As an engineer, former solutions architect and now CEO of a leading supply chain technology company, I have a real affinity and respect for Chief Information Officers (CIOs) and their teams, without whom successful enterprise technology deployments would be impossible. That’s why I value the time I get with CIOs every bit as much as I value time with CFOs, CSCOs and supply chain professionals of every stripe.

Recently, I’ve been asking CIOs the “What keeps you up at night?” question as it relates to the operations and performance of company supply chains.

OTIF. We’re just not meeting customer expectations. And that’s impacting our top-line revenue and our cost to serve.

I’m paraphrasing an answer I’ve heard from more than a few CIOs of late. Many companies are still struggling to deliver “on time and in full” — that most basic of shipper promises, which says, “You’re going to get exactly what you ordered, and you’re going to get it on time.”

As the CEO of a company whose solutions specifically solve for OTIF deliveries, it’s particularly disheartening to hear. We are well into the era of real-time transportation visibility, where shippers and their partners can track freight in real-time across every mode of transport.

So why are so many still falling short of OTIF targets (and other key metrics)?

My answer — to CIOs in particular — boils down to the complicated and disconnected stack of supply chain solutions most companies are saddled with, from legacy systems that weren’t architected to ingest and process real-time data to newer point solutions that are siloed from other critical operational systems.

What’s needed is a modern platform approach to supply chain tech — with the specific objective of enabling effective real-time execution.

Planning is practically useless anymore

I’ve said it plenty — supply chain volatility is the new normal.

That means planning still has its place, but its role is diminishing. In a world of nearly continuous supply chain disruptions, success will increasingly depend upon the ability to react quickly and effectively as real-world conditions change. To use an American football metaphor, if supply chain professionals were quarterbacks, they would need to call a lot more audibles on a day-to-day basis than they used to. If we want them to call the right plays in those critical moments, they need to be supported by a platform built for real-time decisions and execution.

What does that look like?

Let’s go back to OTIF. Your real-time transportation visibility solution can tell you where your shipment is in transit, and the AI built into that solution can give you a highly accurate ETA. That covers “on-time.” But to verify the “in full” part, your real-time transportation solution needs to be connected to warehousing, inventory, fulfillment and order management.

Supply chains, after all, are very appropriately named — and the old saying about a chain being only as strong as its weakest link holds true here. What’s more, today’s supply chains operate at lean levels. If an inbound truckload is late by even a few hours, it could jeopardize an entire outbound load or halt production.

A platform approach to real-time supply chain execution integrates across every critical system so you can get a real-time ETA together with a live view of your inventory. A platform approach is about orchestration across multiple systems using real-time data, building in the right workflows to leverage that data for common supply chain use cases, and leveraging AI to surface risks, provide insights so supply chain professionals can proactively address issues, and eventually automate certain remedial actions.

Be willing to share data – and make it easy

CIOs are critical change agents in all of this. My mantra when speaking with them is, “Please be willing to share data across systems — and make it as easy as possible.”

That said, many CIOs wisely insist that their internal business counterparts and their technology partners take a use-case-by-use-case approach, where the objectives and potential business value of a project are clearly articulated, and system integration and data-sharing requirements are well-defined. In this business environment, everyone is looking for quick wins that address tangible issues and deliver concrete returns.

Supply chains are entering an era where planning takes a backseat to an emphasis on real-time execution excellence. That will only be achievable if companies take a modern, platform approach to their supply chain systems.

Matt Elenjickal is the Founder and Chief Executive Officer of FourKites. He founded FourKites in 2014 after recognizing pain points in the logistics industry and designing elegant and effective systems to address them. Prior to founding FourKites, Matt spent 7 years in the enterprise software space working for market leaders such as Oracle Corp and i2 Technologies/JDA Software Group. Matt has led high-impact teams that implemented logistics strategies and systems at P&G, Nestle, Kraft, Anheuser-Busch Inbev, Tyco, Argos and Nokia across North America, Western Europe and Latin America. Matt is passionate about logistics and supply chain management and has a keen sense for how technology can disrupt traditional silo-based planning and execution. Matt holds a BS in Mechanical Engineering from College of Engineering, Guindy, an MS in Industrial Engineering and Management Science from Northwestern University, and an MBA from Northwestern’s Kellogg School of Management. He lives in Chicago.

A few weeks ago, I had the opportunity to speak with Kushal Nahata, Co-Founder and CEO at FarEye. In this conversation, Kushal and I talked about the complexities of last mile delivery.

