Cloud Logistics Archives

Guest Commentary: Challenges with Global Logistics Workflows

Global Trade Management Solutions | By Mark Nix • 08/29/2013

Global supply chain networks have become more complex over the past several years, increasing the hunger for end-to-end visibility and supporting data at both the order detail and shipment level. The force behind this has been the desire to calculate precise inventory arrival dates and times to coincide with special promotions, replenish store inventory, and keep DC safety stock to a minimum, while ultimately increasing customer satisfaction and profit margins.

In an effort to become more agile and maintain a competitive advantage, companies are changing from regional suppliers to ones located in many different countries of origin. This can improve product quality and control cost increases. With each product being sourced from many different regions of the world, there may be different processes and players to manage the flow. The processes can be multiplied by a half dozen freight forwarders, ten thousand suppliers and four-hundred carriers.

When the supplier is located in the same region as the buyer, the logistics department can easily track a two-day truckload shipment travelling 900 miles on a reliable common carrier or private fleet backhaul asset. When that supplier is replaced with a manufacturer on another continent, the process workflow adds a dozen new steps that each requires a more sophisticated approach. When a buyer changes suppliers, there may now be a 200-day manufacturing lead time estimate, reduced communication, lack of data sharing, different technology utilization, and a less sophisticated infrastructure, which makes tracking shipment status more difficult.

These new global workflows may include a combination of agents, international freight forwarders, 3PLs, and brokers that all work with a client’s internal staff to help transport the goods from the supplier to the end customer. Each of these participants has their own independent system where they track the flow of goods for their clients as they move around the globe.

Every supplier workflow can have a dozen different processes starting when the supplier receives the forecast or the EDI 850 purchase order in some format. The supplier commits to either all or part of the PO or blanket PO with an estimated manufacturing date and estimated ship date. Once the goods have a confirmed sailing schedule, they are loaded, the cartage carrier moves the container with the goods to the origin port and the ocean liner departs for the destination port. Customs brokers get involved, followed by port drayage, rail transport, drayage to cross-dock, cross-dock to DC network, proof of delivery is signed, vendor compliance, cost allocation, and freight payment processes may take place.

It is very difficult to calculate the exact time of arrival for each incremental process in the new workflow without constant communication or a common technology platform. Imagine how well an annual promotion can go when the shelves are empty and the product has not arrived at the port. Imagine how, with no advanced notice, the distribution center teams react when ten ocean containers arrive four weeks late on a Friday evening and they need to be cross-docked to help with the promotion. Unfortunately, this still happens every day for many companies. Many of their trading partners are smaller and cannot afford sophisticated technologies with high ongoing support costs.

Cloud-based technology must be architected to support multiple flavors of both domestic and international workflows to fill all of these current gaps that even the top 25 supply chains experience with older systems. The technology must also take all of the unique rating complexities of each region and construct the user experience to facilitate 100 percent participation by all trading partners. As each partner updates the system automatically as each process is completed, the ETA is much more accurate, which allows the company to reduce safety stock. With all of the trading partners onboard, social and mobile technology can be utilized in a many-to-many stream. This provides the partner closest to the shipment the ability to provide updates to a buyer, instead of trying to call the 35 people around the globe to check on a status. Technology empowers the company to create their private one-to-many network but also allows their trading partners and carriers to have a single sign-on and connect in a many-to-many network as well. Updates can be made via a web browser, EDI, or a smartphone to place the smallest suppliers and single-truck carriers on equal ground to improve the experience and efficiency for all.

Mark Nix serves as Cloud Logistics‘ chief executive officer and a member of the Board of Directors. Mr. Nix has 28 years of supply chain software experience in helping clients of every size address their global needs. Mr. Nix serves as a Partner with Nix Venture Partners, is on the Board of Directors with the One Step Closer Foundation, and advises various charities. Mr. Nix served as VP of Major Account Sales at Manhattan Associates, an EVP with One Network Enterprises, and worked with IBM’s Nistevo division, Metasys, and the TranScape/Vocam/PBTS divisions of PBI. He holds a Bachelor of Science degree from The University of Tennessee.

