collaboration Archives

Collaborating Across Supply Chains Is Here. I’ll Show You How.

Cloud/Software-as-a-Service | By Dan Clark • 07/25/2017

We’re all operating in a social world and communicating through software. It’s what we do. So where the old days of logistics management were focused on getting cheaper carrier rates, companies operating in today’s freight environment must focus on collaboration—both with carriers and with one another. So how can a company go about gaining new efficiencies by collaborating across supply chains without disrupting current logistics processes?

The Answer Lies in the Cloud

Cloud-based transportation software not only exists, but it’s also affordable and easy to deploy. In fact, thousands of shippers are already using cloud-based software to manage their freight and are benefitting from high levels of supply chain collaboration.

By leveraging a logistics community built around a cloud-based transportation management system (TMS), users manage their day to day freight with their contracted rates while leveraging the community for spot quotes when needed. Since companies typically only require spot rates 10-20% of the time, supply and demand communities that are built strictly on spot pricing have failed in the past because companies want to manage all of their freight on a single platform (i.e., both contracted rates and the occasional spot rate).

A community built around a cloud TMS that manages both negotiated and spot transactions becomes very “sticky.” And as that community grows and expands, the levels of cross supply chain collaboration increase exponentially. All residing on a single, web-based platform, participants can seamlessly share information with one another. This results in very high levels of communication and collaboration, both of which translate into improved efficiencies and cost savings.

The benefits of the cloud technology don’t end there. Once a platform is in place, and multiple entities are using it, those users can take an Uber-like approach to transportation procurement that would never be possible with a legacy system. Being able to connect with anyone, anywhere, and anytime opens the doors to a host of new opportunities. As “sharing” freight (i.e., one company fills the forehaul opportunity and another uses the backhaul on the same truck/route) becomes a reality, the resulting increase in carrier efficiency creates significant cost savings for shippers.

Getting Onboard

The first step to supply chain efficiency always begins with properly managing your own supply chain. This means that every company needs a TMS if it doesn’t have one already. Ideally, the TMS is cloud-based, which makes collaborating with other supply chains much easier. However, don’t despair if your company has a legacy TMS. Shippers can still leverage cloud technology in a “mode 2” fashion for cross supply chain collaboration, because one of the many benefits of most cloud technologies is its ability to integrate with legacy systems.

It’s important to note that collaboration isn’t a one-and-done deal. Companies that effectively leverage the cloud can continually hone and finesse their transportation strategies, all the while continuing to improve efficiencies and save even more money. By utilizing cloud technology and collaborating to leverage open capacity in other supply chains, shippers gain new levels of visibility, solidify relationships with providers, and enhance their bottom lines.

With multiple modes of transportation to choose from, and with many partners to collaborate with, companies can make their supply chains extremely efficient without much extra effort. All it takes is an investment in cloud software and a commitment to using that platform to tap into a collaborative community. It’s as simple as that.

Dan Clark, Kuebix Founder and President, is a transportation industry veteran. He possesses extensive operations and sales experience gained from years of working with leading freight carriers and multibillion-dollar supply chains. Kuebix offers a transportation management system (TMS) that delivers true shipping intelligence empowering companies to capitalize on supply chain opportunities through visibility, collaboration and predictive analytics. Dan is a passionate thought leader on how technology is revolutionizing the logistics industry. You can read his unobstructed view of supply chain logistics in his blog “Supply Chain 20/20.”

A Fresh Look at Supply Chain Visibility

Cloud/Software-as-a-Service | By Steve Banker • 04/11/2016

In ARC‘s recent Supply Chain Visibility & Collaboration Study, we found that the supply chain visibility & collaboration market is the fastest growing supply chain market. Over a year ago, ARC started to come across large corporations investing in supply chain control towers as a way of taking their supply chain program to the next level. We decided we needed to look into this, and kicked off a market research project on this market.

When it came to supply chain collaboration, we defined this as having a collaborative, multi-supplier, multi-tier, supply chain planning solution. For visibility, the definition was a solution providing visibility to the order process (order placed, order adjusted, order accepted), inventory at rest or inventory in motion events, or supply chain risks, or providing a stand-alone supply chain analytics/event management solution not embedded in other solutions.

