GT Nexus Archives

Infor Embraces the Network

Cloud/Software-as-a-Service | By Steve Banker • 07/18/2016

Infor’s Inforum 2016 event was last week. Infor is the third largest provider of enterprise software solutions. Because I’m a supply chain analyst, I was most interested in what the executive leadership would say about the GT Nexus acquisition; GT Nexus was acquired for $675 million last August.

GT Nexus – whose products are now called the Infor Commerce Cloud – is a public cloud supply chain platform used by very large companies like Nike and Caterpillar and their supply chain partners. The solution includes:

The procurement of strategic materials – in particular, the check off process where a buyer says I need 7 pallets of this item on this date, and the seller comes back and says, for example, “I can give you 6 pallets on that date and the other pallet four days later.”
Control of the inbound and outbound supply chains including transportation tendering, transportation planning, and detailed tracking of shipments. Here they are well known for their strength in supporting Ocean, although I was told at the demo station they are getting very good in Air as well.
The participation of banks on the platform. Banks add value to the network by allowing small suppliers (particularly Asian apparel manufacturers) to get paid more quickly. In some instances in fact, suppliers receive capital before shipping the goods.

At the time of the acquisition it was estimated that GT Nexus had revenues of about $150 million, so the acquisition price was a substantial multiple of the GT Nexus’s revenues. So why did Infor pay so much for GT Nexus? In his keynote, CEO Charles Phillips made the point that “no one wants to be on a network until everyone is.” But the GT Nexus network has traction with $100 billion in spend managed on the platform. “80 percent of the data needed to run a global supply chain,” Mr. Phillips claimed, resides with partners.”

It used to be suppliers of enterprise solutions talked about a single version of the truth being something that resided in enterprise applications, but with supply chains depending on significant collaboration across multiple partners, that perspective is outdated. Now the Infor Commerce Cloud can provide the “truth” of what transactions and shipments have occurred, when they have occurred, and whether they have proceeded as they were supposed to. Kurt Cavano, President of GT Nexus, summed it up by saying, “We are the first (enterprise software company) to bring ERP and the network together.”

Mr. Cavano’s presentation demoed the ability to start in an Infor ERP solution but then being able to drill down seamlessly from an order into the network to get up to date visibility on estimated times of delivery (ETDs) and related end-to-end supply chain information. The goal is to have more of this visibility be based on real time visibility – “a Waze for global logistics” – rather than less accurate and timely EDI transactions.

Duncan Angove, the President of Infor’s Digital Disruption unit, explained the Waze for global logistics concept in more detail. Infor’s goal is to take a more predictive analytics approach to ETDs. Infor will do this by accessing external data sets -including IoT, GPS, and weather data – and then using machine learning technologies to analyze the networks’ data.

Mr. Phillips probably summed up Infor’s perspective on the GT Nexus acquisition the best when he said “the future belongs to network solutions.”

Efficient Financing Options Help Enhance Factory Standards in Emerging Markets

Procurement/Sourcing | By Neelam Singh • 08/06/2014

The financial supply chain needs more attention than it usually gets. Traditionally, the focus of supply chain management is on the movement of finished goods and raw materials across the value chain. But companies also need to pay attention to the flow of money. The movement of money happens in the form of bank credits or with the help of other financial institutions. Often these methods do not work well for medium to small suppliers who frequently are cash constrained and need to free up their working capital more quickly. There are solutions available in the market to facilitate credit retrieval, but banks are financing the receivables of small suppliers, which involves risk and requires the banks to investigate the relationships between buyers and the suppliers (their customers) in those chains. This drives up the fees paid by small suppliers. Another major issue with small and medium enterprises in emerging regions is the cost of capital. The rates can be between 7-10 percent which is difficult to afford.

One solution would be to get the suppliers, buyers, and financial institutions on one platform. But, this has been a challenge. Better integration between the physical and the financial supply chain can lead to improvements in both the physical and the financial supply chains.

A partnership between GT Nexus and International Finance Corporation (IFC) facilitates such an arrangement through a program called Global Trade Supplier Finance (GTSF) focused mainly on the financing option for small and medium suppliers based in emerging countries. GT Nexus, with its cloud-based platform, connects local exporters in countries like Bangladesh with their global trading partners and IFC. In 2013, GT Nexus merged with TradeCard, which offered financial supply chain capabilities to a large network of suppliers, retailers and service providers. Complemented with GT Nexus’ GTM and TMS solutions the capabilities became more holistic. “In the movement of goods, money and data, if all three are synchronized, a new and innovative set of capabilities can be brought about,” said Kurt Cavano, Vice Chairman and Chief Strategy Officer of GT Nexus in an interview with ARC Advisory Group.

How Does it Work?