Continuous Moves (Part 1)

Transportation | By Steve Banker • 08/19/2013

I’m working on developing a supplier selection tool for Transportation Management Systems (TMS), and one form of optimization a TMS can support is “continuous moves.” I wanted to learn more about continuous moves and so I called several of our Logistics Viewpoints sponsors to discuss this topic.

First of all, what is a continuous move?

Continuous moves involve a shipper stringing loads together for their carrier, so that the carrier can better utilize a particular truck or asset. In return, the shipper shares in the improved asset utilization by receiving a discount. Both sides profit by connecting the moves with minimal deadhead or empty miles between drop-off and pick-ups. In an example, perhaps a carrier offers $1.50/mile for a single leg but if the shipper provides continuous moves they may agree to a $1.35 rate for all miles including the empty miles between the first drop and the second pickup. Mark Nix, the CEO of Cloud Logistics, mentioned that several years ago some carriers offered even deeper discounts when shippers would connect several legs over several days, but most common carrier contracts today are of the first scenario, probably because it is less difficult to calculate for both parties. A variety of other pricing schemes are also used.

Fab Brasca, VP of Global Logistics at JDA Software, pointed out that not all TMS solutions have rate management engines that are flexible enough to handle the pricing variability, or have “trip” logic (multiple loads executed using one power unit) that makes executing and auditing the moves so much easier.

Certain industries are much better suited to continuous moves. Dave Belter, VP of Transportation Management at Ryder, pointed to final assembly in the automotive industry as providing very good forward visibility and predictability around loads. In this case, the plant knows it will produce so many cars; that knowledge propagates backwards to the Tier 1 suppliers that send components to the Kanban warehouse that feeds final assembly. Routes are engineered to maximize the efficient flow of components into the assembly plant and returnable containers back to the supply base. Further, the automakers have often asked key suppliers to build their plants close to their assembly plant.

Automotive Final Assembly Continuous Move

The predictability and network control is what makes continuous moves work in the final assembly automotive supply chain.

Steve Barber, VP of Strategic Carrier Development at Transplace, pointed out that a supply chain with predictable reverse logistics movements also has great potential for continuous moves. For example, car battery manufacturers deliver batteries to dealerships, pick up the dead batteries, and take those batteries to a lead smelter that melts them down to recover the lead, and then heads home.

Several of the executives I interviewed pointed out that a continuous move is mathematically very similar to planning backhauls for dedicated and private fleets. Interleaving arrivals, departures and backhauls for a private fleet has better economics, is easier to execute, and is far more the norm than is the case with continuous moves.

Sean Burke, the VP of Customer Logistics at Ryder, pointed out the value of engineering studies — loading historical and forecast move data into a transportation network planning tool — in uncovering continuous moves and other forms of interleaved movements. An engineering study uncovers potential round trip opportunities based on how lanes complement each other. If the lanes are cleverly constructed, more opportunities will present themselves. And, not surprisingly, the larger a shipper’s network the more opportunities will be uncovered. While these studies may uncover ad hoc continuous moves that may not be worth pursuing, these tools can also uncover more predictable continuous moves described in this article, as well as a variety of opportunities for a private or dedicated fleet. In Ryder’s case, as well as other TMS or 3PL suppliers that have visibility to a network of customers and their moves, there are more opportunities to uncover collaborative cross-customer move opportunities. And in Ryder’s case, it also has visibility to its own fleet of trucks. Cross-company collaborative moves can fall apart in dozens of ways. Collaborative continuous moves are easier to execute if they involve the Lead Logistics Service Provider’s own trucks.

