Friday, April 28, 2017

SUPPLY CHAIN ANALYTICS


Supply chain analytics requires SCM domain expertise. Analytics as a standalone is not enough.  Otherwise it may be a lesson in misguided results.




BIGGEST LOGISTICS CHANGER

Biggest logistics changer--digitization, omnichannel, Amazon Effect, or ?




Thursday, April 27, 2017

NON-LINEAR SUPPLY CHAINS

Supply Chains were never linear. They are non-linear--even more so in the omnichannel reality moving across industries. Supply chains within supply chains.






Wednesday, April 26, 2017

SUPPLY CHAIN TIME COMPRESSION

Read LTD article on #SupplyChain Time Compession in Global Supply Chain ME at https://issuu.com/globalsupplychain/docs/global_supply_chain_april_2017_issu

OMNICHANNEL -- MORE THAN RETAIL

Omnichannel is for more than retail. For manufacturers, logistics providers, and much more. Has more power for change than even digitization.




AUGMENTED REALITY AND SUPPLY CHAIN MANAGEMENT


Augmented Realtiy for retail must be supported by the New Supply Chain for velocity, larger orders, more SKUs. You ain't seen nothing yet.




Tuesday, April 25, 2017

ORDER VELOCITY AND ERP


In the new reality of order velocity, is ERP a help or a hindrance?



AMAZON LOGISTICS

Amazon’s logistics add supply chain velocity, set new customer expectations, and address issues with 3rd party providers. And they widen the competition gap.




SUPPLY CHAIN ANALYTICS

Supply Chain analytics has untapped potential--for macro and granularity gains with velocity demands.



ORGANIZATION VS PROCESS

Company conflict and reality. Vertical organization vs business as a horizontal process. Supply chain management is the perfect example of this.



WILL CONTAINER LINE RECOVERY CONTINUE IN 2017?

On course for recovery or more ocean freight rate chaos? Opinions divided

© Sheila Fitzgerald hanjin 89611549
© Sheila Fitzgerald
A leading shipping analyst has predicted the return of rate volatility to the world’s major trades as the spectre of overcapacity comes back to haunt the industry.
This is despite growing confidence in a container market recovery over the past six months and other expert opinions.
Tan Hua Joo, executive consultant at Alphaliner, told delegates at the TOC Asia Container Supply Chain event in Singapore this morning, that despite 2016 being the “most balanced year in terms of supply and demand since 2009”, with a global fleet growth of just 1.6%, “hopes on the part of carriers for greater stability are still some time away”.
This is largely because the growth rate last year was constrained due to a high number of new vessel delivery deferrals, in combination with an unprecedented number of vessels sent to scrapyards and an unnaturally large idle fleet propelled by the collapse of Hanjin.
“As we move into this year, the rate of growth in the global fleet is going to increase as there is very little room for the industry to keep the growth of the fleet down,” Mr Tan said.
However, this view was contradicted by Robbert van Trooijen, head of Maersk Line for Asia-Pacific, who claimed that 2017 would be the year “in which all of us would find that balance”.
Alphaliner is forecasting total fleet delivery of 1.32m teu, mostly ultra-large container vessels (ULCVs), and although it also forecasting another year of record scrapping levels – up to 700,000 teu – there will still be a net increase in the global fleet of 620,000 teu, a 3.1% rise.
Around 1.6m teu of the world’s fleet was idled last year, although some 500,000 teu of this was Hanjin tonnage, but much has been brought back into operation.
Mr Tan said: “A lot of the Hanjin vessels have been brought back into operation and panamax vessels have seen something of a spike in demand due to the new alliances’ demand for capacity, pushing charter rates back up to around $10,000 per day.
“Idle Hanjin tonnage is now down to about 200,000 teu, and we expect this to be reintroduced by May,” he added.
“So as long as the shipping lines take back this idle capacity there is no sign of a recovery in the market, as carriers continue to bid for market share and significant freight rate instability will continue.
“In fact, we do not see a genuine recovery in the freight markets for another 18 months – it is not until 2019 that the supply-demand situation comes back into balance,” he suggested.
However, Mr van Trooijen argued that on the transpacific, Asia-US east coast and Asia-North Europe trades, capacity was likely to be far more in line with demand than Mr Tan suggests.
“It depends when the comparison is made. On Asia-US east coast, there was 148,000 teu deployed at the height of capacity last year, and although it has been growing since Hanjin’s bankruptcy, it is now at 144,000 teu per week.
“The transpacific trade is showing a similar pattern, and if you compare the capacity on Asia-North Europe in January 2016 with the anticipated deployment in December this year – even with the newbuilds coming in – it is 240,000 teu per week compared with 237,700 teu.”
Mr van Trooijen concluded: “In view of all this, I think we should be confident that the capacity injected in the east-west trades is more balanced than it was.”

