SaaS Archives

Guest Commentary: Keystone Foods Improves Supply Chain Visibility with SaaS TMS

Food & Beverage Industry | By Eric Meister • 04/04/2013

Keystone Foods is a multi-national, multi-protein processor for the world’s leading brands, providing fresh and frozen protein products to customers worldwide. Keystone processes poultry, beef, fish and pork and is dedicated to food safety as well as quality. The company runs 50 facilities that serve about 6,400 restaurants around the world. The Keystone Food Logistics Services Group is part of the Keystone U.S. distribution business, which has four distribution centers servicing the quick serve restaurant industry. Keystone Food Logistics Services stores and ships every item customers require using a private fleet while handling inbound through contract carriers. Keystone typically handles 500-700 loads per week.

Keystone ran several business case scenarios in search of opportunities to grow business while reducing supply chain costs. The company determined that centralizing its internal freight and launching a new logistics service would be the most profitable route. Historically at Keystone, freight was managed in a decentralized manner, so each individual manufacturing facility managed transportation. The company used both asset-based carriers and brokers to handle freight. Lanes consisted of transfers of raw materials between facilities, fresh and frozen products to customers, cold storage facilities as well as inbound ingredients from suppliers.

Keystone created a wishlist for a revamped transportation management system that included:

Visibility into real-time supply chain information
Collaboration with everyone involved in the freight network
Centralized data on common platform
Ability to benchmark and establish KPIs
Reduced overall transportation costs

Keystone selected a true software-as-a-service (SaaS) TMS to improve overall supply chain management in a collaborative environment. The collaborative platform enables Keystone to manage the entire freight process, from optimizing mode to routing shipments to managing carrier selection while ensuring capacity commitments are met. Additional benefits include:

Real-time monitoring of the entire freight process – everyone is in the loop so plants can continue producing and meeting customer demands.
Orders received automatically and loads tendered to carriers directly through the system.
Automated processes and reporting, providing access to data that was not available previously.
Visibility to all carriers and rates in the system, so Keystone knows it is selecting the best possible rate for a particular lane.
Electronic scheduling gives total control of appointments for each facility while being configurable to a specific schedule and dock.
Easy to use system for carriers and other users who are not traditionally computer savvy.

By leveraging transportation technology, Keystone is now able to:

Improve Visibility: A central data repository enables visibility for analysis of costs and performance measurement to uncover areas for improvement.

Reduce Costs: Keystone saved 5% of overall freight spend and received quick payback of four months.

Increase Collaboration: With all parties in the transportation process having access to the system, Keystone gained insight into how freight impacts operations.

With such complex distribution processes and requirements for on-time delivery to ensure product freshness, food and beverage companies need real-time visibility into the transportation process. With true SaaS transportation technology, Keystone continues to gain supply chain visibility as well as collaborate with suppliers, cold storage facilities, plants, planners, carriers and customers.

Eric Meister is Vice President of Technology Operations at LeanLogistics. He is responsible for all aspects of customer technology implementation, post-implementation tactical customer support, strategic support services, and client services. Prior to joining LeanLogistics, Eric drove operational excellence through the adoption of technology in supply chain leadership roles in best-in-class manufacturers and a third party logistics provider including the implementation of LeanLogistics’ solutions. His experience as a customer helps drive a practical approach in developing innovative supply chain solutions.

Guest Commentary: Transportation Management Wasn’t Always This Easy

Guest Commentary | By Peter Yost • 04/02/2013

Today’s logistics departments have a lot of options for systems that help them plan and execute the shipments that drive their businesses. It wasn’t always this easy though. A brief look in the rearview mirror will help us appreciate how we got here and the direction we’re heading.

Every time I plug my $20, 16GB USB memory stick into my computer I recall my days marketing 856MB disk drives for $26,000. If you remember those days, then you’ll probably also remember 300 baud acoustic coupler modems, green screens and token ring networks. How about Hollerith cards, dot matrix printers and SCSI cables (pronounced “scuzzy,” my all-time favorite industry term)? Yes, we’ve come a long way!

