Logistics Viewpoints

A complete analysis of logistics trends, technologies, and services

Guest Commentary: The Logistics Story for 2012 and Beyond

Guest Commentary | By •

The lasting image of the supply chain in 2012 is one of a consumer with a smartphone engrossed in making an online purchase. The story that goes with that image is all about the rapid changes that this new “connected consumer” has injected into our industry in 2012. So let’s take a deeper look at this evolution and some key things to watch for in 2013.

Historically, transportation has been treated as an ancillary function, but due to its importance in providing value to customers, organizations are increasingly taking a holistic view of the entire chain. They are looking for ways to reduce cost, retain service levels, and create agility and resiliency. In the past, businesses spent more time focusing on up-front challenges such as the customer’s web experience, while leaving transportation as an afterthought. Now, organizations need to look at the impact and opportunity that the connected consumer brings to the supply chain.

Up until this past year, the key topics facing the transportation industry have centered around the long standing cyclical areas of fuel costs, network capacity and the health of the economy. I believe that 2012 marked a major turning point or “cementing” of the attitudes and expectations of the connected consumer. Consumers have now grown firmly entrenched in the “fast and free” home delivery offered by Amazon and other online retailers, as well as other flexible options for taking delivery of goods.

To meet the expectations of this emerging demographic, many companies are finding that their traditional transportation solutions are simply not built to serve the demands of the connected consumer. This is driving the rapid adoption of transportation analytics – the integration of external and internal data gathered from the user experience, enabling more effective responses.

By using this data, companies can better provide the low prices and high service that are needed to win in a highly competitive marketplace. This combination of price and service will allow retailers and their manufacturing partners to succeed, both in the short-term sale and in longer-term customer loyalty.

As we leave 2012 behind, we have a world of new data to analyze and a fresh set of challenges to meet.

Things to watch in 2013:

  • Alternative Delivery: This year we can expect to see a push from the large providers to consider alternatives to at-home delivery. Before, shippers would deliver something to you and try a few times if they couldn’t find you, but this is no longer the case. Locker services and centralized pick-up locations are on the horizon. Traditional brick-and-mortar retailers with e-commerce websites may create temporary local “pop-up” stores where products can be picked up by online shoppers during periods of high seasonal demand.
  • Cost Awareness and Reduction: Retailers are going to have to look at cost reduction within their transportation chain, without sacrificing service. Businesses are recognizing the cost of delivery to their bottom line and are looking at ways to reduce it.
  • End-to-End Approach: This year, companies should strive to plan dynamically. In doing so, companies will enter a new era of building and maintaining resiliency. This end-to-end approach will allow companies to make more sophisticated changes on the fly, such as re-planning remaining delivery legs as goods are in transit.
  • Partner Approach: Moving forward, one of the key strategies for retailers and manufacturers will be increasing their level of collaboration and information sharing. Advanced technology solutions will help analyze demand and identify patterns that retailers and their suppliers can respond to more proactively. In responding to this data, manufacturers have a real opportunity to differentiate themselves and demonstrate their value to their retail partners by helping them manage the challenges presented by the connected consumer.
  • Speed and Agility: Both manufacturers and retailers will increase their overall supply chain flexibility and responsiveness to meet the increasingly impatient and fickle demands of consumers. In terms of transportation, this means relying on more flexible schemes and multiple modes that might include private fleets, third-party truckload carriers and parcel carriers — and even mixing modes in new and creative ways.
  • Innovation: Perhaps the most critical imperative for both retailers and manufacturers is to focus on true innovation as they rethink the most basic tenets of how they deliver their products to consumers around the world. With today’s delivery addresses spread over a large geographical area, the advent of many small and low-cost packages, and the frequent need to repeat deliveries when consumers are not home, it’s clear that direct-to-home delivery will not remain a profitable option if online shopping continues to grow at its current pace. Manufacturers and retailers simply will not be able to absorb the associated parcel shipping costs, even as their leverage with shippers grows.

