uber_ice_creamUber is at it again. With the crowdsourced livery service growing, and facing scrutiny and regulatory issues, the company is branching out again. Much like last year, Uber is offering ice cream day today, July 24th. While hours and prices vary by country, state, or city, the gist is that instead of ordering a ride, you can order ice cream to your door. The promotion is taking place in 252 cities across 57 countries on 6 continents. If you don’t like ice cream, and you live in Singapore or Malaysia, you can purchase Xiaomi’s new Mi Note smartphone, and have an Uber driver deliver it to your house instead. It will be interesting to see what Uber does next…

And now, on to the news.

It was a busy week for Descartes Systems Group, as the company announced two acquisitions. The first announcement came on Monday when it announced the acquisition of MK Data Services LLC. MK Data US-based provider of denied party screening trade data and solutions. In addition to doing denied party screening, the solution has intelligent search functionality.  This means that even if you spell the name of a company slightly wrong, or abbreviate, it will still flag the partner as someone that perhaps you should not do business with.  Denied party screening can do transaction by transaction, or you can do a batch download and clean up your CRM.

Descartes then announced the acquisition of BearWare, Inc. This company is a US-based provider of mobile solutions to improve collaboration between retailers and their logistics service providers. The system scans cartons at each point from the DC to the store. This gives complete granularity into merchandise throughout the entire supply chain. For retailers, this means they have more flexibility over replenishment frequencies, making them more agile. For carriers, routes can be more efficient as they have more data for store replenishments. This acquisition will fit with Descartes’ route planning technology.

leatherThe US leather industry has taken a beating as a result of the West Coast port delays. U.S. hide prices are down over 40% as Chinese tanners and others look elsewhere. Leather makers blame gridlock at West Coast ports, which delayed getting their products to market. Hides packed in cargo containers sat waiting stateside for weeks in February and March as the West Coast dockworkers union negotiated a contract with their employers. The industry was dealt another blow when cargo started moving again in the spring, and U.S. hides flooded the market, driving down prices. This shows the results of the port slowdown is still rippling through multiple industries.

pickupSeattle-based start-up, Fleetzen, is offering to solve a major problem of many shoppers. The company is offering a crowd-sourced service to connect consumers with drivers who own a large SUV or pick-up truck. Founded by former Microsoft employees Nirdesh Mittal and Surendra Shetty, the company insists that people who shop at Costco, Ikea or Home Depot are more likely to make an oversized purchase if they can get it home the same day. The startup plans to expand from Seattle to other West Coast cities over the next year, with a service that promises arrival times within an hour. The cost will be about $50 for loads that take about 30 minutes to deliver.

Macys deliveryMacy’s is expanding same-day delivery to several new US markets. Currently, the company offers same day delivery in eight markets. Macy’s utilizes a partnership with Deliv, a crowd-sourced fleet of drivers that pick-up online orders from stores and deliver them to the customer. The driver behind the move is to keep up with Amazon, and their same-day delivery service which currently operates in 14 markets. Macy’s sees one distinct advantage it has over Amazon – 886 stores to source items from against 50 fulfillment centers.

walmart storeWal-Mart is making changes to approximately 40 of its 24-hour super centers in Philadelphia, New Jersey, and Maryland. Traditionally, these stores have been open day and night. Now, however, the stores will close for at least a few hours every night to allow store associates to re-stock shelves and organize stores in time for peak shopping hours. This move allows the company to get a better idea of actual on-hand inventory as well, which will aid in its omni-channel initiatives. By organizing the store, and re-stocking shelves, online inventory availability will better match actual physical inventory in the store, making for a better customer experience.

And finally, the availability of truckload freight on the spot market remained in a lull during the week ending July 18, reports DAT Solutions. The average rate for vans dropped 2 cents to $1.85 per mile last week as van load availability fell 15%. The van load-to-truck ratio slid to 1.7 loads per truck, meaning there were 1.7 available van loads for every truck posted on the DAT network—a 16% decline. Average spot van rates were down in key markets across much of the country.

