should start talking about the shaping of logistical solutions.  The long introduction has already seen some asking us to cut-to-the-chase.  Perhaps this reflects a situation where, for many, solutions are simply things that you cut-and-paste; and in their mind that’s the smart thing to do?

One of the saviors for enterprises that have adopted cut-and-paste logistical solutions for their on-line consumer markets (in the tech sector in particular) in recent times, has been the continual shrinkage during the period of the unit sizes of the items they have been shipping.  Navigating capacity issues arising with existing transport and logistics channel capacity, even as their shipped unit volumes grew exponentially, was perhaps made a little easier.  Still, looking at the e-tailers actual bottom line results, it might hint at the depth of logistical under-performance elsewhere.

Several recent pointers, however, (like computer tablets morphing back into laptops, or smart phones growing-in-size) probably indicate that we are reaching the limits of gaining systemic logistical capacity as a result of the said unit volume shrinkage trend in the sector as-a-whole.  Moreover, bulky deliveries also appear to now be a new frontier in the B2B and home delivery markets that will make their mark, as discussed here:

www.bloomberg.com/news/articles/2015-09-25/why-fedex-has-a-delivery-headache-from-trampoline-you-got-online

In the transport sector, this is a turn of events (in respect of individual shipment size growth) that transgresses the haulage capacity issue.   Starting from the point of a decade or so ago, when most deliveries entailed a delivery vehicle operated by one man making a delivery to a commercial delivery dock, with available lifting equipment, and being easy offload; to the new scenario - where consumer goods deliveries often require two men, timed arrival appointments, with the need of an on-hand receiver with security access, and perhaps the need of difficult furniture removal styled set-down, and even tech-courier styled equipment assembly or installation, and removal of packaging may also be contemplated.

Even given the prospect of further advances with roll-up LCD panels and knock-down furniture/appliances, we see an altered & more fragmented landscape of logistical features entering into the mainstream discretionary on-line consumer market.

In some ways, however, those operators in the “Third Party Logistics” warehousing and distribution sector will be quietly pleased at this latest turn of events, as the on-line consumer marketer’s physical stock size profile is seen to grow.  This isn’t surprising, given that the most commonly heard lament in the 3PL sector in past decades concerned mid-contract physical volume shrinkage, and the consequent offloading of liabilities (like under-utilised warehouse leases and excess staff) onto 3PL contracted vendors.

The 3PL industry sector has generally performed woefully in financial terms in the same three decades that the industry itself grew remarkably.  3PLs continued to grow in spite of poor yields because large transport conglomerates kept chasing top line revenue growth opportunities arising fro their customers' outsourcing & integrated logistical-transport enterprise strategy by making acquisitions/investments despite the past financial performance of the 3PL's.  Even so, many 3PLs have folded along the way.

Another common lament heard from 3PL vendors during the period, was that customers that had shifted their focus from the delivery of physical goods to services were demanding unit pricing while increasingly under-delivering on the unit volumes promised. This trend could continue as existing tech conglomerates seek to cross over into the media sector. 

The maintenance of satisfactory KPI levels in the 3PL sector often also required out-of-scope IT infrastructure enhancements & investments.  These investments are fundamental when seeking to improve logistical solutions and adapt to new channel realities as they emerge.  Customers issuing 3PL tenders usually take no account of the need to fund such post contract initiatives & are seldom given the budget to fund cooperative projects;  and hence it is unsurprising when  3PL's are not prepared to research, fund, develop, & assume the risks of IT projects if the payback on their side is limited.    If this scenario unfolds, an enterprise has locked-in degrading levels of performance, and the identified issues might only be resolved when the next 3PL contract tender is released.     

As a result of the above, contracts often fail to deliver either the revenue or yield required to satisfy 3PL vendors’ budgetary expectations.   Fights over contract specification have been legend in the sector, and even though there is inherent risk to an enterprise of a collapsing supply chain, as a result of a failed 3PL contract; the 3PL vendor often came out the worse-for-wear.

