Tag Archives: IOT

Happy New Year 2016! Looking forward to a sweet 16 year for Supply Chains

Happy New Year to all, I hope that your 2016 is already off to a great start. Looking forward to this year there are some exiting changes as well and continued progress in other areas. Here are some trends we are focusing on for 2016:

  • Retailers will continue to seek new solutions and services to empower their stores: in 2015 we started seeing greater efforts and emphasis on the role of brick and mortar stores. Written off as irrelevant, even a burden a few years ago, retailers’ views of their real estate assets has taken a turn. Brick and mortar stores’ role in the retail supply chain will continue to grow in importance. This momentum is due to the evolution of how stores are being leveraged by retailers. Embracing show rooming, leveraging stores as distribution centers, creating contextual experiences within the store to drive traffic to name a few indextrends, are all making stores matter again. Most significantly the redefinition of the store’s role allows traditional retail to tackle the pure eCommerce players. 2016 will continue to see this evolution of the store. Gaining improved inventory visibility, empowering store associates with greater information, enhanced operational data to allow more business processes to be tested and adopted are all areas where retailers will be seeking appropriate solutions. Look for retailers to lean on their solution and service providers to bring them the necessary technology and business processes that can allow retailers to continue to transform their physical assets. Solution and service providers must work with their retail clients to not only provide technology or business process solutions, but to also offer strategic insights and ideas. Technology is not the panacea but the enabler for new ideas and processes.
  • Logistics continues to feel the strain: Your supply chain is only as strong as your ability to minimize the friction associated with moving inventory and products throughout your supply chain. This burden falls on logistics – rail, ocean, air, trucks even bicycles and donkeys are all part of our logistical network. This past holiday season witnessed another situation where the strain on the logistics network can rear its ugly head. eCommerce retailer Jet.com had to apologize to some of their clients for falling short on being able to deliver products in time for Christmas. Logistic giants FedEx and UPS had to jump through some hoops to meet the delivery crush. Coincidentally, over the holidays,  eCommerce giant Amazon announced it is exploring adding an air cargo arm to their distribution assets. While eCommerce is growing at a steady 1o-15% year over year since 2012, the strain it is placing on logistics is disproportionate – due in large part to seasonal aspect of certain package delivery. The strain is also starting to pop up in places such as college campus mail rooms where they are being overwhelmed by services such as Amazon Prime. This trend is not going to disappear once the calendar flips to 2016. Transportation and warehousing will continue to feel the strain of keeping up with the accelerated evolution of supply chain in 2016. Look for continued efforts from service and solution providers to work with their customers to continue to find innovate manners to handle the crush of logistics.
  • Explosion of disruptive technologies continue to grow: Whether it is IoT (internet of things), robotics, drones, 3d printing or virtual reality to name a few, these disruptive technologies will continue to grow in importance within supply chains. IoT is already well entrenched within manufacturing and logistics, in 2016 look for this technology to grow in importance with regards to the retail supply chain. Robotics are also well know within manufacturing, but look for this technology to play a greater role in places such as customer service and inventory management in retail. Drones are getting much attention, somewhat negative, post holidays as those who unwrapped them as gifts are wondering if they need to register with the FAA, there was even a near disaster during a World Cup skiing race when a drone literally fell from the sky, click here for video. Reality is drones have a role to play in our supply chains – the genie is out of the bottle and properly leveraged they can reduce friction from our supply chains. As indextechnology giants Amazon and Google continue to push on how to leverage these machines to address last mile delivery. Additive manufacturing will continue to play a role in the manufacturing process, but will also create new business models. Companies such as Lowes are already experimenting with 3D printers in their stores, allowing customers to have custom products manufactured on site.  3D printing is already playing a significant role with manufacturers such as Airbus and Boeing, but we are only at the cusp of how this disruptive technology will play in our supply chains. Finally virtual reality will continue to play a role in places such as retail – allowing customers to experience product as well as in supply chain design and CAD software. As mentioned above, we see warehousing and other logistics being strained as more companies look to add more of these assets, leveraging virtual reality allows for better testing and understanding of how these capex projects will turn out. Imagine being able to test and try out a full scaled model of a plant or warehouse via virtual reality. Look for these technologies and others continue to grow in importance within our supply chains.

