Logistics Viewpoints

A complete analysis of logistics trends, technologies, and services

Modern Business Intelligence for E-commerce Shipping

Business Intelligence | By •

Companies with strong e-commerce strategies are reaping the rewards of rapid growth. Globally, we are nearing one in four human online purchasers, and Amazon commands 14% of these global online sales. Within the US, they dominate with +50% market share of online sales. The ‘Zon’s’ ability to predict and deliver on clients’ expectations for same day, workplace, Sunday, pick-up and locker delivery options (beyond traditional carrier options) while also reducing transportation costs has been a force of industry change. The “Amazon effect” has heightened delivery service expectations of consumers around the world, and carriers have taken notice – now offering myriad same-day delivery options as well.

Meanwhile, Shopify made history in 2018 by surpassing $1 billion in revenues, with more than 800,000 global businesses using its platform – further testament to the e-commerce boom. And adding yet another dimension, static and mobile 3D Print and Ship (or deliver) operations of e-commerce products is projected to grow as well.

The writing is on the wall: to survive and compete, organizations need to properly execute their e-commerce shipping strategy.

To succeed, the use of Business Intelligence is critical. While larger organizations are already disciplined with data strategies and use of business intelligence, small organizations may be so focused on buzz words like ‘big data’ that they have overlooked the importance of ‘right data.’ Management may not fully realize the value of business intelligence, or they may feel overwhelmed when they understand they lack key informational insights or have data trapped in silos. Regardless of organization size or maturity, however, the importance of business intelligence cannot be ignored.

Key Benefits of Business Intelligence in Ecommerce Shipping

Identifying carrier delivery performance improvements and cost saving opportunities provide the incentive for businesses to gather, store and interpret data to assist with decision making and gain competitive advantage. In traditional financial audit processes, this can track back to identifying and adjusting improperly invoiced items relating to contractual rates, accessories, guaranteed service rebates, claims management, address correction validations or even manifested but not shipped transactions.

Optimization analysis can identify even more significant cost savings. Using Business Intelligence to model and compare selected carrier services against actual carrier performance to find routing alternatives with lower cost implications and/or faster delivery times is a starting point. When these results are uncovered, they may require a corresponding behavioral change within the retailer organization. A simple example is use of a premium overnight expedited service level for a carrier, when the lower cost ground option offers the same delivery time to the end customer at a much lower cost. Use of business intelligence can increase confidence levels when making this decision. Carton consolidation opportunities within the warehouse and fulfillment workflow may also arise from an optimization analysis.

More advanced optimization strategies could emerge if analysis includes static or fluid zone ship opportunities affected by seasonal spikes or more effective ways to position facilities and inventory around the globe. These analyses are more complex. However, the overriding principles of near immediate delivery options to satisfy consumers’ need for instant gratification at as low a delivery price as possible are maintained.

In total: the results of each – let alone all – of these analyses can be profound and significant from a cost savings perspective.

Prepare for 3D Print and Ship market growth. Manufacturers and retailers who focus on business intelligence now will be prepared for new, and growing, distribution models tomorrow such as 3D Print and Ship, one of the trends discussed in our eBook, Omnichannel Merchants Shift Closer to the Consumer. Take, for example, a dishwasher manufacturer. Over time, small components within the dishwasher may fail. If the company expects the widget will fail 5% of the time, business intelligence can provide insight into inventory holding costs for this product, or as an alternative, utilize a 3D printer to print and ship to a customer on demand from strategic locations closer to the end customer.

Silos of Shipping Data

Often, smaller organizations operate with data in silos, or worse, ignore data access and leave data outside of their control in the external environment. Traditional data sources relating to shipping business intelligence traditionally begin with manifested shipping data. From here, visibility or event management feeds are available to manage the transaction within carrier networks. Control Towers manage these feeds and should generate ticket events to address problems proactively as they are identified from these carrier status feeds. On average, in North America, there are nine different status messages per small parcel transaction. Finally, the financial data from carrier invoicing is required to effectively close the loop on what has occurred with the transaction from the point of label generation through the carrier network to delivery. Exceptions are segregated and handled quickly to ideally maintain preferred carrier status. Carrier invoice adjustment responses further generate financial data through payment cycle acknowledgements, enabling reliable accrual modelling. Some more progressive companies will align line item details down to the SKU-level within this analysis to attain more detailed business intelligence validating budgeted product costing models and trend analysis results.