Kevin McCarthy, Director of Consulting at C.H. Robinson, is aware of a large shipper that had given key carriers the ability to look at upcoming moves and suggest continuous moves that fit their network. However, this shipper has eliminated this program. McCarthy thinks this is because the shipper’s other carriers reacted to the new, less favorable mix of freight by raising rates and nullifying the savings from continuous moves.

Next week, in Part 2, I’ll write about the special difficulties involved in using a TMS to capture a more ad hoc, opportunistic form of continuous moves.

Will Supply Chain Software Vendors Start Competing on Design?

Logistics Technologies | By Adrian Gonzalez • 04/24/2013

One of the things supply chain software users like to complain about the most is the user interface (UI). This was true 15 years ago when I started as an industry analyst, and it’s true today. Simply put, many user interfaces…

are crammed with too many features and too much information that users don’t need or want to accomplish their tasks;
have non-intuitive workflows that don’t align with the way users are accustomed to working (or the way they want to work);
force users to open multiple windows and tabs, and click countless times, to accomplish what should be a straightforward task.

Sound familiar?

There are various reasons why user interfaces fall short of expectations, including:

Software vendors and those involved in the purchasing decision have always viewed “function” as more important than “form.” Their focus has been predominantly on checking off the feature/function list (“Can the software do this?”), with only passing consideration on the user experience (“How easy and intuitive is the software to use?”).
The people making the software purchasing decision aren’t usually the ones who will be using the application on a daily basis. In some cases, the CIO dictates the purchasing decision — “You will use this vendor’s application because we’ve already spent a gazillion dollars with them.” But what does the CIO know about how a transportation analyst, demand planner, or warehouse associate works? And even if a senior supply chain executive is involved in the decision, he or she is usually not “in the front lines” of executing tasks; it’s the employees further down the org chart that are the power users, but they rarely get a say in the purchasing decision.
The majority of supply chain software applications are designed by IT people who have never worked a day in supply chain. It’s like having a plumber choreograph a ballet.

But the tide is starting to turn, driven by various factors. First, we’re seeing the “consumerization of IT” as a generation of workers who have grown up in the Web/Mobile/Social era enter the workforce, take one look at the enterprise systems they have to work with, and collectively say, “Are you kidding me?!”

(For more on this trend, check out the short video clip below from my Talking Logistics episode last week, where I use a cell phone analogy to make my point).

Second, it is becoming increasingly difficult for supply chain software vendors to compete solely on features and functions anymore. In short, unless you have very specialized or complex requirements, the functional differences between vendor applications are minimal. And so software vendors are starting to compete on other fronts, including design. Infor is a great example. The company has invested heavily to enhance its user experience and make business applications “as easy to use, attractive, and inspiring as personal technology.” Another example is C.H. Robinson. The company briefed me recently about its new Navisphere technology platform, which includes some significant improvements to the user interface based on customer feedback. Start-ups like Cloud Logistics and others are designing solutions from the ground up with social and mobile in mind. And you can also argue that Microsoft’s acquisition of Yammer last summer was driven more by design than function. Yammer is often called “the Facebook for business” due to its user experience, while Sharepoint is often called…well, let’s not go there.

Another reason why software vendors and customers need to pay more attention to design and user experience is that there is a strong business case for it. Here are three examples:

Faster, more cost-effective training. We all know that a 5 year old can pick up an iPad and start using it within minutes without any training. The same goes for an 80 year old. Imagine how much time and money companies could save if supply chain applications were, relatively speaking, as easy and intuitive to use as consumer applications. Instead of days (or weeks) of training, you might only need a few hours.
Improved productivity. How much more can you get accomplished in a day, with how many fewer people, if instead of opening 5 windows and clicking 20 times to complete a task, you could do it all from one screen with just one or two clicks?
Enhanced business intelligence. Do you know what happens if a system is too complicated or difficult to use? People don’t use it, or they find workarounds, which means you’re not collecting all the data you need to make informed decisions. But if the system is easy to use and data entry is quick and painless, you’ll start capturing more information, which will enhance your business intelligence efforts.