Every year at this time it is always interesting to look back and see what the prior year held for us and more fun to look forward to the coming year. As I have become more of an optimist as I have grown older (is that normal?) I am looking forward to 2016 and some of continued evolution of these technologies and trends.

Happy New Year to you and your loved ones!

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The hidden dark side of connected vehicles – Volkswagen’s electronic tinkering

The big bombshell news today on the IoT (internet of things) front was that Volkswagen was caught programming their diesel vehicles to behave better during emission testing. I guess that is much more sophisticated then when a car dealer would roll back the odometer on a used car! The fall out of this news was immediate. The company’s stock tumbled as much as 20%, seeing almost $17b of market value disappearing from Volkswagen AG. Unfortunately for the German automotive giant the pain is not about to end. The United States Environmental Protection Agency, warned that it could levy a fine as high as $18billion for the infractions. Ouch.

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This will be a severe blow to Volkswagen, but it will have some other repercussions as well.  A new reason for some to pooh pooh IoT. I recently wrote a blog post that called out some backlash we are seeing when it comes to connected things. While some may scoff and laugh at such connected items as cat water bowls, jars and socks, I would argue the business plans behind those are not as silly as one might think. Click here for my post. But the cause of that backlash is real. Over-hyped and overpriced connected objects for the sake of it, does not make sense. There has to be a business model associated with the connected item.

It is the same with the stories that come out about someone’s connected skate board being hacked. Yes there is the potential for mischievous acts being perpetrated. But remember that over a decade ago online banking and shopping also fell under the fear mongering – your accounts and credit cards are not safe!!!!! And yes…some breaches have occurred. But as I recall Jesse James and Billy the Kid robbed brick and mortar banks long before the internet. That created a lot of fear, yet people in modern society still having bank accounts…in brick and mortar banks as well as do plenty of on line banking and shopping.

Now I am sure we will hear fear mongering about the companies that are doing the connecting finding some way to “get away” with something. And from the looks of it Volkswagen is guilty of doing so. But this just means that regulators and governments will have to do a better job monitoring. This does not mean that a connected car is now a bad thing. With all new technologies there is a learning curve: for consumers, the creators of the technology, the oversight of the usage and the business models best served. We are only beginning to scratch the surface when it comes to IoT. There will be bumps and abuses of the technology, but there continues to be great promise. Let’s not let the worry mongering detract from the possible.

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Instacart at the edges of the retail IoT network with help from a humble device

The on demand retail economy is in full bloom. Companies from AirBnB, Washio, Favor, Shortcut to Lyft are all offering consumers a new retailing experience when it comes to services or procuring goods. These new business models are also pushing the edges of the retailing envelope – changing how retailers look at servicing the end customer. One shift that is taking place as well is how the physical stores are being leveraged. eCommerce giants such as Amazon and Alibaba began to drive the conversation around why have stores at all? With large logistic networks, strategically placed distribution centers and savvy order capture systems the need indexfor physical stores for customers to come and look at products and then purchase were a relic of the past. Not so fast. Stores are making a come back. As they should. The reality remains, that as a percentage of all retail, the dollars spent via online are still dwarfed by those spent in stores. For every $11 spent in retail, more than $10 of that sum is transacted within a physical store. However retailers are facing the challenge of how to leverage the physical stores in new ways.

An example of this is the services Instacart is offering. The basic premise for the service is to offer consumers the flexibility of having someone else do their grocery shopping and having the items delivered within a finite time. Instacart has partnerships with the likes of Whole Foods, Safeway and Costco. So the grocery store is where the inventory is being held, no carrying costs for Instacart. However, Instacart relies on their pickers as well as their mobile devices to ensure that orders are properly received and most importantly properly picked and packed. This is where problems arise for such a service. The service is similar to a warehouse pick and pack operation, but a warehouse is staffed by professional warehouse employees and is…well a warehouse! Whole Foods is not configured like your local distribution center. So how can you ensure the order is properly handled? This is where the promise of IoT comes into play.

