Supply Chain 2019


Huge bets have been placed with M&As by carriers, freight forwarders, VCs and private equity firms. As well, there has been a steep increase in software and hardware development, which is driving big money and big dreams for our future supply chains.


2019 Vision and Reality

The dynamics — and it is really dynamic on all fronts — of supply chain strategy and operations are driving firms towards bolder plays, expanding our vision of supply chains and what the technology vision should be.

Our supply chain technology vision today is that any user — business, consumer, or IoT device — can experience instant access, across any connection, and instant, accurate information on inventories, capacities, prices, and ETAs. Armed with that information, the expectation is that execution will happen according to the expectations set.

Users, tech companies, and service providers are aligned on this vision. But getting there isn’t easy. We cannot overstate the impact the “e” world is having on global chains, end-to-end. Free shipping, mobile shopping, and the continued globalization of our business has catalyzed the largest explosion in spending in supply chain history: warehouse redesigns costing from tens to hundreds of millions of dollars, huge M&As in the carrier world, and big bets in technology. We are talking billions upon billions of dollars. But no amount of money and the best software, leadership, and people will probably ever be enough, because the bar keeps rising. In the game for market share and sector dominance, one bold move is countered with another bolder one. It is like a Wimbledon tennis match with an endless tie breaker.1 And, of course, it takes a certain amount of determination, resilience, and time to implement.

To keep up or get in the game, tech companies as well as private equity money continue to drive a lot of change — and growth — by the acquiring companies.

There are many notable acquisitions, too numerous to mention, but here are a few examples of companies and why they are doing what they are doing:

  • WiseTech Global has made several important acquisitions that expand their ability to support international transportation and global trade management.
  • Descartes Systemshas made acquisitions that expand their capabilities into small and midsize firms. As well, they continue to expand their ability to provide visibility and control to every aspect of transportation moves, tracking of goods and vehicles, and communication with drivers and end-customers.
  • E2open’s acquisitions are based on the pursuit of an end-to-end model in the chain, from suppliers/manufacturers to transportation and distributors, and to resellers and retailers.
  • Logility‘s acquisitions expand their machine learning/neural network capabilities as well as their integration and collaboration in partner supply chains.
  • (For more on these and others, please read Multi-Party Solutions.

The freight forwarder sector has been rolling up country-specific capabilities so the global freight forwarding service they provide can truly represent their customers in more and more nations. In addition, freight forwarders and 3PL have been doing a lot of internal investments to upgrade their technologies and service, and re-align to the current market environments.

Carriers, often with the backing of their financial portfolio owners, continue to acquire both regional services as well as more fleets so they can provide end-to-end/door-to-door service. This gives them more options as well as the ability to gain and balance revenue over peak- and down-market dynamics.

The dynamics of supply chain strategies are driving all of this, so it would behoove us to look at some of those key strategies and then the technology areas that users should be implementing — or fine tuning — in 2019 and 2020.

The Big Strategies

Omni-channel/Inventory Management: So much has already been said about Omni-channel; however, huge challenges remain. Managing inventory has become less straightforward in an Omni world. Smart organizations know that inventory placement and volume — what to stock, own, consign (or not), and where in the chain to stock it needs to take more into account than just a forecast number. Whether orders are pulled from a central warehouse, purchased from a store, or drop shipped from the supplier, more complex inventory models must also take into account where an item might be sourced from as well as the cost of logistics — warehouse space and transportation costs — knowing that the last mile (and often those “free” returns) is the priciest place in the chain. Read The Agile Retailer, Leveraging Allocations in an Omni World.

Digital Supply Chains: When we talk to most firms, their big push in digital is to get their own house in order. (For example, read about X-Factory.) For external chain work they are turning to their software providers who are already, often, managing their data translations between partners. For firms who do not use the broader-based supply chain network solutions, going it alone will become harder and harder. As your partners and customers change, their expectations for your participation in their network impact your supply chain requirements and force your enterprise to “raise its game” and get real-time digitally connected. That is the journey for many who are still basically users of ASNs and not much else!

Last Mile Logistics: Whether B2B or B2C, this is a hugely competitive space for companies to serve customers. Logistics costs continue to increase, with an expected rise of 25% in the next year, above increases already experienced. Companies do realize they need a game plan to optimize their chains and implement intelligent delivery in order to maintain profitability.

Dynamic Logistics: By this we mean the flexibility to find and select new suppliers, warehouse capacity, and carrier capacity. Due to uncertain or seasonal requirements, having your own larger warehouse or fleet capacity may be too expensive or insufficient. We are all familiar with carrier selection-seeking software that can connect to multiple load boards, but now warehouse operators can post their abilities/capacities where customers can find that needed space. This gives warehouse operators access to a broader market to gain revenue during their non-peak periods.

In addition, so called “ride sharing” firms like Lyft and Uber have plunged into the business world by offering an array of services for small package, time-definite delivery.