The bottom line is that software vendors and customers need to think beyond features and functions. Of course, evaluating whether a software application meets your functional requirements remains critically important. But after that list has been checked off, you need to give equal time and consideration to evaluating the user experience. You also need to give power users, the people who have to work and deliver results with the application every day, a greater voice in the purchasing decision.

For more of my thoughts on this topic, including my view of what makes an ideal UI and the role of mobile, social networking, maps, and voice recognition, watch the rest of last week’s episode.

(Note: C.H. Robinson and Cloud Logistics are Logistics Viewpoints sponsors).

Guest Commentary: Improved Logistics is in Your Pocket

Guest Commentary | By Mark Nix • 04/18/2013

With today’s smartphones, you can sharpen your game by juggling a multitude of tasks each day without letting anything slip through the cracks. How could you handle hundreds of emails, phone calls, text messages and meeting schedules each day without it? Improved mobile coverage and Wi-Fi connectivity make sure that you are connected at all times to all of this necessary information. When you travel on business, various apps — weather, maps, music, clock, camera, GPS, QR Reader, games, and airline apps — make sure that you get to your destination efficiently. Some of us who like to stay ahead of the workload use social media tools to answer LinkedIn requests, Facebook questions, and review new Twitter messages for our business. If you are meeting an important client for dinner in a neutral city, you can check reviews on Yelp for a great local restaurant and schedule dinner reservations using your smartphone. The list of possibilities goes on and on, and it is hard to believe this has all happened within the last few years.

Many of your more sophisticated logistics operations have also enjoyed improved efficiency from local voice and mobile devices that scan moving inventory to update your cross-docks, warehouses, and transportation management systems. Even the top 25 supply chains in the world have small suppliers, small carriers, freight forwarders, subcontractors, brokers, and drayage carriers that may not be able to connect via 40-year-old EDI messages or 9-year-old AS2 (soon to be AS3) transfers. Blind spots in logistics always lead to increased uncertainty, which then leads to increased safety stock and carrying costs. Small suppliers in China or other parts of the world with 150 day lead times drive warehouse workers and the people scheduling a retailer’s store promotions crazy when a dozen ocean containers show up without any advance notice. Small carriers that provide excellent service to their shippers may not have systems in place to accept EDI 204 tender messages and provide EDI 214 status updates, but their drivers do have smartphones in their pockets. With the upcoming driver shortage forecast, we will need smartphones to facilitate communications and improve our partnerships.

The recent convergence of smartphone technology, cloud computing, and cutting edge logistics technology providers working with industry experts is quickly removing the roadblocks of the past. Logistics technology providers are now delivering social technologies to enhance the capabilities of smartphones by allowing the sharing of purchase orders, acceptance/adjustments to orders, manufacturing dates, departure times, shipment status updates, tracking the shipment on a map, and capturing proof of delivery signatures from carriers all enabled on a smartphone app. If you have a damaged shipment you can use your smartphone to attach a photo, video, and claims document to that particular shipment for all global participants involved with the shipment to see and make necessary comments in real time. Smartphones can also enable small carriers to quickly accept loads on their mobile device and allow the GPS to provide status updates on their shipments, thus improving efficiency and customer service.

So, if your teenagers can use “Find My Friend” to get precise smartphone GPS updates every 15 seconds of where all their buddies are located, then we should all strive to pinpoint our shipments, trigger alerts, and calculate ETA’s before these teenagers enter the workplace and roll their eyes at us. The next time you go on a family trip be thankful for the guidance system in your vehicle or on your smartphone as the kids can calculate the answer to “Are we there yet?” or even better, you can avoid the “Are we taking the scenic route again?” question by not getting lost while you are worried about your logistics operation while you are away.

