As an analyst at ARC Advisory Group, this is normally my busy travel time of the year. Along with my colleagues Steve Banker and Clint Reiser, I am usually attending a number of industry and customer events across the country. However, this year things are very different; coronavirus is pushing these events to online virtual affairs. Yesterday, I attended Day 1 of Blue Yonder ICON and DEVCON, the company’s virtual user conference initially scheduled to be held in Denver, CO. The theme for the conference was “Supply Chains Can Save the World.” Given everything that is going on today, it is a very apt theme.
Blue Yonder CEO Girish Rishi kicked things off with an opening keynote that touched upon the double meaning of how supply chains can save the world. Rishi noted that we are facing two major issues:
- The issue of year: COVID-19
- The issue of the decade: sustainability of our planet
Blue Yonder ICON: COVID-19
When it comes to the issue of the year, Rishi pointed out that when he speaks with customers, they have noted a dynamic shift in their business due to COVID-19. Generally, there was an old way of thinking which has changed dramatically over the past few months. There were two changes that jumped out immediately to me. First, the old way of thinking was that we lived in a buyers’ market. This means that consumers could buy what they wanted, when they wanted, and how they wanted. However, there has been a shift now to a sellers’ market. To this point, according to a Blue Yonder survey of 1,000 consumers, inventory availability now supersedes brand loyalty. The results showed that 89 percent have experienced more out-of-stocks during their most recent grocery shopping experience; 75 percent were more likely to buy the same product from a different retailer if a product was out of stock; and 78 percent were more likely to buy a different brand of a product from the same retailer if their desired brand of that product is out-of-stock.
The second change was the role of e-commerce. According Rishi, Blue Yonder’s customers view of e-commerce has gone from an auxiliary role to a necessity. With less people shopping in stores, e-commerce is growing by leaps and bounds. Rishi identified a number of key innovations that the company is implementing to help with the new nature of global business. Blue Yonder launched its Luminate platform in 2018 and has continued to make enhancements. Rishi announced the company is developing Industry Cloud, which delivers industry specific pre-configured enablement. The Luminate platform runs on Microsoft Azure and Industry Cloud sits on top of the platform. It has specific use cases for different industries, including CPG, High Tech Manufacturing, and Grocery. The portfolio of applications, APIs, and partners are all designed for the specific industry.
Industry Cloud will be available to scale and deploy on one platform. The one I found the most interesting, and most relevant to changing nature of e-commerce, is Luminate Warehouse Tasking. As Rishi pointed out, warehouses see disruptions on a daily and even hourly basis. Luminate Warehouse Tasking overlays on top of the company’s WMS, studies data of disruptions, and builds a machine learning model to autonomously respond to these disruptions. The disruptions could be that a truck is arriving early or late to the warehouse, or a new order comes in that needs to be expedited. This allows for rapid changes to be made and the warehouse to be more agile and efficient.
Another session that spoke to the changing nature of commerce was Plan and Pivot with a Modern, Synchronous Supply Chain Platform. This session featured Desikan Madhavanur, EVP and Chief Product Officer. In his session, Madhavanur highlighted the four themes that are driving the modern supply chain:
- Cognitive Intelligence with Artificial Intelligence / Machine Learning
- Responsive Planning
- Digital Fulfillment
- Synchronous Supply Chain Platform
Digital Fulfillment was the one that jumped out to me. There are four key initiatives for digital fulfillment. The first initiative is real-time inventory management capabilities. This ensures that organizations are able to look at inventory across the entire network with complete accuracy. The second is order orchestration. Order orchestration starts with figuring out what demand is going to show up and use available inventory to ship accordingly. This matches with real-time inventory to optimally fulfill order from the best location, looking at shipping time and cost associated with the shipping location. The third initiative is WMS for digital flow. This is used to serve new use cases for fulfillment, including pop-up distribution centers, smaller scale urban distribution centers, dark stores, or ship from store scenarios. The final initiative is dynamic logistics. This covers how TMS, last mile, and freight marketplaces all play a role to fulfill the digital requirements for e-commerce fulfillment.
Blue Yonder ICON: Sustainability
The second issue that was discussed at length is what Rishi called the issue of the decade: sustainability. Rishi made it clear that Blue Yonder’s response is to reduce the waste, energy, and costs required to power global commerce. A digital transformation strategy and a new way of thinking are key components to a sustainability strategy. Two customer presentations touched on these components: Lenzing AG and Albertsons.
Robert van de Kerkhof, Chief Commercial Officer at Lenzing AG, a producer of fibers for the textile industry, spoke about the importance of sustainability. He dubbed this time as an era of VUCA: volatility, uncertainty, complexity, and ambiguity. We are dealing with trade wars, climate change, economic uncertainty, imbalanced supply and demand, tougher environmental regulations, and natural disasters. This new normal is creating a difficult position for the textile industry but van de Kerkhof identified what needs to come from leadership during this time:
- End to end thinking: the focus is on recycling. Today, they are recycling plastic bottles into fibers, but they need to be able to recycle fibers into fibers.
- Increased commitment to sustainability: corporate goals for reduced carbon emissions and using sustainable energy sources.
- Transparent and responsive supply chain: many of the top 100 brands are pledging for 100 percent sustainable fibers by 2025; however, most brands do not have enough visibility into sourcing. Luminate control tower provides real-time visibility and potential supply chain impacts for accurate decision making.
- Partnering for systematic change: the company is focusing on blockchain to increase transparency with consumers and partnering with technology companies to minimize waste from inefficient order patterns.
The second customer presentation that talked about sustainability was from Rucha Nanavati, GVP, IT at Albertsons. In her session, Nanavati identified two components to the company’s sustainability plans: products and planets. On the product side, Albertsons has made the push for its own line of organic food. The O Organics brand has surpassed $1 billion in sales, featuring 1,500 certified organic items. She also said that 100 percent of its O Organics and Open Nature eggs are cage-free. The company has generated more than $2 million for community development from the sale of its organic brands since 2014.
Nanavati also highlighted sustainability plans for the planet. In the company’s more than 500 stores and warehouses, it has completed more than 800 energy efficient projects. Albertsons has recycled more than 705 million pounds of cardboard and 22 million pounds of plastic film, and 100 percent of its private fleet are EPA SmartWay certified for being cleaner and fuel-efficient. It sees Blue Yonder as a key partner moving forward with its sustainability plans.
Blue Yonder ICON: Day 2
Today kicks Day 2 of the Blue Yonder ICON virtual user conference. The theme around the event is “Supply Chains Can Save the World.” Yesterday, this theme rang true from the opening keynote and throughout, as speakers looked at the new reality of commerce and fulfillment in the age of COVID-19. The event also took a look at the longer-term ramifications that come with a sustainability plan to protect the planet. Between the two issues, Blue Yonder showed just how supply chains really can save the world. Tune in for more coverage in the coming days and weeks.