That’s it for the news this week. Enjoy the weekend and today’s song of the week, Young Man Blues by The Who.

Categories This Week in News
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deannaRansomIn the volatile and ever changing domestic transportation market in N. America, there is a growing need. What is it? It’s simple; it is a need to efficiently and effectively measure, track and monitor the right metrics to better manage, control and optimize costs. It sounds very simple, but in truth there are complexities.

Complexities such as:

  • What exactly am I spending today?
  • Who exactly are my best carriers and how can I work with them better?
  • How effective is my current transportation strategy and where am I missing the mark?
  • What are the right things to measure to really understand where my transportation strategy is today while getting insight into where it needs to be?

These complexities underscore a mounting concern faced by logistics executives to balance the competing pressures of both cost and service in today’s end to end supply chain. When looking at the pressure around finding this balance, two elements have been highlighted in our conversations with executives as the top two pressures. The first is fuel cost and volatility while under the pressure to compete. The second is a heightened awareness of the general cost and service impact transportation overall has on the business as a whole.

The external pressure of fuel costs and volatility may leave many executives feeling somewhat limited in terms of their ability to control or impact that variant. Combine that feeling with the sensitivity of the general bottom line cost impact to the business and you have a recipe for losing a good night’s sleep. Let’s take a closer look at what to measure and a simple action item that could shift this dynamic at your company.

Here are five key metrics to monitor, benchmark and optimize transportation spend for your business:

  1. Change in baseline freight spend year over year?
  2. What percentage of your carriers are compliant in contract?
  3. What percentage of your carriers are meeting their service level and routing compliance needs?
  4. What is your average time to process and pay a freight invoice?
  5. What percentage of your transportation invoices are currently audited?

By simply beginning to review and monitor these five KPIs, your company will be well on the way to not only optimizing costs, but to better understanding the variable influences and fluctuations of your transportation costs. You will begin to get a clear picture of where the real weaknesses are and which of your carriers are the best partners of your Supply Chain.

However, by utilizing dock scheduling, shippers can reduce carrier wait time and accidents while increasing visibility and optimizing resource planning. I’d like to share a deeper look at the role that dock scheduling plays in not only optimizing costs, but also in automating business. Long waiting times for pick-up and delivery are costing U.S. shippers, carriers and consumers millions of dollars every year. Prior to 2013, truck drivers were allowed to work 82 hours a week. Federal rules have changed reducing these hours to 70 per week. Drivers can complete no more than 14 hours for any shift and may not drive more than 11 hours during the shift. This dynamic really adds to the pressure felt by the executives to balance an already precarious Supply Chain. Dock Scheduling can uncover and enable efficiencies at the dock, enabling carriers, shippers, 3PL’s, and warehouses to coordinate carrier schedules with load and dock availability. By then utilizing multiple communication channels, the driver is allowed to maximize his 70 hours, enabling the required rest period while still providing delivery in a timely manner.

Using the requirements of the specific dock of delivery, Dock Scheduling enables the warehouse or shipper to stage their loads in order of pick-up or delivery while communicating with the carrier company and the specific driver of any loading dock issues. This level of optimization leads to greater efficiencies which produces substantial results.

All parties are able to seamlessly and effectively communicate throughout the entire process. This enhanced communication and visibility enables a faster close loop process of the entire shipping, delivery and reporting process resulting in:

  • Reduced idle times at loading and unloading by 20 – 40% thus lowering fuels costs
  • Increased loading/unloading productivity by 20% +
  • Clarity in the loading-unloading process
  • Decrease of transportation’s overall impact on the business

The key takeaway is to understand what to measure and monitor, understand their influences on your transportation costs and to take action by moving forward with the visibility and automated collaborative insights that Dock Scheduling can bring to your company. Five measures, one step forward with Dock Scheduling and your business will be on the way to experiencing significant spend optimization like TRANSPOREON Group customers, Vinnolit, Swiss Steel and more.