This Week in Logistics News (March 18-22, 2013)

Cloud/Software-as-a-Service | By Adrian Gonzalez • 03/22/2013

#TwitterTurnedSevenYesterday

#MostSupplyChainExecsStillDontGetIt

In other news…

FedEx and Oracle surprised investors this week with disappointing fiscal Q3 financial results. Net income at FedEx declined 31 percent in Q3 compared to a year ago. The main culprit: customers shifting more international shipments from air to ocean, plus over-capacity in Asia which is eroding margins. Here are some quotes from the press release

“The third quarter was very challenging due to continued weakness in international air freight markets, pressure on yields due to industry overcapacity and customers selecting less expensive and slower-transit services,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer.

“Our lower-than-expected results for the quarter and reduced full-year earnings outlook were driven by third quarter international revenues declining approximately $100 million versus our guidance primarily due to accelerating customer preference for lower-yielding international services, lower rate per pound and weight per shipment,” said Alan B. Graf Jr., FedEx Corp. executive vice president and chief financial officer.

Meanwhile, Oracle’s total revenue declined 1 percent in Q3 compared to the previous year, including a 2 percent drop in revenue from new software licenses and cloud subscriptions. Oracle blamed its sales team for the poor execution, rather than weakness in customer demand. “Since we’ve been adding literally thousands of new sales reps around the world, the problem was largely sales execution,” said Safra Catz, Oracle’s CFO. “Especially with the new reps, as they ran out of runway in Q3.” She expects revenue from software licenses and cloud subscriptions to rebound in Q4, as sales people will be more motivated to hit their annual targets that impact their commissions.

The FedEx results signal that companies are starting to trade speed for cost reductions in their supply chains (in contrast to all the buzz and activity surrounding same-day delivery), and Oracle’s results could be a red flag that cloud and software-as-a-service deals are starting to erode the company’s traditional license sales (we’ll have to see a few more quarters of results to know for sure).

On the mergers and acquisitions front, Echo Global Logistics announced that it acquired Open Mile, Inc., a truckload brokerage headquartered in Boston, MA. Here’s a quote from the press release:

“Open Mile has developed leading edge, cloud-based technology that successfully automates many of the manual tasks of transportation management,” said Douglas R. Waggoner, Chief Executive Officer of Echo Global Logistics. “The acquisition of Open Mile enhances the technology solutions we offer clients and carriers while also expanding our client base, sales force and carrier network in the Northeastern United States.

I first wrote about Open Mile back in February 2011 when the company announced its Series B round of funding. I’ve known the CEO of Open Mile, Evan Schumacher, for more than a decade, and Evan’s vision for the company was to transform the freight brokerage business by better leveraging mobile and web technology. I’m not sure how far the company got in fulfilling its mission, but it went far enough to grab the attention of Echo Global Logistics, a bigger and fast-growing fish with a similar vision.

New software companies continue to enter the transportation management systems market. The latest entrant is Postmaster, “an intelligent, cloud-based platform with an easy-to-integrate API that allows SMBs to save time and money throughout the lifecycle of shipping, from integration to audit.” The platform currently supports FedEx, UPS and USPS, with regional and international carriers to be added soon (see the press release for more details).

I was briefed by Postmaster earlier this week and a couple of items caught my attention. First, the company is focusing on the SMB market, which is an underserved segment of the TMS market. Just a couple of weeks ago, 3Gtms and Transite joined forces to focus on SMBs too, and Cloud Logistics, which launched last summer, is also taking aim at this market segment. Simply put, the race is on to crack the code on how to profitably serve the shipping and transportation management needs of small and midsized businesses.

The other point that caught my attention is Postmaster’s “bottom up” strategy of pitching its platform to developers — that is, the IT folks at SMBs, as well as third party solution providers, who are tasked with integrating shipping functionality with their order management and other systems. In other words, Postmaster is taking the “techie” sales route in addition to the line-of-business one. It’s similar, in some ways, to what Oz Development is doing with its Integration Marketplace.