Meanwhile, over in the transportation department, loads were being planned on blackboards, columnar paper and there was a lot of eraser dust on the floor. Rooms full of planners spent their days with telephone headsets talking to clients and carriers negotiating rates, scheduling pick-ups, tracking down the status of a load, and confirming deliveries. I remember my first time entering the “war room” of a large company’s transportation department and being amazed (and a little intimidated) at the frantic pace, intensity and volume of the voices in the room. The only technology I could see was the row of fax machines along the wall and some Xerox machines, which is what we used to call all photocopiers.

It didn’t take long for technology visionaries to spot an opportunity to automate all that chaos. The 1990’s brought a lot of innovation to the traffic department.

1990 – “Blue Screen” transportation systems were being adopted by the most progressive companies to try and control the process. These batch-oriented systems had very limited integration with the company’s accounting systems or with carrier systems.

1993 – Client/server technology evolved and transportation applications started to become more approachable. There was hope that someday the beast could be tamed.

1998 – The big break was the evolution of the Internet and browser-based applications around the turn of the century.

However, the problems were too big to be solved by a communication protocol and a Netscape browser (another blast from the past!). Interconnectivity, scalability and configurability were still big hurdles companies needed to clear. As recently as 2001, a transportation management system (TMS) was still only available to big companies that could afford the multi-million dollar price tag for the mainframe-based software, hardware, installation and support.

Good ideas have a way of persevering. Visionaries and entrepreneurs seized the opportunity to use the emerging technologies to make an affordable and full-featured TMS available to more companies. Now you can implement a software-as-a-service (SaaS) TMS that is highly configurable, multimodal, functional and affordable enough for even start-up companies to use. Today’s on-demand systems share real time information with internal systems and with the carriers moving freight door-to-door, all over the world. These systems take full advantage of mobile devices, take just weeks to implement and offer a complete view of the entire process.

Yesterday’s expensive DASD (Direct Access Storage Device) has given way to today’s cloud. The 300 bps analog connections to mainframes are now high-speed digital connections over the Internet. Green screens have been replaced with flat screens, and batch-oriented, locally-hosted transportation software has been replaced by highly-configurable, cloud-based, real time, and affordable transportation management systems.

We’ve come a long way!

Peter Yost is the Director of Business Development at MercuryGate International. He has 29 years of experience in technology sales & marketing, including 8 years in the logistics industry. Peter is responsible for MercuryGate’s market development and messaging, and he is responsible for the company’s domestic and international partner ecosystem that is expanding the company’s reach into Europe, Asia and South America. Peter has a BBA in Marketing and Information Technology from Georgia Southern University.

Guest Commentary: The Next Big Thing in “SaaS” for Supply Chains – “The Entrust”

Cloud/Software-as-a-Service | By Art Mesher • 01/31/2013

We’ve entered a new era. This era is an “always on and always connected” and “nowhere to run and nowhere to hide” environment. This “big data” environment is creating a factorial increase in transparency (costs, prices, performance etc.) that is redefining the permanence of business relationships and supporting system requirements. In the new world, very little will last forever (or should be planned to last forever) and the best strategies will be based on the ability to configure and reconfigure partnerships within supply chains (suppliers, customers and logistics service providers). The key will be not to establish relationships, but to flexibly maintain them in a way that guarantees outcomes and insures against failure. The new “permanence” might be best described as doing lots of temporary and/or different things for long periods of time with the same people, as opposed to the old “permanence” of doing the same thing with the same people all the time.

As a consequence of this new era, product life cycles and shelf lives are shortening – quickly. In today’s world, almost any product or service can be ‘gotten’ from anywhere by anyone. And, if you wait six months to a year, you can find it done better or cheaper by someone else. Just because you have it or can get it isn’t good enough anymore – so can everyone else. Having the product or service isn’t enough – you need to distinguish yourself by being able to guarantee the outcome (or insure against failure) from using the product or service. If you can’t, you’ll be passed over for someone who will and your margins will suffer over time.