While these grocers are not going to become fully IoT operational overnight – having sensors throughout store infrastructure (shelves, aisles, freezers, carts etc), on certain inventory as well as on other essential assets – the ground work is beginning, in large part driven by the services provided by Instacart. Instacart is really similar to a store within a store – or personal shoppers within stores. And with that they also need their own systems in place to manage their business. While they can lean on the mobile assets their pickers carry, they require a more robust and industrial strength solution. This is where they are working with Zebra Technologies to place printers within certain Whole Foods. Printers? You may look at this as a non-digital play, but on the contrary this is a perfect example of how IoT can start being infused into retail.

Retailers do not need to invest in snazzy new beacons, cameras, sensors, smart shelves or RFID but rather can look at items such as label printers as a foray into IoT. Zebra printers are being rolled out into Whole Foods where they are tied to the Zatar IoT platform. The Zatar platform is able to tie these printers into a greater IoT platform. Currently the system is handling the order processing for the pick and pack of groceries. Through simple printing and labeling, it is targeting a more efficient and proper order.

This is addressing a current need for the grocer and Instacart – making sure orders are error free. But think about how this could evolve. The printer is but one item that is becoming smarter. Instacart is able to place this smart, IoT enabled device, in the property of another entity and run their business within someone else’s store. As the printer becomes “smarter” for example adding camera technology, this innocuous looking device now becomes part of an IoT infrastructure within a grocer’s store. The platform that it is tied can now take on new IoT enabled devices – suddenly the network effect takes off.

The long-term impact of relationships between the likes of Instacart and Zebra is in the ability of companies like Zebra to begin to plant the seeds for connectivity, tied back to their platform, within these physical locations. The promise of IoT will not happen overnight, but will start on the foundation created by the infusion of connecting humble machines such as printers into a greater IoT network.

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IoT – don’t focus on the hype, keep the use cases in mind.

An interesting article came out end of August that looked at some “gadgets” that should have just stayed dumb. A good read that highlights some everyday items that probably should have stayed out of the IoT spot light. Click here for the article.

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But are we missing the bigger picture with IoT? I agree with Christopher Mims from the Wall Street Journal about the over smartening of banal items – plates, pans, drinking cup to name a few. Click here for the piece. Not every object in our every day lives need to be connected. However, as prices come down, use cases for some of these gadgets might become more appealing. Let’s look at some that @internetofshit called out:

  • The connected bottle of wine – yes tracking my $5 bottle of wine is a little silly. But think about the importance of track and trace for items such as your cough syrup or baby formula. Ensuring they have not been tampered with or counterfeited. How about monitoring perishables such dairy. From a distributor stand point, being able to track and trace a bottle of Coke or Pepsi could have long reaching impacts on the supply chain, being much more precise with regards to stocking and inventory management.
  • Smart water fountain for pets – do you really need to monitor your pets’ water intake? Probably not. But having access to controlling the dispensing of water and food? There are already plenty of products on the market that have timers to dispense these items. Why not make that smarter? The pet business is a $55b + annual market in the United States alone, with over 3% growth annually. Providing customers with a smart pet food/water dispenser where the pets’ intake could offer an alternative for those who are not always home but still want to ensure their loved pets get the necessary food and water. Consumers spend money on their pets, as if they were their children. In many ways they are. That $55b market doesn’t seem too silly, that seems like real money.
  • Connected socks – Wow, $199 socks…yikes. Even someone like me who loves their socks (just check my instagram page – @gcourtin – for my sock selection) that is a high price tag. But let’s imagine that price tag comes down. At $20 – $50 consumers might start purchasing these items. Why? Companies like Adidas are already putting connected devices in their soccer boots to provide players and coaches with a large amount of data to craft better training regimes. Think it is silly? Click here to read a great piece on how the German national soccer team used this to win the World Cup. Runners, soccer players, basketball players, football teams and the list goes on, of athletes that could gravitate to this type of performance data. Granted this might already become available via the shoes, but if the socks are less expensive they might get to that market first.
  • Smart jars and water bottles – These could fall under the connected kitchen/home category. Do I need to know exactly how much water I drink a day? Or exactly what the nutrition content of the items in my jars? It might sound like a little overkill. What about a use case of tying in your water intake with your Fitbit or Apple Watch or smart phone? Does anyone not believe that personal health tracking devices are not firmly entrenched? Extending this into our consumption does not seem like a big stretch. The smart jar might one day be connected to a larger food supply chain. Large CPG companies such as P&G and Unilever are always interested in getting better data on the actual usage of their products. Even players such as Amazon and Google might want to find a way to have customers use these smart containers so they can better replenish items at the home.