Another thing about transportation facing trends is that one-thing-often-rolls-over-another which in turn underwrites disruptive potential.  The sources for the potential disruption, in contemporary times, as I see them are:

1. The growth of personal consumer goods deliveries to homes or CBD front-of-office by both on-line and bricks-and-mortar based retailers
   
2. An expectation that the existing lumpiness created during holiday seasons by on-line orders, & the consumer’s delivery expectations, will continue to grow
3. The need for new home delivery distribution arrangements (like pick-up centres / locked boxes located in parking lots, or nearby public transport hubs)
4. An increase in the frequency of deliveries received by on-line B2B purchasers
5. Reconfigured delivery driver or staff skills, with more part-time /  occasional / out-of-hours workers
6. Less delivery vehicle efficiency in overall logistical terms

We might also say that we foresee a kitting up at the delivery-face for a prospective increase in the number, and diversity, of delivery channel options made available by the on-line commerce sector.  Some of this will be based upon the consumer’s circumstances & demands, some of it upon the time-of-year, and more again derived of the changed physical characteristics of the goods being delivered. 

However, we are only speaking here about responding to emerging consumer & B2B demand scenarios for final delivery.  As we progress through the series, and remaining mindful of the same scenarios mentioned above, we will head further back towards source to examine solution possibilities for the outbound logistics task.

These days, we often come across the derisory expression “channel stuffing” in merchandise business analyses.  Many say it is the practice of booking revenue on occasions where product has been transferred to third party distributors.  It is said, in many of these instances, that the liability in case of a non-sale to an end-user is retained by the maker or marketer that had earlier booked and reported the revenue.

The description of “channel stuffing” is often confused by accounting practices for the booking of revenue and whether or not an arms length sale has been completed.   Sometimes instances so described turn out to be a straight out “revenue accrual” styled fraud, where revenue is booked without a transactional sale being completed or effectively guaranteed.

However, often the pretence of a contracted sales off-take agreement, one where buying unit volume quotas have been forced upon brand dependent distributors or reseller dealers are presented as if they are effective arms length transactions, which  is highly dubious in many circumstances.  The question always has to be asked, if the sales channel cannot move the product, upon whom does the ultimate liability for losses attributed to delayed, forsaken, or heavily discounted sales of inventory fall?
 
If a dealer has little collateral, then the re-seller agreement can practically found to be secured mainly by the value of the stock/inventory remaining in the channel.  Then there is the matter of the consideration of the risk to the prospects for the manufacturer/marketer’s future sales.  Or in other words, unless they can replace those resellers that they might choose to drive into liquidation for non-payment for inventory they could not shift with more effective ones, what happens to their future sales?
 
Often we have seen cases where a third party reseller is caught with stock they cannot shift, & many other resellers in the sales distribution channel are in the same situation.  It is often not feasible for the manufacturer/marketer to do anything else other than offer the reseller a deep discount (or credit) on the unsold stock already booked in the past as sold at a certain higher price, in order that the reseller may then shift it, and remain a going concern.
 
Whatever happens, despite all the attempts at denial, if stock is not sold - often those claiming to have offloaded the risk are found to have borne the greater burden of resulting liability in the real world.  We saw evidence of this with Australian miner’s supposed long-dated coal off-take export agreements with large Chinese importer customers, those same “firm legal contracts” that were effectively torn-up by some of the Chinese entities soon after the GFC.  We equally note the oft-cited cases of dealer channel stuffing in the US auto industry.  
 
On the other side of the coin, we also see evidence of the same false risk transfer scenario emerging for brand owners / marketers in respect of their outsourcing of consumer goods production to third party vendors (including those sometimes referred to as screw-driver operations).  Those brand owners may believe they have effectively transferred to their third party vendors their minimum production volume & hence pre-shipment related budget risk.  But in such cases where an unanticipated downturn in end-consumer sales for any given stock-keeping unit occurs, where will the weight of liability fall?  They too may well find themselves forced, due to existential realities, to bale out their vendors.   So in this respect too, perhaps the reality is that product still in the pre-shipment phase in contractual terms, may be of interest to us in respect of our logistical theatre-of-interest.  

So again today, we are plainly still just back-grounding ahead of our long promised delivery of a raison d’être for pursuing smarter design & process method for multi channel logistics and transportation solutions.

Our position statement today is that, after material has been produced, it effectively enters a distribution & logistical theatre.  The same theatre may see stock in play for a short or a very long period.

The controlling party in the distribution transactional chain may kid themselves that the de-risking of their organisation by contractual means is more important than the need for them to retain a singular vision of the logistical theatre’s efficiency & execution; but they are usually found to have done so at their own long-term expense.

