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Infographic: Change Is In the Air

By Contributing Author | 12/20/2016 | 10:43 AM

Change Is In the Air 1

Change Is In the Air 2

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Run a smarter distribution center - Adopt Machine Learning!

By Contributing Author | 12/09/2016 | 10:30 AM

By: Vamsi Madabhushi and Swaroop Gooty

As 2016 comes to a close, it is time to reflect upon our achievements and identify opportunities for next year. However, it is also a time for us to ponder upon the future – which is filled with a great promise of change (even in Supply Chain Operations!).

A change so transformative that, soon, machines will learn and execute many tasks that we do today to meet our promise to the customer.

What can machines possibly learn and how can they help supply chain organizations? – In this post allow us to untangle the mystique behind the applicability of machine learning systems to Supply Chain Execution-Operations.

 

What is machine learning (ML)?

Machine learning is a branch of artificial intelligence in which algorithm based models are developed. The models learn relationships in data and can be used to predict or investigate relationships of a dataset.

For large dimensional data sets it is often difficult for a human analyst to develop models whereas ML based models excel in their ability to use vast amounts of data.

For model building, the algorithms require data which is a past evidence of a certain pattern i.e. training data. ML models have been successfully applied in computer vision, search engines, bioinformatics, and financial analysis etc.

Suggestions or predictions from machine learning algorithms are inferred based on the data used to train a model. The learning happens by providing training data to the algorithm. This type of learning is known as supervised learning.

For example: If we provide historic data with trailer pick-up and drop-off times, location, routes, driver information, trailer characteristics etc. – the algorithm will be able to learn from the data and predict transit time of a new load going to a particular destination.

 

How does machine learning work?

ML Process

The picture above shows different steps involved in developing a ML model. In our view, the most critical step is to define the business problem. 

Problem Statement: It is important to understand the kind of problems that machine learning can solve. Machine learning is suitable for scenarios where a number of factors could influence the model outcome/prediction and where rule based solutions are not viable.

Analyze, Validate & Prepare Training data: Using the data that is already available in the enterprise the model can be trained. Determining the right set of classification labels, independent variables and correct training data is the basis for developing a good machine learning model. In certain scenarios where the data is not available in a particular format, it may need some transformation.

Develop ML Model: The next step is to choose an appropriate algorithm that will learn from the training data and identify patterns. The model is iteratively tuned to achieve an acceptable level of precision.

Model Validation: A test data set that is kept separately from the training data i.e. data set that the model has not seen previously can be used to validate the model.  The model is evaluated on its ability to recall patterns and on its ability to predict precisely.

Deployment & Periodic Evaluation: Model deployment requires some level of integration with the enterprise systems. Once a model is developed and deployed, it requires periodic evaluation. During evaluation, new patterns are identified and the model is trained on those. This fine tuning of the model makes it more robust and increases the precision of the model output.

 

Why use machine learning in Supply Chain Execution (SCE)?

Adopting advanced technologies can be a strategic lever to achieve operational goals. Using data commonly available in the enterprise coupled with machine learning models can turn out to be a game changer.

SCE activities such as order orchestration, fulfillment, DC space planning, and transportation management are, today, supported by packages or custom applications.

Yes – they get the job done. For example, a warehouse management application can be configured to achieve efficiency in order picking and shipping. However, it cannot tell you whether there is too much idle time of forklifts in specific areas or whether the door utilization this week is lower than expected.

The next wave of systems need to be intelligent and prescriptive in ways that help managers look at their processes differently.

One might ask – I already have real-time visibility of current operations via dashboards and alerts. What else do I need? – The answer is simple – Machine learning based Supply Chain Execution systems.

Most likely, systems that you currently maintain to run your operations are configured to run on yesterday’s business rules. These systems are not dynamic enough to support the ever changing operational environment. Not only is it difficult to change the rules constantly but also it is very time consuming to analyze large amounts of data to identify changing patterns.  

Machine learning models precisely address the above challenges.

 

Where do you start?

Start with identifying problem statements - Like we mentioned above, the most critical step is to identify problems that can be solved through ML models. In this post, we will leave you with a few ideas where ML can be applied to improve your distribution center operations.

Problem statement

Let us know your thoughts.