Smarter Demand Management: With the introduction of machine learning, we are starting to get smarter. However, many demand suites, although they have great algorithms, don’t really capture all the data needed today. Traditional demand planning software has yet to include all those customer opinion/survey inputs, social sentiments, customer segmentation (which is sorely lacking a more dynamic way to understand and segment our more mobile and changing population), geospatial influences, and product data, to name a few important elements. Be that as it may, organizations need to be thinking of ways to include those types of data in their models and influence solutions providers to expand.

Autonomous Supply Chains: We put this last, since autonomous is a journey, whether you are considering automating your planning department or augmenting your driver pool with autonomous vehicles. In 2019, we saw big announcements in this area, but, quietly, firms have been implementing a lot more analytics, agents, and bots within their software for forecasting and planning. Read The Planning Department of the Future. More about autonomous supply chain here.

What You Need and Why

AI/Machine Learning: Users are inundated with input. So many new data sources from the web, from trading partners, and from geospatial sources affect demand and delivery that users cannot possible internalize, see the patterns, and make decisions about every move and every product. As well, it is hard to glean how all the little daily decisions may affect customer service, profitability, sustainability, and the overall, long-term health of the chain.

AI is not a new technology. By now companies should have accumulated a lot of data and history on plans vs. actuals as an important asset from which to learn. And as use cases keep getting broader, software firms meet the challenge by providing off-the-shelf analytics. With machine learning, users discover previously unseen patterns and can become farsighted. Thus, supply chain professionals can raise their status as key players in the corporation’s strategy.

B2B Communications: Yes, we have so much more to do here. EDI will always be with us, but today we can, via workflows and APIs as well as participation in supply chain networks, have richer/more informed communication with partners and customers.

Cyber Security: Everyday a new scandal. And that is the tip of the iceberg (the hacks into smaller companies don’t make national headlines). The cost of recovery is massive. Additionally, there is loss of competitive advantage due to intellectual property theft. Yet companies are woefully underinvested here.

Global Trade Management: The rules seem to be changing and uncertain. Whether in the EU or North America or with China trade relations, staying on top of what’s required only gets harder. And developing nations are continuing their push forward on digital customs reporting.2

IoT: Visibility and intelligence is the call here. Firms need multiple data inputs — not just from partners and latent carrier status notifications (EDI), but directly from their products. Want to track? Want to maintain the quality and safety of your shipment? Want to know when your equipment needs to be repaired? Want to know the real ETA of your shipment? Or want to provide those services to your customer? IoT devices and the attendant analytics to understand, filter, analyze, and signal are required (more about IoT).

Logistics Technology: Logistics is like the layers of the onion. There is more to it than appears at first glance. It’s all important — and getting more costly. Leveraging technology to increase service yet contain costs has become essential, since relying on your service providers to do so may not work. Yes, they are trying to reduce their costs to serve, but that will not be enough. Even if you exclusively rely on them to operate for you, being a savvy buyer means you can understand and be part of negotiating rates, overseeing contracts and resolving issues.

Ultimately, your customers hold you responsible for success, so ensuring that you can plan, track deliveries, and loop back directly with customers on the service they received is essential. Firms who operate their own fleets and directly manage for-hire services have been investing heavily in upgrading their platforms for the latest real-time continuous planning and visibility, door-to-door solutions. Today, cloud platforms with mobile/electronic/IoT connectivity are a must to manage equipment and drivers, and optimize routes.

What’s Holding Us Back?

In many use cases, technology is not today’s obstacle. From a technology perspective, it is more about understanding how to leverage the multiple data sources. What are they? Which ones will serve us best? How do we incorporate them into our environment?

The bigger obstacle is the alignment of trading partners and how they want to work together in each relationship. Whether participating in collaborative cloud-based supply chain operating models and/or connected processes via digital supply chains, there has to be alignment of all those “icky things” — process, rules and data.3 At the end of the day, there is no substitute for people.

The most important strategy companies can undertake is investment in people. We still find it hard to communicate cross-culturally, yet we continue to expand into global environments. We also need to bring generations together so both can bring their contributions to the table: the skills and knowledge base of the more experienced employees, and the technology skills and fresh energy and dreams of the younger generations. As well, we need to bridge the talent gap. A well-educated workforce will be required to help organizations understand and utilize the new technologies and services that have been created.

By incorporating all the aspects described above, we can build an organization that can lead us into the next decade and beyond, creating new visions, discovering new products and services, and expanding our business beyond today’s limitations.


1 Kevin Anderson and John Isner wore each other down in endless set after set tie breakers with the fifth set tie-breaker of 26-24 during Wimbledon 2018. — Return to article text above
2 ACE, etc. For alot more on current requirements, visit the U.S. Customs and Boarder protection site. — Return to article text above

3 When we talk about data, users run the other way. It’s really hard work — tedious and contentious. This is where a greater partnership with platform providers such as those who provide multi-party solutions can help, since they can help maintain the multiple data models and sources within an industry. — Return to article text above

To view other articles from this issue of the brief, click here.

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