Monday, April 24, 2017

CUSTOMER EXPECTATIONS

Customer Expectations are now Customer Requirements. Does your supply chain deliver those results? Do your metrics measure performance?




E-COMMERCE AND THE CUSTOMER EXPERIENCE

E-commerce is not about technology. It is about the ability to provide the customer experience and deliver orders complete, accurate and quickly.



COSCO--CAN A STATE OWNED ENTERPRISE BE NIMBLE TO THRIVE VS SURVIVE?

Analysis: COSCO may be unsinkable, but it's sailing in very choppy waters

China’s state-owned COSCO Shipping Holdings is unsinkable – yet its latest annual results, on 31 March, confirmed that 2017 could be, at best, a year of transition.
Continuing to sail through choppy waters, this container shipping powerhouse finds itself in the middle of a corporate restructuring that began at the end of 2015 and has yet to bear fruit.
In its annual results, it reminded us how the merger between the two biggest shipping groups in China was undertaken. On 4 May last year, it received “notification from China COSCO Holdings Corporation Limited (COSCO Group) that State-owned Assets Supervision and Administration Commission of the State Council (SASAC) has transferred its entire equity interest in COSCO Group at nil consideration to China COSCO Shipping Corporation Limited (COSCO Shipping), a state-owned enterprise established in the PRC and wholly-owned and controlled by SASAC”.
Essentially, the government had decided to flip a bunch of assets onto its balance sheet, while stripping, at higher corporate holding level, certain operations that might be more problematic than container shipping activities, particularly if the business cycle turns south.
Our take when the deal emerged can be found here, but it still remains unclear what the ultimate corporate structure will look like.

Merger
Unfavourable exogenous shocks played a part in a merger orchestrated by the government, but the writing was on the wall.
In 2013, China Cosco Holdings was forced to sell assets to avoid a possible de-listing spurred by two consecutive years of losses. It managed to find a way to stay afloat, but more structural intervention was already clearly necessary.
Now, in a difficult market where even Maersk has acknowledged the benefits of a leaner corporate tree, its container shipping fleet is the fourth-largest by capacity and adheres to the commonplace philosophy in container shipping that only through economies of scales are operators economically viable.
Then again, I wonder: do global growth prospects actually support this view?
Growth
The International Monetary Fund said in January that global growth for 2016 was estimated “at 3.1%… economic activity in both advanced economies and EMDEs is forecast to accelerate in 2017–18, with global growth projected to be 3.4% and 3.6%, respectively”.
It turned even more bullish this week, tweaking up slightly its growth forecasts for this year, but is that a game-changer for global trades?
The trend in recent years leaves little to the imagination – see the table below – while recession and geopolitical risks loom large in major countries whose economies hinge on fiscal and monetary policies that struggle to find a solid footing.
Source: The Economist
These macroeconomic risks will ultimately affect the box trades. Although The New York Times points to unusually expansive data showings by emerging markets since the turn of the year, “the emerging market story is harder to sell, and so grows the risk of investing in bigger ships”, one container shipping executive told me this week; while the chart below also testifies to a mixed picture for global economies.
Source: The Economist
Latest developments at Maersk are unsurprising, but it is the market leader and rivals are struggling to keep their debt levels down while investing to preserve competitiveness.
Size matters?
Size might – or might not – be the answer, but for the time being it’s interesting to note that Cosco Shipping Holdings highlighted a massive rise to the tune of Rmb14.6bn ($2.1bn) in reported revenues, which climbed to Rmb69.8bn ($10bn) in 2016 as a result of its merger deal.
Source: Cosco
One problem here is that its corporate structure has changed significantly in the past 18 months, so comparable figures cannot be a gauge of performance – although that also means its mounting losses of Rmb9.9bn ($1.4bn) should be taken with a pinch of salt.
After all, the merger was so complex that Seatrade defined it as “one of the most complicated deals in the history of China’s capital market”.
Lots to do
The picture that emerges from its financials points to certain critical areas where drastic intervention is needed. For example, the cost of goods and services (COGS) last year was higher than revenues – these costs usually exclude most or all operating expenses.
As it keeps track of the integration and divestment of certain other assets, financial discipline is of paramount importance – COGS will continue to be a key performance line to watch, because the group was loss-making even before selling, general and administrative costs (Rmb4bn) and net finance costs (Rmb1.8bn) were taken in into account – combined, these two items made up over 50% of annual losses.
Unsurprisingly, its balance sheet shows that property, plant and equipment fell, while long-term and short-term borrowing stood at Rmb57.3bn ($7.3bn), down almost Rmb30bn against one year earlier, which is a good sign.
It said: “Under the situation of the appreciation of the US dollar, in order to reduce exchange rate risk, since the second half of 2015, the company has been adopting measures for adjusting the debt structure, reducing the balance of US dollar loans and adjusting the structure of bank deposit by increasing the balance of US dollar deposits.”
Excluding proceeds from disposals, core free cash flow was negative to the tune of about Rmb4bn – about half a billion dollars annually – and that means it burned over $1m a day last year. However, its gross cash balances were virtually unchanged at Rmb33.8bn ($4.6bn), which gives it plenty of time to fix its accounts.