 

Vamsi120x120Vamsi Madabhushi is a Consulting Manager specializing in Distribution Center Operations and Technology.  An expert in JDA Warehouse Management System he has developed SCE solutions for leading US retailers. Vamsi is enthusiastic about using data analytics to build efficient and greener supply chains.

Vamsi holds an MBA from Johns Hopkins University.



Swaroop

Swaroop Gooty is a Senior Supply Chain consultant with diverse experience across areas of supply chain execution. He is passionate about using technology & data to improve supply chain operations.


Swaroop holds an MBA from Indian Institute of Management Calcutta, India.

Surging Volume In The Supply Chain: Can You Ride The Wave?

By Contributing Author | 11/23/2016 | 8:15 AM

 

By Steve Wilson, Vice President of Logistics Engineering, Redwood Logistics

With Black Friday and Cyber Monday now a predictable feature in November along with cold temperatures and overcast skies, it makes sense to consider an area of human endeavor that can teach us logistics professionals a thing or two about coping with the high volumes of the season. 

Of course, I’m speaking about giant wave surfing.

No, really, I mean it. We can learn a lot from those stalwart souls who show up on YouTube or your Facebook feed who surf giant ocean waves. Known by their intimidating names – Jaws, Mavericks, or my favorite, Teahupoo (also spelled Teahupo'o, and pronounced “Cho-Po”) – these giant waves appear in the winter months in the Pacific Ocean and can reach 50-plus feet high. For years, no one dared to surf them – it was thought to be suicidal to even try.

Then came Laird Hamilton, an American surfer who perfected the art of using a Jet Ski to tow him into the entry. Surfers who paddle out can’t go fast enough to catch these giant waves. It takes a powered vehicle to get surfers up to speed so that they’re not run over by several hundred tons of water.

OK, that’s interesting enough, but how does that relate to us logistics professionals?

Think of Black Friday or Cyber Monday as giant waves. Instead of surges of water, these events are surges in volume, which often dwarf the volumes normally experienced. Also, just like giant wave surfers without the right equipment, logisticians who aren’t properly prepared get no glory. Instead, they wipeout and risk being completely crushed or drowned. Given the size of these events, the stakes are high. Companies whose supply chains fail them in the start of the holiday season often have their entire year’s financial performance ruined. So, what can Laird Hamilton and other giant wave surfers teach us?

  1. Continuously prepare for the season. Hamilton trains year-round with a focus on preparing for the big wave season. He follows a rigorous training schedule and adheres to a strict diet. For logistics professionals, preparation means keeping the holiday surge in mind during the entire year. This translates into year-round planning for the big event. Amazon has been known to utilize promotions and sales throughout the year to prepare for the Cyber Monday event. It makes sense to test your system during the year, as well.
  2. Let fear do its job. While panic is never a good strategy, a healthy dose of fear will keep you focused on the task at hand and motivate you to prepare.
  3. Study the details. Giant wave surfers study the currents, ocean bottom and wave peaks before paddling out. For logistics professionals, we need to understand how the upstream order process works, from customer to release. Also key is to understand your organization’s promotional plans as well as your competitors’.
  4. Learn to wipeout. Sometimes things go wrong, keep your head cool and your eyes open. Don’t forget contingency plans.
  5. Learn from others. Among the innovations Hamilton has brought to surfing, he pioneered the use of smaller surfboards with foot straps (which provide superior board control – vital when you are flying down the face of a giant wave at 50 mph). He got the idea for foot straps from sailboarding and snowboarding. If he had never participated in activities beyond surfing, those insights would have been lost to him. Logistics professionals need to get outside the proverbial box to get new ideas. Conferences, industry roundtables and tradeshows are where these insights are found.
  6. Don’t be afraid to use outside help. Hamilton realized that without the tow from a powered watercraft, he’d never be able to paddle fast enough to catch a giant wave. Surfing purists decried the use of power tows, but it was the key enabler for his ultimate success. Logistics professionals should not hesitate to reach out to their trusted services providers to get the additional expertise and capabilities needed to meet the surge in demand.

I’ll end with a quote from Hamilton himself:

“We lay it all down, including what others call sanity, for just a few moments on waves larger than life. We do this because we know there is still something greater than all of us. Something that inspires us spiritually. We start going downhill, when we stop taking risks.”

Wilson Bio

Brace yourself! Holiday peak is here.