Use of this information is also vital for planning/procurement. When organizations understand where their customers are located, along with order characteristics, frequencies and trends, they can properly manage the carrier RFP process. Evaluating carrier proposals against predicted future transactions or historical data sampling reveals the cost impacts of working with various carriers. Focus can then be applied within these contract negotiations to identify relevant areas of negotiation specific to their environments. The days of carriers telling shippers what they have done and how they have performed should be long gone with proper business intelligence to facilitate carrier scorecards. Retailers leveraging manifest, visibility and financial data with business intelligence can now truly address business transportation problems openly with carriers to mutual benefit.

Data Connections Produce Valuable Insights

When businesses connect the data from shipping execution, visibility and finance, and then apply business intelligence, complex decisions and tasks get simpler. Opportunities to significantly shift, reduce and manage global transportation costs and monitor KPIs – without sacrificing service – are just a few of the most basic, immediate and impactful ways interconnectedness pays off for shippers.

And the customer service benefits of business intelligence can pay off in spades. As global consumers’ sophistication and expectations evolve, so too must the information that supports the decisions to facilitate the delivery of their orders. The players that leverage business intelligence to achieve on-time delivery in full can win the e-commerce consumer loyalty game and the repeat purchase revenue that comes with it.

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Based in Toronto, Mike Eisner is vice president, business intelligence at Logistyx Technologies, the leader in Transportation Management for parcels, where he oversees a team responsible for helping global businesses create value and leverage strategic information with BI within their supply chain operations

Business Intelligence Can Deliver Positive Supply Chain and Business Results, Using Information Already Being Captured Through Existing Processes

Business Intelligence | By •

Karen Sage Gives Sage Advice on Supply Chain Business IntelligenceLogistics professionals have access to tons of data. However, it may be challenging to get the exact information needed quickly so that it becomes actionable, driving strategic decision making, rather than a historical review of tactical actions and transactions. To seek a better understanding of daily transportation operations, an important first step is implementing a supply chain business intelligence (BI) solution that offers greater insight and helps drive strategic, proactive decision making.

If a company currently uses a Transportation Management System (TMS), it is likely that this software alone is filled with an abundance of data that can be used to answer even the most complex logistics questions. The key is unlocking that reservoir of data, analyzing it, organizing it, and delivering the transportation intelligence needed to the appropriate stakeholders.

The most effective BI solutions can harness the torrent of data flowing through a TMS and transform that data into usable knowledge and insights that can shine a spotlight on areas for improvement, monitor key performance indicators, and answer the most critical transportation questions. Logistics professionals who adopt a BI solution no longer have to extract data, pull it into a spreadsheet, and sort through it manually.

Some of the common questions that a good BI system should address for transportation are:

  1. What is the average transportation cost for shipping item Y via LTL for Customer X, year-to-date?
  2. When I consolidate shipping orders onto a single truck, what is the average cost for moves originating from Mexico? (In USD cost, not Peso.)
  3. What does my total 2017 TL freight spend look like, by month, for Customer X, vs. the same period one year ago?
  4. How many times have I had a tender rejected from Carrier X in 2017, and for what reason?
  5. How many containers did I ship to Europe destinations last month?
  6. What is my average per-route margin over the last six months when I optimized through pool point P and used Carrier X?

Logistics professionals may want to take a moment to consider how they currently access the information to address these questions – the process, accuracy, and speed of obtaining the answers. Whether a company has invested in a BI solution or is considering one, it may be enlightening to challenge potential or current software providers to answer these questions and deliver the answers in a way that allows immediate action.

The truth is that business intelligence for transportation management is no longer a “nice to have.” In order to keep up with the demands of modern commerce and take control of logistics operations, business intelligence is a “must have.” Now is the time for logistics professionals to make a move to adopt a solution that generates more value from the data they already have, accelerates insights, and reduces costs of data collection and analysis. It is a simple concept that can drive significant improvements in performance – use the information already captured in the most meaningful way possible, leveraging technology to do the “heavy lifting.”

