Innovation Footprints

What if . . . ?

Supply Chain

Is disruption finally underway in the freight brokerage industry?

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Note: A version of this story was first published on May 10, 2019, at FreightWaves.

On April 25, Amazon announced that it was making an investment of $800 million to reduce delivery times, from two days to one, for members of Amazon Prime. The next day FreightWaves was first to report that, without any fanfare, Amazon had also launched a digital freight brokerage website at freight.amazon.com. Before that, on February 5, Convoy, a startup in Seattle that operates a digital freight marketplace, announced that it can now automatically match 100% of loads to carriers, without human intervention.

These announcements have pushed us farther along a curve tracing the evolution of the freight brokerage market, one that has historically operated on the basis of personal relationships, trust, and phone calls.

What is a market disruption?

A market disruption occurs when new entrants into a market supplant incumbent companies within that market in terms of market share and market power, leading to financial distress for some incumbents.

In his book, The Disruption Dilemma, author Joshua Gans distils what we know about disruption into two major categories;

  • The Demand-Side Theory of Disruption (Demand-Side Disruption) is the more popular and widely known version of disruption because it is the process described and explained in Clayton Christensen’s book The Innovator’s Dilemma. A Demand-Side Disruption is driven by changing customer demands and expectations.
  • The Supply-Side Theory of Disruption (Supply-Side Disruption) is much less well known, and results from research by Rebecca Henderson and Kim Clark. A Supply-Side Disruption is driven by a change in the architectural knowledge that forms the basis by which suppliers satisfy market demand for a service or product.

The freight brokerage market is being attacked on two fronts

Amazon’s entry into the freight brokerage business threatens to shift the basis on which the services of a freight broker are delivered to the market from one reliant on personal relationships, trust, and telephone calls to one that relies on a combination of software, cloud computing, connected devices, stochastic optimization, and automation. These platforms will automatically match carriers to only the most profitable loads, and they will minimize operating costs by automatically optimizing delivery routes. A relatively small number of people trained and licensed as freight brokers would be required to handle complex, unusual, and exceptional situations on an ongoing basis. Such a platform would be tightly integrated through application programming interfaces with all the other supply chain management software that customers rely on, as well as other external sources of relevant data. These platforms will eventually surpass the performance thresholds achievable by the best human freight brokers, and they are already being tested by some of the world’s largest companies. If they pass the preliminary tests and become widely adopted by shippers and carriers, they will represent a supply-side disruption.

Simultaneously, there is already a sizeable population of startups building on-demand digital freight marketplaces with the goal of cutting freight brokers out of the picture. For now, these marketplaces mainly fulfill the function of automatically matching loads to carriers, and they typically target the 10% of the carrier market that is made up of owner-operators. Given the razor-thin profit margins that characterize the trucking market, and the reality that brokers can command fees as high as 40% or more of each transaction, it is not difficult to understand why such marketplaces could potentially win market share from some incumbent freight brokerage businesses as time progresses. These marketplaces also compete directly with load boards. If these digital freight marketplaces succeed, they will represent a demand-side disruption.

There are two wildcards

There are two conditions that have to be met before freight brokerage confronts disruption;

  • First, new entrants have to solve the trust problem. Shippers interests are aligned with those of their freight brokers, and freight brokers act as arbiters of trust between shippers and carriers. Conventional wisdom among industry professionals is that this trust relationship cannot be replicated with software.
  • Second, new entrants have to overcome the cognitive and psychological switching costs that keep carriers and shippers firmly locked into the old way of doing things.

Even just a few years ago it might have been difficult to see how these problems could be solved systematically and satisfactorily with a software-centric approach. Conventional wisdom among industry professionals is that the trust relationship between shippers, carriers, and brokers cannot be replicated through software. I am not so certain. Carriers and shippers have the fundamental need to increase throughput, increase efficiency, and improve profit margins. The new entrants can gain market share by proving that they can satisfy those fundamental needs better than their incumbent counterparts on an ongoing basis.

To be clear, none of the innovations I am describing is a perfect replacement for the best freight brokers. Not yet. That said, venture capitalists have already invested $1.6 billion in FreightTech during the first quarter of 2019. This exceeds the $1.3 billion that was deployed in 2017 and is already 55% of the $2.9 billion invested over the course of 2018. Moreover, REFASHIOND Ventures’ analysis showed that Amazon had $31 billion of cash and marketable securities on its balance sheet as of August 26, 2018. That is more than enough capital to fund a sustained push to redefine the basis of competition in freight brokerage — the $800 million investment it announced is just a beginning.

No industry can escape turmoil if a supply-side disruption occurs within the same period as a demand-side disruption. Fasten your seat belts. We’re embarking on a long and bumpy ride.

A Big Change Is Coming To Maritime Shipping And It Could Affect Everything

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Note: A version of this story was first published on April 30, 2019, at FreightWaves.

The maritime freight shipping industry is central to the functioning of the modern world. Yet it is foreign to most people because it is largely hidden from view. A big change in the way the industry uses oil will come into effect on January 1, 2020. This change is an indication of even more changes to come. These changes will affect everyone, and everything. However, the coming change also presents a great opportunity.

Here are some facts about the maritime freight shipping industry:

  • According to the World Shipping Council (WSC) the global maritime freight shipping industry is responsible for transporting about 90% of the world’s trade.
  • According to the World Trade Organization (WTO), global merchandise trade amounted to $17.43 trillion in 2017.
  • WTO members accounted for 98% of global trade in merchandise in 2017, up from 88% in 1995.
  • So the maritime shipping industry is responsible for moving roughly $16 trillion of merchandise, of which manufactured goods account for 70% or $11 trillion.
  • According to the WSC, the system of world trade the world has become accustomed to depends on a maritime fleet of about 50,000 merchant ships which are registered in 150 different nations, employing over one million seafaring men and women, and generating over $500 billion annually in revenues.