I asked Kushal to give some deeper insights on a few key points. First, what are some things companies can do to reduce delivery costs and how does technology play a role?  Second, how can retailers use technology to enhance the customer experience? Third, how can both retailers and logistics providers better cooperate to provide enhanced service and reduced costs? Fourth, at what point should retailers that outsource their deliveries consider managing their own fleet or delivery network? And finally, how can retailers and logistics providers accurately capture data and act upon the insights they generate?

Here are the key points from our discussion. You can watch the full interview below.

Reducing Cost per Delivery

Reducing cost per delivery is a critical KPI for companies. Most companies are going through cost pressures, and technology can play a big role in how a company reduces these costs. Kushal pointed out that there are two components to cost reduction.

The first part is knowing what is the existing cost per delivery, and what is break-up of that cost. Companies need to look to leverage machine learning and reporting as part of the process of understanding cost per delivery. Different regions, hubs, and branches have different starting points. Once you know where your company stands on initial costs, you need to explore what is adding to costs, and what are the trends around last miles costs.

The second piece comes down to technology and leveraging capabilities like routing and carrier allocation. These use advanced algorithms on an intelligent platform to which help minimize distance, fuel consumption, and time spent on the road. This leads to reducing cost per delivery and improving efficiency.

Customer experience

When it comes to customer experience, the delivery experience is an extension of the brand. The biggest anxiety for consumers is knowing where an order is. Ensuring that you have real-time tracking and updates sent to customers is incredibly important.

Personalization is the next step. Most retailers focus on ensuring that there is a high amount of repeat buyers on their platform. Knowing what the preference is of your customers means you can personalize that experience, whether that is preferred delivery method, location, or custom marketing messages.

Another area of customer experience is returns. Research has shown that about 90 percent of online users want to know what the return policy is before they make a purchase, making a customer-centric return policy important. Returns, much like any stage of the customer lifecycle, relies on enhanced communications for providing real-time updates on anything that is happening with an order.

Better Cooperation for Better Service

How can retailers and logistics service providers better cooperate to increase service and reduce costs? Technology can play a big role. Many companies have employees continuing to do manual processes that could otherwise be automated. It starts with data sharing where companies have integrated platforms; retailers have visibility into shipments from the logistics service providers and can further enhance the experience by further integrating all trading partners on a single platform.

Data Capture

A key question is how do you capture data and act upon it? Knowing were you stand from a performance standpoint is reliant upon data collection. Retailers need to integrate with service provider systems to get the relevant data – NPS, shipment size, location, and on-time delivery – on a single platform, and then normalize the data and use it for more efficient deliveries.

Companies need to make the data predictive and prescriptive, which allows for actionable insights. You need to see the value when you are investing in a system, and insights need to be specific and digestible.

About FarEye

FarEye is a last-mile technology platform; geared towards transforming last mile deliveries for companies. FarEye’s AI-powered functionality optimizes end-to-end deliveries and provides recommendations driven by aggregation of insights. It empowers enterprises to gain real-time visibility, excel in the last mile, and deliver customer delight.

In early May, I participated in one of the supply chain industry’s premier events, which attracted more than 3,500 logistics professionals. I attend this conference every year, but this time, strolling the exhibition floor and surveying the 110+ technology providers’ latest wares, I was struck by a dichotomy.

On the one hand, technology has undeniably helped the supply chain industry solve a multitude of previously intractable problems, making supply chains significantly less fragile in the process.

On the other hand, the proliferation of so many new supply chain solutions over the past decade or so has further pushed the industry toward siloed ways of thinking and working. If we can break down those silos (spoiler alert: we can!), we will enable huge new leaps in supply chain orchestration and automation, saving time and money and driving greater customer loyalty in the process.

Breaking down those silos was the focus of a panel discussion Rob Haddock and I led at the conference. Rob is Group Director, Planning & Logistics at Coca-Cola North America. He runs a massive logistics operation comprising more than 1 million shipments a year across more than 10,000 lanes, with an average haul of 600 miles or more. Rob has firsthand experience in knocking down supply chain silos to drive better operations. (Disclosure: Rob is a customer of my company, FourKites.)

Here’s his real-world template for going about it.

Step 1: Unlock the full value of your data.

As companies deployed new technology systems and solutions, data wound up getting siloed. Warehouse management systems didn’t share data with the transportation management systems, which in turn didn’t share data with the yard management systems. The YMS didn’t talk to the appointment manager or order manager. And none of them shared data with the legacy ERP system.

That’s why the first order of business is the technical work of making all of your data portable — that is, easily available for use by any system or application. (I quoted PwC in my last piece for Logistics Viewpoints: Data “unencumbered by department silos” is key to generating insights, identifying shocks before they happen, streamlining operations and improving the customer experience.)