Karen Sage is MercuryGate’s Chief Marketing Officer (CMO) responsible for the company’s global marketing, communications, sales enablement, and go-to-market efforts. She is a veteran with 20+ years of experience in business-to-business marketing and communications helping several industry leaders launch disruptive new categories, accelerate revenue growth, build leadership brands, and establish marketing organizations that scale globally. She comes to MercuryGate most recently from the spend management solution provider, SciQuest. Prior to SciQuest, she was at CA Technologies where she served as vice president of marketing leading rapid growth initiatives. Her experiences leading growth also include multiple leadership roles during a 15-year stint at Cisco. Karen started her career having invented the NETSYS Performance tools at NETSYS Technologies, Inc., which was acquired by Cisco in 1996.

Business Intelligence in 3PL: Mining the Value of Data

Business Intelligence | By •

joepic2-1In today’s business world, “information” is a renewable resource and virtually a product in itself. Business intelligence technology enables businesses to capture historical, current and predictive views of their operations, incorporating such functions as reporting, real-time analytics, data and process mining, performance management, predictive analytics, and more. Thus, information in its various forms and locations possesses genuine inherent value.

In the real world of warehousing, the availability of detailed, up-to-the minute information on virtually every item in the operators’ custody, from inbound dock to delivery site, leads to greater efficiency in every area it touches. Logic would offer that greater profitability ensues.

Three areas of 3PL operations seem to be most benefitted through savings opportunities identified through business intelligence solutions: labor, inventory, and analytics.

In the first case, business intelligence tools can help determine the best use of the workforce, monitoring its activity in order to assure maximum effective deployment. The result: potentially major jumps in efficiency, dramatic reductions in downtime, and healthy increases in productivity and billable labor.

In terms of inventory management, the metrics obtainable through business intelligence can stem inventory inaccuracies that would have resulted in thousands of dollars in annual losses, while also reducing write-offs.

Analytics through business intelligence tools can also accelerate the availability of information, as well as provide the optimal means of presentation relative to the type of user. One such example is the tracking of real-time status of work load by room or warehouse areas; supervisors can leverage real-time data to re-assign resources to where they are needed in order to balance workloads and meet shipping times. A well-conceived business intelligence tool can locate and report on a single item within seconds and a couple of clicks.

Extending the Value
The value of business intelligence tools is definitely not confined to the product storage areas.

With automatically analyzed information available in a dashboard presentation, users – whether in the office or on the warehouse floor – can view the results of their queries/searches in a variety of selectable formats, choosing the presentation based on its usefulness for a given purpose. Examples:

  • Status checks can help identify operational choke points, such as if/when/where an order has been held up too long; if carrier wait-times are too long; and/or if certain employees have been inactive for too long.
  • Order fulfillment dashboards can monitor orders as they progress through the picking, staging and loading processes, while also identifying problem areas in case of stalled processes.
  • Supervisors walking the floor with handheld devices can both encourage team performance and, at the same time, help assure efficient dock-side activity. Office and operations management are able to monitor key metrics in real-time, as well as track budget projections against actual performance data.
  • Customer service personnel can call up business intelligence information to assure that service levels are being maintained or, if not, institute measures to restore them.
  • And beyond the warehouse walls, sales representatives in the field can access mined and interpreted data via mobile devices in order to provide their customers with detailed information on such matters as order fill rates, on-time shipments, sales and order volumes, inventory turnover, and more.

Thus, well-designed business intelligence tools not only can assemble and process both structured and unstructured information from sources across the logistics enterprise, but can deliver it “intelligently” – that is, optimized for the person(s) consuming it. These might include frontline operators (warehouse and clerical personnel), front line management (supervisors and managers), and executives.

The Power of Necessity
Chris Brennan, Director of Innovation at Halls Warehouse Corp., South Plainfield N.J., deals with all of these issues as he helps manage the information environment for the company’s eight facilities. Moreover, as president of the HighJump 3PL User Group, he strives to foster collective industry efforts to cope with the trends and issues of the information age as it applies to warehousing and distribution.