Why should you care? The shipping industry has played a central role in globalization. It provides an incredibly efficient mode of transporting merchandise manufactured in relatively low-wage countries to customers in relatively high-wage countries. It also facilitates a highly cost-effective trade in non-manufactured goods. For example, Wiskerke Onions reportedly exports about 185,000 metric tons (more than 400 million pounds) of onions, shallots and garlic and exports about 90% of its products to 125 countries around the world. This is made possible by containerized shipping.

Shipping is a capital intensive industry. Despite its size and significance, shipping as a business is characterized by low profit margins and frequent boom and bust cycles.

The International Maritime Organization (IMO) “is the United Nations specialized agency with responsibility for the safety and security of shipping and the prevention of marine and atmospheric pollution by ships.” It has 174 Member States and 3 Associate Members. On January 1, 2020 the IMO will begin implementing a 0.5% cap on the sulphur content of marine fuel, replacing the existing cap of 3.5%. This change is in addition to a 0.1% cap on sulphur content that is imposed on ships in emission control areas (ECAs).

Why is the IMO introducing the new sulphur cap? This measure is the culmination of concerns among the IMO’s members about the impact that the international shipping industry has on atmospheric pollution, global warming, and climate change. The industry’s emissions lead to about 400,000 premature deaths from lung cancer and cardiovascular disease, and about 14 million childhood asthma cases annually (Jalkanan, Corbett et al., 2018).

This measure does not address nitrogen oxides, carbon dioxide, and particulate matter — each of which is present in emissions resulting from shipping, and so the sulphur cap is the first of a number of regulations that will need to be implemented if the IMO’s member states remain committed to minimizing the industry’s negative impact on climate change.

The data below from NASA’s Global Climate Change portal puts things in context.

The first graph shows NASA’s Global Land-Ocean Temperature Index, which measures the change in global surface temperature relative to 1951–1980 average temperatures. The index has been on an increasing trend since 1910 when it attained its lowest value, meaning that the warmest years on record have been the most recent.

The second graph shows atmospheric carbon dioxide (CO2) levels measured at Mauna Loa Observatory, Hawaii, in recent years, with average seasonal cycle removed. Measuring atmospheric CO2 is important because it traps heat generated by human activity and natural processes in the earth’s atmosphere.


The third graph shows changes in sea level since 1993. Sea level changes due to melting ice sheets and expanding seawater as the world’s oceans and seas become warmer.

The new rules, and others that professional observers of the shipping industry expect the IMO will introduce in the future, will have the effect of making the business of transporting the world’s merchandise more expensive. According to a 2017 Wood Mackenzie Study, global marine fuel costs could increase by up to $60 billion annually in a full compliance scenario. Shipping companies will also be confronted by new capital expenditures for equipment to retrofit existing fleets and an increase in ongoing operating costs. The most certain outcome of these developments is that ocean freight rates will increase, and eventually these increases will be passed-through to the individual consumer. In other words, we should expect price increases for 90% of the things we consume.

There’s intense discussion within the industry about the future. For example, Maersk, the world’s largest container shipping line, has stated that it is taking steps to become carbon neutral by 2050. This discussion takes on increased urgency as the stark realities of global warming and climate change become more pronounced. The traditional solutions to the challenge of greatly reducing emissions from the shipping industry are interesting and we should keep pursuing them. However, I am most excited about the opportunity this presents to consider radically new approaches to solving the problem; New materials for ship construction, new methods of powering ships, 3D printing and localized manufacturing, automation and optimization, and better use of data for predictive analytics, among others.

The business of moving the world’s freight across the oceans and seas is an awesome and critical responsibility. Difficult problems are gathering on the horizon. Difficult problems always offer an opportunity to think different, to think boldly, to refashion existing systems, and to champion the innovators among us who we may have ignored in the past.

Image Credit: Linda Rigano


Logistics Network Optimization — Why This Time Is Different

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Note: A version of this article was first published on April 23, 2019 at FreightWaves.

Amazon has changed the retail business. It has changed the cloud computing business. It has also changed the supply chain business, but perhaps not in the way that you think.

On April 9, 2015, Amazon published a blog post on the AWS Blog; Introducing Amazon Machine Learning. In the time since then sophisticated artificial intelligence capabilities and tools that make it easy for non-experts to deploy powerful models to solve business problems that have been intractable until now have become part of Microsoft Azure, Google Cloud, and other public cloud computing services. According to a 2018 report by Stratistics MRC, the market for Machine Learning as a Service (MLaaS) is expected to grow at a compound annual growth rate of 41.2%, growing from $679.32 million to $7,620.18 million between 2016 and 2023.

Why does this matter?

For the first time, technology startups building innovations that rely on supply chain data can utilise and deploy sophisticated Deep Learning, Natural Language Processing, Speech Recognition, Computational Learning, and Real-time Simulation at a fraction of the cost it used to require just to get started.

Concurrently, advances in microprocessor technology have led to a scenario in which data can be collected, analysed, and used to make critical decisions at the point of use — even in situations where poor internet connectivity makes communication between edge devices and public cloud services impossible, at relatively minimal cost. The graph below shows the growth in the number of connected devices globally, from 15 billion in 2015 to 75 billion in 2025.

Before 2015 logistics network optimization was only possible for the largest, most sophisticated companies. Since 2015, that has changed. Supply chain logistics networks can now be optimised in real-time, based on proprietary and non-proprietary data, and used to render a decision in a fraction of the time, and at a fraction of the cost it would previously have taken.

This development has led to the beginning of a new era in supply chain management. We are moving out of the age of transactional supply chain management and into the age of cognitive supply chain management. Transactional supply chains are characterized by; A narrow focus on discrete tasks that optimizes processes rather than end-to-end outcomes, static and siloed data that is refreshed at relatively long intervals, local optimization that does not account for global conditions throughout the supply chain network, reactive decision-making that is also relatively slow. In contrast, cognitive supply chains are characterized by; A focus on optimizing end-to-end outcomes within the supply chain network, data that is dynamic, refreshed in real-time and collaborative, global optimization, adaptive decision-making that accounts for the cadence at which business operations occur.

Why is this significant?