This is much easier than it used to be, provided companies take an API-first approach to their data strategies and insist that their technology partners do the same.

Step 2: Identify high-impact use cases.

Many digital transformation projects fail because organizations try to boil the ocean. Rob prioritized his use cases based on what could drive the greatest efficiencies and savings.

Up first, reducing the OTIF fines that retailers levy when shipments arrive late, or with less than the full quantity of goods the retailer ordered. OTIF fines can run into millions of dollars on an annual basis for F&B and CPG companies.

Rob’s second priority: reducing dwell times for the drivers picking up and dropping off those millions of shipments. Getting them in and out of facilities smoothly and on schedule would slash detention fees and give the drivers a much better work experience.

Step 3: Implement a real-time supply chain command center.

Control towers have failed the supply chain industry. They are all trying to boil the ocean and have a dismal track record of driving better outcomes. Similarly, there’s a common misconception in the industry that you can aggregate all of your data in a data lake, apply a visualization layer such as Power BI or Tableau, and presto, all of your problems are solved. While analytics and visualization have their place, they can’t help you execute, in real-time, on a supply chain issue.

The answer is a real-time supply chain command center that provides a single user interface into all of your data and applications, and that can execute actions in every system. Let’s look at how this works with Rob’s use cases.

In the case of OTIF, for the vast majority of shippers and their customers today, the actual quantity of goods shipped is a mystery until the truck shows up at a facility and gets unloaded. Why? Because the transportation system, order system and fulfillment system are disconnected. But if the data is portable, and everything is viewable in the command center, the discrepancy between the order and the actual quantity of goods shipped gets flagged before the truck leaves. Now, the shipper can source additional product from an alternate distribution center and take any other real-time actions necessary to make the delivery — on time, and in full.

When it comes to dwell time at facilities, there are four different systems in play: yard, appointment, transportation and warehouse. If those systems aren’t talking to each other, the driver might arrive on time but wait for hours if the product hasn’t been picked or staged. The command center sees the big picture and connects the dots. If the crew isn’t ready to unload, the appointment can be rescheduled in real time.

Rob rightly emphasized that all of this requires a fair share of organizational alignment and change management around priority use cases and new ways of working together. But it’s worth the effort, as the power of real-time execution — underpinned by real-time visibility data and data from every other key system — represents the next leap forward in proactive supply chain management.

Matt Elenjickal is the Founder and Chief Executive Officer of FourKites. He founded FourKites in 2014 after recognizing pain points in the logistics industry and designing elegant and effective systems to address them. Prior to founding FourKites, Matt spent 7 years in the enterprise software space working for market leaders such as Oracle Corp and i2 Technologies/JDA Software Group. Matt has led high-impact teams that implemented logistics strategies and systems at P&G, Nestle, Kraft, Anheuser-Busch Inbev, Tyco, Argos and Nokia across North America, Western Europe and Latin America. Matt is passionate about logistics and supply chain management and has a keen sense for how technology can disrupt traditional silo-based planning and execution. Matt holds a BS in Mechanical Engineering from College of Engineering, Guindy, an MS in Industrial Engineering and Management Science from Northwestern University, and an MBA from Northwestern’s Kellogg School of Management. He lives in Chicago.

For a few years now, supply chain professionals and pundits have been speculating on what the so-called “new normal” will look like. That’s shorthand for a supposed future state when pandemics, natural disasters, political conflicts – pick your disruption du jour – have receded into the background and our supply chains can once again operate in a relatively stable environment.

I propose it’s high time we acknowledge the futility of the “new normal” conversation and put it to rest, once and for all. Normalcy is no more. Things have changed, for good, and the environment we now work in is one of constant volatility.

The big-picture macroeconomic signals we’re getting of late seem to bear this out. After months of dire predictions, many in the financial community are lowering the odds of a recession in the next year. Much of this newfound optimism is attributable to a record jobs report in January – and yet we’ve seen a spate of layoffs in tech and other industries. Closer to home for supply chain professionals, driver shortages continue to plague the industry. Freight rates have plummeted, brokerages are struggling, and the industry is still bloated with excess inventory. And we’ve yet to experience all of the possible repercussions of the conclusion of China’s zero-COVID policy.

The compelling case for investing in supply chain tech, now

Bottom line, there’s plenty of market volatility and risk to go around. But we’re also seeing many of the supply chain industry’s biggest digital pioneers displaying real moxie in recognizing the opportunity in front of them. These are the companies and leaders that aren’t letting a good downturn go to waste.