Technology Outlook – Obsolescence of the Permanent Enterprise Platform and the Evolution to Heterogeneous, Distributed Systems
From a raw technological infrastructure standpoint, many of the systems created in the prior decade will become obsolete over the next decade. They are much like a cassette tape player or VCR tape is to today’s methods of music and video distribution. The systems won’t go away, but they will not offer businesses competitiveness either. Why? Because these systems purchased in the last 5 years were purchased as “permanent platforms” that ignore the rapid “acceleration” of technology and networks.

To remain competitive, companies will need to continuously buy (or lease) new technologies that let them keep pace with this acceleration. Specifically, competitiveness will require businesses to be able to harness presence on networks, leverage ubiquitous wireless communications and distributed intelligent devices and extend their legacy systems and platforms. The notion of replacement cycles for technologies will be replaced by continuous investment cycles.

What businesses continue to invest in will also need to change. The architecture of heterogeneous, distributed technology systems that businesses will need are very different than the pre-2011 enterprise platforms. Thinking simply, an architect of houses (your enterprise) follows different design principles than someone who architects multi-tenant apartments or office buildings (an inter-enterprise collaborative, network solution). Things like common areas and shared community services are much more understood by architects of buildings or apartments. This thinking is what makes enterprise systems and inter-enterprise systems different – so different that you can clearly distinguish between an apartment and a single-tenant house on your street.

Logistics – New Super Specialists Eroding What You Thought Was Permanent
On the logistics service providers side, we’re now seeing the real impact of Darwin’s law as the logistics industry continues to evolve and specialize post deregulation. For many years, the logistics system operated with a structure of “Whales” (multi-modal, end-to-end asset-owning logistics providers such as Deutsche Post and UPS), “Sharks” (specialized, best-of-breed in a particular mode, such as nationwide domestic truck carriers) and “Peddlerfish” (non-asset owning provider in a particular space/mode). But, the system evolved and we saw a smarter-than-normal Peddlerfish emerge that I consider a “Dolphin” — a very intelligent and likeable broader logistics specialist (a 4PL, like Menlo). And as Darwin predicted, the ecosystem continues to evolve. We’re now seeing a new member I will call a “Needlefish” — this smaller fish does one thing really well and has sharp teeth. One Needlefish doesn’t eat much food, but a school of them can easily pick away at aspects of the ecosystems. We’re seeing Needlefish that are lane specific, commodity specific or super-specialized in a market/geography (such as fresh seafood or flowers). Needlefish will erode areas of business that the traditional Whales, Sharks, Peddlerfish and Dolphins had always thought of as their own permanent feeding areas.

The Entrust: Rise of the Network Federators
Businesses involved in logistics need to recognize they are competing and partnering with a constantly changing ecosystem of increased specialization. Tomorrow’s successful logistics-sensitive business needs to stop focusing on forging tools to hunt and gather, and instead look to relationships and technologies that can guarantee a constant food supply.

I believe we’re seeing the birthing of new type of company – the “Entrust” – that will help businesses guarantee outcomes (and insure against failures) by maintaining the most competitive environment for process management and systems enabling best-in-class communications, collaboration, and compliance.

An Entrust is a process-enabler, not just a technology or a logistics service provider. An Entrust is trusted by a community to facilitate consistent, predictable transactions. An Entrust is a federator, bringing together other member enterprises and networks to streamline a process. An Entrust authenticates and issues credentials to participants to ensure there are no “catfish” in the ecosystem. An Entrust insulates its members from the continuous investments needed in the new era to modernize, harmonize and effectively harness new waves of technologies. An Entrust provides shared service environments for a community of players with varied technology capabilities. An Entrust provides broad access to a community to allow members to rapidly assemble, disassemble and reassemble its supply chain relationships with speed and grace. An Entrust will distinguish itself on consistency, predictability and fairness to a community. An Entrust will guarantee delivery of expected service and provide warranties in respect of failures.