By Contributing Author | 11/16/2016 | 10:44 AM

By: Jyoti Kapoor, COO, Speed Commerce

The 2016 holiday shopping forecasts are rolling in and all signs are pointing to online shopping as the go-to channel for consumers. Just take a look:  

  • The National Retail Federation is predicting that more consumers will do their shopping online this holiday season, up from 6.8% from 2015.
  • Deloitte expects eCommerce sales to grow 17 – 19 %.
  • Adobe Digital Index is estimating online sales of $8.4 billion on just three days: Thanksgiving, Black Friday, and Cyber Monday.

Retailers and outsourced fulfillment providers have been ramping up for months anticipating the annual spike in eCommerce sales. For most, that spike doesn’t get much steeper than the days between Thanksgiving and Cyber Monday.

Distribution and fulfillment centers have been preparing for months for just this moment. With the countdown to Black Friday entering the single digits, here are five last-minute checks for your warehouse. 

Keep building your team

Thanks to lower unemployment and stiff competition for warehouse associates, hiring seasonal associates continues to be challenging for many retailers and distribution centers. This trend will no doubt continue right up to Christmas as your staffing needs increase as well as the expected attrition with your existing workforce.

Continue to engage with human resources and your outsourced recruitment partners to find new hires. Work to keep your existing team engaged and incentives throughout the season. The fast-paced work and longer hours may lead to lower employee morale. You can keep it up with performance incentives, open communication and verbally recognizing their efforts.

Confirm your emergency plan

Mother Nature is always the random variable when it comes to peak season. While your warehouse may have an emergency preparedness plan, when was the last time you tested or updated it?

If you don’t have time for a complete run through, there are a few key areas to confirm. Update your internal emergency procedures and associated contact lists in the event you need to put your plan in place. Confirm that you have 24/7 contact information for key utilities like electrical, phone and Internet. In the event of a power outage, you’ll need to fire up your generators. Confirm they are in working condition and you have the supplies on hand to keep them running for more than a few hours.

Ready your supplies

Can packing tape cripple your operations? It can if you don’t have it. The same goes for not having the right size box. Maybe you can ship in a different size box, but there’s a good chance it will cost you more to do so.

Double check your forecasts and confirm you have the right amount of supplies on hand, and maybe a bit extra, so you don’t delay the shipping process. In the event you need more supplies brought to the warehouse, reach out to your vendors now to make sure you can get the items you need with a quick turnaround.

Connect with carriers

UPS is forecasting that Black Friday-to-New Year’s Eve deliveries will be up more than 14 percent. FedEx is anticipating a record-breaking peak season with each of the four Monday’s between Thanksgiving and Christmas being the busiest in the company’s history.

Constant communication with your carriers is vital to making sure the orders you picked and packed within your required timeframes make it into your carriers’ network and are not left sitting on your docks. Confirm that your carriers are aware of the sales so they are prepared for the increase of packages leaving your warehouse.

Get ready for returns

While you’re making final preparations to get product picked, packed and shipped, you also need to plan on returns. Your returns department should occupy a separate section within your warehouse, not simply shoved carelessly somewhere in the receiving area or in someone’s office.

Returns need to be organized away from the rest of your merchandise so you can inspect them for any defects, perform any necessary refurbishing or repackaging, and then returned to stock or sent back to the vendor. If you have certain products requiring a specific refurbishing process (hygienic cleansing or steaming, for example), this is especially important so that your areas are clean and the necessary tools are immediately available.

Peak periods are crucial to retailers and e-tailers alike as they work to achieve annual sales quotas. There’s no such thing as over-preparing when it comes to peak season.

Jyoti Kapoor
Jyoti Kapoor is the Chief Operations Officer at Speed Commerce. He has extensive supply chain and operations management experience within technology companies, spanning multiple international and US assignments.

https://nrf.com/resources/consumer-data/holiday-headquarters

http://www.slideshare.net/adobe/2016-holiday-shopping-predictions

https://pressroom.ups.com/pressroom/ContentDetailsViewer.page?ConceptType=PressReleases&id=1477506556294-677

http://about.van.fedex.com/newsroom/global-english/fedex-anticipates-another-record-peak-holiday-shipping-season/               

https://dupress.deloitte.com/dup-us-en/economy/behind-the-numbers/holiday-ecommerce-sales-growth-forecast.html

The Best of Both Worlds – Flexible Freight Management

By DC Velocity | 09/26/2016 | 1:47 PM

It’s been said that the art of management is that of balancing conflicting objectives.  There’s a need for trade-offs, and historically that’s meant sacrificing one good for another.  You can’t enjoy that awesome slice of cheesecake today AND stick to your diet.  Pick one, you can’t have both.