“Even as little as 25 years ago, business intelligence was a completely different art,” Brennan has noted. “The tools of the trade were essentially networks of relationships through which members kept each other apprised of trends and happenings. Still today, the power of mutual benefit drives information flow, but now the enormous volume of data available to provide intelligence and drive decision making forces the question: Where do I begin?”

Brennan has taken a leading role in answering his own question, drawing on the experience and insights of peers as well as the support of HighJump’s Enterprise 3PL division to bring Big Data down to size:

“Business intelligence isn’t just about gathering the data,” he noted, “it’s about getting a group of people with varying levels of background and comfort to understand the data and act upon it. Some managers can glance at a dashboard and glean everything they need to know, but others may recoil at a large amount of data. An ideal BI solution has to relay information to a diverse group of people and present challenges for them to think through.”

Joe Couto is the Chief Operating Officer of the HighJump Logistics Group, which is comprised of DSD, Transportation and 3PL. The HighJump Logistics business unit is responsible for selling, implementing and supporting the software solutions which are in use by over 600 organizations in 17 countries. Joe has over 25 years of 3PL software industry experience and has been instrumental in leading the Logistics group to meet the rapid growth plans for HighJump. Joe is a recognized thought leader in the area of 3PL software including the unique requirements of “concurrent client logistics”.

Leading Supply Chain Software Vendors Differentiate Their Offerings with Analytics

Business Intelligence | By •

Earlier this month I attended the SAPinsider meeting in Las Vegas. SAP was actively promoting its HANA solutions, which uses in-process memory primarily for providing real-time analytics. HANA is particularly well suited to analyzing extremely large amounts of data very quickly. SAP says that HANA can analyze data hundreds of times faster than traditional approaches to business intelligence.

The keynote address was given by Steve Lucus, the EVP and General Manager for SAP Database and Technologies. Steve gave the following example of how companies can use HANA in a supply chain risk management scenario. He asked us to imagine an automotive manufacturer with many large and small suppliers. Then imagine that the automaker has one key supplier of a critical part, such as a fuel injection system. What if a natural disaster occurs and that supplier’s primary factory is knocked out? For the automaker, quick analysis become critical. Many questions need to be answered quickly. How many fuel injection parts are on hand? Who else could they buy from? How long would it take to get those parts? What are the cost implications of sourcing from new suppliers when fully considering tariff, tax, and shipping costs? Using traditional systems, it could take weeks to fully answer these questions. Business suites leveraging HANA can greatly speed this kind of analysis.

SAP now offers HANA solution for Sales and Operations Planning and Demand Signal Management. SAP also announced the acquisition of SmartOps, which has been developing a short term forecasting engine based on the use of downstream data. The SmartOps solution, when used with the Demand Signal Management solution, becomes very synergistic.

Finally, SAP has introduced a Predictive Analytics solution based upon HANA. This solution can be used in several functional areas including supply chain management. It could, for example, be used to make out of stock predictions based upon demand spikes, changing lead times, or other events.

But SAP is not the only software vendor seeking to differentiate its offerings based on analytic capabilities. Infor and JDA Software are also worth mentioning.

Infor has blended together its user interface, SCOR metrics, in-line analytics, and opt-in social communities in a very appealing manner. The offering is very difficult to explain, but its excellence is immediately apparent when you see it demonstrated. Infor’s goal is to provide a greatly enhanced user experience. Interestingly, while business intelligence development is a component of the enhanced user experience, the usability is based upon Infor’s ION solution, which is primarily a middleware solution.

Meanwhile, JDA has built “Process Playbooks” that help to close the gap between planning and execution processes. Perhaps the most important process in SCM is sales & operations planning (S&OP). While plans are great, they have limited value if there are not feedback loops that tell executives when events are diverging from a plan and what changes must be made.

The S&OP process is built around building a monthly plan. The appropriate feedback loop would be detecting plan divergence during the month, having an escalation process in place to alert key executives, creating new plans quickly, and, finally, executing those plans mid-month.

The JDA S&OP dashboard has a deviation dashboard that includes the number of deviations by category — for example, financial plan deviations, over or underutilized resources, etc. The dashboard also categorizes deviations as being high, medium, or low in severity. Then in true dashboard fashion, a user can drill into a deviation, such as a financial shortfall, and see which items or customers are causing the shortfall.