At its simplest level, an Entrust will be a trusted party that enables people of common interests to participate in a defined process of registration, authentication, encryption, the issuance of credentials, standardized business process execution, certification and exception enforcement. Each Entrust will be like a Needlefish – it will be highly-specialized and have sharp teeth that take bites out of the traditional information technology enterprise systems industry.

Winners in this new era will be business models that network together, harnessing technologies to cleanly and elegantly assemble and disassemble themselves and their business processes/relationships with speed and grace. Winners will satisfy the need to continuously invest and reinvest in technologies by trusting Entrusts to unify its business partner networks.

As I look out at the market, I see several other examples of developing Entrusts, like Nulogy, E2open, and SPS Commerce (among others that I profile in more detail in my expanded paper on this topic).

Not everyone can, or will be able to, be an Entrust. Many existing businesses will lack the technological infrastructure or community trust to be successful or accepted as an Entrust. Entrusts will be powered by a commitment to newly-architected real-time distributed network operating systems that facilitate the security, scalability, reliability and collaboration required in community-based distributed computing. The operating system will be designed to standardize transactions that automate multiparty processes across the community – both in the physical logistics supply chain sense and the technical business process management sense. We need only look at history to identify this as a fact rather than a hypothesis – just look at the Transaction Processing Facility (TPF) that was necessary for the success of the Sabre Entrust used in the airline community.

Art Mesher is Chairman and CEO of Descartes Systems, where he has led the creation of the first on-demand logistics network that provides application and communication capabilities for truck, air, and ocean transportation. Mesher has been involved in the development of business applications for distributed computing since the 1980s, helping to grow the logistics software company Vocam Systems, which went public and was then sold to Pitney Bowes. Mesher was also President of Advanced Logistics Research, where he helped companies develop and deploy emerging technology-based supply-chain strategies, and he launched the Integrated Logistics Strategies Services practice at Gartner. Mesher is also the Chairman of the Core Group, developers of the Core Recreational Complex and Elite Athlete Performance Centre in Kitchener, Waterloo.

[Editor’s Note: Adrian Gonzalez will discuss and debate this topic with Art Mesher in an upcoming episode of Talking Logistics (date TBD). Plan to attend and participate in the discussion if you have questions or comments for Art.]

This Week in Logistics News (November 26-30, 2012)

Cloud/Software-as-a-Service | By Adrian Gonzalez • 11/30/2012

I didn’t win the $585 million PowerBall jackpot this week, which is not surprising, because when it comes to lotteries, taking shortcuts through town when I’m late, and picking the fastest checkout lines, I’m like Hemingway’s old man: “salao, which is the worst form of unlucky.”

On to the news, which is dominated this week by transportation management technology.

Almost three years ago I envisioned an app store for logistics software, and the news from LeanLogistics this week is another step in that direction. The company announced the On-Demand TMS® SuiteApp, built using NetSuite’s SuiteCloud Computing Platform. Think of SuiteApp as an app store where customers shop for apps to extend their NetSuite cloud-based ERP system, similar to Salesforce.com’s AppExchange. According to the press release, “NetSuite customers can leverage industry leading transportation management technology with a low cost, plug and play solution built into NetSuite ERP for quicker ROI compared to traditional TMS software.”

The “app store” model, especially one linked to an enterprise system with a relatively large customer base, is another avenue for TMS vendors to reach small and midsized companies, a segment of the market where managing transportation with spreadsheets and fax machines is still the norm.

In other TMS news, Precision Software announced that it has achieved Oracle Validated Integration of Precision Software Transportation Management System (TMS) Parcel v2012 with Oracle Transportation Management 6.2. According to the press release, “Precision Software TMS extends the functionality of Oracle Transportation Management by making it easier for customers to consider parcel carrier services during rate analysis and planning.”