The supplier is provided a set of tools to help pack and ship accurately and produce fulfillment documents in compliance with the buyer’s purchase order terms and conditions. The supplier ships the goods and invoice (or invoices) to the buyer and can choose to discount for immediate payment to the bank. A compliance process will bring about a payment decision while goods are practically still at origin. Provided compliance has been met or any discrepancies are approved, an irrevocable commitment to pay on the part of the buyer is brought about as a result of the legal framework of the platform. After having assured the IFC’s business rules have been met, a funding notice is then sent to the IFC.

Buyers benefit from a more stable supply chain and extended payment terms, while suppliers benefit with a flexible and cost-competitive financing facility. Suppliers receive immediate payments for buyer-approved invoices. All the transactions are carried out in the GT Nexus platform. Even if a delivery is completed before the due date, the payment is made if approved by the buyer. In some countries, IFC offers as low as 3 percent Annual Percentage Rate (APR), which is much lower than the industry norms.

A pictorial representation of the workflow is shown below.

The larger benefit of the GTSF Program goes beyond just the financing aspect. The program can be used as an incentive for suppliers to adhere to acceptable working and safety conditions (like safety exits, proper ventilation, and access to fire extinguishers). Essentially, factories can get better financing rates if they take steps toward ensuring better working conditions. IFC hires third party audit inspectors to check for the compliance and subcontracting issues. ARC has written about the problems of subcontracting and how audits can help (Social Audits Can Mitigate Outsourcing Risks in Asia).

These kinds of programs are already in place for brands like Levi Strauss & Co., Columbia, and many more. These buyers work with suppliers such as MBM Group (Bangladesh), MAS (Sri Lanka) and Brandix (Sri Lanka) who are a part of this program.

Dell and Caterpillar Reduce Freight Costs with Mode Shift

Transportation | By Steve Banker • 10/28/2013

The CSCMP Annual Global Conference, the most important supply chain conference of the year, had some nice mode-shift case studies. Speakers from Dell (Rob McIntosh, Global Reverse Logistics Director) and Caterpillar (Tom France, Director of Global Transportation) shared their insights and experiences last Monday.

In the case of Dell, a manufacturer of personal computers (PCs) and other electronics-based technology products and solutions, the shift meant moving from flying international bulk air to increasingly making use of 2 to 5 day air, rail (particularly in China), and ocean. This shift would not have been possible without a shift in business strategy.

Historically, Dell’s supply chain was famous as a build-to-order (BTO) manufacturer. Customers went to Dell’s website and ordered exactly the components they wanted in their PC. The result was a very fast and responsive supply chain with almost no inventory. However, as the prices of PCs fell, and PCs became ever more powerful, customers no longer felt the need to wait a few days for a specially-tailored PC. They went to retail outlets and bought cheaper products off the shelf.

Dell responded by moving to a segmented supply chain. One segment involved selling lower cost products based on a smaller number of configurations (approximately 300) directly to large retail chains. This involved shifting a large portion of the production from BTO to make-to-stock (MTS). Once Dell became a MTS manufacturer, forecasting and customer analytics (what do customers want and what will they pay?) became more important, and the supply chain slowed down. The company now holds more inventory, but it can also engage in much less costly and greener modes of transportation.

Caterpillar (CAT) is the world’s leading manufacturer of construction and mining equipment. Tom France of Caterpillar made an interesting point. When supply chain professionals think of mode shift they think of moving from faster and higher cost modes, like truckload, to a totally different mode, like rail. But you can also stay in a mode and achieve the same thing. In CAT’s case, that meant moving from flying spare parts overnight to using many more 3 to 5 day flights where customer expectations were aligned on a lower cost, but slower, delivery.

At CAT the ability to utilize lower cost modes has been facilitated by technology. The company built a control tower, using a visibility solution from GT Nexus, to achieve end-to-end visibility. This tool allows it to measure not just carrier lane performance, but also the variability associated with different carrier’s performance on specific lanes. What this means is that a carrier that delivers a number of shipments five days early or late has higher variability than a carrier that consistently delivers within a day or two of the scheduled arrival time, even if on average its on-time performance is the same. Lower variability translates into a lower need to carry inventory.

CAT also uses a number of air and ocean transshipment hubs. These hubs give it better scale on a lane. With scale CAT becomes a more important customer that can pre-book ocean capacity with no dwell times. In the air mode, it ships hub to hub to maximize cube.

CAT got the visibility solution up first, then put the hubs in place. Tom believes that was the right approach because putting in a robust process based on “trusting but verifying” what their 3PL companies were telling them needed to proceed changes to the network.

And at CAT, the question of what customers want and what they will pay also influences what sorts of modal choices it makes on a product by product basis. Tom made the point that engineering $400-500 out of a product is almost impossible. However, in a global supply chain with heavy equipment products, achieving this with a lower-cost mode is quite doable. Transportation can be a “huge lever” in lowering products costs. It is just a matter of working with customers on the price/delivery tradeoffs.