Manufacturing added $2.38 trillion to the U.S. economy in the fourth quarter of 2018. Durable goods manufacturing contributed $1.33 trillion while non-durable goods contributed $1.05 trillion. Transportation and warehousing added $664.4 billion to the U.S. economy in the fourth quarter of 2018. U.S. GDP was $20.87 trillion in the fourth quarter of 2018. Manufacturing, transportation and warehousing represent approximately 15% of U.S. economic output. (Source: Bureau of Economic Analysis)

Of the 251,774 manufacturing firms in the U.S. as of 2015, all but 3,813, 98.5% have fewer than 500 employees and are considered small. (Source: National Association of Manufacturers. Author’s calculations.) This is the opportunity; The portion of that population that is big enough to purchase supply chain network optimization software, but too small to build its own.

According to a BCG Report: How Online Marketplaces Can Power Employment in Africa; “The cost of getting a product from the factory to an end user within Europe adds around 90% to that product’s manufacturing cost. In Africa, logistics add an average of 320% to a manufactured good’s cost.” Consider the implications of supply chain network optimization — in all regions of the world.

The opportunity is even more exciting when one realizes that manufacturing is only one of the sectors in which this transformation is taking place. Every aspect of economic production and consumption will be affected by this shift from transactional to cognitive supply chains.

This is why startups building new supply chain logistics software have captured the imagination of venture capitalists recently, leading to the 25x growth in the amount of capital venture capitalists are deploying in freight tech startups. Some of them are building proprietary products that they use to run their own captive businesses. Others are building platforms that enable their customers businesses. That distinction is less exciting than the possibilities this ongoing transition offers investors and entrepreneurs.


Supply Chain, Innovation, & Technology (#SCIT2019) – Event Summary

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More than 800 Supply Chain Professionals from 15 Countries Attend Supply Chain, Innovation & Technology Conference 

The Worldwide Supply Chain Federation (#TWSCF) held its inaugural global summit on June 19 and June 20, 2019 in New York City. The 2-day conference was hosted by Microsoft Reactor NYC and Microsoft For Startups in NYC. 

The Supply Chain, Innovation and Technology Summit (#SCIT2019) is produced by The Worldwide Supply Chain Federation. Attendees of this FREE global gathering are the most obsessively enthusiastic technologists, supply chain executives, professionals, academics, entrepreneurs, and investors from around the world.  

BUYERS & BUILDERSTM of innovations for future-ready global supply chains came together over two days to talk about how technology is transforming their respective industries. 

A Cross Section of The Audience at #SCIT2019

Here are the highlights… 

Day One #SCIT2019 put all the emphasis on the future of supply chains – globally, and across industries.  Innovators in Fashion Technology, Logistics, Maritime and BlockChain talked about a variety of issues including:

  • What problems remain that need to be solved? 
  • What problems have now arisen that we did not anticipate even a decade ago? 
  • What is now possible with software-enabled technologies? 
  • How can intra-industry and inter-industry collaboration between BUYERS & BUILDERSTM  help make this future a reality? 
  • Why is this an important discussion we need to have now?

Day One Session Highlights – BUYERS

The first day of #SCIT2019 focused on people and organizations who want to buy new innovations for supply chain. 

Keynote with Q&A: Paul McCulloch, NYC Cyber Law Group

Title: The T.A.O of Supply Chain — Technology, Architecture, & Operations

Link to YouTube Video: #SCIT2019 Day I Welcome Remarks, Keynote, & Fashion Track

Notes: Paul’s keynote presentation starts at about 19 minutes.

Paul McCulloch is a coder and information technology architect, a government advisor, and an attorney in technology, privacy, and cybersecurity law at NYC CyberLaw Group. He is a former vice president of technology law & digital compliance at JP Morgan Chase. He now spends his time empowering companies to get compliant, innovate, and implement digital transformation.

The world is becoming more complex, more interconnected, more distributed and more decentralized. At the same time, society demands more from the BUYERS, BUILDERS, and OPERATORS of the world’s supply chain networks. In “The T.A.O of Supply Chain – Technology, Architecture, & Operations”, Paul discussed the issues that emerging startups, medium-sized businesses, and large corporations operating anywhere in the world should be concerned about.

  • Organizations that do not have a strong grasp of technology law risk being burdened by liabilities off-loaded onto them by their more knowledgeable competitors. This is especially critical for startups which can easily be hobbled with fines for non-compliance with technology related regulations.
  • The risks increase as data and information crosses borders and becomes subject to different compliance regulations each time national borders are crossed. This is the internationalization of risk as data is transmitted around the world.
  • Compliance has usually been used as a defensive mechanism. More and more it is being weaponized and used as an offensive mechanism to handicap competitors.

FASHION TRACK

Link to YouTube Video: #SCIT2019 Day I Welcome Remarks, Keynote, & Fashion Track

Notes: Fashion Track discussion starts at about 60 minutes.

How is the fashion industry adopting customization, personalization, and on-demand manufacturing? How is data being leveraged to provide predictive, personalized digital experiences? How are brands allowing their consumers to co-create? What does luxury on-demand manufacturing look like today and where will it be in 5 years?

Moderator — Emma Cosgrove, Supply Chain Reporter, Supply Chain Dive

ELSE Corp — Andrey Golub, Founder & CEO

Milaner — Elisa Rossi, Co-founder

Queen of Raw — Stephanie Benedetto, Founder & CEO

  • Technology makes it possible for fashion and apparel to operate on the basis of customization, personalization, and real-time inventory.
  • Companies who can introduce technology to address huge issues with waste and pollution will be the ultimate winners.
  • This requires major shifts in supply chain operations. It is NOT the same as the fast-fashion business model.
  • Speed to market is critical for luxury fashion which is all about exclusivity. Speed does not have to compromise the product and brand.
  • Breaking down silos can speed up the process of manufacturing luxury fashion and accessories.
  • There is a growing interest in localization, but there are still a lot of outstanding questions, and the process of transition will be gradual. 

LOGISTICS TRACK

Link to YouTube Video: #SCIT2019 Day I Logistics Track

What problems can technology solve in land-based supply chain logistics? What’s most promising in the near term? Where do we still have challenges? What’s happening in other parts of the world?