A famous 2010 HBR article, “Roaring Out of Recession,” studied how 4,700 public companies fared during the recessions of 1980, 1990, and 2000. 17% went bankrupt, went private, or were acquired. But “9% of the companies didn’t simply recover in the three years after a recession — they flourished, outperforming competitors by at least 10% in sales and profits growth.”

Core to their success was scenario planning on multiple fronts, together with smart investments in technology. “The first reason to prioritize digital transformation ahead of or during a downturn,” says Katy George, a senior partner at McKinsey, “is that improved analytics can help management better understand the business, how the recession is affecting it, and where there’s potential for operational improvements.” HBR also cites technology’s ability to cut costs and to make “companies more agile and therefore better able to handle […] uncertainty and rapid change.”

Supply chain leaders get it, as confirmed by recent PwC research that shows:

• Investing in advanced supply chain capabilities bears fruit through lower costs, increased revenues, improved sustainability, higher asset utilization, better risk management, and greater rates of on-time, in-full delivery to B2B and B2C customers.
• For supply chain “digital champions,” investments in advanced supply chain capabilities pay off in an average of 22 months, and these companies see higher returns relative to other companies and “digital novices.”

And a FourKites survey of 350+ supply chain leaders tells us that the past few years of supply chain disruptions — including COVID-19, market volatility, global political conflict, material shortages and extreme weather events — drove 73% of respondents to begin investing in supply chain visibility, with 46% planning to invest more in 2023.

Build the next generation of supply chain solutions, today

The year ahead represents nothing less than a golden opportunity to accelerate the creation of automated, interconnected and collaborative global supply chains that span transportation, warehouses, stores, trucks and more. A future where:

• Data (as noted by PwC) is “free-flowing” and “unencumbered by department silos,” so companies can generate insights to identify shocks before they happen, streamline operations and improve the customer experience – regardless of role.
• Collaboration is pervasive and transparent across supplier ecosystems, so that every participant can respond in concert with changing conditions.
• Supply chain solutions solve problems not just in transit but throughout the planning and order life cycle — from order processing, to transport planning, to fulfillment, yard, tracking, and post-delivery.
• Through data sharing and collaboration, companies and their partners can better understand and solve for their sustainability and decarbonization

These are the tenets of world-class supply chain management in an era of constant volatility. And, once implemented properly, having a collaborative, tech-enabled supply chain network powered by free-flowing, actionable data will unlock measurable business value. Once that’s in place, CFOs will notice:

• Improved margin by lowering your cost of goods sold. With the right data you can reduce your overall transportation costs, both accessorial costs and overall freight spend. While many companies assemble great sourcing and procurement teams when it comes time to renegotiate freight contracts, they often fail to provide good documentation that allows them to negotiate from a position of strength.
• Reduced working capital. For example, imagine your company moves 10,000 containers a year with an average contents value of $75,000. If it takes 50 days from ownership transition at origin to receipt at the warehouse, you could save $2M in inventory, or $250K in working capital, if you reduce transit time by one day (50 to 49 days).
• Faster order-to-cash. With real-time data on the status of orders, shipment tracking, and delivery confirmation you can optimize your order fulfillment process to reduce lead times and delays in collecting payments.

The opportunity for progress is here

In the last several years, the supply chain industry has made tremendous progress in building a digital foundation that sheds light on global supply chains and in-transit goods that have been, quite literally, lost in the dark. Now, with powerful AI and ML technologies to generate predictive ETAs, we can reroute shipments in anticipation of possible disruptions, eliminating manual track-and-trace efforts.  And we can accomplish even more as we break down silos and put supply chain data in the hands of front-line, customer-facing teams. As a result, inventory management improves, workforce productivity increases and customers become happier and more loyal.

We now have an opportunity to take automation, orchestration and supply chain insights to entirely new levels of sophistication and impact. Let’s not waste it.

Matt Elenjickal is the Founder and Chief Executive Officer of FourKites. He founded FourKites in 2014 after recognizing pain points in the logistics industry and designing elegant and effective systems to address them. Prior to founding FourKites, Matt spent 7 years in the enterprise software space working for market leaders such as Oracle Corp and i2 Technologies/JDA Software Group. Matt has led high-impact teams that implemented logistics strategies and systems at P&G, Nestle, Kraft, Anheuser-Busch Inbev, Tyco, Argos and Nokia across North America, Western Europe and Latin America. Matt is passionate about logistics and supply chain management and has a keen sense for how technology can disrupt traditional silo-based planning and execution. Matt holds a BS in Mechanical Engineering from College of Engineering, Guindy, an MS in Industrial Engineering and Management Science from Northwestern University, and an MBA from Northwestern’s Kellogg School of Management. He lives in Chicago.