This Week in Logistics News (September 15-19, 2014)

By Adrian Gonzalez

Are you attending the CSCMP Annual Global Conference next week? If so, let’s connect. I’d welcome the opportunity to meet with supply chain executives to discuss your research questions and objectives for the coming year, and with technology companies and 3PLs to get an update on your products and services.

It’s clear from this week’s long list of news that the pace of change and innovation in supply chain management continues to accelerate.

Omnichannel fulfillment dominated the headlines this week, with Macy’s, Ace Hardware, and Sears making announcements about their work in this area. When it comes to omnichannel, Macy’s is arguably pushing the envelope the most, with a broad array of initiatives in the works, including same-day delivery, mobile point-of sale solutions, and RFID deployments. Check out the press release for all the details, but here are a couple initiatives that caught my attention:

Same Day Delivery: Macy’s and Bloomingdale’s this fall will begin piloting same-day delivery of products purchased online at macys.com, bloomingdales.com and on both brands’ mobile-enabled websites. Macy’s will offer same-day delivery to customers in eight major U.S. markets…Bloomingdale’s will offer same-day delivery to customers in four major markets…Deliveries to customers will be powered by Deliv, a rapidly growing crowdsourced same day delivery provider, in collaboration with major mall owners…Macy’s and Bloomingdale’s same-day delivery is built on an operational foundation that has enabled Macy’s and Bloomingdale’s customers to buy online and pickup in store.

RFID Yielding Results and Expanding: Macy’s and Bloomingdale’s are seeing tangible results from their adoption of radio frequency identification (RFID) technology that began rolling out in 2011. Macy’s, Inc. was among the first retailers to implement RFID on a broad national scale to improve the accuracy of item-level inventory counting…In recent omnichannel pilots in fashion categories…Macy’s documented RFID’s ability to significantly improve sales, gross margins and markdowns by better leveraging inventory counts that are real-time and accurate. Additional rollout of RFID tagging in fashion categories is planned for 2015.

One takeaway from this news: the rise of omnichannel fulfillment is raising demand for same-day delivery, which in turn is creating a new class of transportation providers (like Deliv, Uber, and others) and driving innovation in software solutions (see Grand Junction and “Mobile and Continuous Optimization are Transforming Home Delivery”).

Meanwhile, eBay Enterprise announced an expanded partnership with Ace Hardware to power its omnichannel initiative with eBay Enterprise In-Store Pickup. Here are some details from the press release:

Ace and eBay Enterprise partnered together during the summer of 2013 to pilot the in-store pickup program. Its initial implementation included 36 stores and on average has added this cloud-based solution to more than 50 stores per month. By the end of July with more than 500 stores enabled with eBay Enterprise In-Store Pickup, Ace has realized an average lift of 18 to 20 percent in its ecommerce sales. Furthermore, Ace has seen growth in overall sales and new customers they would have not obtained without this program.

One takeaway from this news: eBay Enterprises is another example of the convergence I’ve been taking about. Is eBay Enterprises a 3PL? A technology company? A consulting firm? The answer is all of the above, and they are competing with the traditional players in each category.

Last year at the Ariba LIVE 2013 conference, I led a discussion session titled “At the Intersection of Social and Business Networks” with about fifty senior executives in supply chain and procurement. I made the case that we are currently seeing the rise of supply chain operating networks, the business equivalents of Facebook and LinkedIn, which are enabling communities of trading partners to communicate, collaborate, and execute business processes in more efficient, scalable, and innovative ways.

The timing of my session was perfect because it followed a keynote presentation by Sanish Mondkar, now Executive Vice President and Chief Product Officer at SAP, where he showed what’s possible at the intersection of social and business networks — and he hinted that starting in 2014, the company would expand into supply chain, logistics, and inventory management processes (see my video interview with Sanish below). Well, it seems like SAP is finally taking steps in that direction, announcing this week “cloud-based innovations that leverage the connectivity, community and insights of the Ariba Network to help companies fuel more agile, intelligent and collaborative supply chains to succeed in today’s increasingly global and networked economy.”

I haven’t been briefed on the solution, but assuming Sanish and the Ariba team are playing a lead role in strategy and product development, this is a big step in the right direction for SAP. There is a big difference between supply chain operating networks — i.e., truly network-based solutions, which Ariba exemplifies — and hosted applications, which often get lumped into the “cloud solutions” category too. As I wrote earlier this year, companies will ultimately find opportunities for supply chain innovation at the intersection of Software, B2B Connectivity, and Social Networking, and that seems to be the direction SAP is moving toward with this announcement. We’ll just have to wait and see how well they execute.

Moving on to transportation management, Oracle and Kewill both announced cloud versions of their TMS solutions this week, which are essentially hosted offerings aimed at reducing upfront costs and implementation times for customers. Simply put, demand for on-premise TMS solutions is waning, while demand for software-as-service, hosted, and cloud solutions (pick your favorite term) continues to grow. A big driving force, as I wrote earlier this week, is total cost of ownership.

In other TMS news, Infor announced a reseller agreement with MercuryGate International “to bolster transportation management within the existing supply chain portfolio.” Over the years, Infor had a acquired several TMS applications (including CAPS Logistics and Arzoon), but it’s clear from this partnership that the company has opted to partner with a best-of-breed provider than trying to modernize and enhance those legacy solutions. Here are some details from the press release, which further underscores the breadth of TMS delivery options available today :

MercuryGate TMS enables Infor SCE and enterprise resource planning (ERP) customers to rapidly customize the solution and select the delivery option that is right for them. The sophisticated application architecture and modular approach provides a more extensive layer of integration to create an end-to-end supply chain solution. The delivery options include Software-as-a-Service (SaaS) delivered in a multi-tenant shared environment or in a single-tenant dedicated environment or as a traditional license model delivered in a secure hosting center or on-site at the client location. The cloud solution enables users to access the system from any browser anywhere in the world, to store and recover data in the cloud and to collaborate with all trading partners across the supply chain.

And with that, have a happy weekend — and I hope to see you in San Antonio next week!

Song of the Week: “Girl” by Beck