Moderator — Eric Johnson, Senior Editor, Technology at JOC.com

Maersk — Bob O’Donnell, Head of North America E-Commerce Logistics

Princeton University & Optimal Dynamics — Juliana Nascimento, Optimization Expert, Operations Research

SCMI University of San Diego — Joel Sutherland, Managing Director & Professor of Practice                                                                                                    Transfix – Ahmad El-Dardiry, Chief Revenue Officer

  • The biggest problem is harnessing technology to reduce waste in a fragmented industry.
  • Supply chain is a massive optimization problem. There’s a lot of value in implementing simple technologies in supply chain logistics.
  • Transparency and automation matter A LOT to shippers and carriers.
  • For supply chain optimization to be effective it cannot be siloed. It has to be organization-wide. Optimization requires critical mass.
  • Technology is allowing us to do things we could not do in the past but we still need people with expert knowledge to augment software systems.
  • Startups still make the mistake of building technology that is too cutting-edge for market realities, and there isn’t enough collaboration. 

MARITIME TRACK

Link to YouTube Video: #SCIT2019 Day I Maritime Track

What problems can technology solve in maritime supply chain logistics? What’s most promising in the near term? Where do we still have challenges? What’s happening in other parts of the world?

Moderator — Timothy Simpson, Maritz Global Events

Advent Intermodal Solutions — Allen Thomas, Chief Strategy Officer

Maersk — Erez Agmoni, Regional Head of Supply Chain Warehousing and Distribution, Americas

Gemini Shippers Group — Kenneth O’Brien, Chief Operating Officer

  • Shippers in the maritime industry are facing several complex problems, and many are looking for builders to help them solve those problems.
  • Visibility across intermodal systems was an issue 10 years ago, and it’s still a problem.
  • Shippers expect reliability, but it’s complicated. Reliability means different things to different companies.
  • Market-driven collaboration is the new norm.
  • Blockchain is still controversial in maritime and it is unlikely to have a meaningful impact on maritime logistics. 

BLOCKCHAIN TRACK I

Link to YouTube Video: #SCIT2019 Day I Blockchain Track I

Notes: Tanjila starts at 2 minutes, Patrick starts at 24:30 minutes, and Michael starts at 37:30 minutes.

What lessons have we learned about bringing blockchain + supply chain from the lab and into the real world? 

Emcee — Kelly LeValley Hunt, Blockchain Specialist, Forbes 2018 Blockchain “Pioneer”, Microsoft’s 2018 Women in Blockchain Award for Hyper-growth & Innovation

Blockchain in Transport Alliance (BiTA) — Patrick Duffy, President

BlockScience — Michael Zargham, Founder & CEO and Harry Goodnight, Lead Executive Advisor

TradeFlo — Tanjila Islam, Founder & CEO

  • Tanjila Islam is building TRADEFLO, a blockchain-powered platform to facilitate global trade and trade-financing with an initial focus on emerging markets. When she spoke at The New York Supply Chain Meetup’s event in April 2018, she had not yet started building TRADEFLO. However, after meeting an IBM executive at that event she began exploring building TRADEFLO in partnership with IBM. She’s been building TigerTrade for over a decade, and TRADEFLO is inspired by that experience. TigerTrade is the largest wholesale reseller of excess retail inventory.
  • The Blockchain in Transport Alliance (BiTA) focuses on creating open-source and royalty-free technology standards to encourage the adoption of blockchain in the transportation industry by bringing together technology companies, service providers, transportation companies, financiers, and insurers. Patrick Duffy is President of BiTA and he talks about the progress they’ve made in the two years or so that the organization has existed.
  • BlockScience’s Michael Zarghan and Harry Goodnight touched on supply chains as cyberphysical systems, what blockchains enable, and the implications on operations research, applied AI, and distributed systems. They believe that blockchains are ideally suited for describing and establishing supply chain network ontologies. They emphasize that corporate executives need to start thinking about ecosystems.

BLOCKCHAIN TRACK II

Link to YouTube Video: #SCIT2019 Day I Blockchain Track II

Given some of the lessons learned, what work is being done to bring blockchain + supply chain from the lab and into the real world? Kelly and Rob are returning speakers: They have each spoken at past meetups organized by The New York Supply Chain Meetup on the topic of blockchain in supply chain.

Emcee — Kelly LeValley Hunt, Blockchain Specialist, Forbes 2018 Blockchain “Pioneer”, Microsoft’s 2018 Women in Blockchain Award for Hyper-growth & Innovation

Inflection Point Blockchain Advisors — Joshua Klayman, Founder & CEO

MState — Rob Bailey, Co-founder & CEO

r3 — Alisa DiCaprio, Head of Trade and Supply Chain

  • We’re in the early days of figuring out how blockchains will impact supply chains and it is important to get try to get the fundamentals right.
  • Companies interested in figuring out how to deploy blockchain can tap into a wealth of resources, partnerships, and organizations focused on understanding how blockchains can be integrated into supply chains – no one has to go it alone.
  • There are many more blockchain projects that no one is publicizing than those that are in the news. There are a lot of questions that remain open.
  • Blockchain in supply chain is complicated by the fact that data traverses multiple legal jurisdictions. There are also relevant questions that surround laws specific to specific industries. This is an important part of the conversation. The role of incumbents is a source of concern.
  • Blockchain is a point of convergence of many other technologies. Container shipping is one of the industries doing early work on this issue. Here, blockchains function as a permissioned data transfer layer.
  • Supply chain might require the development of new blockchain protocols that are uniquely designed for application in supply chain.
  • There’s an outstanding question about the utility of product provenance for mass consumers. 
  • Here’s the reading list Kelly refers to during the conversation. 

Day Two Session Highlights – BUILDERS

The second day of #SCIT2019 focused on people and organizations who are building new innovations for supply chain. 