STORE CLOSINGS, E-COMMERCE, SUPPLY CHAIN MANAGEMENT

What good is good is closing stores if retailers do not have strong, viable e-commerce driven by transformed Supply Chains?




E-COMMERCE AND THE SUPPLY CHAIN VS LOGISTICS DIVIDE

For manufacturers and retailers, e-commerce has accelerated the divide between what logistics providers offer vs the new supply chain requirements.




Thursday, April 20, 2017

AI / ARTIFICAL INTELLIGENCE, SUPPLY CHAIN LOGISTICS, TRADING


TOPBOTS

AI Is Turning Supply Chain Logisitics Into Automated Trading


Ever wonder how your Amazon Prime packages show up at your door mere hours after you place an order?
A complex series of operations connects suppliers to manufacturers to wholesalers to retailers to you, the end consumer. Oversight of this process is called supply chain management (SCM). Within SCM, logistics is the portion that handles the movement of goods. E-Commerce giants like Amazon specialize in logistics while consumer packaged goods leaders like Unilever provide full-spectrum supply chain management services.
Like every other data-driven industry, logistics and supply chain companies are investing in transformational A.I. solutions to tackle their most pressing pain points. Both small and large enterprises are dabbling in innovations ranging from machine learning to robotics.
A breakdown in logistics breaks the supply chain, so companies constantly seek out improved ways to manage inventory, predict pricing, and streamline operations. Chad Lindbloom, CIO of C.H. Robinson, a Fortune 500 multi-modal transportation company, shares with us the top business use cases he’s using AI to tackle.
The largest portion of C.H. Robinson’s business is North American truck freight. A portion of their customers pre-commit to regular business and outsource portions or all of their logistics needs. The remainder are one-off transactions, for which the company is a surge provider for unplanned freight.
Surprisingly for a transportation company, C.H. Robinson owns no vehicles. They are instead what’s called a “freight broker”, an operational and financial middleman between buyers who want to move freight and suppliers of vehicles who can do the job. The supplier base is incredibly fragmented, ranging from one man with a truck to massive fleets of co-owned vehicles. Despite these capacity challenges, CHR must commit to move freight for a customer at a specific price in advance. Sometimes they’re asked to quote a price a last-minute same-day load. Other times they commit up to 2 years in advance.