Back in 1982, best-selling management guru Tom Peters and fellow consultant Robert Waterman authored an exceptionally popular book, “In Search of Excellence.”  In it, the authors attempted to identify the formulas and practices that leading companies used to become great.  While some of the ideas were very straightforward, one concept in particular was put forth that seemed essentially contradictory – “Simultaneous Loose-Tight properties.”  Essentially, this was the ability to delegate decision-making to lower levels of the organization while maintaining overall control and direction. 

In transportation management, this tradeoff is manifested in the conflict between centralized vs. de-centralized management. 

On one hand, centralization of transportation management is pursued by companies who want better compliance and control of their transportation spend.  Additionally, companies who pursue centralization desire to aggregate their buying power, develop domain expertise and maximize the productivity of their transportation team.  All good and noble ideals, yes?

On the other hand, decentralized transportation management has its advocates as well.  The first and foremost reason being related to “tribal knowledge” regarding the customers and market of a particular industry or geography.  “Those (insert disparaging adjective related to intelligence, education, parentage, etc.) in (HQ location) don’t understand our business” is the common refrain.  Other arguments for decentralization refer to a lack of responsiveness.  “Those guys are in the (other) time zone, and they never answer their phone or respond to emails,” is repeated often and enthusiastically.

Interestingly, organizational design can influence the support for decentralized operations.  The desire for a “culture of accountability” for a particular plant, DC, business unit, often conflicts with the desire to centralize transportation management operations.  “How can we hold an individual or team accountable for a given outcome if they have reduced or limited ability to make decisions?”

How an organization has grown will also have an impact on how centralized transportation management operations are.  Organic growth, where a business expands existing business into new markets and new geographies, is much more amenable to centralization, particularly because the “tribal knowledge” resides at the headquarters.  But so often these days, growth comes through mergers and acquisitions.  The P&L may be centralized, but the day-to-day knowledge of how the business runs
remains at the acquired companies.

BBW Graphic

The push and pull between the desire to centralize transportation operations and the need to respond quickly and appropriately to business issues is something we see all of the time with our customers.  In most cases, companies have reached an equilibrium point depending on all of the factors identified earlier, but because of conflicting objectives, companies become mired in the status quo and forward progress grinds to a halt.

Break the Status Quo through Flexible Freight Management

After seeing customer after customer wrestle with centralization / de-centralization conundrum, we’ve found a solution in Flexible Freight Management, which eliminates the false choice between benefits of centralization with the business imperatives that drive de-centralization.

What is Flexible Freight Management?  It’s a customized, holistic approach to transportation management that leverages technology (both connectivity and automation), “next practices” and “tribal knowledge” of shipper personnel to eliminate the trade-offs between centralized and decentralized transportation management and instead, implement a solution that truly combines the best of both worlds.

How do you get there from here?

It starts with collecting and documenting the knowledge that your team members possess about how your business works, what your customers require, and what decisions need to be made.  Without this knowledge, no amount of technology or organizational re-engineering will yield any improvement.  The second key element is technology, specifically process automation and connectivity.  Today’s SaaS-based technology is easier and more cost-effective to implement than ever before, and integration technologies such as Application Programming Interfaces (APIs) are far less time-consuming to implement than older technologies such as EDI.  New technology platforms enable custom workflow development, which drastically shortens user learning curves, and also aids in compliance and speed.  Finally, it’s about using the visibility and data now available to make better decisions, as well as leverage the full scope and scale of the business when procuring resources.

The Best of Both Worlds

With Flexible Freight Management, shippers are able stay close to their customers and delegate decision-making authority for day-to-day operations while gaining the control needed while maintaining and growing expertise.  It’s truly the best of both worlds.

 

Wilson Bio

Return to Sender: Steps for Retailers to Keep Customer Returns of Dangerous Goods Compliant

By DC Velocity | 08/31/2016 | 8:28 AM

By Mike Pagel, Senior Consultant, Labelmaster

For companies in the e-commerce retail market, coordinating consumer returns of hazardous materials – otherwise known as reverse logistics – can be a challenging part of business. Hazardous materials or dangerous goods (DG) make up an increasing number of manufactured items and include batteries and battery-powered devices, electronics, paints and coatings, perfumes, aerosols, cleaning solutions, smoke detectors and even cosmetics. 

