Descartes Evolution – Logistics in Motion

Descartes Systems Group held its annual user conference last week in sunny West Palm Beach, FL. This was my first time attending the event, and it did not disappoint. There were over 400 attendees at this year’s conference, making it their biggest yet. The theme of the conference was “Logistics in Motion – Company in Motion.” This was certainly an aptly named theme. Descartes as a company is certainly in motion, with revenue growth over 10%, an increased focus on research and development, employee retention and growth, and an expanded global footprint. The company has also acquired 3 new companies since its last user conference in 2015: Oz Development (for filling logistics white spaces), Bearware (for pooling and tracking cartons), and MK Data (a denied party provider).

There was a heavy emphasis on visibility as well as home delivery at the conference. Descartes CEO Ed Ryan used the phrase “logistics in motion” and highlighted that this is an industry in motion. In his remarks, he pointed out 6 key trends that were driving the industry forward.

• E-commerce was at the top of his list. It’s no secret that e-commerce is changing the way that the global economy works. More and more consumers are relying on e-commerce to purchase goods. This is putting a huge strain on the logistics industry as they look for the most cost efficient ways to handle global, national, and local shipping, as well as last mile deliveries.
• Mobile technology. When most people think of mobile technology, it relates to smart phones and tablets for consumer usage. Things are changing though as truck drivers are able to arm themselves with mobile handhelds to perform their jobs as well. Mobile proof of delivery streamlines what can be a cumbersome and paper-dominated process.
• Home delivery. This was a theme that was prevalent at the event. Consumers now expect to have anything they buy delivered to their door. This makes things difficult for retailers. However, retailers have figured out that they need to be able to deliver items to their customers or Amazon will do it for them. This puts an emphasis on dynamic booking (but I’ll talk about that later).
• Global security concerns. Global security has always been an important area to focus on. However, in the post 9/11 world, there are a lot more regulations regarding how items cross the border, what items cross the border, and where they are going. This puts an added emphasis on proper customs and regulatory compliance.
• Regulatory change. There is simply more compliance factors that shippers need to follow and be aware of these days. From trucker driving time to carrier compliance, changing regulations will have a significant impact on the industry.
• Driver shortage. While e-commerce is a boon for the trucking industry, there is still a shortage of qualified drivers to fill the void. According to estimates, the driver shortage reached 48,000 by the end of 2015, and if the current trend holds, there will be a shortage of 175,000 drivers by 2024. The advent of driverless trucks may help to curtail the shortage, but there is not short term technology fix.

During the conference, I caught two sessions that I found very interesting, and really spoke to the changing nature of home delivery in the retail world. The first was a presentation by Chris Jones from Descartes. His presentation examined the results of a benchmark survey Descartes released on home delivery. The company surveyed its retail customers across North America, Australia, and Europe, with revenues ranging from $1b to $10b. These customers were delivering large format goods. One of the key findings that jumped out to me was why these companies were investing in home delivery. Creating customer value was top of mind, rather than controlling costs. The most cited objectives were improve customer experience, service differentiation, revenue growth, and visibility.

Chris Jones also pointed out that speed of delivery is driven by business model, strategy, and competition, rather than by the product sold. Many of the retailers are focused on delivery choice rather than immediacy. This is where dynamic booking comes into play. But many retailers are confused by whether they have dynamic or static booking capabilities in place. Dynamic booking gives the customer unique delivery choices based on their delivery address, products and services being bought, delivery network capacity, and the orders already in the booking system. Static booking gives the consumer delivery choices based on a fixed number of deliveries in an area or standard lead time. Many of the retailers surveyed thought they had static, when in reality, they had dynamic. This affords them the ability to differentiate their service by giving much tighter 2-hour delivery timeframes, which leads to higher customer satisfaction. They simply didn’t know they had the power to achieve these results.

The final presentation that jumped out at me was by Eric Scholar of the Home Depot. Home delivery is becoming a big business for Home Depot, with $10b of their $88b in revenue coming from delivery. The Home Depot has three distinct delivery methods: direct fulfillment center, appliance network, and store delivery. The store delivery utilizes flatbed trucks (which are used on most deliveries), box trucks, and pick-up trucks.

Home Depot was using an older Descartes tracking software but it was not meeting its customer demands. A large portion of their customers are what they refer to as Pro Customers. These are builders and contractors who need products delivered to a work site. With the old system, Home Depot could only give the contractors a “morning” or “afternoon” delivery window. This left the contractor at a work site paying a crew to stand around while they waited for their delivery. The company needed more visibility at the time of sale. They upgraded to Route Planner and are now able to give either 2 or 4 hour delivery windows at the time of the sale. The software also gives them real-time capacity updates. These changes have improved their Pro Customer business by providing a lot more visibility into the delivery process.

In conclusion, the Descartes Evolution user conference took a long look into the changing nature of the supply chain and logistics industries. The theme of “Logistics in Motion – Company in Motion” was prevalent throughout the sessions. From the evolution of e-commerce and its impact on shipping to the advancement and growing adoption of home delivery, Descartes showcased how their solutions and expertise are geared towards helping their customers succeed. It will certainly be interesting to see if Descartes can continue to evolve their applications to meet the changing needs of today’s global economy, and we’ll check back on how they did at next year’s conference.