 

Deanna Ransom is a 20 yr. technology veteran with a diverse background in marketing, sales, tele and project management, including the positioning and branding of solutions like ERP, Business Intelligence, Analytics, Predictive Analytics, Big Data, Cloud, Governance, Risk and Compliance, Business Performance Management and Global Trade Services.  She has spent the last 7 years of her career at the #25 Global Brand creating strategies for solution positioning and demand generation across multiple portfolios in addition to serving as the President of the Philadelphia Chapter of the National Association of Professional Women which boasts a membership of over 900+ seasoned and accomplished professional women. Now the TRANSPOREON Group Director of Marketing for N. America, Deanna continues to pioneer innovation and transformation in integrated programming while instilling and building leadership in others as a member of the prestigious John Maxwell Leadership Team.  She holds a Bachelor’s, a Master’s and has a certification in Executive Leadership from Cornell University.

 

The Pacific Rim trade deal, formally known as the Trans Pacific Partnership (TPP), obtained a great deal of media coverage in June as Congress debated legislation aimed at providing the President with “fast-track” approval authority. The intensity surrounding debates and opinions led me to believe that this proposed multi-lateral trade agreement would soon come to fruition. Not even close.

Source: Office of the US Trade Representative

Source: Office of the US Trade Representative

Examining the Details?
Logistics is inexorably linked to international trade. At ARC, we conduct research on logistics processes and technologies that directly support international supply chains. Some of the technologies include global trade management (GTM) systems, transportation management systems (TMS), and supply chain planning and network design tools. Due to the potential impact of this trade deal on these markets, I decided to dig deeper into the details to obtain insight into the imminent changes slated to occur. The scope and structure of the agreement are available on The Office of the US Trade Representative for those interested in viewing the agreement framework. However, obtaining specific details on the proposals is proving to be more difficult. Although details are not yet available, there are some features worth noting.

Reduction of Trade Barriers and Development of International Supply Chains
The TPP participating countries are working to eliminate many of the tariffs placed on each other’s exports. This will serve as an important step toward increased integration of multi-national supply chains through the reduction in government imposed competitive barriers. Examples of current tariffs outlined on USTR.gov include a 27 percent Vietnamese tariff on US made auto parts, a 40 percent tariff on poultry entering Malaysia, and tariffs from a number of countries on US made textiles.  The removal of government duties such as these is likely to make customs management less complex for companies and will also shift the competitive landscape toward those with comparative advantages and increase international trade volumes. The increase in global trade is likely to increase international sourcing, extend production lead times, and increase demand for supply chain visibility solutions that provide insight into upstream supply chain events and status changes.

Rules of Origin
The elimination of tariffs between TPP countries opens the opportunity for non-participating countries to use TPP countries as a transshipment intermediary, or a “pass through” to avoid tariffs and duties. To assure compliance, the TPP countries are looking to develop a common set of rules of origin to determine whether or not a given product or item originates within the TPP region, and therefore qualifies for preferential treatment.  It is questionable how quickly these rules will be developed, as the WTO harmonization program was originally expected to be completed in 1998, but is still ongoing due to unforeseen complexities.  However, specific rules such as the yarn forward rule of origin is being proposed to assure that only properly sourced items will receive the preferential duty treatment. The complexity of the rules of origin and ongoing updates to the agreement will assure that item classification software will remain a critical application for those companies that produce complex products and engage in substantial international trade activities.

Intellectual Property Rights
The World Economic Forum publishes an annual global competitiveness report leveraging its Global Competitiveness Index (GCI). The Index categorizes the most advances economies to be those driven by innovation. It should therefore be no surprise that the US is seeking strong intellectual property rights and protections to be included in the TPP. Patent, copyright, and trademark infringements are major concerns for companies that invest heavily in research and development. Increased protections will help alleviate theft and counterfeiting concerns and encourage additional investment in product innovation. Pharmaceutical IP provisions are specifically mentioned as an area of focus for the US. Also noted is US-Japan bilateral negotiations on motor vehicle trade, IP rights, and phased out US tariffs on Japanese automotive products.