Returned products complicate logistical planning because they are subject to the same hazmat shipping regulations as other outgoing shipments. Plus, a majority of customers don’t know how to ship hazmat compliantly, and often don’t even know they are shipping hazmat.

The problem has been exponentially exacerbated with the surging use of lithium batteries.

How big of a deal is returns in the U.S. economy? Almost 9% of total U.S. purchases are returned to the amount of $284 billion annually. If your products include DG, it only complicates returns. 

In addition to customer returns, there also are employee store returns that must remain compliant. For example, a large technology company may have employees in retail locations returning a large number of products back to a distribution center. Any violations or penalties in this case would directly affect the company involved.

The Reverse Logistics Rule

To make the process of returning shipments easier for retailers, the United States Department of Transportation’s (USDOT) Pipeline & Hazardous Materials Safety Administration (PHMSA) recently published a final rule that sets forth specific rules to regulate the transport of materials under the so-called “Reverse Logistics” principle. This ruling makes some return shipments easier for retailers with brick-and-mortar stores. 

PHMSA HM-253 defines reverse logistics as the “process of offering for transport or transporting by motor vehicle goods from a retail store for return to their manufacturer, supplier, or distribution facility for the purpose of capturing value (e.g., to receive manufacturer’s credit), recall, replacement, recycling or similar reason.”

The new regulation provides the appropriate procedures for retail outlets returning unused, damaged, or defective hazardous materials products to their sources. Previously, such products were shipped in accordance with the Limited Quantity and ORM-D exceptions. Very often, such goods were not even recognized by their shippers as being regulated in transportation. This has caused shippers to occasionally run afoul of regulations that in many cases they were not even aware existed.

It is important to note that, under the new rule, HM-253 applies only to highway transport, limited quantity shipments and private carriers. It does not apply to air shipments, rail shipments and marine shipments.

Per HM-253, for retailers shipping returns with their own vehicles, most hazmat packages do not have to be labeled or marked to reflect their specific contents. They can be shipped with a new marking. If shipping returns through non-private carriers – such as FedEx, UPS or USPS – all the full labeling and marking rules still apply.

To meet these new DOT guidelines, retailers will benefit from streamlined training requirements that include:

  • Identifying the hazardous materials in the shipment and verify compliance
  • Providing clear handling and shipping instructions
  • Ensuring that the instructions are known and accessible to employees when they prepare the shipment
  • Documenting that employees are familiar with the requirements

The Customer Conundrum

Unfortunately, HM-253 does not apply to returns that come directly from customers. Still, it’s the shipper’s responsibility to comply with hazmat transportation regulations and, in the customer return scenario, the customer is the shipper.

Should a customer have a return shipment rejected, who are they going to blame? A business, as a recipient of non-compliant hazmat shipments, is not necessarily liable for mistakes made by customers returning shipments. However, the company’s name and address are likely to be on the package. If a customer has a return shipment rejected, they are going to blame the business who shipped them the product.

If an incident in transport should occur, ultimately the package is going to have the company name on it. If that business was not providing instructions or guidelines on how to return dangerous goods, it can have a significant negative impact on the company’s reputation.

Additionally, regulatory inspectors will care more about the commercial aspect of the non-compliant shipment and will likely follow up with either the carrier or the company involved based on the number of customer violations. And, the inspector may recommend that the company provide better guidance on shipping methods.

Thus, it’s important that a business takes whatever steps possible to help customers ship packages in accordance with regulatory requirements.

Helping Customers Meet Shipping Requirements

Easy returns are an essential part of overall customer care. Retailers can help consumers ship returns compliantly by developing a returns process that includes the following components:

  • Train customer service representatives on the basics of hazmat shipping so they can assist customers.
  • Notify customers that rules exist, and give them guidance on the shipping requirements for the products being returned.
  • Insist that all return shipments be made via ground shipping, since air transport is exponentially more complex.
  • Consider sending customers packing materials and instructions.
  • Consider sending customers replacement items and skipping the return process altogether. In this case, provide the customer with information on the proper disposal of the items.