Keynote with Q&A: Rosemarie Truman, Center For Advanced Innovation

Title: SCALE – Supply Chain and Logistics Enterprises

Link to YouTube Video: #SCIT2019 Day II Welcome Remarks & Keynote

Rosemarie Truman is an entrepreneur, growth strategist, distinguished corporate executive, angel investor and prolific startup catalyst. She is the Founder and CEO of the Center for Advancing Innovation (CAI), a 501c3 non-profit which identifies breakthrough inventions and maximizes their commercial potential. 

SCALE – Supply Chain and Logistics Enterprises is a global contest to disrupt retail supply chain, logistics, and transportation. SCALE is orchestrated by the Center for Advancing Innovation (CAI) in partnership with the Walton Family Foundation. CAI’s past challenges were the catalyst for 200+ startups and 2000+ knowledge-based jobs in the past 4 years. 

The rest of the day featured presentations from start-ups around the globe as well as a guest presenter from the Singapore Economic Development Board.

STARTUP SHOWCASES

BLOCK I – Emcee: Sapna Shah, Principal, Red Giraffe Advisors

MILANER

Elisa Rossi is co-founder MILANER. MILANER empowers the world’s top luxury manufacturers to sell direct to consumers for the first time. MILANER has operations in Europe and San Francisco, CA.

Link to YouTube Video: MILANER

FAST Applications

Adam Yaron is ceo of FAST Applications. FAST Applications designs, develops, and manages professional networking software solutions for the freight industry.

Link to YouTube Video: FAST Applications

limbiq, by Setlog

Guido Brackelsberg is a founding partner and managing director of Setlog. Setlog develops supply chain management software that optimizes transparency, digitalization and real-time data exchange. In this presentation, Guido premieres limbiq, a new platform for digital procurement that has been developed by Setlog.

Link to YouTube Video: limbiq by Setlog

FreightWaves Sonar

Description: Patrick Duffy is President of Blockchain in Transport Alliance, a sister organization of FreightWaves. FreightWaves is a provider of data for the freight markets. Patrick showcases Sonar, a platform that brings together millions of disparate freight market data points with a robust analytics toolset and the market intelligence of the FreightWaves team. FreightWaves operates from Chattanooga, TN.

Link to YouTube Video: FreightWaves Sonar

Queen of Raw

Description: Stephanie Benedetto is founder & CEO of Queen of Raw. Queen of Raw turns pollution into profits across the textile supply chain by building a marketplace for brands to sell excess and scrap textiles rather than warehousing or shipping and incinerating them at a loss. Their analytics tools provide real-time actionable insights, helping to create transparency and efficiency. Queen of Raw operates from New York, NY.

Link to YouTube Video: Queen of Raw

Voyage Control

Description: Jameson Peterson is Head of Construction Solutions at Voyage Control,  a cutting-edge ‘Air Traffic Control’ for inbound logistics management. 

A powerful and easy-to-use software platform, Voyage Control enables ground transport hubs to proactively manage, optimise, track, and communicate with their traffic. Voyage Control has operations in the UK and the US.

Link to YouTube Video: Voyage Control

BLOCK II – Emcee: – Michael Rentz, Founder, The Charleston Supply Chain Meetup

Optimal Dynamics

Daniel Powell is co-founder and CEO of Optimal Dynamics, a NY-based company bringing advanced AI to the supply chain and logistics industry. Based on over 30 years of innovation, Optimal Dynamics is changing how companies operate. 

Link to YouTube Video: Optimal Dynamics

Singapore Economic Development Board 

Samuel Chan is the regional vice president for the Americas at the Singapore Economic Development Board (SEDB). SEDB is a statutory board of the Government of Singapore that plans and executes strategies to sustain Singapore as a leading global hub for business and investment. *This is not a startup showcase, but rather an update on what’s happening in Singapore as the government facilitates and enables supply chain innovation to boost economic growth.

Link to YouTube Video: Singapore Economic Development Board (EDB)

PeerLedger

Dawn Jutla is founder and president of PeerLedger. PeerLedger uses cutting-edge blockchain technology to help companies collaborate to protect human rights, improve environmental performance and significantly reduce key risks, such as counterfeiting and safety, in their supply chains. PeerLedger is based in Halifax, Canada.

Link to YouTube Video: PeerLedger

ELSE Corp

Andrey Golub is founder and CEO of ELSE Corp, an Italian B2B and B2B/2C startup. Headquartered in Italy, ELSE Corp, designs new technological solutions for virtual retail and cloud manufacturing. 

Link to YouTube Video: ELSE Corp

Kontainers

Graham Parker is co-founder and CEO of Kontainers, an ocean freight platform serving some of the biggest brands in shipping. Kontainers allows users to get instant container shipping rates and transact entire shipments online in under one minute. Containers has operations in the UK, and in New York, NY.

Link to YouTube Video: Kontainers

Locus

Shaun Siler is vice president of sales for North America at Locus. Locus is a global decision-making platform in the supply chain that uses deep learning and proprietary algorithms to automate all human decisions required to transport a package or a person, between any two points on earth. Locus is headquartered in Bangalore, India and is establishing operations in the United States.

Link to YouTube Video: Locus

The Worldwide Supply Chain Federation

The Worldwide Supply Chain Federation is the collaborative, and mutually supportive coalition of open and multidisciplinary grassroots communities focused on technology and innovation in the global supply chain industry. Founded in August 2017, The New York Supply Chain Meetup is the founding chapter of #TWSCF with a sister chapter launched in Charleston, SC, and other chapters in the process of forming in Vancouver, Athens, Singapore, Bangalore, Chicago, San Francisco and other cities around the world. There are more than 1900 members in New York, and 2700+ members globally.

#MarketVoices | Introducing My Weekly Column at FreightWaves

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Brian + His Pencils

According to the International Monetary Fund, the world’s economy is worth $88 Trillion as of 2019. The Conference Board estimates that the global economy will grow at an annual rate of about 3% between 2019 and 2023, and at about 2.8% between 2024 and 2028. None of this is possible without supply chains; The networks of interdependent organizations that cooperate and collaborate with one another to move goods and information between producers and consumers. In the past this mission-critical activity was relegated to the unsexy confines of the business world – back office operations. That attitude is changing and it is changing fast.