Conclusion
The Trans Pacific Partnership is still a deal in the making. It is a complex, multi-lateral negotiation that is likely to hit a number of speed bumps going forward. Reduction of trade barriers, standardization of processes, and international supply chain integration are all key tenets of the proposed agreement. NAFTA trade flows increased from $290 billion in 1993 to over $1.1 trillion in 2012 (about 7 percent CAGR by my calculation). If NAFTA trade flows are an accurate barometer, then the TPP shows promise to propel pacific trade forward at a rapid pace.

Categories Global Trade, Logistics Trends
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Growing practice of supply chain modeling requires more than just technology smarts

John Ames JrWhat types of supply chain roles are on your company’s career webpage? What skills are important for new hires to possess in order to manage this increasingly critical area of the business? Many of the best practices LLamasoft has advocated related to supply chain design as a repeatable, sustainable process within the business have been highlighted in a recent article, Companies See ‘Massive Shift’ in Search for Supply Chain Talent, Wall Street Journal, May 22nd, 2015, Loretta Chao. Here are a couple of examples.

You can’t hire just anyone to be a supply chain design analyst. In the article Chao states that, “Industry experts say an understanding of technology and an ability to work in a global environment are increasingly important in the supply chain, forcing managers to look for people with a rare mix of specialized skills to manage this crucial aspect of their business.” The large global businesses we work with every day are attesting to the importance of the people and process aspects of developing supply chain design teams. The people side of supply chain design cannot be underestimated, and that means you can’t put just anybody into the role of supply chain analyst. Unlike execution systems, you can’t rely on a software system to simply “give you an answer”.  Leading businesses understand that, with a given set of inputs and distributions there could be a range of outputs that business leaders will review and then decide on the best course of action at the time.

LLamasoft PeopleProceessTech

Analyzing the supply chain requires more than just technology savvy. Developing analytical skills and the ability to understand the growing complexity and interdependencies of cost, service, risk, capacity, tax and demand make the analysis of the end to end supply chain a demanding position and one that needs constant development.

Chao also cites the huge volume of global enterprise data businesses are generating which is both an enabler of more detailed and accurate analyses and a potential pitfall if not managed and understood. Working with some of the world’s most complex supply chains has driven LLamasoft to develop demand classification, inventory optimization and simulation technologies that can incorporate large data sets and include end to end modeling of SKU level flows to understand inventory stocking levels.

Retailers developing an omni-channel distribution strategy are incorporating simulation of digital consumption replenishment processes in order to understand how the continuing shift of digital demand with options of store fulfillment processes can best be designed.

Supply chain design should be a top-down, executive-driven process. Large enterprises are consolidating the formerly independent functions of procurement and logistics and creating broader supply chain executive functions and responsibility. In order to have the greatest impact on the business, supply chain design must be a top-down, executive-driven process with leadership that understand the importance of creating a repeatable design process that is linked to business value and goals. Supply chain design is the third discipline required for supply chain management, sitting alongside planning and execution but requiring different skills, technologies, and processes.

Supply chain leadership should have end-to-end supply chain view for greatest benefit potential. Supply chain design has always been about understanding the end-to-end supply chain and trade-offs among competing metrics: efficiency versus flexibility, cost versus service, local versus global, off-shore versus near-shore, etc. Businesses need to have a team that owns the end-to-end supply chain or they end up creating functional islands and run the risk of missing opportunities for cost savings and efficiency improvements that can only be recognized when viewing the holistic supply chain.

Finally, building a supply chain design center of excellence (COE) has, as one of its driving values, to break the barriers of decisions made in isolation.  Companies that develop these global teams end up developing a more holistic view of the company that can drive out costs and inefficiencies so often seen in departmentalized companies.