I agree that sometimes these devices appear to be technology looking for a problem to solve. But with some aspects of IoT it might be just that at some level. We are still in the early stages of IoT. And with that there remains many skeptics, issues that still need resolution (privacy and security being two of them) and at times too many things being made “smart” for the sake of it. What we need to focus on is not the devices and gadgets that are being connected, rather the use cases that these connected devices might open up.

Now where are my connected socks?

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Plex manufacturing makes happy customers – which leads to healthy growth

I recently attended PowerPlex, Plex Systems’ annual user conference, the largest in their history with over 1000 attendees. It was hosted in the biosphere that is the Gaylord Opryland in Nashville Tennessee; I think I have finally figured out how to navigate the vast property (anyone who has been there knows that the place is absolutely massive, over a beer I am happy to share a funny experience…it involves different shades of green and trying to enter the wrong room).

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Show me some numbers!

Enough about my issues with hotel lay outs, what was not confusing from my time spent in Nashville was the positive energy that was running throughout the event. The high level of enthusiasm as well as the positive attitude flowed through the event – Plex truly is living up to their goal of making their customers “happy ERP customers.”

Some highlights from the event:

  • It is all about being the best manufacturer possible – Plex’s community of customers is truly touching a large part of the global economy. From main stage, CEO Jason Blessing, highlighted some impressive numbers of what Plex solutions are powering throughout their installed base:
    • 6m items are being produced weekly.
    • 41m quality checks are taking place per year.
    • $25b worth of customer revenue generated annually.
    • 945b pounds of materials handled on an annual basis.

Some impressive numbers indeed. The lesson to be drawn from these figures is that, as manufacturing remains a vital driver for the economy, Plex continues to play an important role in making this happen. Bottom line as Jerry Foster, VP of Research and Development, said, “Our job is to ensure manufacturers can manufacture more efficiently every day.” It was clear from main stage as well my hallway conversations that Plex remains true to this mantra. They are completely laser focused on how they can partner with their customers to be the best manufacturers possible.

  • The core is solid, but now it is time to improve the edges – The core functionality for Plex is humming along, while Plex certainly is not resting on their laurels, there was discussion around the work Plex has been embarking on with complimentary aspects of their solution. One such area was an emphasis on a new and friendlier user interface, calling it Plex UX. This is not a minor challenge for a company like Plex and the customers they are servicing. Unlike other software providers, the Plex software is truly being leveraged from shop floor to top floor. Plex UX has to be adaptive to a shop floor, which contains many environmental challenges, as well as users who maybe interacting with the software while wearing gloves or other manufacturing gear. At the same time a head of manufacturing, CFO or COO needs to interact with the same software in an office environment. Not a simple design challenge. Look for this to be rolled out in Q4 of this year. The interface is also only as useful as the data and insights that are available, that is where their Plex Insight comes into play. This offering empowers Plex customers to extract the right data from their systems, truly giving a full understanding of data that is being processed. A third new offering is Plex Connect, a platform to connect the vast expanse of data generating parts of the Plex environment. This is most exciting, to this author, when it comes to tying the data being produced from IoT enabled parts of the manufacturing and supply chains. Potentially a real game changer for Plex. In addition to these new offerings, Plex spoke at length of their partnerships with Workday, Demandcaster and Salesforce. Highlighting their focus on bringing together enhanced cloud based offerings to their customer base.
  • Lets get serious about some toys – Apple watch, Google glass, wired clothing, GoGlove and wristband technologies from the likes of Myo and Nymi were all highlighted as areas of continuing focus for Plex. Good. At Constellation Research we are constantly challenging our customers to think about and to be willing to explore areas of digital disruption that can and are impacting their industries. Plex’s continue efforts to explore how they can leverage new technologies and more importantly how they can work with their customers to utilize these new offerings will continue to pay dividends. Plex’s work in the wearables space is of particular interest. For example, they discussed working with clients on connected vests to make the shop floor safer. Environments where heavy machinery, such as forklifts, are constantly in motion, being able to have safety measures such as IoT enabled vests, which can alert drivers of workers on the floor – preventing accidents. The opportunity for Plex is to take some of these learning and offerings and push into areas they currently do not have a presence – think warehousing and even yard management. As IoT, wearables and even drones become more prevalent on shop floors, look for Plex to continue to explore how to make sure these allow companies to manufacture more efficiently.