In conclusion, one of the things that most struck me was Dell’s business strategy transition. Much of the rhetoric in supply chain management today is about becoming “demand driven.” The poster child for this was the old Dell. There is no better way for a manufacturer to get demand signals directly from the customer, and then reacting to those demand pull signals, than engaging in a MTS e-fulfillment supply chain. Dell’s experience shows that sometimes survival involves becoming less demand driven.

Facebook Graph Search, Through a Supply Chain Lens

Business Intelligence | By Adrian Gonzalez • 01/16/2013

There were plenty of rumors about what Facebook was going to announce yesterday, everything from the launch of a Facebook phone to the introduction of a “Dislike” button. But the big announcement was about Graph Search, “a new way for you to find people, photos, places and interests that are most relevant to you on Facebook.” While traditional search tools were designed to search the Web, Graph Search was designed to search a social network — specifically, the immense quantity and wealth of content contained in Facebook’s 1 billion profiles, 24 billion pictures, and 1 trillion connections. According to the press release:

Graph Search and web search are very different. Web search is designed to take a set of keywords (for example: “hip hop”) and provide the best possible results that match those keywords. With Graph Search you combine phrases (for example: “my friends in New York who like Jay-Z”) to get that set of people, places, photos or other content that’s been shared on Facebook. We believe they have very different uses.

Graph Search, which is still in beta, allows users to enter natural language queries, such as “People who like tennis and live nearby,” “Photos of my friends in New York,” and “Sushi restaurants in Palo Alto my friends have liked” (as well as some funny search ideas people are already posting on Twitter under #FacebookSearchIdeas).

So, is Graph Search a big deal or not?

At first glance, the capabilities of Graph Search don’t seem much different than what you can do with “advance search” filters using traditional search tools. The big difference, however, is the user interface. According to a posting on Facebook’s engineering blog, the company had “discussed and debated, and built several simple prototypes of graphical UIs that allowed users — click-by-click — to build up structured, database-like queries. But they all seemed too complex and not quite up for the full scope of Zuck’s [Facebook CEO Mark Zuckerberg] challenge to us…If a person simply entered the title of the content they were looking for, could we then build a system that would understand the searcher’s input [emphasis mine] and find the content for them?”

The ability to use natural language queries is one reason I believe Graph Search is a big deal, mainly because it’s a step toward something even bigger: user interfaces driven by spoken commands, specifically for enterprise apps (see “Siri” Comes to Enterprise Apps, one of my predictions for 2013).

Graph Search is also a big deal when you think about applying this technology to existing and emerging Supply Chain Operating Networks, like those managed by Descartes, LeanLogistics, GT Nexus/TradeCard, E2open, Ariba, C.H. Robinson, and others that are the Facebook equivalents in the supply chain and logistics realm. “Graph Search takes us back to our roots and allows people to use the graph to make new connections,” says Facebook in its press release. And the same opportunity to make new connections exists in the supply chain realm, if you were part of a Supply Chain Operating Network and could use Graph Search to conduct queries such as:

Battery suppliers in China my industry peers have liked
3PLs with warehouses in Nevada and Tennessee with Automotive connections
Professionals with S&OP experience in retail who speak Spanish and live in Canada
Trucking companies in Utah with more than 10 refrigerated trucks with the most likes
Companies my Tier 1 suppliers are connected to in China, India, and Brazil
TMS and WMS software applications my connections like

Simply put, the ability to discover and establish new business connections, either company-to-company or person-to-person, is a key value proposition of network-based solutions. Providers are starting to explore ways to enable this capability (see, for example, Descartes Community), and Graph Search would greatly aid that effort. Of course, the value is ultimately dependent on the accuracy and completeness of the information in the network, especially information contained in business profiles (see “The Problem with Big Data”).

So, that’s my view of Facebook Graph Search through my supply chain lens. What do you think? And what supply chain queries would conduct on Graph Search? Post your ideas below or on Twitter using the hashtag #SupplyChainSearchIdeas

UPDATE: Watch Adrian discuss the Rise of Supply Chain Operating Networks on Talking Logistics.

(Note: C.H. Robinson, Descartes, and LeanLogistics are Logistics Viewpoints sponsors).

This Week in Logistics News (January 7-11, 2013)

Global Trade Management Solutions | By Adrian Gonzalez • 01/11/2013

No time to waste this morning, as I have a lunch date planned with my soon to be five year old daughter. Here’s the news that caught my attention this week:

The first significant merger of 2013 was announced this week, with GT Nexus and TradeCard announcing that they have signed a definitive merger agreement. According to the press release, the combined company will have “a global network of over 20,000 businesses spanning every major industry—from retail and apparel to high tech, automotive, heavy industry, consumer products, pharmaceutical, chemicals, commodities, finance and logistics. Together, the companies will manage over $100 billion in direct supply chain trade.”