So what are the lasting images from 2012 for you and your organization? And what is top-of-mind for you in 2013 and beyond?

Fabrizio Brasca is vice president, global logistics, JDA Software. He is responsible for developing innovative transportation and logistics strategies across all industry verticals.

Best of Breeds are Dead. Long Live Best of Breeds!

Logistics Technologies | By •

Last week, RedPrairie and JDA Software, two leading providers of supply chain and logistics software, announced that they are merging together (see our commentary here). Both companies had grown through the years by acquiring best of breed vendors, and now that they have reached a certain size, they are joining forces to offer customers “a full spectrum of solutions for planning and execution across the entire value chain.”

In a call with analysts last week to discuss the merger, Hamish Brewer, JDA’s CEO who will also lead the new company, shared his perspective on what customers are looking for today with regards to IT:

“Most of our customers today have an IT strategy that I would broadly describe as best of suite, which is to say that they don’t…want to do everything with one supplier, but they don’t want to go back to having hundreds of suppliers either. They want to have a handful, usually a single-digit number, of suite providers that can handle sizable pieces of their IT infrastructure, which can work together, especially now that we have much better common platform integration tools. So, in general, that is the IT strategy that I hear from most of our customers.”

So, where does this leave best of breed providers of supply chain and logistics software? Must they become “best of suite” providers to survive? Are best of breeds going the way of the dodo bird?

First, it’s important to note that (to paraphrase Mark Twain) the death of best of breeds has been greatly exaggerated in the past. Back in 2003, for example, Oracle CEO Larry Ellison emailed a colleague that “Within the year every analyst will agree that best of breed is dead — except at dog shows.” He was referring to CRM best of breeds, but the belief extended to other applications too. Almost a decade later, best of breeds are alive and well, with new startups entering the market every year. The bottom line is that as long as there are new supply chain and logistics challenges and opportunities to go after, as long as there are continued innovations in technology, and as long as there are entrepreneurs with new ideas and the drive to realize them, there will always be a role for best of breeds in the market.

That said, many manufacturers and retailers, especially large ones, are indeed pursuing the IT strategy outlined by Brewer. So, aside from expanding their solution footprints, either organically or via acquisitions, what else can best-of-breed software vendors do to succeed in the market?

I believe there are at least four areas where best of breeds can set themselves apart from the competition:

Provide network-based solutions: Supply chain and logistics processes are inherently network-centric — i.e., they involve many external parties, such as suppliers, customers, transportation providers, 3PLs, and customs. Best of breeds that provide customers with software designed for cross-enterprise planning and execution, and also provide a built-in network of trading partners, will have an advantage over vendors that provide software designed only for “inside the four walls” and also require their customers to build and maintain their own B2B networks. For related commentary, see “Revisiting Supply Chain Operating Networks” and “An Overlooked (But Critical) Component of Transportation Management Systems” and “SAP Buying Ariba: Because Software Alone is Not Enough.”

Leverage Social and Mobile technologies to innovate user interfaces and workflows: Startups always have the advantage of designing their solutions from the ground up using the latest technologies and software innovations. Two of the hottest areas in technology today are social and mobile capabilities, which are opening new paths to innovation, particularly in user interfaces. For related commentary, see “Guest Commentary: Next Generation of Visualization and User Interaction” and “Maps: The New ‘Killer App’ in Supply Chain Software?”

Focus on under-served vertical industries: This has been a formula for success for many best-of-breed vendors in recent years. Instead of following the herd into consumer packaged goods and retail, they have differentiated themselves by serving 3PLs (including freight forwarders and brokers), transportation providers (including trucking companies, railroads, and airlines), and companies in the chemical, pharmaceutical, oil and gas, and other industries with specialized requirements.