Based on our definitions, solutions built with different tech stacks – BI, optimization, and B2B networks – were involved in providing different types of visibility and collaboration solutions. But in particular, it was B2B network solutions – both for visibility and collaboration – that was driving this market’s very rapid growth.

What are the reasons for this? Well there can be a very good ROI associated with visibility projects. The primary way Supply Chain Planning (SCP) applications drive ROI is through improving service levels with less inventory. The more companies can reduce their lead times, and the less variability there is surrounding those lead times, the better the ROI that can be achieved with SCP tools. Supply Chain Visibility, provides the data and metrics surrounding lead-times, and then allows Lean practitioners to work with supply chain partners to improve and control those lead-times.

Much of the traffic flowing through B2B networks is either initiated by supply chain masters or mandated. Many of these very large multinational corporations work to tightly orchestrate their end-to-end supply chain from suppliers all the way out to customers. Without good visibility, tight orchestration is impossible. Further, the more outsourcing – use of contract manufacturers and 3PLs – the more valuable collaborative planning applications are.

Supply Chain Synchronization

But beyond visibility is supply chain orchestration. Orchestration takes the service improvements and inventory reductions to the next level. In this scenario, balancing supply and demand is not merely improved through faster lead times, but rather the supply demand matching process is actively and collaboratively managed on an ongoing basis. Improved supply-demand balancing also leads to increased revenues by reacting to surges in demand more quickly than a company would be able to do based on a traditional sales & operations planning process. It also helps companies react more nimbly to supply disruptions, helping to deliver on orders that have already been booked but which are now in jeopardy.

And ARC thinks this market will continue to grow quickly because the concept of a “network of networks” is being pursued by both SAP and Oracle. In short, just as companies with very strong supply chain capabilities are looking closely at this space, so are some of the largest supply chain software suppliers.

The supply chain product set and visibility roadmaps of SAP and Oracle are strikingly similar. SAP and Oracle are not only leading suppliers of supply chain solutions, through partnerships they exert additional influence on all supply chain software markets. Their product sets and vision matter.

Both SAP and Oracle recognize that supply chain synchronization capabilities are key for success in this market. Both suppliers offer a variety of planning and execution solutions, many of them with best of breed style functionality. Both have developed collaborative planning solutions (SAP is earlier in their journey) that are well adapted to companies with a large degree of outsourcing in their supply chains. Both have developed robust supply chain cockpits built on BI technologies that allow for the real-time analysis of supply chain data with drill down capabilities. Both have very fast in-process memory technologies that allow for simulation and predictive analytics. Both have cockpits that allow the sales & operations planning process to be effectively managed. And both are seeking to go beyond inward looking S&OP to more collaborative planning environments built upon better visibility.

To accomplish this, both have partnered or procured providers of B2B networks. Yet, both suppliers recognize that no one B2B network provides all the visibility necessary. Descartes, for example, is very good for Air visibility, while Transporean has robust visibility into European road transportation. So to take supply chain orchestration to the next level, SAP and Oracle will need to collaborate with a variety of B2B network providers. Both recognize that effective integration to those networks will depend upon semantic integration; in other words, a transport order as defined in Oracle will need to be mapped to the same concept in the electronic messages sent through the Descartes network to insure that apples are not being confounded with oranges. Both SAP and Oracle recognize that semantic integration is difficult and admit they are early in this journey. And in both cases the vision is that they will offer a Network of Networks visibility solution, they will provide the visibility layer that rides on top of all other BWB networks. Both Oracle and SAP are well positioned to achieve this.

Collaborate? Sure, Except I Don’t Trust You

Logistics Outsourcing | By Adrian Gonzalez • 12/04/2013

According to an AP-GfK poll conducted last month, only one-third of Americans say most people can be trusted. That’s down from half who felt that way in 1972, when the General Social Survey first asked the question. Almost two-thirds of the poll respondents said “you can’t be too careful” in dealing with people.

Is that what you’re thinking when you’re sitting across from a supplier, customer, or other trading partner? Are they thinking the same thing about you too?

