Monthly Archives: December 2014

Happy New Year – some wishes for 2015

Once again the inevitable is happening, our journey around the sun has almost come full circle. 2014 was an interesting year – of course for us soccer fans it was extra exciting with a World Cup, but I digress. As we head towards 2015 here are some wishes I have for our supply chains far and wide:

 

2015 Puzzle Piece Shows New Year's Festivities And Celebrations

Happy 2015 to all!

 

  • Better and more actionable data: Raise your hand if you are sick of hearing about big data…okay you can all put your hands down. This is not about the continued deluge of data, we all know that we are flush with data and with new technologies such as the Internet of Things (IoT) will only add to this wave of information. What we need to focus on, and achieve for our supply chains is more business data. Business data is the actionable information we can absorb, make a decision with and discard. Many of the CxOs I have spoken to this year, have pointed out that they know the information is out there, the
    Hey look...more "big data"

    Hey look…more “big data”

    issue they have is to identify and focus on the business data that their organizations can better leverage. This is no small task. It is easier to hoard mountains and mountains of data as opposed to be smart about which data to focus on and which pieces of information to lean on. Offerings from the likes of Cisco with their intercloud product provides a layer of intelligence to all that information flowing across our networks. Of course the need to do a better job of filtering and identifying that business information is vital…especially as “big data” only gets bigger. In 2015 let us hope that we become smarter about the types of data we lean on to be better with our supply chains – no easy task.

  • Continued harmonization of execution systems: The need to integrate WMS and TMS seems like a no-brainer, yet remains surprising that in many instances the systems have themselves remained in silos. It is telling that a supply chain vendor such as JDA only acquired a robust WMS solution when they merged with Red Prairie. But as more companies that are in the execution space look to not only add functionality but ensure full integration – even mega vendors like Oracle are working to add functionality such as yard management to their execution suite – one can hope that 2015 sees more of these strategic moves. The value for the end users is to have a faster and deeper visibility into the end to end execution process. For this reason, let us also hope that focused manufacturing service providers such as QAD and Plex also push out from within the factory four walls to include greater services in transportation and warehousing. Being able to monitor my entire execution process is the only way to start to eliminate the blind spots that constantly haunt our supply chains.
  • Smarter evolution of SMAC within all aspects of supply chain: What is SMAC? It isn’t what you talk on the basketball court. SMAC – Social Mobile Analytics Cloud. I look for a greater focus on the first two letters of SMAC for 2015. When it comes to analytics, supply chains have been working on ensuring we add greater layers of analytics and intelligence to our processes. This will only continue to be vital as we add…more data. As for the cloud, it continues to be an area of much debate for supply chains. By some studies, there remains a lot of skepticism when it comes to the cloud. And I understand why. It isn’t because the cloud is not a viable delivery mechanism for the tools and solutions we need to manage our supply chains, rather the business value has not been properly expressed. I am looking at you marketing and sales departments. Too often we lead with the lower total cost of ownership (TCO) or the ability to
    Decision making at the edge - at your finger tips.

    Decision making at the edge – at your finger tips.

    have access to the latest version of the software, rather than discuss why these features of the cloud open up new business models for supply chains. Smart vendors in 2015 will hone in on the business models the cloud empowers – not just lower TCO. But where 2015 holds more promise is with the social and mobile aspects of supply chain. Almost half of supply chain executives agree that social will play a vital role in their business, however less than 20% have any active strategy with social. I expect to see more partnerships such as the one between IBM and Twitter – to bring to the market solutions that these supply chain CxOs can lean on to take advantage of the nuggets that are in social. Finally 2015 will continue to see the importance of mobile in the supply chain. We already have witnessed how tablets and handhelds have impacted the factory floor, logistics, warehousing and within the store. But this is only the beginning. Smarter and more powerful devices will allow us to push decision making and control to the edges of the network. How solution providers tackle this new found power will be integral to how supply chains evolve in 2015.

I don’t think these are too much to ask of our supply chain users and vendors. Next year is an exciting one for new solutions and the continued evolution of existing technologies. But don’t we say that every year??

Happy New Year to you and your loved ones. See you on the other side!

