Weekly Roundup - Logistics Transformation Challenges, Amazon’s Spendings on AI and Intel’s Cost-Reduction Strategy

A Gartner survey reveals that 76% of logistics transformations fail to meet key metrics like budget and timeline. It also shows that addressing team resistance and incorporating feedback significantly boosts the chances of success by 62%. Despite this, most leaders adopt a directive approach to resistance, which is counterproductive. Engaging teams early, valuing resistance as a resource, and adapting plans based on feedback can improve outcomes. The survey, involving 306 logistics professionals from large organizations, found that resistance within teams was a bigger obstacle than external pressures. Only 20% of leaders used resistance positively, which greatly increased their success rates. The study emphasizes the need for leaders to listen, involve resistant stakeholders, and maintain flexibility, turning resistance into valuable insights for better transformation results.

Source: 2023 Gartner Logistics Functional Transformation Survey

Amazon is expected to report a significant increase in capital spending on artificial intelligence, following the trend set by Google and Microsoft. The e-commerce giant's investments, primarily in cloud and generative AI infrastructure, are projected to have risen by 43% to $16.41 billion in the second quarter, marking a $1.5 billion increase from the previous quarter. This surge in spending is likely to pressure Amazon's profit margins, despite cost cuts and supply chain efficiencies benefiting its retail unit. Amazon Web Services (AWS), a leader in the cloud-computing market, is facing strong competition from Microsoft's AI-powered Azure services. To counter this, Amazon has partnered with Anthropic and offered startups free credits for using major AI models to boost its AI platform, Bedrock. The company also appointed a new head for AWS in May. Despite these efforts, there are concerns about the speed of Amazon's AI adoption and its focus on smaller companies struggling in a high interest-rate environment.

Source: LSEG, press releases

Amazon has launched a new micromobility hub near Alexanderplatz in Berlin to facilitate eco-friendly deliveries using electric cargo bikes. This center, opened in July 2024, aims to service several populous districts, including Reinickendorf, Spandau, and Pankow, potentially delivering over 1.5 million packages annually. Located in the Apcoa parking garage of the Alexa shopping center, this hub is part of Amazon's broader strategy to reduce emissions and traffic congestion in inner cities through alternative delivery methods, such as electric bikes and hand trolleys. Amazon now operates more than 50 micromobility centers across 40 European cities, doubling their number since 2022. In Germany, electric cargo bike deliveries are available in six cities, contributing to over 50 million eco-friendly package deliveries in 2023. This initiative aligns with Amazon's goal of achieving CO2 neutrality by 2040.

Intel, once a dominant force in the chip industry, is facing significant financial challenges and plans to cut around 15,000 jobs, about 15% of its workforce, to save over $10 billion next year. This move is part of CEO Pat Gelsinger's broader strategy to reduce costs and position Intel as a contract manufacturer for other chip developers, competing with companies like TSMC. Despite these austerity measures, Intel remains committed to its "IDM 2.0" strategy, which includes building a new plant in Magdeburg, Germany, although investment plans will be more demand-driven. Intel's financial difficulties are reflected in its stock plummeting nearly 30%, its worst drop in over 40 years. The company also faces stiff competition in the PC and AI markets, and plans to reduce capital expenditure by 20% and halt dividend payments to streamline costs. Investors' confidence has waned, as evidenced by disappointing quarterly results and a bleak outlook for the second half of the year.

Dive deep into research

"Locations of logistics facilities for e-commerce: a case of the Tokyo Metropolitan Area" by Sakai, T., Santo, K., Tanaka, S. and Hyodo, T. (2024)

"Dynamic pricing strategies for efficient inventory management with auto-correlative stochastic demand forecasting using exponential smoothing method" by Kumar, L., Sharma, K. and Khedlekar, U.K. (2024)

Events

Sustainable Supply Chain Summit Europe

When: 10. October 2024

Where: Brussels, Belgium

What:The Sustainable Supply Chain Summit will bring together thought-leaders from across supply chain, ESG, sustainability and procurement roles, innovative solution providers and Verdantix researchers to share ideas and strategies. With delegates and speakers from a diverse range of industries and geographies, our aim is to inspire new thinking and to generate new practical approaches.

Intermodal Europe 2024

When: 12. - 14. November 2024

Where: Rotterdam, Netherlands

What: Every year, the intermodal industry gathers at Intermodal Europe for three exciting, dynamic, and productive days. Thousands of individuals from across the container market and beyond come together to meet, do business, and shape the future of maritime transport

not just in Europe, but around the world too.

Biodiversity in Food Supply Chains

When: 13. - 14. November 2024

Where: Berlin, Germany

What: This conference will spotlight innovative approaches and best practices for protecting biodiversity while building sustainable and resilient food systems. Engage with exciting presentations from leading experts in industry, politics, and science. Participate in interactive workshops and network with professionals from across Europe. Together, we will tackle challenges and develop solutions to integrate biodiversity as a key component in our food systems.