As I wrote a few months ago after attending the Plex analyst day, the company continues to push towards some lofty heights. Based on the financials the executive team shared with us this growth is being reflected in the numbers, especially impressive is their average annual revenue per customer, which is trending upwards. It is clear that Jason and the executive team are also putting more wood behind the arrow as they are targeting another 100% increase in quota carrying sales executives by end of year. It was also evident in the customer stories from the likes of Accuride, Sanders Fine Chocolates, Fisher & Co, American Axle and Floracraft to name a few.

Of course the road ahead is not without challenges. The company is pushing up stream into larger accounts, which will start putting them head to head with a new batch of formidable competitors. There is also global expansion. While their solutions are being used in over 20 countries, at some point Plex will need to target and close business with manufacturers that are not headquartered in the United States. While they argue there remains plenty of business in the domestic market, for Plex to truly achieve some of the goals they have they will have to target some global geographies.

A good challenge for Jason and his team, one that will determine how far Plex can go. As long as they focus on making “happy ERP customers,” Plex will continue to have success.

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Capgemini continues the journey to becoming the innovation company

Two weeks ago I was on the road again…I know I know…. what a surprise! I can’t complain since I was home, Paris France, where Capgemini was hosting their summer analyst day at their fabulous training center (see picture). While the setting at Les Fontaine captured the tradition and history of France, the discussions with Capgemini were dominated by the theme around innovation and looking forward. How Capgemini is working with leading firms across a variety of industries to infuse innovation into their every day DNA.

Not a bad place for a 2 day meeting.

Not a bad place for a 2 day meeting.

Capgemini is correct in focusing on how the digital revolution we are undergoing, will have a wide and deep impact on industries. While there were a number of examples from all the businesses they work with, the ones that caught my attention were, no surprise, around supply chain.

  • Capgemini and large European retailer discussed their thinking around an important customer centric project. At the base of this project is the need to implement a large and comprehensive CRM system. Speaking with an executive from the retailer, it was evident that they recognize the importance to create a 360-degree view of their customers. The goal being to nurture the customer experience, constantly and continually. The notion of a sequential relationship – customer has a need, customer seeks solution, customer buys product and transaction is consummated – is no longer how the retail/consumer relationship works. The retailer has identified the need to be much savvier when it comes to their consumers’ data. As they work through the technological needs, it was clear in my discussions that they are exploring new and powerful ways of leveraging the information they expect to extract from their CRM solution to better service their customers, which is really about providing an enhanced retailing experience.
  • Speaking with some of the Capgemini executives it was clear that they regard supply chain improvements as holding great opportunity. The thinking focuses on how digital is disrupting the entire supply chain, and the opportunity to target the parts that are “hidden” from the general public. Of course this is music to my ears. A wonderful example of this in action is the work Capgemini is doing with Nokia and their world class supply chain. The Finnish telecom giant has looked to Capgemini to overhaul their production and sourcing processes – to harmonize the supply chain. The work is not simply about buying a new software solution, but rather about identifying the business processes that must change and some that need to be adopted. Not a small task. But the work Capgemini is accomplishing at this level with Nokia could and should lead to more transformative projects within their supply chain – leveraging the digital transformation for future business cases.
  • The Internet of Things (IoT) and the impact it has with manufacturing. Digital manufacturing within such areas as the automotive industry was highlighted as well. Speaking with the Capgemini heads of the automotive sector, the discussion revolved around the base line use cases many companies are using IoT for: asset management, predictive maintenance and field enablement. However in my discussions around this topic we began to explore the possibility of new use cases emerging from IoT. Around greater customer experience, enhanced store utilization and new business models between manufacturer and customer. Some of which may never see the light or day, but Capgemini is clearly thinking about disruptive this technology will truly become. More importantly, Capgemini is partnering with their customer base about how to take advantage of IoT.