Simply put, manufacturers and retailers today are looking for TMS solutions that go beyond truckload and less-than-truckload capabilities. Parcel shipping, fleet management, and global trade capabilities (ocean and air, plus customs compliance) are moving from the “wish list” to the “must have” list.

Last year, in “The IT Dilemma for 3PLs,” I raised the following question: Should 3PLs continue to develop their own IT systems in-house or should they implement third-party solutions instead? There are good arguments for both approaches, as the comments readers posted illustrate. A 3PL that invests significantly in its own solutions is CH Robinson. The company announced the latest update to its Navisphere technology platform, which is used globally by employees, customers, and service providers. Enhancements to the platform include “a modernized user interface, streamlined access to business-critical data, and customization to support customer requirements across global workflows.”

The platform also addresses a critical, but often overlooked, component of transportation management systems: network connectivity. Via Navisphere, customers “gain access to a centralized network of more than 100,000 supply chain partners, without the need to integrate with each provider individually.”

I’ve been saying it for years and I’ll say it again: when it comes to enabling supply chain and logistics processes, software is not enough; you also need B2B connectivity, and I believe companies should access it as a service, just like electricity or any other utility.

In another example of how smartphones and mobile devices are playing a bigger role in transportation management, Roadnet Technologies launched its MobileCast vehicle GPS tracking software on the Android™ smartphone operating system. Here are some excerpts from the press release:

The Roadnet Technologies MobileCast vehicle GPS tracking software enables companies to see a fleet’s transportation routes in real-time, combined with the ability to make changes to particular routes based on occurring events or conditions, such as traffic or the needs of customers.

The mobile application allows drivers to review their daily routes, complete stop surveys, examine stop information, record arrival and departure times, complete stop reconciliation, add delivery receipt information and mark stops as undeliverable. Roadnet has also taken advantage of integrating other Google Android technology such as voice navigation and traffic in order to provide a complete solution for delivery.

And finally, in another example of how innovations in packaging can result in transportation and warehousing operational efficiencies, Staples announced “the launch of new packaging technology nationwide that customizes delivery box sizes to each order.” Among the benefits cited in the press release: “Customized box sizes allow more shipments to fit on each line haul and more orders in each delivery truck. In addition, just-in-time packaging with Smart-size reduces costs and warehouse space from storing delivery boxes.” For related commentary, see “Del Monte Foods: Packaging, Transportation, and Sustainability” and “The Importance of Packaging in Supply Chain Management.”

And with that, goodbye November, hello December. Have a great weekend!

Song of the Week: “Wishing I Was Lucky” by Wet Wet Wet.

(Note: CH Robinson, Descartes, LeanLogistics, and Precision Software are Logistics Viewpoints sponsors).

Guest Commentary: Is Community Cloud the Future of Logistics?

Cloud/Software-as-a-Service | By Chris Jones • 11/29/2012

Are you saturated by all the cloud hype? Recently, a leading analyst firm published a report on cloud computing that listed 24 variations. It’s tough to name a vendor that does not claim to have a cloud offering. With all of the confusion, it’s hard to identify what part of cloud technology will really benefit logistics and other sophisticated ecosystems.

I believe that community cloud has the potential to transform not only company performance, but industry performance too. This claim may sound like a stretch, but there is history and some sound economics behind it.

First, let’s start with the definition of community cloud. It addresses unique industry requirements, connects organizations with common business interests, leverages shared data, streamlines common business processes, allows organizations to create new shared business models, and is delivered through a software-as-a-service (SaaS) model. Community cloud is industry focused. Community cloud is versus enterprise or two-party technology.

There is considerable mathematics, economics and technology to support the emergence of community cloud. Let me cite four cases.

Everyone is familiar with the “network effect.” A simple example is the telephone. Two phones have little value, but billions of phones connect the world and are the backbone of communications.

Anyone who took economics in college knows the concept of “diminishing returns” with scarce resources. But the technology world has proven that you can turn this concept into “increasing returns,” where the conflict between “guns and butter” goes away, and you can actually create more when more organizations and individuals adopt ecosystem standards. W. Bryan Arthur published a paper in the HBR over 10 years ago that used Microsoft as an example. Today it would be Apple.