The changes taking place in attitudes about supply chains are due to a combination of factors;

  1. Changes in consumption patterns driven by economic growth in China, India, Brazil, Russia and other markets outside North America and Western Europe.
  2. Changes in the buying behavior and consumption patterns of individuals and businesses around the world, accompanied by increasing awareness about how the production and consumption patterns of the past may be affecting climate change and the future of our planet.
  3. The inexorable forward march of technology, as it evolves to solve the problems that have arisen due to the preceding two factors; Connected devices, artificial intelligence, autonomous vehicles, predictive data and analytics, 3D printing, blockchain, advanced manufacturing, and advanced materials. These technologies, and others, have finally matured to the point where they are being tested in the world’s supply chains – to solve problems that could not be solved in the past, to eke out efficiencies, and in some cases to completely overturn how things have been done in the past.
  4. The politics of tradewars, tariffs, and geo-political groupings and alliances brings the interconnected, interdependent, and fragile nature of today’s global supply chains into stark relief for even the most uninformed citizen.

These concerns are not some theoretical or imaginary distraction; Supply chain is the basis on which corporations win or lose competitive advantage. In the space of a few decades Amazon has become one of the world’s most valuable companies at the expense of Walmart, Toys R US, Barnes & Noble, and other retailers, largely on its superior supply chain management,  and its expertise in technology. In its heyday, the same was said about Walmart. There are many more examples

Well functioning supply chains are also positively correlated with economic development: Regions of the world with well developed infrastructure and supply chains tend to experience superior economic growth in comparison to parts of the world with poorly functioning infrastructure and supply chains.

My column will study, analyze, and highlight the innovations that are being brought to market to solve problems in supply chain management, supply chain logistics, and supply chain finance, with a particular focus on how they are inextricably interdependent on one another. I will examine this topic across industries, and across regions of the world. Where possible we will look to data to help inform the discussion. Often we will highlight the specific individuals and organizations doing interesting work tying supply chain, innovation, and technology together in ways that create value for businesses, for individuals, for countries, and for the world; A 1% efficiency improvement in global supply chains represents aggregate value-creation of roughly $880 Billion.


The column will appear on FreightWaves once a week. If you have ideas you want to see me cover in future articles, send them to me via Twitter @brianlaungaoaeh or via LinkedIn. I believe that the best ideas come from the most unexpected places, so I want to hear from FreightWaves’ readers and anyone else who is obsessively enthusiastic about supply chains, innovation, and technology.

NRF Big Show 2019 – My EXPO Hall Tour Notes

by

My Supply Chain Credo

Disclaimer: This blog post reflects my personal opinions only. It does not represent the opinions of REFASHIOND Ventures, or REFASHIOND CO:LAB. It does not represent the opinions of The New York Supply Chain Meetup, or The Worldwide Supply Chain Federation. It does not reflect the opinions of any other person who is associated with any of those entities. This blog post does not represent the opinion of any other individual or organization that is mentioned by the author. I do not have any business or commercial relationship with organizations mentioned in this article, however CIM Tours paid The New York Supply Chain Meetup a stipend for my services as a tour guide during NRF’s Big Show 2019.

Background

During the fall of 2018, my co-founder, Lisa Morales-Hellebo and I met Daniel Hodges for coffee in NYC. We discussed what we were working on, and he told us about his company, Consumers in Motion Tours (CIM Tours). Paraphrasing the description from Dan’s LinkedIn profile; CIM Tours creates experiences that transform business. They guide CEOs, BODs and CMOs through technological, and consumer behavioral changes and the resulting disruption by exposing them to innovative ideas and technologies being used by startups and other cutting-edge companies. They utilize major conferences and workshops to accomplish this task. When he asked us if we’d be interested in leading the tours for the National Retail Federation’s 2019 Big Show Conference, we immediately said yes – after all, supply chain is our thing.

What is the National Retail Federation (NRF), you ask? It is a retail-industry trade organization that has existed for more than a hundred years. According to its website, the retail industry contributes $2.6 trillion to the United States’ gross domestic product – far outstripping any other industry. As an industry, retail is the largest private sector employer in the United States. The Big Show is the NRF’s annual flagship conference – the world’s largest retail conference and expo. This year it attracted 38,000 attendees, 16,000 retailers, and 800 exhibitors, representing 99 countries.

CIM helps delegates and attendees at conferences like NRF’s Big Show, the Consumer Electronics Show (CES), Cannes Lions, C2 Montreal, and the IoT Solutions World Congress, etc., navigate and explore the technologies and trends at the forefront of change today.

You can understand why Lisa and I were excited about this. Below are the notes I prepared for Lisa and I as we were getting ready to lead the tours. We led 3 tours, each 2 hours in duration, on each day from January 13 to January 15.

can you tell Lisa and I had just failed to find acceptably strong coffee to help us get through the first day of tours? The lines at Starbucks in the Javitz Center were too long, and we ran out of time.

Note: These notes are prepared directly from materials the participating companies provided us directly, or that I found on their websites. Any direct similarities between my notes and descriptions and other materials on their respective websites is deliberate.

ACCUSTORE

AccuStore is a store-intelligence software platform that helps retailers maintain and update store data in real-time. It helps retailers base decisions on a single-source of data to help execute store-specific initiatives.

Here are two examples of how AccuStore helps retailers.

Walgreens is one of the largest pharmacy chains in the United States. Walgreens implemented AccuStore to help them with marketing cost savings. With over 8,000 stores, they were throwing away money on marketing overages by sending the same generic sign kits to every store. Since each store had unique requirements, such as the number of windows or the number of fixtures, these sign kits were not only confusing for employees to install, but stores ended up throwing away up to half of what was being sent to them.

By using AccuStore’s store-specific profile data, store distributions are created for each individual store. So, each store receives only the signs that are appropriate for that location. Plus, marketing can now tailor POP by store to eliminate waste. Walgreens has saved over half a million dollars this year alone!

Another example of how retailers are using AccuStore is with the company, Crocs.