Finally, in customs-related news, Transplace announced that Transplace Mexico has received Custom-Trade Partnership Against Terrorism (C-TPAT) certification for supply chain security. This complements the C-TPAT certification earned by Transplace International in 2008. As stated in the press release:

Participation in the program provides companies with the assurance of a safe, secure and expeditious supply chain, benefiting their employees, internal operations, suppliers and customers. C-TPAT members benefit directly by reducing the number of physical inspections and documentation reviews when crossing borders, helping to dramatically decrease the time required when passing through customs. Obtaining C-TPAT certification offers businesses an opportunity to take an active role in improving national security.

And the United States and Canada are getting ready to launch a pilot to “test the concept of conducting primary inspection of U.S.-bound truck cargo in Canada in order to better manage our shared border and improve economic opportunities for Canadian manufacturers and their U.S.-based supply chain partners,” Canadian Public Safety Minister Vic Toews said in a statement. According to an article in The Globe and Mail, “The deal is part of the slowly unfolding effort called Beyond the Border. It’s intended to shift inspections and clearances away from actual border crossing so that shipments – once cleared and approved – can go directly to destinations.”

And that’s a wrap. Have a great weekend!

Song of the Week: “Houdini” by Foster the People

(Note: Cloud Logistics, 3Gtms, Ryder, and Transplace are Logistics Viewpoints sponsors)

Guest Commentary: 6 Impacts of Social and Mobile on Supply Chain Management

Cloud/Software-as-a-Service | By Travis Parsons • 01/22/2013

You wake up in the morning and grab your smartphone. You notice you have 5 notifications from your network about important events pending. You quickly scan your news feed to see what conversations and key updates you missed during the night. A key topic catches your eye and you jump into a discussion with a group of people around the world. You accept an invitation from a pending request to connect. You see that a new location-aware app is available that looks very useful. In five minutes, you’re in sync with your connected global network of people, places, and things.

The scenario above describes using Facebook on a smartphone. But it also describes what is coming to enterprise software and supply chain management. Your supply chain will be social and mobile, and will work much like Facebook does today.

When Internet-based supply chain software arrived on the scene over a decade ago, only a small number of early adopters could see how software-as-a-service and a network of trading partner connectivity would become a competitive advantage over slow-moving and costly legacy installed software. A decade later, software-as-a-service has won the battle over enterprise software and its benefits are obvious.

Now, we’re heading into the social and mobile phase of technology change. And once again, we have naysayers who have never used Facebook and can’t envision how social tools will transform their business. True, it’s difficult to see how these types of tools would be useful if you’ve never used them. But one thing is certain – employees entering the workforce today have been raised on social and mobile and they will be the drivers of adoption.

So social and mobile are coming. Here are the 6 impacts of social and mobile that will be obvious a decade from now:

Social enables a network of people to connect and communicate in real-time to manage a supply chain. It’s people that manage a supply chain, and social provides the platform for all these people to connect in a single place.
Social will wrap a community of people around transactional workflow. The supply chain management systems of the past focused on transactions and processes. Social will combine community and communication with transaction management.
Social enables everyone to be on the same page. Email is not a good solution for managing a supply chain. The roles-based social news feed that is the core feature of Facebook will be the unified means for communication.
Mobile provides a constant connection to your operation. Your role in your supply chain will not be bounded by location or time of day – you can tap in at any moment from anywhere.
Mobile makes trading partner onboarding easier. Your suppliers and logistics service providers can simply use their smartphone to provide status updates or respond to issues. It’s super simple, easy and cost effective to adopt.
Higher levels of connectivity, communication and engagement from the community result in increased and accelerated information sharing and improved supply chain performance.

So, if you don’t already have a Facebook account, go sign up for one and download the app onto your smartphone. The future of supply chain management is right in front of you.

Travis Parsons is the CTO of Cloud Logistics, which allows users to manage in a single thread all social communications with each transaction, and to track shipments and order updates from their smartphone. Previously, Travis was Founder and CEO of Elogex, one of the first logistics software-as-a-service providers.

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