Following up from my meetings with Capgemini this March in Chicago, the digital disruptive theme continues to be a vital theme to what Capgemini is executing on with their customers. Their ability to continue to help their customers innovate around digital, will determine how successful Capgemini is in becoming a leading services firm in this space. Companies, from all industries, will need these types of partners as their industries become transformed and disrupted by digital changes.

We are all witness to the transformation every day – for example while in Paris with Capgemini we were subject to a strike by an traditional business, taxi drivers, against a digital disruptor Uber. We are all seeing and thinking about how each industry will be impacted by this change, companies like Capgemini are working on a valuable services partner to help navigate the journey.

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Lifesciences IoT opportunity – will privacy issues slow it down?

This week I met with an executive from Biogen. We spent time discussing their business, the usual areas where covered: how they were dealing with the patent cliff, their diversification of offerings, how they were working internationally to name a few. But the one area that really got my juices flowing was when we touched upon how IoT impacts the pharmaceutical space. From my discussion it appears that there are two interesting plays for IoT in pharmaceuticals.

  • The first is in their supply chain. From manufacturing, to storage and distribution, IoT holds great promise. No surprise as we see a large majority of manufacturers across a large spectrum, leaning on IoT to provide data that leads to greater efficiencies within their supply chains. For heavily regulated industries such as pharmaceuticals, the promise IoT holds out with regards to greater visibility as well as enhanced track and trace addresses a key issue these companies must address. Unlike a clothing manufacturer where a defect lot can lead to lost sales or a public relations night mare (think Lululemon’s recall with transparent yoga pants) if a pharmaceutical company has a defective batch of products the potential results are much more serious. They could have dangerous even fatal consequences for the end user. For the manufacturer or distributor they are under threat of heavy fines and even arrest. Not what either the end consumer of the manufacturer wants. Pharmaceutical companies, if they aren’t already, should be looking at IoT solutions that can allow them to secure the handling of their products. For example leveraging sensors that can monitor how product is handled through the transportation nodes: was it maintained at the proper temperature or was the container properly handled: Sensors could also be leveraged to ensure that there was no tampering with the product. Of course sensors can also be used in the manufacturing process to measure and optimize the factory process.
  • The second potential usage of IoT is with the product itself. Now this is where there is the potential for some great insights and good, but also raises a potential red flag. Companies like Merck are already talking about and exploring the development of “digestables.” That is right, IoT enabled drugs or devices that consumers would eat. The hope is that the data that we can extract from these products revolves around how the drugs interact with our bodies, how are they truly interacting and simply if they are being taken properly (read as doctors tell us to!). From a medical devices perspective we already see companies like Boston Scientific who make pace makers that are IoT enabled. Anyone who is a fan of the HBO show, Homeland, knows the potential risk that poses! Much of this is only being tested in the labs or thought about in development meetings, but it does bring up the question about privacy. An enormity that might hold back IoT is how is the data going to be handled and protected? There are already rumblings around simple data that our iPhones or Fitbits collect about how many steps we took today, our heart rates or how many calories we burned. What happens when there are devices that are throwing off data about the health of our intestines, how often we go to the bathroom or if we are showing early signs of diabetes? Richie Etwaru has a wonderful model for IoT where as the IoT enabled product gets physically closer to a person’s heart, the greater the possible issues, especially around privacy. Digestables might be just a few inches away from the heart…from the inside.

Pharmaceutical companies should absolutely be exploring how to leverage IoT. When it comes to managing their supply chain, they are a prime industry to unlock the greater visibility and monitoring of the processes within the supply chain. The real issue is when pharmaceuticals start to productize IoT what will the privacy ramifications be? They better start thinking and preparing for this issue today.

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