In addition to the training aspect, sticking to ground shipping is an important component. Employees won’t know what happened to that battery or that device from the time it got to the customer to the time they are returning it — if it’s damaged, then it’s an even greater risk. And there’s no need to receive it overnight, so there’s no reason to have an untrained person package a battery for air shipment. It just doesn’t pay.

Reverse logistics is a growing issue – especially with the increased use of lithium batteries in technology. Businesses should consider partnering with a DG consultant who can establish logistical processes to ensure compliant shipping, including appropriate hazmat labels and packaging, and provide optimal customer service training and resources.

 

Mike Pagel - High Res
About the Author
Mike Pagel is Senior Consultant for Labelmaster, providing dangerous goods and product regulatory support to customers worldwide through his vast experience and knowledge of hazardous materials regulations and his extensive network of dangerous goods professionals. Pagel may be reached via email at mpagel@labelmaster.com. 

The Smart Enterprise: Leveraging Mobile Data and Analytics to Make Better Business Decisions

By DC Velocity | 08/24/2016 | 7:44 AM

By Samuel Mueller, CEO and co-founder, Scandit

Many supply chain executives are realizing that mobile initiatives are paying off more than they expected. Sure, they might have assumed that mobile solutions would provide greater flexibility and help cut costs—but there’s more to mobility than many think. One key benefit that is often overlooked is the enhanced visibility that mobile technology can provide when you’re evaluating your company’s performance. 

Each mobile device that is deployed throughout an organization is collecting massive amounts of useful data. Every time a worker uses a mobile device, data is collected. For example, details about supply chain performance, inventory trends, sales figures, or asset location. The question is this: are you using that data in beneficial ways or is it just sitting untouched?  

This data can provide unprecedented insight into your operations when it’s used correctly. Not only will it fill in the gaps that you have in your existing knowledge, but it will also help you predict what’s going to happen in the near future and even years down the road. This kind of business intelligence contributes to the bottom line and leads to smarter decision-making and improved efficiency. Let’s take a look at just a few examples.

Manufacturing

When you leverage the business intelligence available from mobile devices to understand your customers’ requirements and have a complete view of your operations, you can closely evaluate your workflows and better predict upcoming orders and inventory needs. The efficiency boost that this provides leads to more efficient picking, increased employee productivity, and improved fulfillment.

Transportation and Logistics

Equipping drivers with mobile devices means that the efficiency of your delivery fleet won’t be a mystery anymore. Smartphones and mobile solutions work together to track assets and facilitate proof of delivery, and since that information is sent to the cloud, you can get real-time data at any given moment. You’ll have visibility into every truck, which will help you to understand shipping trends and optimize routes and load capacity so you can save money on fuel and make your drivers more productive.

At the same time, when you understand where an asset is at any given moment, you can provide up-to-the-minute status updates for your customers so they know exactly where their packages are. This level of visibility improves your customer service and drives loyalty. 

Retail

Getting the right products in the right locations at the right time is the goal of any retailer, and mobile data collected from stock taking and order entry helps you understand inventory and customer demands so that can be possible. The result: increased sales and more efficient distribution of products.

Analyzing data on customer shopping behavior also gives you the opportunity to provide a personalized sales approach for each customer through mobile clienteling so you can increase the likelihood that you’ll make the sale and provide excellent customer service along the way. 

Clearly, by integrating mobility into your operations, you’re not just taking advantage of the latest opportunities—you’re working to create new opportunities for your organization each and every day. Being data-focused will ensure that you stay ahead of your competitors. It’s time to get smart about mobility and find out what detailed data can do for your company and the decisions that you make. 

 

Samuel

Samuel Mueller is the CEO and co-founder of Scandit and is responsible for overall strategic direction, marketing, sales and business development. Prior to Scandit, Samuel was a management consultant and project leader for multinational companies such as Swiss Airlines, Swiss Re and IBM as well as a corporate researcher at the renowned IBM Zurich Research Lab. While at IBM, Samuel was awarded an IBM Research Division Award and a total of three IBM Invention Achievement Awards. He has authored numerous patent applications and has published his research results in leading conferences and journals. Samuel holds a PhD from ETH Zurich and graduated summa cum laude with an MSc in Computer Science and an MA in Financial Economics, both from the University of Zurich, Switzerland.