Wrapping it up
In short, be aware that it may become more challenging to recruit the right analysts, but don’t hire just anyone who has the right degree. Successful team members should be effective problem solvers—people who think analytically and are natural researchers and implementers of new processes. The growing practice of supply chain design has at its core a view and consideration of the end-to-end supply chain picture, and as such should staff and recruit talent equipped with this holistic perspective as a way to achieve business goals.

 

John Ames is Senior Vice President of Customer Success at LLamasoft. John’s career in supply chain has spanned over 15 years and his expertise spans across numerous technologies including demand planning, inventory optimization, finite capacity scheduling, product lifecycle management, and network design. John has worked with both large and small consultancies to craft partnerships that best serve the end client to deliver best in-class solutions for strategic supply chain analysis. He received his MBA at Northwestern’s JL Kellogg graduate school of management and received his BBA in marketing at Stephen F. Austin State University.

 

Supply chain professionals have said for years that integrated planning and execution is the Holy Grail for market responsiveness and operational efficiency. But often they think of this as integrating demand planning with supply chain execution. However, additional and more immediate benefits can be achieved by integrating transportation planning with warehouse management. This allows both systems to understand the constraints under which each function operates so that plans are not created that cannot be executed within the needed timeframes.

To learn more about the specific benefits of constraint-based transportation planning and warehouse management, Real Results contributor Jim LeTart turned to a panel of industry experts for their insights. Panel members included ARC Advisory Group’s Steve Banker and JDA Software’s Fabrizio Brasca and Tom Kozenski.

TomK

The success of transportation plans and warehouse execution are often limited because the transportation management system (TMS) and warehouse management system (WMS) don’t readily interact with each other. How can companies integrate WMS with TMS to gain full visibility into constraints in both areas?

Banker: A yard management system (YMS), which includes the dock door scheduling functionality, has historically been the system most helpful in coordinating the activities of both the transportation and warehousing departments. In some suppliers’ systems, YMS was part of the WMS; in other suppliers’ systems, it was part of the TMS. Having managers from both departments have visibility into dock door schedules, however, is really just a starting point. Better visibility would occur if both transportation and warehousing system users can get the appropriate alerts from each other’s systems. For a warehouse manager, this might mean that the TMS sends an alert when a truck is delayed and will not arrive at a dock at the expected time. For a transportation manager, it might mean being alerted that inventory that was thought to be ready to ship, is not ready — perhaps because of spoilage or breakage. The visibility is improved if there is common master data and user interfaces.

Kozenski: I agree with Steve that it needs to be more of an iterative process than just visibility into constraints. I like to refer to it as “continuous optimization.” Best-laid plans tend to change after the initial plans are laid — carriers fail to arrive, inventory gets damaged, orders change or are cancelled. The TMS and WMS need to optimize and re-optimize continuously through the day or work shift in order to minimize both labor and freight costs.

Brasca: Let me put my “idealist” hat on and position a different perspective. I think the challenge that needs to be addressed is this isolated view of these currently very individual domains. We use terms like integration, visibility and sharing, which implies the bridging of isolated capabilities that by definition yields latency. The way I like to frame the thinking here is there needs to be a greater tangible adoption of a unified view of logistics as a whole. When I plan my transportation, which should happen at a network level to maximize value and scale, I need to do more than just see what is happening at the warehouses, I need to think like one entity. Downstream constructs such as dock scheduling and facility flow path need to be considered upstream, eliminating the latency created by simple integration.

Banker: Going forward I think we will also see the use of social media type functionality built into the TMS, WMS and other complementary applications. Private online chat groups — including warehouse managers, transportation planners, other internal departments and customer managers as well — will interact to solve, or at least mitigate, unexpected shipment problems. For example, imagine that there is a problem with a shipment to a company’s most important customer. To work on this problem, it might be helpful to have a private chat group that includes the company’s pertinent supply chain personnel, but also the account manager for the customer, and a supply chain manager at the customer site.