I believe the two companies complement each other well. They are both network-based solution providers, where connectivity to trading partners is at the core of their respective solutions. The merger brings together the financial supply chain (TradeCard, PO to Financial Settlement) with the physical supply chain (GT Nexus, global trade movements and visibility). And the timing seems right too. While I’ve been a big proponent of network-based solutions for a long time, particularly for cross-enterprise business processes (see “Revisiting Supply Chain Operating Networks”), I believe more and more companies are starting to “get it” — they’re starting to understand the unique benefits a network-based solution can provide versus a traditional, standalone, behind-the-firewall one.

Steve Banker at ARC adds, “GT Nexus has not so secretly been positioning itself for an IPO. This merger may slow that down a bit, but it will make the new company much more interesting to the financial community. This is because neither company was in financial distress and both companies were roughly the same size. The new company will have about 1000 employees, and this larger heft should make them more interesting.”

The bottom line is that for supply chain and logistics processes, which involve the exchange of data and information with many external trading partners, software is not enough; you also need network connectivity. My bet is that solution providers will continue to march in the direction of realizing the Supply Chain Operating Network model depicted below.

Represenation of Supply Chain Operating Network (Source: 2010 presentation by Adrian Gonzalez) — Representation of Supply Chain Operating Network (Source: 2010 presentation by Adrian Gonzalez)

In other technology news, Oracle announced this week significant enhancements to its transportation management and global trade management solutions. According to the press release, new capabilities include “enhanced fleet management, transportation sourcing, transportation business intelligence, transportation planning, rail transportation, workflow and event management, freight payment, billing and claims, document management and customs management.” The press release provides more details, but here are a couple of new capabilities that caught my attention:

Mobility enhancements [for Oracle TMS] that improve efficiencies and decision-making by enabling customers to conduct key business processes and common transportation management tasks, such as shipment tendering and shipment visibility, on mobile devices using a configurable mobile web-app.

The introduction of Oracle Customs Management, a new module within Oracle Global Trade Management that helps customers manage customs clearance screening and custom filings by directly supporting US export AES filings and enabling data to be easily transferred to any other third-party filing broker solution.

Historically, TMS and GTM have been separate solutions. But over the years, as supply chains have become more global, demand for integrating these capabilities has increased. Oracle was relatively late to GTM, but its decision to build its own global trade management solution on the same platform as its TMS was a smart one. The missing piece, per my comments above, is having a network. Oracle continues to partner in this area, but I wonder if the company will change course this year and acquire a network-based solution provider in the near future.

On the 3PL front, Menlo Worldwide Logistics announced that it has expanded its operations in Singapore. Normally, the opening of a new distribution center is not very interesting, but this one caught my attention because of its “green” design and construction. Here are some details from the press release:

The new distribution centre features advanced building design and construction materials emphasizing environmental sustainability and high levels of energy and water-use efficiency—from the use of recycled concrete aggregates, to sustainably sourced office carpet and ceiling board, to high-efficiency air-conditioning and Philips T5 florescent lighting.

These efforts will be part of the criteria to be certified by the Singapore Building and Construction Authority (BCA), designating the Sunview facility as achieving BCA’s Green Mark Gold Plus status. The facility will be among the first to be so designated under the program, which encourages the use of recognized best practices in environmental design and construction and advanced “green” building performance.

Finally, one of my predictions for 2013 is that retailers and service providers will continue to focus on innovating the final mile. There’s been a lot of buzz lately about same-day delivery, with Amazon, Walmart, Google, eBay, and USPS all launching or ramping up their efforts in this area (see “On Amazon’ Quest for Same Day Delivery” and “Google, Same-Day Delivery, and Container Tracking”). The Financial Times published an article this week on the topic, which raised an interesting question: Do consumers even want same-day delivery? Here’s an excerpt from the article:

Profit margins are already under pressure in a sector where aggressive Christmas discounting produced only lacklustre sales growth and same-day delivery could erode retailers’ profitability further.

But rather than speed, there are signs that what matters more to some people is a reliable estimate of when their packages will arrive.

UPS adds: “Quite honestly, what consumers are telling us is as long as they know what the committed delivery date and time is, they are fine.”

This reminded me of a posting I wrote back in June 2009 titled “Speed vs. Consistency in Logistics,” where I highlighted a project Ace Hardware undertook to reduce lead time variability. I believe many of the points I raised back then apply here too.

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

Song of the Week: “Hurry Hurry” by Air Traffic Controller

(Note: Menlo Worldwide Logistics is a Logistics Viewpoints sponsor and Oracle is an ARC client)

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