Why does this decline in trust matter? From the write-up about the poll results:

What’s known as “social trust” brings good things.

A society where it’s easier to compromise or make a deal. Where people are willing to work with those who are different from them for the common good. Where trust appears to promote economic growth.

Distrust, on the other hand, seems to encourage corruption. At the least, it diverts energy to counting change, drawing up 100-page legal contracts and building gated communities.

When you consider that so much of supply chain management involves people and relationships, this decline in trust is very troubling. And it suggests that establishing truly collaborative and Vested relationships is actually becoming more challenging, not less.

“Without a fair degree of trust, companies will simply not continue on their journey to We,” say the authors of Getting to We in a chapter devoted entirely to trust. “A lack of trust sets a hurdle that is too high to jump.”

I interviewed two of the authors, Kate Vitasek and Jeanette Nyden, in a recent episode of Talking Logistics and I asked them why trust (along with transparency and compatibility) is so important to creating highly collaborative relationships. Watch this short clip for their response and great insights on this topic.

If you choose to trust and remove that first big hurdle, you can move forward toward creating collaborative relationships that yield significant benefits for everyone involved.

For example, at LeanLogistics’ ClientConnect 2013 Conference last month, I shared the stage with Frederic Fimbel, Head of Logistics Customer Collaboration and Sustainability at CHEP Europe, who provided an overview of CHEP’s collaborative transportation initiative with customers in Europe. In a nutshell, the company identified opportunities, with the help of Lean’s technology and network data, to create “continuous move” lanes with customers and other trading partners. The net result was a reduction in empty miles, which yielded both cost savings and sustainability benefits for everyone involved. The slides below summarize the process and benefits.

Source: Presentation by Frederic Fimbel, CHEP

But here’s the statistic that really caught my attention: CHEP’s Net Promoter Score (NPS) — a management tool that measures the loyalty of customer relationships — was over 13 percent higher among customers that participate in the collaboration program compared to the average. In other words, collaboration strengthens customer relationships and loyalty.

But it all begins with trust, which is something (if you believe the poll results) we’re less inclined to do these days. If “you can’t be too careful” in dealing with a customer or supplier, then your caution and lack of trust is holding your relationship back, preventing you from achieving greater things together.

So, as we approach 2014, here’s a New Year’s resolution to put on your list: Choose trust and see where it takes you.

Note: LeanLogistics is a Logistics Viewpoints sponsor.

This Week in Logistics News (October 21-25, 2013)

This Week in News | By Adrian Gonzalez • 10/25/2013

“Did you come to Denver to plant mango trees?” the taxi driver asked me shortly after we left the airport. He had a thick accent, so I thought I had misunderstood his question. “Excuse me?” I said leaning forward, and so he asked me again, “Did you come to Denver to plant mango trees?”

The taxi driver was originally from the Congo, and his younger brother had come to America too, and he did well for himself. The brother bought a large parcel of land, built a large house on it, and with every child born to him and his wife, he planted a mango tree. “In a few years,” the younger man explained to his brother, “the trees will start to produce fruit, which I will sell and save the money to help pay for my children’s education in the future.”

“In that case, yes, I have come to Denver to plant mango trees,” I told the taxi driver, and he glanced back at me with a smile, and then he faced the long road ahead, and I turned my head and looked at the snow-capped mountains in the distance, and for a minute or so, we sat there in silence, strangers again.

—

Aside from Q3 financial results, it was a relatively quiet week for news.

Manhattan Associates and SAP both reported Q3FY13 financial results this week. What was the common thread between them, aside from reporting increases in total revenues? The ongoing decline in license revenue.

Manhattan Associates reported record Q3FY13 revenue of $107.8 million, up 12.5 percent from Q3FY12. License revenue, however, decreased 8.6 percent in the quarter compared to the same period a year ago. Through the first nine months of 2013, total revenue is up 9.3 percent and license revenue is down 4.2 percent.

Meanwhile, SAP reported a 23 percent increase in Q3 net profit compared to a year ago, but total revenue increased only 2 percent (due in part to currency fluctuations), while software license revenue dropped 5 percent overall, and down 13 percent in the Americas and 9 percent in Asia.