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Christmas is around the corner – what Santa Claus can teach us about supply chain

You better watch out
You better not cry
You better not pout
I’m telling you why
Santa Claus is coming to town
Santa Claus is coming to town
Santa Claus is coming to town

Yup, the big guy dressed in red is getting ready to make his annual appearance. Bringing all the girls and boys, as well as some lucky moms and dads, presents and gifts for their Christmas trees. And all he expects in return is maybe some milk & cookies or even a carrot for his reindeer. But did we ever expect Santa Claus to provide us with some simple lessons that are applicable to our supply chains?

He has the global fulfillment thing down...

He has the global fulfillment thing down…

  • He makes and list and checks it twice. Sage advice about how to handle all the data and information that extended supply chains produce and leverage on a weekly and daily basis. Many of the conversations I have had with supply chain practitioners and service providers comes back to getting a cleaner and more complete view of all the data that their supply chain produces on a weekly and daily basis. Look at what Santa is able to do – put all those wish lists in one aggregate list. He does check it twice to ensure consistency and correct for errors. Also good advice. Since we all know what garbage in gets us…companies like Avaya have worked with solution provider Kinaxis to create a more clear and single view of their distributor network and the data that is the connecting glue. One clean and unified view! Make sure to clear out that garbage before it gets into the system – or on Santa’s list.
  • Gonna find out who’s naughty or nice. Yup Santa also looks at his data to segment his customers. Granted he has two simple categories. Our supply chains’ customers and suppliers are also segmented and they do not fall into simple “naughty” or “nice.” But maybe the simplicity of how Santa does his segmentation should drive our own. The key is identify what key variables matter to our businesses and supply chains. Determine which variables you need to identify and focus on to create the most effective segmentation. Santa might not explicitly state it, but his segmentation like our supply chains leverages a greater number of predictive analytics to drive better clarity. For example service providers such as Infosys work with a large office products manufacturer to better understand customer segments to establish service level engagements. Santa and our supply chains need to lean on tools and service providers that can help identify the variables to effectively and efficiently segment our target audience.
  • He sees you when you’re sleeping …He knows when you’re awake. Maybe Santa has a secret deal with the NSA to eves drop on our calls…okay I joke…I think…but Santa makes sure he is aware of his consumers’ characteristics and where they are in the gift receiving pipeline. If we are awake he wouldn’t deliver our presents! Your supply chain needs to be sensitive to customers and where they are in the buying cycle. Think of how companies such as Steelwedge and Salesforce have worked together to help their customers better with the S&OP process by tying in the data coming from the Salesforce CRM to get a clearer view of where customers are with regards to the transactional pipeline. It is not simply about identifying our sleeping patterns, but understanding where we stand in terms of the buying cycle what our demand is and might be – are we in a position to have our gifts delivered by Santa?
  • Santa’s a busy man he has no time to play…He’s got millions of stockings to fill on Christmas day. Wow, talk about solving the delivery to the home enigma. Santa and his reindeer are able to criss cross the global, in one night, and accurately deliver a vast number of packages, of different shapes and sizes, to millions of locations! Unbelievable. Santa is also ahead of the curve as he has been able to provide home delivery since day 1. Now I am not saying we can all find a Rudolfo with his nose so bright to guide our fulfillment and logistics departments, but there is something to say about how integrated Santa’s workshop is with his distribution center and his logistics. He cannot be expected to demonstrate this level of efficiency is he stocks the wrong goods, doesn’t properly load them to his sleigh and then takes poor routes to his delivery locations. Clearly the value for supply chains to integrate the warehousing and transportation is what Santa’s efficiencies demonstrate.  Vendors like Oracle with their integrated WMS/TMS and now yard management (that is like what Santa does with regards to managing the elves and ensuring their are efficient) or JDA with their TMS integrated with the WMS acquired in the RedPrairie merger, are prime examples of solutions that even Santa would appreciate to ensure seamless optimization between the workshop and the big red sleigh – ensure the inventory that he has to haul around the world on the night of December 24th is properly slotted and routed.

