This Week in Logistics News (July 10-14, 2017)

By Adrian Gonzalez

I will be climbing to the clouds this Sunday. Well, not literally. It’s a bike ride I’m participating in as part of my training for our Logistics Leaders for T1D Cure team ride this September in support of JDRF.

You know who else has been hitting the roads? My teammates Andrew Clarke, CFO at C.H. Robinson, and Steve Wallace, Inside Sales Executive at Elemica. Check them out:

My other teammates, James Coon (BluJay Solutions) and Ken Wood (Descartes) have been training hard too; I’ll share their photos in a future post.

Remember, if you’re a colleague or friend of any of our riders and would like to contribute to the cause, please visit our team page for the donation links.

Moving on to this week’s supply chain and logistics news…

What’s different in supply chain management today compared to a decade ago? There’s less and less margin for error, especially when it comes to meeting customer delivery expectations. Exhibit A is On-Time In-Full (OTIF), the tightening delivery requirements Walmart will begin enforcing next month. As reported by Bloomberg:

The new rules begin in August, and the company said they will require full-truckload suppliers of fast-turning items — groceries, paper towels — to “deliver what we ordered 100 percent in full, on the must-arrive-by date 75 percent of the time.” Items that are late or missing during a one-month period will incur a fine of 3 percent of their value. Early shipments get dinged, too, because they create overstocks.

By February, Wal-Mart wants these deliveries to be on-time and in-full (known as “OTIF”) 95 percent of the time. Its previous target was 90 percent hitting a more lenient four-day window.

In some cases a problem will be Wal-Mart’s fault, so the retailer has developed a scoring system that breaks down reasons for non-compliant deliveries and will fine suppliers only if they’re responsible. If suppliers don’t agree with the fine, too bad: Disputes “will not be tolerated,’’ Wal-Mart says.

I love the “disputes will not be tolerated” part. Maybe their supplier relationship management handbook was written by Fidel Castro?

Target is also implementing more stringent delivery requirements and hiking its fines, as I highlighted last year in Target Cracking Down on Suppliers: An All Stick Approach to Supplier Relationship Management. I’ll just repeat what I wrote then:

If you continue using the same old same old approach to supplier relationship management, you will continue to get the same old same old results.

There’s nothing bold and different about carrot and stick. Nothing at all. And wielding a bigger stick and dangling a smaller carrot is even worse.

BTW, I discussed OTIF and the role of real-time freight visibility with Bennett Adelson, CEO of MacroPoint in a recent episode of Talking Logistics. I’ll share some highlights in a future post.

One of my supply chain and logistics predictions for 2017 was that traditional software user interfaces would start migrating toward chatbots and virtual assistants. At its user conference this week, Infor ushered in this new era with its introduction of Coleman, “an enterprise-grade, industry-specific AI platform for Infor CloudSuite applications [that] mines data and uses powerful machine learning to improve processes such as inventory management, transportation routing, and predictive maintenance; Coleman also provides AI-driven recommendations and advice to enable users to make smarter business decisions more quickly.”

Here are more details from the press release:

“Coleman is so powerful because it takes the mission-critical business data from Infor CloudSuite, coupled with the supplier, logistics, and finance data from the GT Nexus Commerce Network, and analyzes it with the computing power of a hyper scale public cloud,” said Duncan Angove, President of Infor.

Some examples of what a user could ask Coleman:

– “Coleman, what is the accounts receivable balance for ACME Corp?”
– “Coleman, what’s the next best offer for this customer?”
– “Coleman, who is the sales rep on the ABC Labs account?”
– “Coleman, what price should I charge for a hotel room?”
– “Coleman, what are sales by month for the NW region this year?”
– “Coleman, how much PTO do I have left?”
– “Coleman, create a requisition for item 4321”
– “Coleman, approve the promotion for Nurse Jones”

I haven’t seen a demo of Coleman yet, but based on my experience with Amazon’s Alexa and Apple’s Siri, my guess is that Coleman will not always understand the questions she gets asked or get the answers right, but with the rapid pace of innovation taking place in this field, I have no doubt that chatbots and virtual assistants will play a prominent role in how people interface with enterprise software in the next 5-10 years. As Fab Brasca from JDA Software said at the Kenco Customer Summit in last October, “It used to be that executing a task with 1 click was better than 5 clicks, but moving forward, no clicks will be better than 1 click.”

Finally, investors continue to bet on new entrants looking to transform the freight brokerage business, as evidenced by Transfix’s announcement this week that it has closed a $42 million Series C round of funding, led by New Enterprise Associates (NEA), along with Canvas Ventures, Lerer Hippeau Ventures and other strategic investors. The company will use the funds “to further develop its software platform and grow its technology and enterprise sales teams.”

According to an article in the Wall Street Journal:

Transfix has raised a total of $78.5 million since its founding in 2013. The company projects it will be profitable in 12 to 18 months, said [Drew McElroy, Transfix’s founder and chief executive].

Although the company launched with a marketplace where shippers could book trucks directly, Transfix gets a growing share of its revenue from managing transportation for large companies [emphasis mine], Mr. McElroy said. That means tailoring technology to the needs of individual customers, and hiring teams to manage the largest clients, he said.

I haven’t been briefed by Transfix, but based on the comment above, it seems like the company is quickly evolving into a managed transportation services provider. In short, Transfix is responding to the convergence trend I’ve been writing about for several years (see Putting 3PLs and Software Vendors in a Box and What Do Shippers Want? The Right Mix of Technology, Managed Services, and Advice), which I sum up as follows: “The reality is that manufacturers and retailers have a diversity of options today, and the right partner (regardless of what you label them) is the one that can provide the right mix of technology, services, and advice to help them achieve their desired outcomes.”

And with that, have a happy weekend!

Song of the Week: “Same” by Matthew Logan Vasquez