It took more than a decade, but it seems to me that growth in recurring revenues, specifically from cloud and software-as-a-service offerings, is replacing growth in license revenue as the primary measure of a software company’s health.

On the 3PL front, Ryder reported third quarter revenue of $1.63 billion, up 4 percent from the same period last year. The company’s Supply Chain Solutions business segment posted strong results, with operating revenue (revenue excluding subcontracted transportation) up 9 percent compared to Q3FY12. According to the press release, “SCS operating revenue grew as a result of new sales and higher volumes. The Company saw strong growth in industrial, consumer packaged goods/retail, and high tech industry vertical groups. In particular, dedicated services saw strong double-digit growth, driven by increased customer outsourcing activity.” Looking forward, Ryder’s Chairman and Chief Executive Officer Robert Sanchez said, “We expect our Supply Chain Solutions business to continue to grow, driven by strong new sales and customer volumes. In particular, we anticipate strong ongoing performance in dedicated services driven by both secular outsourcing trends and our sales initiatives.”

Earlier this year on Talking Logistics, I interviewed Sonney Jones from Dal-Tile Corporation and Ben Enriquez from Transplace Mexico about the collaborative transportation project that earned their team — which also included members from Whirlpool and Werner Ladder — the 2012 Council of Supply Chain Management Professionals’ (CSCMP) Supply Chain Innovation Award. Building on the success of that initiative, Transplace announced this week the expansion of its TransMATCH co-shipping service that “offers the opportunity to consolidate freight through collaboration with multiple shipper companies and increase delivery frequency to targeted customers without increasing costs.” Here are some excerpts from the press release:

Collaboration has long been a focus in the transportation industry, but the realization has been a challenge because of the manual processes and lack of scalability. Transplace has worked with its partners to provide a solution with technology for automation and reporting, allowing for scalability, visibility and velocity in the market.

“Transplace has helped consumer packaged goods customers in the TransMATCH program [including Clorox, Colgate-Palmolive, Del Monte Foods] find the right partners and optimize freight, providing an innovative and valuable service to retail companies,” said Transplace Operations Vice President Mark McEntire.

McEntire added: “The current TransMATCH program was borne out of our annual CPG Summit, where our customers review logistics needs, share visions for industry progress, and give Transplace guidance on how we can help them grow and improve their businesses. We listened to what they said, developed the technology, process and team to execute their vision, and we are now rolling it out on a broader scale.”

Are we finally reaching the tipping point on collaboration, where companies are not just talking about collaboration, but actually taking action on it? Check out my thoughts on the barriers to collaboration and how to overcome them.

And on that note, have a happy weekend!

Song of the Week: “Cab” by Train

Note: Ryder is a Talking Logistics sponsor.

Amazon Inside P&G Warehouses: A Case of “What’s In It for We”

Logistics Trends | By Adrian Gonzalez • 10/16/2013

An article in yesterday’s Wall Street Journal revealed that Amazon has set up operations inside at least seven P&G warehouses worldwide where “each day, P&G loads products [such as paper towels and diapers] onto pallets and passes them over to Amazon inside a small, fenced-off area. Amazon employees then package, label, and ship the items directly to the people who ordered them [online].” Amazon’s partnership with P&G started three years ago, and the company is reportedly doing the same, or is in talks to set up similar operations, with Seventh Generation, Kimberly Clark, and Georgia Pacific.

As it turns out, my guests yesterday on Talking Logistics were Kate Vitasek, architect of the Vested business model and faculty member at the University of Tennessee, and Jeanette Nyden, a negotiation expert and adjunct professor at Seattle University. We talked about their recently-published book, Getting to We: Negotiating Agreements for Highly Collaborative Relationships (more on that in a future posting). I didn’t read the WSJ article until after the show, so I didn’t get to ask Kate and Jeanette about it. But after reading most of the book and reflecting on our conversation yesterday, it struck me that Amazon and P&G are planting an orange tree.

Let me explain.