The one aspect Santa does not seem to have worry too much about, is with returns. He does not seem to have a good reverse logistics or after sales service department. But since he has gotten so much of the upfront part right he does have to worry about delivering the wrong items! Alas our supply chains do not have that luxury, and our supply chains do need to take into account reverse logistics, returns, maintenance and other after sales issues. But thanks to Santa Claus we have something to aspire to with regards to our supply chains.

Merry Christmas! Happy Holidays!

Screen Shot 2014-12-18 at 9.07.03 PM

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Amazon – increases the pressure on retail – 1 hour delivery

Amazon announced earlier that in New York City…okay in one zip code of NYC – 10001 – it will offer 1 hour delivery of tens of thousands of items for customers in that zip code. Click here for press release. This service will be for those customers to are Amazon Prime members and cost an additional $7.99 (2 hour deliver is free), another “perk” for paying to be part of the cool kids on Amazon.com. It would appear that the new Amazon store on 34th street will be tasked with handling much of the distribution for these potential customers. While the 1 hour delivery is limited to this area code for now, the retail giant plans to expand to other cities in the near future. I wonder if Boston is on their list of potential target cities…hmmm.

This should come as no surprise as Amazon continues to act as the 800lb gorilla when it comes to retail and supply chain. The idea of such rapid delivery is also not a new one. Anyone remember Kozmo.com? During the dot com boom that cool .com company could be seen in many an office lobbies delivering everything from ice cream to the latest CD from TLC. Alas they could not solve the issues of having to carry such a wide array of inventory with order runs that could not cover the carrying costs, delivery costs etc. So should we expect Amazon to fare better? Maybe. The have a couple of factors in their favor that Kozmo.com did not:

  • Years of experience with running distribution centers – unlike Kozmo.com that really started as a company leveraging bike messengers to pick up small orders and deliver them, Amazon is a well oiled machine when it comes to understanding the nuances and challenges of running DCs with large arrays of SKUs. Their move into the 34th street location was seen by some as curious. But for Amazon it was clearly just the ability to place another potential distribution hub closer to its target audience.
  • Vast amounts of buying behavior data for those Amazon Prime members in that zip
    Just this little slice of the Big Apple

    Just this little slice of the Big Apple

    code…and else where for that matter. Amazon has years of historic data for those that sit in the 10001 zip code (about 20,000 people). And as we all know, Amazon is very good at figuring out what to suggest for our next purchase and even claim to know what to put on the truck before we even order it. Of those tens of thousands of items that could be delivered in that zip code, I have a feeling all the purchase data being analyzed in the Amazon cloud has identified the 1,000s (maybe only hundreds) of most likely items that are most likely to be ordered for those customers.

  • A war chest that Kozmo could only dream of. I think it is safe to say that Kozmo.com could only dream of one day having the war chest Amazon can dip into. With over $5b of cash on hand, Amazon can afford to lose money on their delivery model as they work out the details. And unlike Kozmo.com, Amazon is only servicing one part of Manhattan. I bet the bike messengers from Kozmo.com would have appreciated that much more!

What cannot be under-emphasized is the impact this will have with regards to firing another salvo across the bow of the retail world. Just like with other bold moves – think drone delivery – this  move by Amazon is as much to test out a new fulfillment and commerce model as it is to cause ripples through the retail world and beyond. The digital disruption it will create is  disproportional to the actual disruption, but it will force companies and supply chains to once again figure out how to combat Bezos and Amazon.

I wonder how de Blasio will feel once Amazon looks to fly drones up and down 34th street.

 

 

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The Ruble reminds us – our supply chains do not operate in a vacuum

This week has not been a good for the Russian currency, as it has dropped close to 20% versus the US Dollar. Some analyst fear that the Putin and Russia will default on their debt and this might throw the global economy into a tail spin. The impact could have graver consequences in places such as Ukraine – where Russia has already acted belligerently this year – in Eastern Europe or the Baltics. It is not simply the Russian ruble that should enter our thinking process for our supply chains – look at what is happening this week in Belgium as well. As union workers have gone on strike, halting ports, airports and highways it has brought much of Belgium to a halt.