But this is where JDA’s solution gets interesting. JDA allows planners to add a root cause reason code with preset reason tabs (e.g., “market below plan”) for why a particular item is below plan. There is also a comment section where planners can select predefined comments such as “Needs immediate attention.”

The solution also has resolution levers for this particular type of deviation! In this case, the levers are “reduce price” or “run promotion.” The solution then has the ability to escalate the problem to teams or executives for sign off; the ability to examine the new plan before executing it; the ability to push a button and update the plan; and, finally, the ability to communicate action items to the affected individuals.

In short, supply chain software vendors are doing interesting things with analytics, and they are using analytics to differentiate their solutions in the market. Because of space limitations, I’ve elected to briefly write about three vendors that I believe are doing particularly interesting work in the analytics area.

(Note: JDA Software and SAP are Logistics Viewpoints sponsors)

Kraft Foods Implements Transportation Business Intelligence Solution

Business Intelligence | By •

Last August, my colleague Clint Reiser attended the Oracle Transportation Management Special Interest Group (OTM SIG) in Philadelphia, an independently run conference that drew almost 400 attendees, predominantly Oracle Transportation Management (OTM) users.

Clint wrote an ARCview report about this trip that contained three short case studies, including an interesting overview of Kraft Foods’ implementation of OTM’s transportation-specific business intelligence (BI) tool. Here is what Clint wrote:

Mark Kissell of Kraft Foods and Brian Fish of Chainalytics discussed Kraft’s recent implementation and use of Oracle Fusion Transportation Intelligence (FTI). Kraft Foods manages a complex supply chain that consists of more than 900,000 annual shipments and over 100,000 lane pairings with total annual transportation spend of approximately $1 billion. The company went live with OTM in 2006, which is currently used to manage transportation in the US, Canada, Russia, and Brazil. Kraft previously utilized its ERP business intelligence solution for transportation management, but found it difficult to transfer data from OTM into this particular BI product. The company looked to obtain a reporting solution for widespread use within the transportation function that would inform its users of exceptions and issues to help improve overall decision-making within the transportation function. Kraft purchased and implemented FTI to meet these requirements.

Mark and Brian provided details on the implementation and shared their lessons learned from the process. They stated that establishing a base structure for reporting was both a critical step in the process and an area that is often overlooked. The development of a base structure included defining base cost, volume, and service calculations; the upfront development of the reporting drill-down structure; and the decision to define an individual owner within the organization for every transportation move category. This upfront planning provided a robust foundation for the report and dashboard development process. The drill-down structure was developed with three main structural levels: executive, management, and execution. This structure allowed the appropriate level of information aggregation and detailed breakdown throughout Kraft Transportation. The routing guide dashboard was created with 84 reports. These included the name of the individual lane owner on the bottom of each report to facilitate accountability for the lane specific business processes within the organization. Additionally, the company standardized report formatting to improve usability and minimize confusion. The product’s capabilities and structural design have provided increased visibility, decision-making improvements, and a reduction in data mining requirements in Kraft Transportation.

Analytics is a very hot topic in the industry today, which is why we’ll be writing more about supply chain analytics, especially analytics that support logistics process, in the weeks ahead.

4 Important Factors to Consider When Evaluating 3PL Partners

Logistics Service Providers | By •

I often get emails from logistics executives looking for help and advice on selecting a 3PL partner. A couple of weeks ago, for example, I received an email from someone asking if I had updated a framework I had developed several years ago to help companies evaluate 3PLs. The answer was no, but this person’s email got the wheels in my head turning: What are the most important factors to consider when evaluating and selecting a 3PL partner?

I discussed this question last week on my talk show Talking Logistics, which you can watch by clicking below. I won’t repeat everything I talked about here, but I want to focus on the four evaluation factors I highlighted that go beyond the basics.

3PL_Factors_Spreecast_Screenshot

First let me tell you how I came up with these factors. I started by looking at the most common areas where 3PLs fall short of customer expectations. The number one complaint of customers — by a wide margin — is that their 3PLs are not proactive enough in identifying continuous improvement opportunities (see my October 2011 posting “I Wish My 3PL Was More Proactive”). Another top complaint is that 3PLs are slow to implement process changes and other requests.