Perhaps the Americans stumbled upon this concept accidentally, when they began classifying the critical party to an international shipment using the term "Principal-Party-of-Interest" (PPI)?  And they proceeded to incorporate this terminology into their regulatory-security framework, instead of seeking to rely solely upon strict notions of the legal ownership of the goods being shipped.

The Americans adopted the said terminology for sound practical reasons - and we hope our reasoning proves equally solid as we develop our case.

What other vertical market might we look to for pointers when developing our case in respect of emerging on-line consumer markets and effective logistics?  Well, we’re going to start by discussing agricultural equipment. 

And if that isn’t counter-intuitive enough, let’s talk firstly about service parts for agricultural equipment…
 
One of the outstanding features of service parts logistics market for agricultural equipment is the profitability dimension.  Despite the rise of contractors, farmers remain a significant buying group for agricultural equipment; and among that group of farmers there are a significant number that employ their equipment assets well past any depreciation date recognised by accountants or the taxman.  We are often talking periods of many decades.  

And the most profitable parts for agricultural equipment suppliers are?  Underwritten by the financial world’s often limited vision in respect of reporting of long held assets, that is often found to be the older low stock-turn parts, those warehoused for many decades.
 
And why would those old parts be tucked away, and not have been offloaded to vintage machinery specialists in the meantime?  Moreover, why would the regimen of expensing the storage and stock-keeping costs on those low stock-turn parts have been a little slack in the decades they were held? 
 
Well, perhaps because senior ag equipment managers have known their business better than the usual horde of spreadsheet jockeys.  Their reasoning is that a farmer (in Australia we call them cockies), is a highly brand allegiant specimen.  And the one sure turn off of this customer group’s brand allegiance is a lack of after-sales support.   But given the stock-turn scenario for both the parts and the finished goods, who would give a fig (says the high-turn consumer merchandiser mind)?  

Well the response is that, while a cocky may have an older tractor – they may well have purchased 2-3 other significant pieces of high-value new machinery within the tractor’s life (by way of example).

Regular readers might also recall the scenario we discussed in the past in respect of GE - their aircraft engines, and the world’s fleet of both freighter & passenger aircraft.  Specifically in respect of how GE induced market liquidity into freighter leases was justified by them wanting to keep more engines in the air (for service parts turnover purposes), and how by extension it afforded the whole goods (aircraft) producer additional significant new business sales.  This dance goes on between whether equipment is owned or operated by contractors or cockies, how many hours it does a season, and how many seasons etc, etc. 
   
And what about the agricultural equipment provider’s high-turn wear parts for the more contemporary equipment?  Perhaps you are starting to see the point?  This latter set of inventory has a completely different stock-turn dynamic to the former, and yet both business cases make perfect sense, and the parts are all observed being managed by the same service parts logistics group.  Obviously, the logisticians have learned over time that there is a sound business case to be made for logistical solution streaming when it comes to agricultural equipment after-market parts that are being stocked and supplied by the major equipment manufacturers.
 
Most serious logisticians’ interest is piqued by encounters with the service parts logistics business (given the opportunity), and none more-so than those serving the agricultural equipment sector.  Not only do you have demand scenarios that are heavily influenced by weather, seasonal timing, & market price changes for produce/stock; but, moreover, all these factors combine unevenly within the same regional geography due to the different crops or stock of the various farmer customer groups. 
 
Forecasting the near-future demand for both parts and finished goods in the above mentioned industry is fraught.  In finished goods, we are talking high capital items with very long production lead times.  Long range weather forecasting is just as inaccurate as long range soft commodity forecasts.  The new equipment manufacturer also has to order rims, tyres and balance weights that are appropriate to the various accessories and row widths employed on different types of farming operations in different regions. 
 
Further, just as the sowing or harvest season is about to kick in, the “last-minute-Charlie” cocky floods the parts order books for both wear parts & regular maintenance parts, as they attempt to “bring their equipment up” for the few weeks it is employed per year.  If it is a bad season, and they have no crop – there is no order.
 
Our point here is?  We cite a dynamic environment – there is no place for the one size fits-all solution here; and there are different biases in the warehouse-versus-transport equation that have to be accommodated within the one enterprise.  The resultant deployed bias takes specific account of the nature of the particular stock-keeping unit, and tactical responses are configured in accordance with what is optimal for the micro-market condition of the day.
 