HOW MUCH DOES A LOAD COST?
Price prediction is thus their biggest business challenge. “The pricing in our industry varies seasonally, by day of the week, by lane, by time of the day,” explains Lindbloom. A “lane” is an origin destination pair, such as Toledo, OH to New York, NY. Note that reversing the lane, from NYC to Toledo, requires a different price since urban centers don’t generate high volumes of goods that must be moved back to manufacturing zones.
Many vendors such as Watson Supply Chain, ToolsGroup, and TransVoyant offer logistics and supply chain software with AI baked in, but the complexities and nuances of C.H. Robinson’s massive business require them to build in-house technology tailored to their specific needs. Pricing was previously done by human experts with deep domain experience and historical market knowledge.
Prior to becoming CIO, Lindbloom spent 25 years in finance and 15 years as CFO. Combining financial with technical expertise, he and his team have built machine learning models for price prediction that resemble those built by automated traders on Wall Street. These models examine historical freight pricing data along with concurrent parameters such as the weather, traffic, and socio-economic challenges to estimate the fair transactional price on a spot basis.
AI doesn’t always outperform market experts, which Lindbloom believes will not be fully replaced. “In some cases, humans come up with better price. In most cases, the technology helps them hone in on the fair market price,” he points out. He also adds that a key benefit of effective algorithms is democratization and accessibility of information. Instead of relying on a few industry experts to produce estimates, more employees can use machine intelligence to ensure they’re quoting within market so they don’t lose the sale, and within capacity so they don’t botch the execution.

WHERE ARE ALL THE TRUCKS?
The second important use case is securing and managing the supplier inventory, the vast and fragmented array of trucks available to transport loads.
CHR commits to a transport price for freight buyers before they know the exact pricing and availability of requisite vehicles. The company relies on strategic human relationships, specifically a vast trading network across employees to find the right truck with the right capacity for the load.
For every lane, CHR runs background analytics to examine which carriers have moved freight at what price and service level. Fragile, expensive, or time-sensitive freight requires a much higher service level. Pooling together these various factors allows CHR to optimize matching freight to the best mover.

CAN WE EXPECT THE UNEXPECTED?
Managing disruptions is the third important business task that can be improved with AI. Hurricanes, carrier bankruptcies, and employee strikes all have the potential to cause massive damages to the logistics business.
Predicting such disruptions and training AI to learn from contingency plans developed by humans enables automated corrective action in the future. To do so, CHR pulls together sources of information to analyze the impact of past disruptions, such as a carrier strike in France or a hurricane in the NE United States. If a distribution center is threatened with adverse weather, freight can be re-routed to a safer one.
Part of the data collection entails detailed surveys that track how human employees handled disruptions and the outcomes of their management. Lindbloom hopes that eventually systems can be trained to automatically take optimal actions after learning from humans.

HOW DO WE BUILD THE TECHNOLOGY?
“We are constantly looking at what’s on the marketplace, and we believe we build better technology,” says Lindbloom. Due to a critical need for reliability, CHR builds and manages their own data centers, only going to the cloud if extra computing power is needed. Owning data center resources allows CHR to spin up environments very quickly as needed, but also to commit idle systems to research and development.
In addition to flexibility, owning data centers enables privacy and control. “We are a cloud provider of transportation management system to our customers,” emphasizes Lindbloom. “We have all the same technology as the core cloud providers, but we know where all the data is, we can control it, and we make confidentiality promises to customers. Many of them are more comfortable using us.”
“Technology is such a differentiating factor in our industry,” Lindbloom concludes. Other giants in logistics and supply chain agree and also committed substantial dollars to AI initiatives. DHL aims to reduce costs with autonomous cars, Active Ants builds wearable technology to optimize warehouse tasks, Locus Robotics develops warehouse robots, and Honda leverages smartphone applications for real-time shipment tracking.

WHERE WILL WE GO FROM HERE?
DHL’s 2016 Logistics Trend Radar predicts that artificial intelligence investments will continue to surge for both domestic and international logistics. Increasingly more companies plan to invest in in-house development for AI applications in predictive analytics, operations and management, augmented reality, robotics, and industrial IoT.
Lindbloom has words of wisdom for those who want to replicate CHR’s success with AI: “Many of the things you’re going to try probably won’t produce value. Be willing to experiment and fail fast. Try to solve the same questions with multiple different models. Multivariate-type testing is key.”
Additionally, he cautions against overfocusing on AI and encourages executives to define clear business use cases first. “Have the business challenges drive your development, instead of data scientists and engineers pushing AI into the business.”