I then asked myself, are there things you can look for when evaluating prospective 3PL partners that would minimize or eliminate the risk of experiencing these issues? And that’s how I came up with these four evaluation factors:

1. Alignment of Continuous Improvement Cultures. I’ve had the opportunity to research many successful 3PL-customer relationships and the common thread across them all is that both parties have strong continuous improvement cultures, usually grounded in Lean/Six Sigma principles — a common language that immediately creates a bonding point. It’s like meeting someone for the first time and realizing that you both grew up in the same neighborhood or went to the same university. Sharing the same experience and level of commitment to continuous improvement creates a strong foundation to build a lasting relationship.

And you can gauge that level of commitment by, among other things, the number of continuous improvement projects the 3PL initiates and completes each year; the investments it makes in formalized training programs; the number of Six Sigma Black Belts the 3PL has across the organization; and the number of awards it receives from customers related to successful continuous improvement projects. Simply put, if continuous improvement is not part of a 3PL’s DNA, then you are setting yourself up for disappointment down the road.

2. Modern IT Platform with a Focus on Innovation. Why does it take a 3PL so long to make a process change or enable a new process in response to a customer request? The answer, in most cases, is that they are burdened with an inflexible and outdated IT infrastructure. If the majority of a 3PL’s systems were developed in the 90s (or earlier), or they are written in outdated and proprietary languages, then you are putting yourself at risk of experiencing integration issues, and more importantly, the 3PL will not be able to keep pace with your rapidly changing supply chain and logistics requirements. In short, make sure that a 3PL’s commitment to continuous improvement also applies to its IT systems, that the company is keeping pace with the rapid and ongoing changes occurring in technology, and that its IT strategy and roadmap align with yours.

It’s also important to look at the number of IT resources a 3PL has and how much the company invests in technology annually, as a percent of net revenues. But don’t be fooled by the overall dollar investment. Many 3PLs spend a lot of money on IT annually, but the vast majority goes to maintaining existing systems. And the older and more outdated the systems are, the more money they cost to maintain. Therefore, what you really want to know is how much of a 3PL’s annual IT budget goes toward innovation-related projects — i.e., toward developing or implementing new applications or functionality, especially customer-facing solutions.

3. Invest in Talent Development and Retention. There is a shortage of supply chain and logistics talent in the industry, and it’s arguably the biggest issue facing both 3PLs and their customers. At the end of the day, it’s people that make or break any relationship, including a business one. In fact, one of the things that often creates friction in a 3PL-customer relationship is when the primary person in charge of managing the customer relationship is moved to a different account or leaves the 3PL. How deep is the 3PL’s talent pool? Will the replacement be as competent and have the same communication and relationship management skills as the other person? Does the 3PL have a defined succession planning process that involves the customer to ensure a smooth transition? These are all important questions to consider. Ideally, the 3PL will have people across all levels of the organization that are knowledgeable about your vertical industry, and even better, have worked in it. Also, take a close look at the training and development programs the 3PL invests in, and the content of those programs. This will shed some light on what skills and knowledge the 3PL deems important, and if they align with your expectations.

4. Provide Business Intelligence and Insights. This point goes beyond IT. Sure, having access to BI dashboards is very important, but I view that as a basic requirement these days. What I’m talking about here relates to something many customers say they want from their 3PLs: “Tell me something I don’t already know.” As I wrote about last September in “Operational Excellence is Not Enough – Why 3PLs Must Leverage Their Most Valuable Asset,” customers want their 3PL partners to provide them with insights about leading industry practices and trends, as well as to facilitate networking and knowledge-exchange opportunities with other shippers in the 3PL’s community. Does the 3PL conduct market research and share its findings with customers? Does the 3PL organize peer-to-peer learning and networking events for customers and industry experts to attend? Does the 3PL make it easy for you to contact and collaborate with their extended team of experts? If all a 3PL has to offer is a dashboard, then don’t expect to gain much insight beyond what you already know.

Obviously, there are many important factors to consider when evaluating and selecting a 3PL partner. But in my opinion, the four factors above are the most critical in paving a smoother path to a long and successful relationship.

What do you think? Post a comment and share your perspective.

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