Address the “white spaces” in existing solutions: In other words, identify the functionality gaps in existing solutions and fill them. For examples related to transportation management systems (TMS), see “Transportation Forecasting: A ‘White Space’ in TMS” and “Innovation: Addressing the White Spaces of TMS” and “What’s Next in Transportation Management Systems (TMS)?”

Finally, there are two more important points to remember:

  • It doesn’t matter what software application or suite you implement, it won’t deliver much value unless you have the right people, with the right training and know-how, to use it effectively. And this is where 3PLs and managed services providers come in. As a 3PL told me recently at a conference, “A shipper can deploy a TMS themselves, but many of them don’t have the resources internally to effectively use and manage it, so they don’t get the full value from the application or stop using it. What a 3PL brings is not only the technology, but also the experts that know how to use it to continuously deliver value.”
  • “Best-of-suite” might matter more to customers today than in the past, but not at the expense of time-to-value and speed of innovation. In some cases, speed and flexibility actually matter more to customers than functional breadth and depth, which is why software-as-a-service (SaaS) solutions continue to gain traction in the market.

(Note: JDA Software, Oracle, and RedPrairie are ARC clients and/or Logistics Viewpoints sponsors)

This Week in Logistics News (October 29 – November 2, 2012)

Mergers-Acquistions | By •

The biggest news this week was Hurricane Sandy, which left a path of flooding, power outages, and destruction along the east coast. Our thoughts and prayers are with everyone affected by the storm, especially those hardest hit in New Jersey and New York City. The storm also disrupted logistics operations, including the closing of local airports and the Port of New York/New Jersey. Events like these are another reminder of why companies need to prioritize and invest more in supply chain risk management.

In other news…

Earlier this week, rumors started circulating online that JDA Software was on the block. Yesterday, those rumors were confirmed with the official announcement that RedPrairie and JDA Software are merging. According to the press release, “entities affiliated with RedPrairie,” namely New Mountain Capital, “will effect a cash tender offer to acquire all outstanding shares of JDA common stock for $45 per share, [which] represents a 33 percent premium to JDA’s stock price on October 26, 2012…The transaction has a total enterprise value of approximately $1.9 billion.” The new combined company will be private, with JDA’s current president and CEO, Hamish Brewer, serving as CEO. RedPrairie’s CEO, Michael Mayoras, will remain on the board.

The solution footprints of both companies are mostly complementary, with JDA’s strength in supply chain planning, merchandising and pricing solutions, and RedPrairie’s strength in warehousing, workforce management, store operations and e-commerce. The biggest area of overlap is transportation management. JDA has a stronger market presence and larger customer base in TMS than RedPrairie, thanks to its previous acquisitions of Manugistics and i2 Technologies, so I suspect the new company will position JDA’s solution as the primary offering moving forward.

I’m still thinking through what this merger means for both companies, their customers and employees, and the market in general, but here are some quick thoughts and observations:

  • A lot of the buzz and hype generated by supply chain vendors these days is centered on CPG-Retail, with discussions about omnichannel, mobile, and social media leading the way. If you’re a B2B company, say in the paper or chemical industry, you’re probably not feeling much love these days, at least from the marketing folks. Let’s hope the R&D folks don’t forget about you too. And to be fair, the same goes for analysts and industry watchers like us.
  • I wonder if SAP and Oracle are smiling today. Best-of-breed providers used to criticize them for their single-platform strategy and value proposition (and their lack of supply chain and logistics functionality, at least historically), but now these best-of-breeds are migrating toward a similar single-platform strategy and value proposition. This merger, at least in part, is a response to the shifts taking place in the competitive landscape and the ongoing desire by customers, especially large companies, to simplify their IT landscape.
  • As I’ve argued in the past, software alone is not enough. You can have a best-in-class enterprise software platform within your four walls, but without an adequate B2B connectivity network and associated capabilities, you can’t effectively manage end-to-end supply chain processes. This is an area that RedPrairie and JDA still need to address.
  • JDA’s revenues are down 2 percent this year through the end of September compared to the first nine months of 2011. Software and subscription revenue declined 18 percent in Q3 2012 compared to last year. In contrast, peer companies like Manhattan Associates, SAP, Oracle, and Descartes Systems Group have all grown their revenues this year. This merger won’t help sales in the near term, as customers wait for more clarity and information about what this means to them, but going private and taking Wall Street off its back could help down the road.