New Look at Supply Chain Start-Up Landscape

By DC Velocity | 08/16/2016 | 7:53 PM

By Julian Counihan, Red Sea Ventures

Given the enormous size of the entire supply chain market, verticals (and the start-ups within) are mostly discussed in isolation. I thought it would be interesting to examine start-ups in relation to the supply chain as a whole and soon noticed a pattern. Companies fell into one of three buckets: technology enabled, software infrastructure or automation infrastructure — and each bucket seemed loosely tied to particular verticals.

Julianchart

(Click chart to enlarge)

For more detail on the framework, I’ve defined the categories below.

Technology Enabled

Business models that easily integrate into a supply chain network and are generally characterized by a high service component and transactional pricing. Most start-ups in this category are disrupting brokerages, one of the largest verticals within supply chain composed of ~$125Bn in transaction fees. At first glance, start-up offerings can appear similar to incumbents but innovation lies underneath the surface. Automation through software achieves better operating margins which are leveraged for faster growth, better product, higher levels of service or lower pricing. If a start-up company in this category cannot automate labor-intensive processes, it heads down the challenging path of raising significant capital and chasing economies-of-scale. Transactional sales are easier to close than software or hardware sales meaning lower barriers-to-entry and more competition.

Software Infrastructure

Software businesses balance all the levers in a supply chain for optimal utilization. Even without adjustment to physical infrastructure, the opportunity for cost savings through optimization is massive. Software has been a part of supply chain networks since the early stages of the Internet and the major verticals (MES, SCP, TMS, WMS, ERP, etc.) are now dominated by large software companies. While this can mean considerable challenges for start-ups, incumbent platforms carry the baggage of decades-old technical design allowing start-ups to outperform on price or product offering. Alternatively, start-ups can seek to create new markets by digitizing formerly analog processes. This approach has little competition but a more difficult sales hurdle of justifying a new expense line item to the customer. In either case, the sales process can be difficult whether disrupting incumbent platforms or creating new markets. To get around this difficulty and lengthy hardware integration, software start-ups sometimes rely on systems integrators for channel sales.

Automation Infrastructure

Robotics & automation are the holy grail of supply chain technology; the idea of a physical internet with near-zero marginal cost for the transportation of goods. With e-commerce growth and the still unrealized potential for mobile commerce, existing supply chain networks cannot continue to satisfy rising consumer expectations on price and service without robotic automation. To meet this need, start-ups are leveraging advancements in other technology sectors (drones, virtual reality, self-driving cars) for autonomous trucks, last-mile drones and warehouse robotics. This market comes with challenges as physical infrastructure requires massive capital expenditure oftentimes expected to last for over ten years. Risk-averse customers may be unwilling to work with unproven start-ups without significant funding or sector experience on projects of such scale. Even in seamless design situations, cultural obstacles can stall transition from labor to automation; despite measurable benefits, companies may not be ready or willing to make the change.

Gross Oversight?

Thought I forgot about air & rail? Well, the above landscape includes start-ups that I personally track and I’ve yet to encounter more than one start-up operating in air or rail. My best guess is that the high barriers-to-entry (regulation, capital intensity, sales cycle, concentrated market share) make launching a start-up in those industries very difficult.

The supply chain market encompasses more than one trillion dollars and is an exciting, difficult market for start-ups. Innovation in this sector could bring near-zero marginal cost of delivery that will revolutionize where / how we live and what our cities look like. Needless to say, I’m excited to meet any founder willing to take on this challenge.

If you would like to be added to the landscape or have any questions, please shoot me a note at julian@redseaventures.com. Thanks for reading!

 

Julian

 

Julian is a principal with Red Sea Ventures. He started a career in technology at Fortna where he helped develop distribution & supply chain CAD software. After leaving, Julian joined Citigroup where he designed portfolio analysis systems and later transitioned to advising technology companies on M&A and capital market transactions. At Red Sea, Julian focuses on investments in logistics, automation, robotics and other emerging technology sectors.

Distribution Operations – Execution excellence requires data. Do you use it?

By DC Velocity | 07/22/2016 | 6:44 AM

Digital (in) Supply Chain

My colleague (Deepinder Dhuria) and I, while working on a DC process design, stumbled upon a fundamental question — is data the new tenet for execution excellence? Here is our answer.