Crocs is a footwear brand. Crocs has saved tens of thousands of dollars during a single campaign because of accurate sign types and quantities. They needed to right-size their inventory so AccuStore developed a plan to gather and maintain their store profile data so they could send stores exactly what each store needed. Now, the information is available 24/7 via AccuStore’s cloud-based mobile platform. Plus, AccuStore helps Crocs gather store-specific information for inventory planning and store walks.

RELEX SOLUTIONS

RELEX Solutions helps retail businesses improve their competitiveness through localized assortments, profitable use of retail space, accurate forecasting and replenishment, and optimized workforce planning.

Here are two examples of how RELEX Solutions helps their customers.

Musti Group is the leading pet supplies and accessories retailer in the Nordics, with 264 stores in Finland, Norway, and Sweden. They needed supply chain integration between the company’s 5 distribution centers and 264 stores as managing changes and disruption in their supply chain was becoming a significant headache.

With an implementation period of a few months in 2015, RELEX Solutions; Optimized the flow of goods, for example, with deliveries scheduled for quieter days. Simplified Musti’s supply chain management – the complex supply chain is now managed by a single super-user – reducing the chaos that previously reigned when many managers at individual stores were involved. Improved campaigns the company runs by ensuring that there is adequate availability of promoted products. Inventory control now happens on a bottom-up basis using store-level data and optimizing transportation requirements.

Saarionen is a leading Finnish convenience foods manufacturer, with operations in Estonia as well. They needed demand planning software that is comprehensive, flexible, and transparent. They also wanted to introduce automation, so that planners could focus on exception management.

With an implementation period of 4 months in 2016, RELEX Solutions; Installed a system with error margins of less than 5% in weekly and monthly baseline forecasts for some standard high volume products. Improved efficacy for forecasting exceptions by incorporating the human expertise of the demand planners. Strengthened Saarionen’s position in its market.

Other Notes: Relex Solutions just raised a $200M growth equity round from Technology Crossover Ventures.

BOARD INTERNATIONAL

BOARD is a software platform for unified business intelligence, performance management, and predictive analytics.

Here is one example of how BOARD International helps its customers.

Coca-Cola European Partners is the world’s largest independent Coca-Cola bottler. It is the market leader in one of the biggest fast-moving consumer goods markets, worth over 100 billion euros. The business serves over 300 million consumers in 13 European countries.

Coca-Cola European Partners needed a supply chain finance solution to deploy across 48 manufacturing plants, 85 warehousing locations, cold drinks operations sites, and across its supply chain logistics organization. The company also needed the solution to be used by divisional CFO, heads of supply chain management, controllers, and department and plant managers. The company wanted to achieve: leaner financial operations, automated planning, and optimized reporting – underpinning a new way of doing planning based on comprehensive communication across the company.

Using BOARD, Coca-Cola European Partners has; Increased the efficiency of its finance activities with 10 percent manual inputs based on country specific data, and 90 percent pre-populated data. Reduced data transfer times from 24 hours to 15 minutes. Implemented a live status tracker based on BOARD’s automation capabilities. Implemented consolidation with one click, simplifying the process of performing full country consolidation for all of Coca-Cola European Partners’ operations. Implemented data transparency by effectively enabling automation and standardization. Increased ease communication around supply chain management and planning across the company.

Other Notes: I had the most fun with the team from Board International. We kept cracking jokes with one another, and it always seemed like we were old friends meeting after a long time apart. They also had an espresso station on the second day. The name “board” is supposed to evoke the flexibility that comes with working with a whiteboard to design a robust supply chain management solution for each customer – with no need to write a single line of code.

ANAPLAN

Anaplan is a software platform for enterprise-wide planning needs. The software enables financial planning, budgeting and analysis, demand and supply chain planning, sales compensation and territory management by connecting data, people, and plans.

Here is one example of how Anaplan helps its customers.

Sonos is a consumer electronics company with a complex supply chain enabling sales in 60 countries, and relying on more than 200 suppliers. Before Anaplan, Sonos was managing its sales, component sourcing, and supply chain through countless spreadsheets. As you can imagine, planning and forecasting was slow and prone to mistakes.

Sonos is now using the Anaplan platform to build end-to-end supply chain visibility and connect plans across resources, spend, and product lines.

The Sonos team started their implementation with supply and demand balancing. Then, they added a supply planning module, which enables a granular view of products at the factory level. Lastly, they incorporated demand planning to add forecasting into the mix.

Anaplan has helped Sonos:

  • Reduce tedious and mistake laden manual data entry and increase value-added work
  • Cut down the amount of time integrating spreadsheets from 70% to 10% of analysts’ time
  • The Global Planning Team can now execute a change in demand in one day, when this activity used to take 2 weeks.

Other Notes: Imagine what a surprise it was to see Vivek Soneja, a member of The New York Supply Chain Meetup at the Anaplan booth! We have grown so quickly that it’s hard to get to know everyone – especially since I am usually running around trying to make sure that our events go on without a major hitch . . . So it was cool to see one of our members in action outside the context of one of our meetups. Lisa and I must have beamed with pride when he turned around and told everyone within earshot about how great The New York Supply Chain’s events are. In his words; “You have to check it out. They are doing an amazing job.”

Booth 1304: Anaplan at #NRFBigShow2019

MANHATTAN ASSOCIATES

Manhattan Associates designs and builds supply chain software that connects front-end customer facing solutions with back-end operations and execution.

Here is one example of how Manhattan Associates helps its customers.

Adidas Group is the second largest sportswear manufacturer in the world. Adidas sought to improve its supply chain systems across all its brands, with a global implementation.

Manhattan Associates’ Distribution Management software has been implemented at 3 strategic sites in the United States, Europe, and Asia.

This has led to; A standardized distribution systems model for Adidas, enhanced supply chain control and visibility, and improved inventory accuracy.

Other Notes: They refused to let me have a cup of coffee during the first tour, on the first day. I’ll leave it at that. I had just spent a few minutes talking up their company to the delegates on the tour, and they wouldn’t even let me have a fucking cup of coffee!?

