This Week in Logistics News (November 2-6, 2015)

By Adrian Gonzalez

Seemingly overnight, all the leaves from the trees are now resting on my lawn. A long day of raking awaits me, but before I head out, here’s the supply chain and logistics news that caught my attention this week:

It didn’t take long for LLamasoft to dip into the $50 million investment it received from from Goldman Sachs just a few weeks ago. On Tuesday the company announced that it has acquired Barloworld’s Supply Chain Software (SCS) Division, a provider of supply chain design (“CAST”) and supply chain planning (“OPTIMIZA”) solutions. Here are some details provided by LLamasoft:

LLamasoft will merge the CAST business unit into our existing supply chain design operations, much the same as we did with the IBM LogicTools suite. This means that all of LLamasoft’s existing infrastructure (Support, Training, Solutions, Sales, etc.) will now also cover the CAST product.

The OPTIMIZA business unit will be set up as a new LLamasoft “supply chain planning” business unit. They will support their existing customers in much the same fashion in which they currently operate, however this team will also be supplemented with some additional new resources to focus on the next generation solution that will be a combined entry branded under the LLamasoft logo.

In a nutshell, this acquisition accomplishes three things for LLamasoft:

It strengthens LLamasoft’s market share in the Supply Chain Design space. Back in April 2015, the company acquired another major competitor: IBM’s LogicTools supply chain applications business unit. This latest acquisition adds another 100+ supply chain design customers, mostly in Europe. Simply put, LLamasoft is not only taking competitors out of the market, it is creating a large community of supply chain design practitioners. As LLamasoft CEO and President Don Hicks said back in April: “Supply chain design is a people business, pure and simple. The answers will never be automated. As a designer, you need to have access to other companies, other teams, and other people tackling similar problems. In short, supply chain designers absolutely need a community to support their continued growth and development.” LLamasoft’s community just got bigger with this acquisition.
It enhances LLamasoft’s presence and opportunities in Europe, Africa, and the Middle East. Although Barloworld has a limited presence in the United States, it has a well-established customer base of global shippers and third-party logistics providers in the United Kingdom, South Africa, and elsewhere in Europe, Africa, and the Middle East.
It provides LLamasoft with a platform to build out its supply chain planning capabilities. As I wrote following LLamasoft’s SummerCon conference, the line between Supply Chain Design and Supply Chain Planning is fading. Simply put, as time horizons continue to shrink and the frequency of supply chain design exercises increase, the distinction between supply chain design and supply chain planning starts to blur. Instead of starting from scratch, Barloworld’s OPTIMIZA solution provides LLamasoft with a foundation to build a “next generation solution” that I believe will ultimately meld supply chain design and supply chain planning into a single platform. It will probably take 18-24 months to see the fruits of this endeavor, but getting there is a big reason why Goldman Sachs invested.

In other news, the likelihood of Congress passing a long-term highway funding bill improved this week. Yesterday, the House approved a six-year, $325 billion funding bill in a 363-64 vote. The bill now heads to the Senate, which had passed its own version several weeks ago. Figuring out how to pay for it, however, remains a huge hurdle. The House bill nixed the idea of raising the gas tax and the existing Senate bill only pays for three years of funding. It’s going to take a lot of creative accounting to get this bill passed, but history has shown that politicians of both parties are masters at it.

Best Buy is the latest retailer to start offering same-day delivery. According to Re/code:

[Best Buy] recently added the option as a test in San Francisco and towns and cities between that city and San Jose as it looks to keep up with Amazon’s furious rollout of speedy delivery options in the U.S. Best Buy is working with Deliv, a delivery startup that runs a network of contractor drivers, to handle the deliveries on its behalf.

Best Buy’s same-day option will carry the same fee as its express shipping option, which varies in price and usually gets orders to customers in one business day. The test is seen by Best Buy as a way to gauge interest in a complementary option to in-store pickup, which the company says is a popular option for its online customers.

What more can I say about same-day delivery? Let the experiments — and the quest for profitable execution — continue!

Finally, last week I commented on how even though using drones for customer deliveries gets all the buzz, their use within distribution centers and yards for inventory management is equally compelling. Third-party logistics provider Kenco agrees. The company announced this week that it’s working with PINC Solutions on exploring the potential to deploy drones for yard management at Kenco distribution facilities. “Kenco wants to use drones for managing real-time data gathering in outside yard operations,” said Kristi Montgomery, vice president, Kenco Innovation Labs. “PINC’s patented RTLS sensor platform captures locations of assets and inventory, and can provide up-to-the-minute information that would allow Kenco to customize and segment yard operations based on customer needs and business rules.”

3PL customers always say they want their 3PL partners to be more proactive and innovative. Well, here’s a great example.

And with that, have a happy weekend!

Song of the Week: “Is That Love?” by Squeeze