Here are some initial thoughts from Steve Banker at ARC:

Product integration is always difficult in these situations. When a new common product set is achieved, moving to the new solution is more akin to a brand new implementation than an upgrade for existing customers. That said, JDA has a lot of experience in this area. The JDA/i2 integration went quicker and smoother than I had expected.

 

After years of talking about eCommerce, eFulfillment, and Omnichannel, I think the time is now for bringing a more holistic solution set to market. Home Depot had a conference call for financial analysts in June where the sense of urgency for big retailers in this area came through. The biggest product holes are that neither RedPrairie or JDA has a Demand Signal Repository, although JDA has argued the DSR matters less than the analytics that ride on top of the DSR. And omnichannel requires much better store level inventory accuracy. Will retailers buy what in effect is a light WMS for the store? RedPrairie has such a solution but I don’t sense that retailers have been buying that type of solution.

In other news, Con-way reported Q3 2012 results this week. Revenue increased 2.0 percent and operating income declined 9.7 percent in the quarter compared to Q3 2011. Here are some excerpts from the press release:

Commenting on the quarter, Douglas W. Stotlar, Con-way’s President and CEO said, “Consolidated third quarter results for 2012 fell short of our expectations, due largely to higher-than-anticipated employee benefit expense, primarily healthcare, at Con-way Freight, and technology costs incurred in support of our three-year improvement roadmap.” Stotlar added that volume trends so far in the fourth quarter at Con-way Freight have declined compared to last year. “Tonnage levels in October, prior to the effects of Hurricane Sandy, were about three percent below those of October 2011, so we expect the fourth quarter of 2012 to be challenging as well.”

 

Menlo Worldwide Logistics…maintained consistent growth in revenues and net revenues but saw a modest decline in operating income. “Gains in core transportation management services were somewhat offset by lower warehouse management revenues,” Stotlar said. “Menlo continued to benefit from its international operations and their pipeline of opportunities.”

On the technology front, social media and mobile solutions continue to dominate the headlines. SAP introduced two new social offerings: the SAP® Jam social software platform and the SAP® Social OnDemand solution. Here are some excerpts from the press release:

The design principle behind SAP Jam was to create a unified environment in which users can easily connect with colleagues and collaborate around data, content and processes right where they are working, to more effectively solve problems, make decisions and drive results…The platform combines the best parts of SuccessFactors Jam for enterprise social networking, the SAP® StreamWork® application for social workflow and problem-solving as well as new capabilities.

 

SAP Social OnDemand helps marketing organizations take action on insight by simplifying the process of prioritizing and engaging on social media and honing in on key trends. With real-time monitoring, routing and escalation, it helps ensure that critical conversations are not missed and that responses are appropriate, based on a poster’s profile that includes social influence metrics as well as customer data from other enterprise systems.

Meanwhile, Manhattan Associates announced the development of Mobile Shipment Manager, an application for Manhattan SCALE available on Windows 8 and Windows RT. “Mobile Shipment Manager, the latest creation from Manhattan Mobility Labs, provides immediate visibility into supply chain shipments and allows one-touch management access via any Windows 8-enabled device.” The press release includes the following quote from Jim Casselman, chief information officer, Buffalo Hospital Supply: “An application like this will enable me to re-route shipments as needed, execute rush deliveries and immediately remedy any challenges from a mobile device while integrated to Manhattan SCALE. Being able to make key supply chain decisions anywhere is invaluable to me and my operations team.”