The Internet has leveled the playing field by allowing all members of a “community” to get electronically connected, from large to small companies, local to global organizations, and even individuals.

SaaS-based computing has enabled complex network-oriented solutions to exist outside the enterprise and scale to an ecosystem or even industry level.

So why is logistics a perfect fit for community cloud? Let’s take a look at the fundamentals of logistics, the business of moving goods. It is a $3.4 trillion global industry with millions of geographically dispersed logistics organizations, both large and small. Logistics has always been about companies working together — business processes are multi-party (meaning more than two) and many activities are ad hoc. Much of the information resides outside of the enterprise. Data is shared and leveraged. There is some degree of communication standardization.

There are many nascent examples of community cloud. Cargo community systems were the first electronic logistics community facilitators. Messaging networks (aka VANs) have been prime examples of the value of connecting multiple organizations and moving data between them. Product information data pools serve the retail ecosystem by standardizing critical multi-party information between retailers and suppliers. Shipment “load boards” are great examples of how carriers and shippers can leverage community “arbitrage” to increase revenue or decrease costs. Content aggregators provide a critical, but overlooked community service, such as shipping schedules that collect and standardize information used by community members. The emergence of multi-party applications has shown that enterprise applications haven’t addressed the vast “white space” that exists between logistics organizations. Social networks have demonstrated the viral effect that can be achieved with cloud-based technology.

So why haven’t any of these emerged as true community cloud providers? Without diving into the details, all of these suffered from one of several maladies: they were too narrowly focused in scope or geographic coverage; they were significantly under-capitalized; too focused on information as opposed to action, on applications as opposed to industry platforms; and they were not able to support, streamline or leverage information across the community.

What will it take to be a community cloud leader? Three simple words: network, applications and community.

You need a backbone that can connect organizations, regardless of their IT sophistication (high-tech, low-tech, and no-tech enterprises and individual users). This backbone also needs to manage the flow and transformation of information between the parties. It has to be independent of the applications, because community members will need to be able to construct their own business processes through a combination of network and enterprise-based applications.

The network-based applications must facilitate and streamline basic business processes like booking, tracking, customs filings and invoicing. In addition, the community applications must support true multi-party processes that support an ecosystem, for example, linking retailers with suppliers, logistics services providers and carriers to reduce total purchase order-to-delivery cycle time and system-wide inventory.

Lastly, the community needs members, lots of them. Building business networks takes lots of time, effort and, most importantly, money. Unlike social networks which are largely unsecure, transacting in a business community requires the adoption of industry trading norms and trust between the parties. There are ways to streamline this effort over time, but don’t expect the viral explosion of consumer-oriented social networks. The infrastructure for these kinds of cloud-based network services is extremely sophisticated and the level of performance has to be well beyond what the consumer is willing to tolerate.

Most of the cloud hype that exists today will be just like the weather – it will pass. However, a few, like community cloud, will stay and be industry transformative.

Chris Jones is the Executive Vice President for Marketing and Services at Descartes. He has over 20 years of experience in the supply chain market, holding variety of senior management positions including: Senior Vice President at The Aberdeen Group’s Value Chain Research division, Executive Vice President of Marketing and Corporate Development for SynQuest and Vice President and Research Director for Enterprise Resource Planning Solutions at The Gartner Group.

3PLs and Software Vendors: Keep Innovating Your Business Models

Cloud/Software-as-a-Service | By Adrian Gonzalez • 11/28/2012

Most of the time, when people talk about innovation in supply chain management and logistics, the focus is on technology (e.g., social and mobile) or business processes (e.g., same-day delivery and omni-channel fulfillment). But what about innovation in business models? Is there an opportunity for 3PLs and software vendors, for example, to innovate their business models to deliver greater value to clients, differentiate themselves from the competition and gain market share, and achieve greater financial success?