In Chapter 1 of Getting to We, Kate and Jeanette (and co-author David Frydlinger) highlight a classic tale about how to divide an orange, from the best-selling negotiation book, Getting to Yes by Fisher and Ury. Here’s an excerpt:

In the orange story, two people negotiate to divide one orange. Positional bargaining would split the orange in some fashion — in half or perhaps with the party with the most power getting two-thirds and the weaker party getting one-third.

Fisher and Ury presented a new paradigm known as interest-based bargaining in 1981. Interest-based bargaining allows each person to share their interests with the hope of finding mutual gain. For example, one party may want the pulp while the other party may want the peel…Thus, in the Fisher and Ury analogy, the parties’ self interests are maximized, with each person getting exactly what is wanted: one would get all of the peel and the other all of the pulp.

The problem with this approach, the authors of Getting to We argue, is that “people are still fighting over one orange today [emphasis mine],” and the mindset is “short-term and opportunistic.” A better approach is for the negotiators to take a “What’s in it for We” (WIIFWe) mindset, the “philosophical mantra for all highly collaborative relationships.” The authors go on to say:

Ultimately, as negotiators embrace the WIIFWe mindset, partners begin to view the relationship as a unique and individual entity with interests of its own. Changing the lens to view the partnership as its own entity with its own interests in addition to each partner’s interests solves the problem of fighting over one orange today. Using a WIIFWe mindset changes the question from what is in my self-interest to what move will generate value for the partnership. The parties would then find solutions to work together to perhaps plant an orange tree allowing both to prosper from an increased harvest [emphasis mine]. Planting that tree requires a paradigm shift.

And what increased harvest are Amazon and P&G going after? The online sales of household goods like toilet paper and diapers, which despite being worth $16 billion in 2012, represents only 2 percent of the market today. However, Nielsen Holdings predicts that online sales will increase 25 percent per year to $32 billion in 2015.

Of course, I don’t know for certain if Amazon and P&G have truly taken a WIIFWe approach to their partnership, but based on the info disclosed in the article, it seems that way to me. According to the article:

The economics of the arrangement benefit both sides. For Amazon, co-location reduces the cost of storing bulky items like diapers and toilet paper and frees up space for the Web retailer to stock higher-margin goods in its own distribution centers.

P&G, meanwhile, saves on the transportation costs that it would have incurred trucking products to Amazon’s regional distribution centers. Plus, it gets Amazon’s help in boosting online sales, a priority for many in the industry.

And P&G is not new to Vested. The company was one of the case studies featured in Kate’s previous book, Vested: How P&G, McDonald’s, and Microsoft are Redefining Winning Business Relationships (watch the Talking Logistics episode with Kate and co-author Karl Manrodt where they discuss the key takeaways from the book). In short, P&G has already experienced the value of taking a WIIFWe approach in one part of its business, so why not here?

Back in July, I highlighted the top ten supply chain trends presented by Tom Linton, Chief Procurement and Supply Chain Officer at Flextronics, at an MIT conference. Number one on his list: “Non-Zero” Supply Chains Win. In other words, supply chains focused on greater collaboration between everyone in the ecosystem will win, which will result in end-to-end supply chain solutions that will create new value for customers. The relationship between Amazon and P&G, if truly built on a WIIFWe foundation, will serve as a great case study and proof point that “non-zero” supply chains do indeed win.

The Amazon and P&G partnership also raises some interesting questions to ponder. For example, is this an opportunity or a threat for traditional third party logistics providers? Many 3PLs view e-commerce fulfillment (and, more broadly, omni-channel fulfillment) as a growth engine. Regardless of how 3PLs ultimately view Amazon’s activities, either as a risk or opportunity, what will matter the most is their response. Will 3PLs and their retail and manufacturing clients continue to split an orange or will they plant orange trees instead, perhaps with the help of Google, Facebook, and eBay?

Guest Commentary: Millennials and the Supply Chain

Cloud/Software-as-a-Service | By Dan Dershem • 09/10/2013

Do a quick Google search. Just type ‘Millennials’. You should get a screen like this:

Outside the two definition-type searches, two broad ends of the spectrum are represented: being lazy and the workplace (assumed to be the antithesis of lazy). The world is still trying to figure out how to classify, identify, and ultimately work with the Millennial Generation. With 80 million Millennials vs. 79 million Boomers in the U.S., the corporate world needs to figure it out. The world of supply chain is no different.