Finally, and shifting gears from logistics, yesterday was Type 1 Diabetes Day (T1D), an initiative launched by JDRF to raise awareness about this chronic disease that affects millions of children and adults, including my oldest daughter who was diagnosed last year at age 11. Unfortunately, Type 1 Diabetes (which is not the same as the more common Type 2) is on the rise for reasons that aren’t clear to researchers. This not only raises the stakes for finding a cure and improving treatments, but also for educating the public about this disease. As I’ve learned this past year, many people (like I was until a year ago) know very little about T1D — or worse, they have incorrect information. So, instead of providing a song of the week, please take a few minutes to watch this informative “Type 1 Diabetes 101” video featuring kids providing an overview of the disease, its symptoms, and how it impacts their daily lives.

(Note: Con-way, JDA Software, Descartes Systems Group, Manhattan Associates, Oracle, RedPrairie, and SAP are ARC clients and/or Logistics Viewpoints sponsors).

This Week in Logistics News (October 15-19, 2012)

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My wife is going away for a long weekend with her mom and sister. But I should be fine. She left me three detailed pages of where I need to be and what I need to do, hour by hour, for the next three days.

So, with no time to waste, here’s this week’s news:

Manhattan Associates reported record total revenue of $95.8 million in Q3 2012. License revenue was $16.2 million, up 12 percent from Q3 2011. The company closed two $1 million-plus deals in the quarter (one with a well-known retailer, the other with a well-known CPG company, both of them existing customers). Here are some highlights from the earnings call:

  • Year-to-date, about 65% of license revenue has come from existing customers and about 35% from new customers.
  • Year-to-date revenue has increased 14% to $281 million. Compared to Q3 2011, total revenue in the Americas grew 13%; EMEA, 5%; and APAC, 14%.
  • The company updated its full year revenue guidance to a range of $370 million to $375 million, which represents 12% to 14% growth over 2011.
  • Planning for 2013, Manhattan expects low double-digit year-over-year growth of about 10% to 12%.

As I’ve noted before, this has been a very positive year for most supply chain and logistics software vendors, and despite the ongoing uncertainty with the global economy, most software vendors are optimistic about the year ahead. The bet is that companies will continue to invest in technology to drive down costs, improve productivity, and enable new processes.

When a 3PL issues a press release, it’s usually about the introduction of a new service or about an acquisition that will expand their solution footprint. This week’s announcement by C.H. Robinson, however, is about a divestiture. The company has sold its payment services business, T-Chek Systems, Inc. to Electronic Funds Source, LLC for $302.5 million in cash. T-Chek had been a subsidiary of C.H. Robinson since 1984. Here is a quote by John P. Wiehoff, chief executive officer of C.H. Robinson, from the press release:

“We are proud of T-Chek’s success and of T-Chek’s employees, who built a very strong business with a long track record of growth. As the payment services industry continues to consolidate and evolve, scale and alignment with the financial services sector are becoming increasingly important. EFS is an excellent organization and we felt, for T-Chek’s long term success, that strategically it was the right time for T-Chek to join forces with EFS.”

In the immortal words of Kenny Rogers, “You got to know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run.”

There’s been a lot of buzz this year about the rise of online education (see edX, launched by MIT and Harvard earlier this year, with Berkeley and The University of Texas also joining). This trend is now extending to software training programs, as evidenced by JDA’s announcement this week of JDA Minutes, “a cloud-based video training program, from JDA Education Services, that is available 24/7 via pc, tablet, or mobile device.” Here is an excerpt from the press release:

With JDA Minutes, users can expect flexible, timely and efficient learning – all in the cloud. Popular features include:  3-10 minute training videos on useful solution topics, expert presenters, video rating, “suggest a minute,” favorite’s folder, searchable video content, and more. JDA Minutes currently offers channels for JDA® Advanced Store Replenishment, JDA® Advanced Warehouse Replenishment, JDA® Fulfill, JDA® Demand, and JDA® Space & Category Management customers. Additional channels will be added in the future.