But this is not meant to be a post about geo-politics and world history, although those are the areas of my early formal training. What the issues in Russia and Belgium remind us, especially those of us in the supply chain space, is that we do not operate in a vacuum. I realize that I am stating the obvious, but at times I am surprised at how many turn a blind or an ignorant eye when it comes to global events. There have been and will continue to be articles and studies done on risk management. Something that is crucial for our supply chains. However

You need a complete view...otherwise the world remains blurry

You need a complete view…otherwise the world remains blurry

one aspect that remains missing from these conversations is how to account for these global events. Much thinking has been done around assessing risk for suppliers, customers, geography, transportation, raw material costs, weather and natural disruptions to name a few. Yet it remains difficult to quantify geo-political risk. In other disciplines this has been marginally tackled, but for supply chains it still takes a back seat.

When it comes to assessing our supply chain risks we need look to an index that looks at a number of geo-political aspects. A combination of credit rating, political stability, regional history, religious tension, border fluctuation, socioeconomic make up, relationship with neighboring nations to name a few, could make up a supply chain exposure and risk indices that would compliment the other data points we study.

Companies, such as General Electric, have chief economists on their executive committee, this is should be a role all businesses that are international and that have extended supply chains have – which means 99% of companies. But let us not limit ourselves to economists…as a political scientist at heart…I would argue corporations need to also look to have geo-politically focused assets at their disposal. Our supply chains touch all the four corners of the globe, if we do not have the assets in place to provide better insight into the impact history and politics have on the geographies, we risk exposing our supply chains to a greater array of disruptions.

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Demand – it is a fickle beast

Understanding customer taste and their buying patterns remains a tricky exercise. The story of L.L. Bean and their snow boots is a great example of how challenging it is to accurately predict demand. The Maine clothing and outdoor company is already sold out of their iconic boot. According to the Yahoo report, click here, there is already a 100,000 name long waiting list for the boot. Wow. Talk about a good problem to have, well maybe.

L.L. Bean cannot just ramp up their manufacturing, well in the long run they might be able to, but not fast enough to meet this pent up demand. Based on their meticulous manufacturing process, it takes half a year to train someone to manufacture the product, you cannot just bring on seasonal labor or outsource to a contract manufacturer to bolster your assembly line. So what should L.L. Bean do? It isn’t as if these shoes are a new product that vastly exceeded the expected demand. These shoes have been around, for what seems…forever.

No...you can't wear this LL Bean boot

No…you can’t wear this LL Bean boot

Their popularity is clearly back. I remember my classmates wearing these when I was in high school…and that was a long time ago. I never looked at them as a trendy item, not like what UGGs did or other brands. But clearly the product has regained popularity with the “younger people.” Meaning it is appealing to the 15 – 23 year old segment where trends can truly go viral. When you do a Google search for “L.L. Bean boots” you get sub searches “women,” “men,” “frat,” and “preppy.” Clearly it has mass appeal for the kids!

Should L.L. Bean have had better demand sensing? Could they have anticipated this upswing in orders months ago? Granted, based on the lead time they need with regards to adding manufacturing capacity, it might not have mattered. And how should they monitor this demand moving forward? Will there be this level of demand next winter? Or will some other brand become the cool footwear on campus next winter? This is one area of Matrix Commerce that calls for a high degree of digital sophistication as well as some good old fashion intuition.

Clearly this season is over capacity and there is very little L.L. Bean can do to accelerate the production. Moving forward, L.L. Bean needs to apply some savvy digital monitoring to better gauge the demand for 2015 and beyond. For example – what is the reaction of the shoes? Are they trending on social channels? How are they being discussed on social channels? Are the returns on pace with historic returns? Or are there more or less? L.L. Bean should monitor the fake and knock off products – imitation is the sincerest form of flattery. Companies that can produce a similar product will rush into the market if they believe the pent up demand cannot be met or if there is another layer of demand at a lower price point. These are all digital data points that L.L. Bean will have to pull back into their planning and forecasting engines to better manage their supply chain. Of course there is the other strategy of potentially keeping the supply low, to create exclusivity of the product. Hmmm makes one wonder.

But this latest Christmas season and fashion trend story reminds all of us, that accurately predicting future tastes and demands remain a fickle beast. The digital world allows us to cast a wider and more detailed net of what is going on, but we are far from being able to create an precise map for demand.