DSI

DSI delivers mobile supply chain technology solutions focused on helping companies advance their business to meet the accelerated demands of the digital economy.

Here is one example of how DSI helps its customers.

Rally House is a national sports apparel and gift store. It specializes in immersing its customers in hometown pride by stocking products unique to each local areas professional and college teams. To do this, the company needs an efficient inventory management system, moving away from centralized planning and distribution and more towards in-store fulfillment. This became more of an issue as the company expanded to 61 stores, in 9 states, with products for hundreds of different teams, represented by thousands of SKUs.

Rally House was  already using DSI’s warehouse inventory management software, and so by implementing in-store logistics, the company transformed its stores from showrooms into warehouses.

DSI enabled Rally House to eliminate their central distribution center within a few months and move all shipments direct to store from their vendors using their existing apps. This change eliminated weeks of costly lag time associated with the movement of warehouse shipments and expanded available inventory to customers.

Rally House’s distribution processes have been simplified significantly on every level. As demand ebbs and flows for products or for specific team merchandise, stores can stock accordingly and have inventory on the floor in days instead of weeks. Individual stores can now respond faster to time sensitive and regional events—such as World Series Championships—by moving product direct to their stores.

Other Notes: DSI was the most mobile-focused of the companies on the tour. I’d even perhaps go as far as describing them as mobile-first and mobile-only – obviously an exaggeration, but you get the point.

ENVISTA CORP

enVista is a global consulting and software solutions firm that helps its customers to optimize supply chain efficiencies to drive cost savings, and unify commerce to drive customer engagement and revenue.

Here is one example of how enVista helps its customers.

Saddle Creek Logistics Services is a privately held, asset-based 3rd-party logistics provider. It provides omnichannel fulfillment, warehousing, and transportation services. It operates 19 million square feet of space, across 45 locations with 3,300+ employees.

Saddle Creek wanted an order management system as it grew. Because of the nature of its business it was important for such a system to work for various types of clients . . . from those who ship hundreds of orders per month, to those who ship millions of orders per month. It also had to integrate with a variety of supply chain software solutions used by Saddle Creek’s clients and suppliers.

enVista provided an out-of-the-box multi-tenant order management system. Saddle Creek’s developers work closely with enVista to enhance the product for Saddle Creek as well as Saddle Creek’s clients. The enhancements include automated order processing and exception handling.

Saddle Creek now has:

  • Full visibility to all clients using the order management system in a single snapshot.
  • The system is seamlessly connected to 14 different systems between Saddle Creek and its customers, with as many as 80 different integration points.
  • Greatly reduced manual order processing for Saddle Creek’s customers and clients.

Other Notes: During one of the tours – I do not recall which, we were lucky enough to catch Jim Barnes, CEO of enVista at the booth. Watching him engage with the delegates on the tour reminded me why it’s so important for early stage startup founders to be able to sell and engage with customers. His intensity level and mastery of the issues the delegates were curious about was without comparison throughout the tours we gave during the event. You could tell that in affected the delegates, they paid rapt attention. For example, he went fairly deep into the philosophical underpinning of enVista’s approach to unified commerce in a way no one did during the remainder of the event.

Booth 4249: enVista Corp. at #NRFBigShow2019, Jim Barnes – facing me, speaking with the delegates on the tour.

MAGSTAR

Magstar provides enterprise resource planning solutions with integrated POS and CRM software for retail supply chains. The company provides Enterprise Resource Planning, Point-of-Sale, Customer Relationship Management, Warehouse Management, Business Intelligence and Analytics, and Mobile Solutions specifically designed for the SMB market. It promises the same functionality and support provided by the big vendors, without the cost. For example, they said each customer is assigned to a specific customer support employee at Magstar for the duration of that customer’s relationship with Magstar.

Here is one example of how Magstar helps its customers.

Fields Canada is a mid-sized retailer with 62 locations and a warehouse. The company needed to reduce inventory cycle time, and gain full control over in-store inventory.

Using Magstar’s Total Warehouse, Fields was able to:

  • Gain real-time visibility into inventory.
  • Reduce time to store by 14+ days.
  • Reduce cycle time by 70%.
  • Implement a paperless warehouse – no more missing pallets.
  • Simplify ship-to-store processes
  • Implement instant purchase order creation.
  • View inventory trends across peak seasons.
I do not always attend conferences, but when I do it is most likely a supply chain conference where I’ll be trying to learn about supply chain, technology, innovation, and startups.

WHAT DID I GET OUT OF DOING THIS?

I always find it fascinating to understand how customers describe the problem that they want technology to solve. Many times technologists and entrepreneurs think they are solving one problem, when customers think about the problem from a completely different perspective. The number one cause of failure among startups is the failure to find product-market-fit, which is an indication that the startup has solved a problem that customers are unwilling to pay for. Activities like this help me gain a better understanding of how customers see their world and the role that technology can play in helping them achieve their goals. One may say that on the rare occasion when I attend a conference it is to enable me do market research. I met executives from all over the world, and got to see the various perspectives from which they were thinking about deploying technology where they live and do business.

About The Worldwide Supply Chain Federation

The Worldwide Supply Chain Federation is the collaborative, and mutually supportive coalition of open and multidisciplinary grassroots communities focused on technology and innovation in the global supply chain industry. Founded in August, 2017, The New York Supply Chain Meetup is its founding chapter. Local chapters are run by volunteer organizers who each build a team to manage chapter activities and events. You can learn more here: The Worldwide Supply Chain Federation – Our Manifesto.

About REFASHIOND Ventures

REFASHIOND Ventures is an emerging early stage venture capital firm that is being built to invest in early-stage startups creating innovations to reinvent global supply chain networks. REFASHIOND Ventures is based in New York City. The Worldwide Supply Chain Federation and The New York Supply Chain Meetup are initiatives of REFASHIOND Ventures.

Update #01, at 23:54 EST on Sat Feb 16, 2019: Removed ghost bullets by changing from bullets to paragraphs for Board, and Manhattan Associates. Added whiteboard analogy for Board International.