Like I said in my posting on Wednesday, when it comes to learning and talent development, we need to think beyond four year universities and traditional education programs. New paths to learning and training are being created every day.

Infor introduced new branding this week, complete with a special website outlining “The New Infor.” What’s noteworthy, in my opinion, is the emphasis the company is putting on “Social” and on “Beauty.” On the latter point, here is an excerpt from the website:

Business applications have traditionally been functional, but not much to look at. The new Infor changes that by making beauty a competence [emphasis mine].

It seems like Infor is taking a page from Apple’s playbook and bringing beauty to the enterprise software market. Steve Banker wrote about Infor’s new user interface back in April and he was impressed by it. The bottom line, as Steve pointed out, is that software usability is becoming a competitive differentiator, especially in market segments where there’s minimal difference in functionality between vendors.

And that’s a wrap. Now where did I put that list?

Song of the Week: “In the Meantime” by Spacehog.

(Note: CH Robinson, Infor, JDA Software, and Manhattan Associates are ARC clients and/or Logistics Viewpoints sponsors).

Guest Commentary: Next Generation of Visualization and User Interaction

Logistics Software Vendors | By •

I was recently invited to participate in the Massachusetts Institute of Technology (MIT) Center for Transportation & Logistics’ roundtable focused on the trade-off between planning and execution. The event spanned two days and presented an agenda of discussion topics across the multiple time horizons of planning (strategic, tactical and operational) as well as views on process and technology. The audience was comprised of an excellent collection of experts, including practitioners from a variety of industries, academics and a few of us from the software solution industry. The format of the roundtable entailed a number of session topics complemented by a series of interactive polls designed to spark and stimulate active discussions among the group, which was expertly facilitated by Dr. Chris Caplice, Executive Director of MIT’s Center for Transportation & Logistics.

Of particular interest to readers of this blog was the final session entitled “Software Provider Perspectives.” In this session, my industry peers and I were asked to give a brief presentation on some of the underlying concepts and approaches to our respective solutions, as well as give a view into what we see as the future of the planning and optimization space. This was followed by a lively and very interactive group discussion on the challenges, limitations and opportunities of technology in this domain. In particular, my peers and I were keen on listening to what the users of our capabilities had to say.

The discussion was lively and easily the most interactive of all the sessions, and while there were a number of concepts bandied about from buying/selling behavior to optimization approach, there was one particular view that emerged consistently at the forefront of everyone’s mind. The issue was visualization and usability.

As views were shared and opinions presented, the topic of usability, information (not data) presentation and overall visualization appeared to be the hot topic. In particular, the need for more intuitive interfaces that mask complexity, define metrics, and aggregate views designed to synthesize the abundance of available data into something actually digestible for both the day-to-day user as well as the supply chain senior executive. I cannot say this was surprising as the industry as a whole has been so focused on making more sophisticated solutions that it is easy to see how the solving technology has outpaced the focus on user interaction. That being said, however, a key salient point that emerged was that despite the desire for better interaction, it was clear that better interaction did not mean simplifying the underlying engines. There was no complaint about sophistication or approach and that a “simple” user interface did not diminish the need to be able to solve complex problems. The ideal was the merging of these two paradigms into one.

As the discussion continued, we began to engage on where we thought this might go, and in particular, the role newer user interface and visualization technology might have in the world of sophisticated supply chain planning. No one had a definite answer but here are a few directional thoughts that, in my view, are critical when thinking about the next generation of user interaction:

  • A picture is worth a thousand words – As a rule, people understand and react to images better than they do streams of data and tables. Metric-enabled graphics, intuitive and directional alerts and representative maps can all be effective tools to communicate information to a user.

  • What I want, when I want it – Configurability is becoming more and more important as an enabling factor to user productivity. The ability to not only decide what I want to see but also the sequence and importance can dramatically increase ease of adoption.

