This Week in Logistics News (December 12-16, 2011)

Is there a friend or a family member you haven’t spoken to or gotten together with in a long time? Pick up the phone and call them this weekend. I caught up with an old college friend yesterday evening and it was the highlight of my week. And a reminder, especially as the holidays approach, that spending time with people we care about, recalling cherished memories or creating new ones together, is always a treasured gift.

Now, this week’s news…

Strong demand for FedEx Home Delivery and FedEx SmartPost services contributed to the company’s Q2FY12 results. FedEx’s total revenues increased 10 percent and net income was up 76 percent compared to the same period a year ago. Revenues for FedEx Freight increased 9 percent in the quarter compared to Q2FY11 and “less-than-truckload (LTL) yield increased 8% primarily due to higher LTL fuel surcharges and ongoing yield management actions, which reduced LTL average daily shipments by 3%.” FedEx also reconfirmed its earnings forecast of $6.25 to $6.75 per diluted share for fiscal 2012.

The Freight Transportation Services Index (TSI) declined 0.2 percent in October compared to September’s level, but “for the first 10 months of 2011, freight shipments measured by the index were up 2.3 percent.” Compared to previous years, “October 2011 freight shipments rose 4.0 percent from October 2010 and 12.4 percent from October 2009, [but] they remain below the all-time high for the month of October (110.4) reached in both 2004 and 2005.”

Earlier this week, in my predictions for 2012, I said that traditional enterprise and supply chain software vendors will increase their investments in cloud computing and software-as-a-service (SaaS)  next year. Allow me to add a corollary: SaaS vendors will respond by expanding the scope of their applications, either organically or via acquisitions, to provide customers with more “end-to-end” solutions. Salesforce.com’s acquisition of Rypple, which the company announced yesterday, is a good example.

I also predicted that social media tools will play a bigger role in supply chain and logistics processes next year, and I pointed to enterprise and supply chain software vendors embedding social media capabilities in their solutions as a driving force. The partnership announced this week between SAP and NetBase is further evidence of this trend. As stated in the press release, “SAP will resell NetBase’s solutions as the SAP® Social Media Analytics application…[The application] processes billions of social media posts across millions of sites globally to extract structured insights and metrics that enterprises can use to quickly discover market needs and trends, quantify perceptions about products, services and companies, and effectively track their success in the market.”

Speaking of SAP, Steve Banker attended the SAP Influencer Summit 2011 in Boston this week and here is his report:

A key theme of the event was how SAP’s solution architecture is evolving. The company sees four key layers to its future architecture:

 

  1. The core ERP layer including Business Intelligence
  2. Mobility
  3. The Cloud
  4. In-Memory solutions, which it calls SAP HANA.

 

At the core ERP layer, a key takeaway is that SAP is moving to quarterly enhancement packs so that customers don’t have to go through as many costly upgrades. SAP has also introduced more rapid deployment solutions with implementations that take 16 weeks on average. For example, if a customer has already implemented SAP Warehouse Management and now wants to take that data and implement the more advanced Extended Warehouse Management, SAP has developed a rapid deployment solution to help accelerate that process.

 

In Mobility, SAP announced that it has developed 30+ mobility applications and its partners have built another 200 or so mobile applications. Part of SAP’s strategy is to provide partners with a platform that makes these applications easy to build. These applications come pre-integrated to SAP’s core system of record.

 

At the Cloud layer, SAP wanted to make it clear that it can provide application, collaboration, and platform services. But my key takeaway was how critical the acquisition of Crossgate is to its future development plans. SAP’s vision is to use the Crossgate solution not just to do the types of things other EDI network solutions do – exchange Purchase Orders, tenders, Advance Ship Notices, etc. – but to build what the company hopes will turn into the most important network in existence for business-to-business collaboration. By virtue of buying one of SAP’s software solutions, customers would automatically be connected to many of their trading partners.

 

Finally, the In-Memory solutions are designed to handle big data volumes and they allow for high-speed analytics. The key idea is that ERP solutions are generating massive and ever- growing volumes of data and performing timely analysis of that data is key to unlocking value.  This architecture can also solve really complex planning problems, like promotion planning at the store level, that were very difficult to solve in the past.

Steve also shared his perspective on IBM’s announcement this week:

IBM has also been on an acquisition spree. The company announced last week its intention to buy DemandTec, a leading price optimization solution. Yesterday, IBM announced its plan to buy Emptoris, a leading procurement solution provider. Just as SAP is increasing its focus on networks and B2B collaboration, so is IBM. These two new acquisitions are meant to build on IBM’s acquisition of Sterling Commerce last year, a leading B2B integration solution set, in what the company calls its Smarter Commerce initiative. IBM specifically said it doesn’t want to be just in the business of moving messages around; its goal is to embed analytics into inherently collaborative processes and allow fact-based decisions.

Well, that’s all the time and space for today. Have a great weekend!

(Note: SAP and IBM are ARC clients).