Now where are my boots…we are having a Nor’Easter here in Boston!

 

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Filed under Consumer Product Goods, Current Events, Retail, Supply Chain

Future hardware that impacts your supply chain – think V2V.

I wrote a post earlier this week about a number of hardware trends that will impact your supply chain, those are all in place today, already impacting supply chain and will only grow in significance. But here is one that is futuristic – V2V (vehicle to vehicle).  Why would  a driverless vehicle impact my supply chain you may ask?

Of course the biggest impact will be on making road safer, make cars more energy efficient, reduce congestion to name few. But this enhanced hardware also has the potential to impacting your supply chains. For example – last mile package delivery. Driverless vehicles will bring to delivery the same advantages as companies like Kiva have to warehouse management. Companies like Fedex, DHL and UPS could leverage a fleet of driverless vehicles to make

Coming to you...without a driver.

Coming to you…without a driver.

small parcel, last mile deliveries. With greater overall visibility of traffic patterns, other vehicles and tied into overall grid would allow greater optimization of package delivery. There are already applications such as Route4Me that look to provide optimal routes based on the errands or destinations the consumer has to run. There are a number of these apps that are being baked into the smart cars. Add to this routing software the ability for vehicles to drive themselves and you open up great possibilities when it comes to logistics. Private operators could “rent” out their vehicles for delivery purposes….just like Uber drivers do with their cars when it comes to the chauffeur business.

Supply chains need to think about how this could impact parts of their business models. We are already seeing some retailers like Footlocker offering same day delivery from their stores. They are doing so using services from Deliv (think Uber for small parcel delivery). What if instead of having to use Deliv, they could dispatch driverless vehicles? What if the consumer could use the driverless vehicles for returns? What if the retailer use the driverless vehicles to bring back returns to other locations? This potential delivery channel could truly transform the consumers’ home into an extension of the brick and mortar store.

I realize that V2V technology remains in the future with regards to becoming a reality in our day to day lives. Unlike the other hardware changes, V2V is not going to impact your supply chain today. But think about the potential it may have once it becomes a reality – which is closer than you may realize.

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Hardware is back! Impacts on supply chain from an old friend.

Hardware has been pushed to the back pages a lot of times – what is cool is the software that sits on the hardware. We don’t want to be bothered with thinking of servers, smartphones, computers, tablets, touch screens, televisions, appliances etc etc…we just want our apps! But hardware is making a come back, at least in the cool category. There are some changes coming to your supply chain…that being powered by changing hardware.

  • Robotics – okay okay, I know that automated factories is nothing new…but we are seeing a new surge in how robots are being leveraged within the factory and warehouse.  It is nothing new to see robots on assembly lines. However companies like Kiva Systems have pushed robotics deeper into the supply
    Coming to a supply chain near you.

    Coming to a supply chain near you.

    chain. Their orange robots gained fame by being integral in Zappos’ warehousing. The robots did the majority of pick and pack for the online shoe company. The joke was if you saw a light in the Zappos distribution center it was bad – a human was most likely fixing a robot! The horror…otherwise the robots did not need light…or a lunch break. But the robot influence is not limited at the warehouse or factory floor, companies like iRobot – best known for their Roomba robotic vacuum – offer a number of robotics for areas such as telemedicine and video collaboration. Think about the possibilities of this platform for such areas as after sales servicing. A technician could also have a telepresence robot that is tied back a veteran technician who could be located in one place but bring their expertise to numerous robots at once. Robots will also help do the 3D jobs – Dirty, Dangerous and Dull. Being able to off load these jobs to robots will free up the human for more valuable roles within the supply chain.