  • More than one way – Mobility has become a fact of life for the average consumer, let alone the supply chain practitioner. Enabling views on multiple formats for different levels of the organization without having to be a slave to a desktop creates organizational synergy.

  • Enable change – I have long been a proponent of the interoperability between planning and execution in the transportation space. Along those lines, interfaces should provide effective ways for users to digest and act on rapid changes that occur within their domain through a combination of sensitivity-based alerts, embedded actionable analytics and powerful underlying engines that can weed through available “big data” and suggest courses of action.

It was an exciting and rewarding experience sharing and interacting with my peers and customers in an open forum. I listened and learned and I particularly enjoyed discussing and speculating on where we could go. It will interesting to see the fruits of our debates unfold.

Fabrizio Brasca is vice president, global logistics, JDA Software. He is responsible for developing innovative transportation and logistics strategies across all industry verticals.

Analytics is Integral to Optimization in JDA’s Transportation Management System

Business Intelligence | By •

JDA’s transportation management system (TMS) product management team recently visited ARC to brief us on their product roadmap (JDA is an ARC client and Logistics Viewpoints sponsor). I also got a chance to see a product demo that highlighted those enhancements. Because I’m conducting research on supply chain analytics, the visit also gave me a chance to discuss the analytic capabilities of JDA’s TMS in more detail.

I was intrigued by:

  • How advances in TMS usability are connected to the way analytics and user interfaces are blending together.
  • How in-line analytics can enhance existing functionality (see “The Science Behind the Benchmarking of Lane Rates” for an example).
  • How JDA’s analytics support both enhanced forms of optimization and plan enforcement.

Covering all three of these topics in today’s posting would take too long, so I will just focus on the last point, on how analytics and optimization are working more seamlessly together to improve outcomes.

Understanding how analytics data can impact an optimization run is difficult to visualize. Here is an example of how this works. For ocean shipments, many shippers negotiate discounts if they commit to providing that carrier a certain volume. There is a financial risk to the shipper if they do not honor their commitments. Imagine a shipper that has promised a third of their projected volume on a particular lane to three different carriers. Further, imagine that halfway through the year one carrier has received about half of the tenders on that lane. The optimization engine can take that data as an input, and automatically penalize that carrier in the optimization run, thus greatly increasing the chances that the other carriers will start receiving their fair share of the loads.

Analytics can also be used to examine to what extent the plans generated by the optimization engine are being honored in execution. One metric that can be used is “percent deviation from the original plan.” The plan may have called for tenders to certain carriers, but analytics show what proportion of time planners have not adhered to the original plan. A manager can use this metric and look at the costs the company has incurred from not honoring the original plan and which planners, covering which lanes and customers, were most apt to deviate from the plan.

Just because a planner is not using the carriers suggested by the planning engine does not necessarily mean the planner is at fault. This is where fault codes become useful. If there are exceptions on a lane, the person tendering that lane may be asked to provide a fault code. These fault codes can help to explain whether the fault was the shipper’s or the carrier’s.  Some examples of fault codes include: “tender exceeded the carrier’s capacity limits,” or “tender sent 24 hours before scheduled pickup date,” or “customer requested that a different carrier be used.”

The fault codes selected, in turn, can be turned into analytics that can be used to improve performance by a planner (reduction in maverick spend), a carrier (fewer tenders rejected), or the optimization engine (engine reconfigured to prevent tenders to a particular carrier when delivering to a particular customer destination). However, the use of fault codes is dependent upon making sure planners are trained on how to use them.

Managers must monitor the codes to ensure that they are used rigorously and consistently. A manager can create alerts to see whether planners are consistently using these fault codes. The manager can also drill down and see if users are just defaulting to a token response, or if they are actually selecting different fault codes.

Supply chain management software vendors increasingly seek to differentiate their offerings from their competitors based on the way analytics are used to support usability, functional enhancements, and optimization. JDA has certainly done a good job of using analytics to help differentiate its TMS solution.

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