This Week in Logistics News (March 25-29, 2019)

“I am playing rugby this semester,” my daughter, a freshman in college, announced a few weeks ago.

I don’t know anything about rugby, other than it kinda looks like American football, except it’s played with no helmets and pads, the ball is a bit bigger, and there’s a lot of diving into the end zone.

When I visited her in February, I bought her the only piece of equipment she needed: a mouth guard.

I’ve been trying to learn the basics of the game, and as luck would have it, at the Descartes Evolution 2019 conference this week (more about the conference in a future post), I sat with a Descartes executive who is an experienced rugby player — he even coached the women’s team at his university. Over lunch, he explained the basics of the game to me, including this very helpful fact:

In rugby, there’s a position called a hooker. So, if your daughter comes home and announces that she’s a hooker, don’t rush to judgement.

You learn something new every day.

Speaking of learning, here’s the supply chain and logistics news that caught my attention this week:

Trucking Futures Trading: Are You Buying?

As reported by Alexander Osipovich in the Wall Street Journal, “The first futures tied to the cost of trucking goods across the U.S. are set to launch on Friday [March 29, 2019], testing whether an old-school industry will embrace a new financial tool designed to protect cargo haulers and shippers against swings in freight rates.” Here are some more details from the article:

Nodal Exchange, a unit of German exchange giant Deutsche Börse AG, plans to debut 11 new futures contracts linked to trucking costs […] Seven of Nodal’s new contracts will track the cost of booking a truck over popular routes, such as Los Angeles to Dallas and Philadelphia to Chicago. Another three will reflect regional averages for trucking rates in the western, southern and eastern U.S., and one will track a national benchmark.

Futures trading is outside my realm of knowledge and expertise, and I suspect this is also true for many shippers and carriers (except for the very large ones that might already engage in other types of futures trading). Therefore, I’m not sure what impact this will have on the market. But as history has shown in the transportation industry, overcoming “the way we’ve always done things” is always the biggest obstacle.

Will you buy and trade trucking futures? Why or why not? Post a comment and share your perspective.

The Volkswagen Industrial Cloud: A Manufacturing-Centric Supply Chain Operating Network

What do you get when you combine all of the buzz terms in the industry today — cloud computing, Internet of Things (IoT), machine learning, analytics, Data Lake, and more — into a single initiative?

You get the Volkswagen Industrial Cloud, “an industrial digital production platform to empower a worldwide industrial ecosystem that will integrate more than 30,000 facilities and 1,500 suppliers and partners in Volkswagen’s global supply chain over time.”

Here are some details from the press release:

Amazon Web Services (AWS) and the Volkswagen Group announced a multi-year, global agreement to build the Volkswagen Industrial Cloud, a cloud-based Industrial digital production platform that will transform the automotive company’s manufacturing and logistics processes. Volkswagen will rely upon the breadth and depth of AWS’s portfolio of services, including IoT, machine learning, analytics, and compute services to increase plant efficiency and uptime, improve production flexibility, and increase vehicle quality.

The Volkswagen Industrial Cloud will bring together real-time data from all of the Volkswagen Group’s 122 manufacturing plants to manage the overall effectiveness of assembly equipment, as well as track parts and vehicles. Volkswagen will use the suite of AWS IoT services […] to detect, collect, organize, and run sophisticated analytics on data from the plant floor. AWS’s IoT services will deliver new insights into manufacturing operations across facilities that will optimize production and improve process efficiencies. With a company-wide Data Lake built on Amazon Simple Storage Service (Amazon S3) to analyze the data, Volkswagen will glean insights that will pinpoint operational trends, improve forecasting, and streamline operations by identifying gaps in production and waste.

In essence, Volkswagen is building its own manufacturing-centric Supply Chain Operating Network powered by Amazon.

“Multi-year and global” typically implies risky and costly, which is the opposite of what most companies want to invest in these days. Yet, the risk and cost of not embarking on such a digital transformation journey might be even greater in the long term. Breaking down this grand vision into smaller, relatively quick and cost-efficient projects — versus attempting a “Big Bang” approach — will be critical for success. So will managing data quality, especially from trading partners, because we still have a big, crappy data problem in supply chain management.

And with that, have a happy weekend!

Song of the Week: “The Promise” by When in Rome