We are not done yet with the agricultural equipment industry, but will leave the discussion of production-run, transportation, & inventory issues for another day.

As we see it, one of the most unfortunate aspects of logistical developments in the past three decades is the virtual take-over of the large-scaled enterprise tactical planning space in logistics by those whose panorama is confined to what they believe to be the capability limits of their existing system structure & architecture.

The problems associated with the rise of logistical process gatekeepers within enterprises, especially those that are system cadres, or devotees, are often compounded by these same people's lack of experience in the wider logistical world.  Many in the logistics space now appear to have evolved their way to the top of logistics organisations, on the back of credentials which are underwritten by various accreditations & certifications.  There is often a rightful emphasis placed upon the merits of a given adaptable philosophy in respect of logistics & enterprise planning, but in translation the output has often become process dogma.  This would be an unhealthy state of affairs for any enterprise over time, and it is especially so today as we confront new market realities. 

When logistics professionals become captivated by the merits & soundness of their existing process it is sure to inhibit their employer's enterprise when it is required to respond to emerging events that require a significant structural shift.  This scenario becomes especially burdensome for enterprises when their imperative requires more adaptable logistical architecture, that which might respond faster to the more cantankerous consumer demand scenario we see unfolding today.  Doing as well as the guy down the road, or any other user of their enterprise software provider, may not cut it at the enterprise viability level when large swathes of the consumer merchant-supply chain business model is threatened by disruption (or failed efforts at achieving disruption). 

To illustrate our message, and talking about one of those cantankerous cases that we have observed elsewhere, we will initially cite here the example provided by the US’s Afghanistan War “bump-out” logistics planning team's last-minute recruiting efforts.  This team were seeking supplementary human resources, and their executive appeared to be looking beyond a process-cadre style of human asset.  And our point is that their HR sourcing team had very good reason to be looking beyond those captivated by existing logistical planning architecture.  It is this style of circumstantially driven, & enterprise-specific, case that we wish to start exploring today. 

In the cited case, the US military at that time had very likely already done the sums, based upon all the existing logistical processes they had available to them in seeking to complete their Afghanistan “bump out”.  Perhaps they didn’t like what they were seeing?  There had been a gradual build-up of assets in Afghanistan over many years, the inbound logistics costs had already been enormous (plainly ridiculous in commercial equivalent terms) & the fast exit was mandated.  The "bump-out" would be a very different & far more challenging beast.

www.economist.com/news/asia/21576720-logisticians-face-practical-and-geopolitical-mess-relish-big-retrograde 

The soundest logistical advice the military hierarchy would have received from any free thinker would likely have entailed the planning team manager making a request for their political masters’ to seek to improve their working relationships sufficiently (within the near-term time constraint mandated by the force withdrawal) with those nearby states that would have afforded the logistics team access to the optimal logistical corridors & transit opportunities.   However, the eventual outcomes reflected a scenario where the politicians were only able to respond within time at the margins (over-flights etc). 

These Afghanistan “bump out” logisticians were always facing an uphill task, one where options narrowed as the political opportunists started making their next plays - before extracting themselves from their ill-fated last one.  That had immediate consequences at significant logistical pressure points & imposed new constraints.   The US military did, however, apparently source a few more capable logistical minds; and they then set about reducing the task by wrecking, & dumping, & redirecting assets.

The result was that the US military generally muddled their way out - while testing the Russian’s patience to the limit; and apparently taking it past the said patience limits of their central Asian “partners”.

But we pause here, and reset, because we were supposed to be talking about something derived of my experience. Having been part of the team handling the Sydney Olympics’ official broadcaster NBC’s "bump-out" air charters & shipping, did however, see us appreciating the Afghanistan "bump out" effort as it unfolded.  Although this latter task was far smaller, here too there had been a long build up of inbound infrastructure (1 year in this case), and all but the inessential needed almost immediate repatriation (to cover the next big world media event/s in Europe & the Americas).  And it wasn't down to fortune that we did far better than muddle our way through, we executed using a bespoke process.

We could also have chosen to further illustrate our case by going down the oil & energy services route here, to draw upon specific tactical logistics experience, and that enterprise has certain synergies with military logistics.  Instead, I have chosen today to talk about 1980’s and 90's vinyl gramophone record imports.

https://vanessaberryworld.wordpress.com/2012/04/21/sydney-record-stores-of-the-past/ 

Why should a case based upon a gramophone record market resonate better than that of oil & energy services, given the latter's just-in-time movement to far flung drilling sites of down-hole nukes & mud?