The issue is raised very often in today’s media about the dwindling numbers of younger professionals coming into the supply chain space. Mostly, this conversation is regulated to a discussion on trucking alone, yet the supply chain touches all facets of logistics — from load planners to transportation managers to supply chain analysts.

So how do you marry the Millennial Generation with the supply chain? Some say Millennials need to adapt/conform to corporate America; some say that corporations need to restructure in ways that suit Millennials’ needs. Another approach comes in the form of technology. As technological adoption continues to increase in supply chains, so does the opportunity for Millennials to take on an active role in the supply chain world.

Always On
Millennials grew up with technology, and most importantly, computers with Internet access. That means these potential employees are always connected and always on. Because of this inherent trait for technology, the solutions they gravitate toward need to have that same emphasis on connectivity as well as accessibility. For example, most VPs of Supply Chain know their TMS needs to have a high uptime, but Millennials know that installed and hosted software is challenging when it comes to keeping things up and running. Crashes, slow loading times, or constant upgrades are not the way to win over this group. Instead SaaS-based, web-enabled solutions that can be accessed from anywhere will provide Millennials with the right technology to keep your business moving.

In the Cloud
Along the same lines, Millennials are comfortable with having their tweets go across the world, Facebook statuses liked by friends of friends, and following 50 brands on LinkedIn. SaaS-based technology or “the cloud,” allows that level of networking to happen. A Millennial will conduct business across the cloud and complete their transactions with carriers they don’t know or have even heard of without batting an eye. The generation is savvy enough to make informative decisions by leveraging the data in the cloud, such as using the historical performance of a carrier on a specific lane to find a match for their load.

Visibility of data
“Just Google it” has become a common saying in today’s world. Millennials need to have answers instantly, and are quick to find solutions when given access to technology and data. That’s no different in the supply chain world.

With SaaS-based TMS, all transactions flow through one central transportation command center, which allows the monitoring of critical activities in a supply chain. Because partners are all in the same environment, visibility is that much greater. Real-time communication is enhanced – every party knows what is happening, when, and why. Additionally, this type of visibility enables real-time analytics and performance metrics that are significantly more accurate and robust. If you put that Millennial in the driver’s seat of a SaaS-based TMS that has deep data and deep visibility, all in real time, you’ve got yourself a power user.

Naturally collaborative
From LinkedIn to Salesforce to Constant Contact, network collaboration is considered to be one of the most significant benefits of any SaaS-based platform. All members of the network have the opportunity to connect with other network members for additional capacity and collaborative transportation opportunities. The millennial generation can share information faster and more efficiently than any other generation in the supply chain workforce, which naturally facilitates collaborating with other vendors, carriers, and shippers to work across each other’s networks. This allows for sharing transportation assets and creating economies of scale.

There is a lot that the supply chain industry can teach Millennials, but there is a lot that they can teach us. Millennials should be encouraged to be part of the supply chain and organizations that embrace their profile will ultimately benefit. Yes, those organizations need to be open to new styles of thinking and executing, but that is what growing is all about.

If you go back to the 80 Million Millennials vs. 79 Million Boomers statistic, what does your organization look like? Eventually, those Boomers will move on, and we’ll be stuck trying to find answers. The supply chain can be proactive today by adopting technologies that align with Millennials as well as business goals. The Millennial group is a growth engine that, when tapped, will drive major growth in the supply chain.

Dan Dershem, President and CEO of LeanLogistics, is responsible for the overall business strategy and corporate leadership of LeanLogistics. Dan oversees the day-to-day operations of LeanLogistics as well as develops the executive strategy for business growth to drive maximum value for LeanLogistics’ clients. In addition, Dan holds responsibility as Senior Vice President of Global Logistics at CHEP, where he is responsible for the development and implementation of the global logistics strategy for CHEP, including global technology roll-out along with cost and service performance.

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