Of course there is, and it’s already happening.

Over the past decade, software vendors have been moving away from the traditional model of having customers pay large sums of money upfront to implement software solutions in-house toward software-as-a-service (SaaS) and cloud computing models where customers pay over time to access solutions deployed remotely via the Internet.

In the 3PL realm, it’s no longer outsource everything or nothing. Many service providers now offer customers more configurable service options, where customers can choose which functions they want to keep in-house (such as procurement) and which ones they want to outsource (such as day-to-day operations and IT). Some 3PLs and their customers are also starting to adopt Vested Outsourcing principles in the way they work together.

And as I’ve discussed in previous postings, the business models of 3PLs, software vendors, and consultants continue to converge. A successful 3PL today, for example, is an operations manager, a consultant, and a technology provider all rolled into one.

Simply put, 3PLs and software vendors have been transforming their business models over the past few years. The challenge now is to keep looking for additional opportunities to innovate. But how do you find these opportunities?

You can start by answering these three questions:

1. Is your mission statement aligned with your customer’s objectives and desired outcomes? As highlighted in a recent HBR blog posting (“When Business Models Trump Technology”), an Israeli company, Netafim, captured almost one-third of the “seemingly commoditized” micro-irrigation equipment market by changing its business model to better address the needs and constraints of its customers (read the posting for all the details). According to the authors, “Netafim went so far as to change [its] mission statement from ‘making the best drip irrigation equipment for customers’ to ‘helping the world grow more with less’, an objective far more aligned with the objectives of its customers, the farmers.”

This reminded me of the Jaguar and Unipart Logistics case study I wrote about last year. Jaguar and Unipart created the following shared vision statement, which they review at the start of every meeting between the two companies:

”To support Jaguar dealers in delivering a Unique Personal Ownership Experience to Jaguar Drivers worldwide, ensuring industry leading owner loyalty through partnership and world-class logistics.”

This shared vision statement aligns both companies toward a common goal that both unifies and transcends the interests of each company.

Simply put, if your mission statement and objectives are not aligned with those of your customers, then an opportunity exists to change your business model to close that gap.

2. What challenges and constraints do your customers still face that you can solve or alleviate for them? The SaaS model emerged in large part to address a problem many companies faced: they had limited IT resources and limited (and shrinking) IT budgets. Supply chain and logistics organizations face many challenges today, such as finding and retaining talent, enabling new business processes quickly, and dealing with high variability in supply and demand. The idea here is to take a step back and look at all of the resources and assets you have at your disposal (including those you’ve only been utilizing internally) to see if there are opportunities to bundle, price, and deliver them together in new and unique ways to solve the problems and constraints your customers still face.

3. What is your customer’s total experience with your product or service? In their July 1997 HBR article “Discovering New Points of Differentiation,” Ian C. MacMillan and Rita Gunther McGrath write that “most companies, in seeking to differentiate themselves, focus their energy only on their products or services. In fact, a company has the opportunity to differentiate itself at every point where it comes in contact with its customers—from the moment customers realize that they need a product or service to the time when they no longer want it and decide to dispose of it.” They go on to say: “We believe that if companies open up their creative thinking to their customers’ entire experience with a product or service—what we call the consumption chain—they can uncover opportunities to position their offerings in ways that they, and their competitors, would never have thought possible.”

The article outlines how to map the consumption chain, which includes answering questions such as: How do customers find your offering? How do customers make their final selection? How is your product or service delivered? How is your product or service paid for? What is your customer really using your product for? What do customers need help with when they use your product?

The bottom line is that by exploring these questions in detail, you will likely uncover opportunities to streamline and improve your existing business model and practices.

I’ll end with a quote from another great HBR article related to this topic: “One secret to maintaining a thriving business is recognizing when it needs a fundamental change.” Something to think about and discuss in your next strategy meeting.

For related commentary, see the following postings:

A complete analysis of logistics trends, technologies, and services

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