  • Drones – one could argue that drones are a subsection of robots…and you would have grounds for an argument, but I think they deserve to be discussed separately. What makes them unique is that the drones I am speaking of are the robots that fly. Drones became a part of our vocabulary through their usage by the US military. From a commercial usage we got our first taste of the possibilities when Jeff Bezos of Amazon went on 60 Minutes a year ago and suggested that some day in the near future we might be getting our Amazon packages delivered by drones. While Bezos has since tempered his Amazon
    remote controlled drone aircraft

    Don’t expect this to deliver your packages…but its little brother and sister.

    deliver via drone, we are starting to see actual usage of the technology to solve some logistics’ issues. DHL has started employing delivery drones to make deliveries to remote areas in Germany. Our supply chains have really only scratched the surface when it comes to using drones. We will continue to see them being leveraged for logistics but also to assist with tasks otherwise challenging to address.  Companies are looking to use drones to go “look” at potential maintenance issues in places that are difficult for humans to reach – for example, drones could inspect parts of oil facilities or factories that are difficult to access. Drones will play a greater role in our society and our supply chains. This time next year Santa Claus might very well be using drones to help him deliver his presents.

  • 3d Printers – Last week I took my son to a 3d printer store, and it was great to see how a 7 year old reacted to seeing the printers making a wide array of “things.” Dinosaurs, building models, snow men and other shapes. What I saw was the ability to change how we manufacture, how we deal with spare parts inventory and even impact logistics. Bringing 3d printers to the manufacturing floor will offer new methods but can also expand the factory floor. Manufacturers could place 3d printers closer to the final customer for products that might require some customization or assembly. One can imagine mobile 3d printing capabilities – allowing for true delaying of production and JIT (just in time). Companies like Nike are already experimenting with using 3d printers to make their sneakers. A customer could walk into a Nike retailer, customize a shoe and have it printed on site. True customization. With regards to spare parts, companies such as Airbus are looking to leverage 3d printers to keep certain plane models in service longer. Their vision is to leverage 3d printers to produce specific spare parts that would otherwise not be cost effective to continue to manufacture. When it comes to logistics – we are always trying to solve our last mile issue with regards to delivery. What if your local Staples or OfficeMax had a 3d printer and you could have some of our deliveries sent to the store and printed? Between drones and 3d printers we might have competing hardware solutions for the last mile delivery challenge!
  • Wearables – Mobility has had a deep impact on our supply chains already. This should come as no surprise as the BYOD (bring your own device) wave has swept over businesses in general. But I am not just speaking of greater usage of smartphones and tablets in our supply chains. Wearables are the next evolution – dedicated, connected items that we wear. The most common wearable is Google glass. While the jury remains out as to whether or not it will catch on, the genie is out of the bottle when it comes to growing usage of wearables. We are seeing the usage of Google glass in the factory, companies like Plex Systems are demonstrating how they are integrating the hardware with their solutions to add efficiencies on the factory floor.

    Other solution providers like Unvired are leveraging Google glass into their warehouse solutions – bringing greater efficiencies to the pick – pack process. Warehouse workers, using the Google glass hardware coupled with the Unvired solution have hands free access to vital data that makes their job more efficient. Look for wearables to impact a growing number of other parts of our supply chains such as logistics, maintenance and service, POS (point of sale) to name a few. Wearables offer greater mobile intelligence, think of them as adding this enhanced connectivity at the edges of the supply chain network. Look for this added capability to open new business models and capabilities.

  • Sensors – The internet of things (IoT) has permeated many of today’s headlines. Pundits speak of all the wonderful things that will come from being able to connect an every growing part of our infrastructure and supply chain. But what is one of the underlying technologies to make this possible? That’s right, the inexpensive and smart sensors – the hardware – needed to make this connectivity possible. Companies like GE are working to infuse a greater number of sensors into their products from locomotives to wind turbines to airplane engines. The sensors throw off a wide array of data allowing for better monitoring of the assets, usage and network optimization. As these sensors continue to drop in price – look for their usability to be expanded to a greater number of assets and products.  Sensors and IoT hold tremendous potential for driving greater network optimization for supply chains – providing the necessary solutions and hardware to achieve greater network visibility. And much like wearables – pushing control and intelligence to the edges of the network.

These hardware evolutions have and will continue to drive innovations in our supply chains. Of course these are all tied into software and intelligence that make the hardware “smart” and useful. Reality is the line between hardware and software has blurred over the past few years and will continue to do so. But companies need to think about reinvesting in hardware to take advantage of these new innovative tools.

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