People, Processes & Technology — that’s the foundation for yesterday’s operations. Strengthen it for tomorrow using “Data.”

If you work in a DC, you are no stranger to lean processes and waste reduction. Process re-engineering is the buzz word in the building.

Don’t always re-engineer your process but adapt to the changes as they happen. Gain insight into external & internal variables that impact your processes. Supply Chain Execution systems of the future (near future!) will be intelligent enough to direct users to perform tasks as the systems adapt to changes in the environment. However, for this, you need data (lots of data).

In this post allow me to make a case for gaining efficiencies in inbound operations using data (commonly available data).

Let’s look at inbound operations — dock scheduling — How often have you seen days with excellent plans resulting in less than normal productivity on the dock? – The four trucks that showed up hours after their scheduled appointment times and caused a processing backlog for the rest of the day!

Managing dock capacity & processing inbound freight efficiently makes appointment scheduling a critical control point in your supply chain. This control point, when managed intelligently, will be a stepping stone for building smarter distribution centers.

Today, at distribution centers, carriers or suppliers are required to schedule appointments to deliver merchandise. Requests for appointments are typically sent via email or phone to the appointment scheduler. Some DCs provide appointment scheduling portals for users to request appointments. Appointments are confirmed to the carriers based on the dock capacity and dock availability.

Current appointment scheduling processes, in my view, have some limitations. One such limitation is that the process considers dock capacity and often leaves out some of the key operational attributes when recommending an appointment time. 

Another limitation is that the appointment scheduling process does not seamlessly synchronize with subsequent inbound processes such as Trailer Check-In and Receiving.

These limitations, largely overlooked by practitioners designing distribution processes, if addressed can significantly increase the efficiency of a distribution center’s inbound operations.

I foresee future appointment scheduling systems adopting an intelligent rule base scheduling process. Such intelligent Appointment scheduling systems will consider rules driven by key operations variables to determine an optimal slot for the inbound delivery. These variables can be used with varying degrees of priority in the appointment slot determination.

Inbound Dock Capacity: Maximum number of trailers that can be processed on the inbound dock by day of the week, month of the year. This capacity is determined by the DC operations team.

SKU Profiling Information:  Characteristics of a SKU such as handling type, weight, cube & NFPA codes/Hazmat classification of the SKU help determine the right slot and the door at which the product can be received.

Equipment Type: Conventional, Mechanized or Automated equipment types that are available to offload and receive the product at the time of appointment.

Floor Space: Space available to offload, process merchandise on the receiving dock to avoid congestion and adhere to safety rules.

Priority Shipments: Shipments that contain inventory to fulfill shorted order demand can be given higher priority over regular shipments for a dock appointment slot.

Appointment Schedule Rule Engine_Vamsi

Carrier: Preferred carriers, retailer owned fleet or 3P contracted fleet carriers can have dedicated appointment slots in addition to the regular slots. Carriers can also be classified in to groups based on score carding metrics that give them access to certain dock slots.

Supplier: Not every supplier is the same. A trusted supplier’s merchandise is mostly accurate on any given Purchase Order. Receiving process from a trusted supplier is often streamlined and requires less contingency planning.

As data is fed from sources (internal & external), the system will adapt and adjust the schedule for the dock seamleslly. The data for these variables should be commonly available to you in your organization.

Let me know your thoughts.

 

Vamsi120x120

Vamsi Madabhushi is a Consulting Manager within North America- Retail Practice at Cognizant Technology Solutions. He is a supply chain process consultant specializing in Distribution Center Operations and Technology.  An expert in JDA Warehouse Management System he has developed SCE solutions for leading US retailers. Vamsi is enthusiastic about using data analytics to build efficient and greener supply chains.

Vamsi holds a MBA from Johns Hopkins University.

 

Deepinder Dhuria is a Senior Consultant within North America- Retail Practice at Cognizant Technology Solutions. He is a supply chain process consultant specializing in Distribution Center Operations and Inventory Optimization.

Deepinder holds a MBA from Great Lakes Institute of Management, India

The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About One-Off Sound-Off

Welcome to "One-Off Sound-Off," a blog page devoted to guest commentary on all things supply chain. This is a space where industry leaders can share their opinions and expertise with the logistics and supply chain community. If you have an article or commentary you'd like to share, please consider sending a guest blog proposal to feedback@dcvelocity.com.



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