How can companies optimize both WMS and TMS to leverage the strengths of each? What’s the right approach?

Kozenski: Both the WMS and TMS applications do a great job of optimizing within each of their domains. They are both well-equipped to deal with changes that can (and will!) occur. They just need to know about the change. Companies should look at their own business and determine if they have to deal with changes to fulfillment plans on a regular basis. If they do, they are likely making manual decisions on how to deal with them. That would make me believe that they are not making the optimal decision that will lower the overall costs and maintain on-time deliveries.

Banker: I think the answer is probably different for different supply chains. In general, however, there is more money spent on transportation than on warehousing. So optimal transportation plans are typically developed first and the warehouse fulfillment activities are scheduled to support those moves. The sooner a warehouse manager knows the transportation plans, the better they can plan the exact amount of warehouse labor that will be needed.

As Tom suggests, there are joint constraints that do need to be understood for optimality. These include how long it takes to load a certain size truck at a certain dock door (loading times can be different based upon equipment) and how much inventory can be staged near the dock door.

Brasca: Steve is correct in that it will clearly vary by type of supply chain, but the general school of thought that I have been advocating is — like we do with many things — to look at the problem from the top down. Transportation, if looked at from a standpoint of maximizing value and scale, is fundamentally a network problem, whereas warehousing is typically location-centric. Therefore, it stands to reason that transportation planning should come first and flow into warehouse execution. There are two points, though, that I would challenge readers to consider: first, to minimize latency, integration is not enough. The transportation solution needs to truly think like a warehouse. Second, there is no reason these processes have to be serial. There are activities in the warehouse such as labor planning that can occur upon initial visibility to order demand as opposed to waiting for the specifically built loads to appear from transportation.

Nothing ever stays the same, so how can companies achieve greater agility and responsiveness with iterative planning and execution?

Kozenski: I think the business value of integrating planning and execution is that it allows all parts of the business to agree that the plans are achievable. A forecast that tries to ship more product than a warehouse can handle, or requires a fleet larger than the trailer assets a company has available to it, is not a viable forecast. This is where an understanding of the warehouse and transportation constraints is important. Planning needs to take these constraints into account. These constraints are not static bits of data. They dynamically change for each day of the month. Therefore, the planning application needs to check and verify with the TMS and WMS for the impact it has on each day or shift.

Banker: I would add that for the warehouse manager, a cockpit where he can see the status of wave completion supported by the ability to easily move people to tasks that have suddenly become urgent is another key function needed. And in TMS, the ability to continually re-optimize, but re-optimize in a way that is not too nervous (not like starting from scratch but keeping most legs in place), is the critical functionality.

Brasca: I very much agree with my peers here. Tom stated it well, that these processes need to be extended upstream to an organization’s forecasting and planning processes. And as per Steve, iterative planning is great but it cannot be “twitchy” and must always be focused on what is practical.

What are the benefits of integrated warehousing and transportation to the top and bottom line?

Kozenski: The benefits are far-reaching. The top line is improved because of the customer satisfaction provided through real-time flexibility of handling order changes and achieving optimal performance metrics such as on-time delivery, perfect order, order fill rates, increased sales and on-shelf availability.

The bottom-line benefits can include lower freight costs, lower labor costs, improved throughput, better utilization of capital equipment (such as fleet assets and warehouse forklifts), and lower overtime costs.

Brasca: I think Tom hit all the key metrics, but let me add an additional perspective. Supply chains, particularly those affected by the growth in consumer-driven demand, such as retail and consumer goods, need to become more agile. Agility, however, can be expensive. I think the approach that we are advocating here creates that notion of agility while mitigating and maybe even reducing overall supply chain costs.

Banker: I agree. The main savings would be from reduced freight spend and the labor savings in the warehouse.

This article originally ran in the Jan. 2014 Real Results magazine put out by JDA.  It has been rerun with JDA’s permission.  Looking back at this, I think Fab had the best answers.