Well oil & energy services companies are able to selectively plan their inventory's levels & geo-locations.  They have established lead times for all their customers & geographies.  In my experience, these enterprises planned & carried inventory at certain locations that provided a patterned contracted level of response & support to their customers.  Under this operating basis, the oil & energy services providers then looked to engage the best available transport professionals to meet or improve on delivery outcomes; or more usually to save them in the case that supply shortages or breakages meant drawing on inventory from further away than anticipated.

There wasn’t, however, much of a chance of another oil or energy services competitor turning up in the meantime at their customer's drilling site & making a sale with a similar piece of inventory, one that could substitute, given the nature of the turnkey-styled contracts prevalent in that industry.

The import gramophone record market, however, was essentially - in its time - more dynamic from the logistical point of view. This stemmed from the dynamism of the import vinyl record pop music market.  The on-line B2B and retail world of today has certain synergies with that vinyl record market in respect of the international sourcing model, and it is this facet that we wish to explore.

The music market of the cited days was a discretionary consumer purchase based one.  In such a case, where non-availability or non-delivery was encountered, a buyer was likely to source elsewhere, or buy something else entirely.  An import record shop’s loss of a customer at that time can therefore be an exemplar of an on-line buying platform’s discretionary purchase & repeat business loss today. 

If you take today's on-line consumer scenario in the approach to the Xmas peak, the consumer is likely, despite loyalty programmes etc, to buy from one of a diverse array of platforms - or a bricks and mortar competitor - based upon the expectation of a delivery being fulfilled, irrespective of allegiances.  Similarly, the B2B platform buyer, one who has an array of on-line vendor choices, will more often buy-to-stock dynamically, with a weather eye on opportunistic pricing and being more immediate in their reaction to the latest stock-turn rates, than was possible previously.   

Back-in-the day, however, an import record shop's game plan was more specifically adapted to its limited market.  The owners would be trying to beat the local labels to the street with trending music, or supplying a niche market that local vinyl record production-run economics could not support.  Like the mainstream market, however, popular demand for a given recently-released record usually waned quickly.  Stock that could not be moved brought the undoing of many of these import record merchandisers.  The wider industry environment at that time was also full of traps.  It was replete with boondoggle mandates, but this is another story, and it is better left unexplored here.

Given the recent resurrection of vinyl record sales internationally, it is interesting to note that some of the old production run & distribution issues have resurfaced in the mainstream media:

www.nytimes.com/2015/09/15/business/media/a-vinyl-lp-frenzy-brings-record-pressing-machines-back-to-life.html

The matter of interest for us here, however, is that the single most important concern for the import record shop proprietor back-in-the-day was the necessity of not being beaten for stock arrival by their competitor.

In the said times, it was a non on-line environment where orders were taken at origin in New York and London by phone or telex on a Thursday; product was shipped on a Friday, yet it was expected to be on shelf by the following Wednesday.  The Australian import customs clearance process was also at that time uneven, & it took 48 hours or more (juxtaposed with today where most commercial import shipments are cleared within minutes).

An interesting side-factor was the back-chat channel between the various import record shops (bred of the incestuous nature of the general industry-wide environment) about what they had ordered, what had shipped, who got theirs, and when. 

This chat-loop fed back to the suppliers at source who were often pressured to act “fairly”, and to the transport carriers whose performance was judged on the basis that a pass was on-time, a service irregularity was when you delivered late – but you had also delivered their competitor’s products late, and a fail was when their product was not delivered on-time - but their competitors had been.

Another continuously evident aspect of this trade was that there was always an individual gramophone record of which the import record shops did not have anywhere near enough stock-in-hand on any given day.  This red-hot stock-keeping unit (SKU) issue, where product runs - rather than walks - out the door during demand spikes, and where supply chain options & corridor widths are assumed to be limited, is one we will return to.

To close today's case however, in the import record market we have described, the transport provider choice made by the owners of most of these record shops was to select only one or the other international freight forwarding company, from a field of hundreds.  Many also employed the same import customs broker.  Those select transport services vendors were said to be those that understood their business. 

Funny that.