VENTURE CAPITALISTS FUNDING LOGISTICS CHANGE AND CHAOS

Venture capitalists have found another multi-trillion dollar market to upend: shipping

Obsession

Getting There

Obsession

Getting There

Software may be eating the world, but some industries have been off the menu. Now, international shipping’s time has come. The UN estimates at least 90% of the world’s physical goods end up in a shipping container before arriving at their destinations. Until recently, shippers have conducted much of their business as they have for decades: using spreadsheets, emails, and phone calls.
Those days are drawing to a close. Last year, venture investors backed more than 245 startups in shipping and supply-chain management, a record number worth at least $4 billion, reports business intelligence firm CB Insights. AngelList tracks 420 shipping startups (not all international), as well as hundreds more in logistics and supply-chain management.
While domestic logistics is being rapidly transformed by robotic warehouses, autonomous trucks, and on-demand services such as Uber, DoorDash, and Amazon Prime, the unglamorous world of international freight has remained largely a rolodex affair. A single shipping transaction may involve 28 different entities including customs, terminals, forwarders and carriers, reports Lloyd’s List, a marine intelligence firm. Many of these interactions still happen by email, phone and manual data entry, generating reams of paperwork. Startups spy an opportunity.
“Our competition is [Microsoft] Excel and email,” says Renee DiResta, co-founder and director of marketing at logistics startup Haven which builds software to replace today’s workflow. Haven, which raised $13.8 million in venture capital, is automating a quoting, booking, and shipping process in which setting a price for customers can take days. By accessing data about trillions of dollars in goods shipped around the world, Haven plans to help create an open, transparent shipping market that can be automated and optimized with machine learning.
The efficiencies couldn’t come soon enough for an industry that just weathered its worst year in a decade amid a wave of consolidation. The losses prompted shippers like the Danish line Maersk to announce last year that “everything that can be digitalized will be digitized,” Jane Porter, an editor at Lloyd’s List, said in an interview. “Everyone else is playing catchup.” Last year, Maersk embarked on an internal reorganization to prioritize digital solutions, and plans to experiment with selling container slots on Alibaba, building new software and possibly acquiring technology startups.
The industry, long fixated on building bigger ships, is now turning its attention to the back office and customer experience. But designing new technology has proved challenging. In 2011, DHL spent $1 billion modernizing its own freight forwarding software, a failed effort that had to be written off four years later. Such efforts are nothing new. Lloyd’s describes half a dozen attempts to digitize the industry that have foundered since 1998 because carriers never bought into the idea that they had to change their business processes, not just technology. That’s different today, says Porter. Maersk’s announcement last December has made finding new digital solutions a matter of competitive survival. “That has been the wakeup call for whole rest of the industry,” Porter says.
Silicon Valley investors are betting startups will solve this problem. Companies like Haven and Flexport argue their cloud-based solutions will displace shipping and logistics companies’ SAP and Oracle software the same way Salesforce has grown to dominate sales and marketing solutions.
If they’re right, they could fundamentally accelerate global trade. The shipping container is a case study. The standardized metal box helped send costs down and global trade soaring by 700% over 20 years, researchers estimate (pdf), more than any international trade agreement. Within a few decades, the number of new products in countries like the US had quadrupled. Just as importantly, manufacturers whose only advantage was proximity to ports or customers were no longer protected: Malaysia could suddenly compete effectively with New York, reports The Economist reporter Marc Levinson (pdf). By the end of the 20th century, purely local markets for goods had become rare.
Software may remove massive delays and inefficiencies in an industry moving 180 million containers around the globe every year. If so, trillions of dollars in cheaper goods arrive faster at ports around the world.

OMNICHANNEL SUCCESS

Omnichannel success depends on the inbound supply chain and extending it upstream--a de facto vertical integration. Creates inventory velocity.




Tuesday, April 18, 2017

VELOCITY IS REQUIRED FOR BUSINESS

Velocity is the demand for business—from decision-making to customer expectations. Supply Chain Management drives velocity with inventory and time compression.