Speakers at project44’s Transform 2018 Technology Executive Summit here last week said it’s no longer a question of whether to adopt technologies that automate supply chains but how.
“We have to manage data,” said Elaine Singleton, vice president of supply chain at Technicolor, a Los Angeles-based firm that manufactures and distributes entertainment-related products, including DVDs. “That’s how we survive and how we scale. It’s all about simplifying processes, and letting people know how technology helps us meet customer expectations.”
Businesses of all sorts, especially larger companies, find legacy systems installed years ago can’t help them scale operations to meet customer demands. In this era of rapid fulfillment and high-touch customer service, they’re “scrubbing” data, crunching numbers, and automating processes to improve control over supply chains, especially when managing time.
“We’re very date- and time-sensitive due to the nature of our product,” Singleton said. “We manufacture and distribute DVDs all the way from polycarbonate to the finished retail product, and we deliver to 9,500 retailers every week. When you’re moving $1 million in freight in a truck, you have to have data and processes and make sure people are really well trained.”
“Innovation time” isn’t carved out of working hours. Change occurs while goods and events are in motion. “You need part of your group focused on keeping the lights on, and then other resources working on innovation and disruption,” said Marion Gross, senior vice president and chief supply chain officer for North America at McDonald’s, based here in Chicago.
Pace of technological change to increase exponentially
The pace of technological change is set to increase exponentially. “This is the slowest rate of change you’ll experience the rest of your life,” Peter Sheahan, CEO of the Karrikins Group, said. “Just when you start getting comfortable with all this new technology, don’t,” said Kurt Cavano, president of GT Nexus. “Because there’s all this money and all this growth coming.”
Rapid advances in the power of graphics processing units, or GPUs, will propel advances in artificial intelligence (AI), Cavano said. The results may first be noticed by gamers whose online experience will become much more lifelike, but the increasing power of AI will quickly advance machine learning. “That’s going to enable things we can’t even think about,” he said.
For truckers, “It’s like driving down the road at 65 mph and deciding you need to change the tire because it’s flat, without stopping,” said Shawn Graves, vice president of transportation at J.B. Hunt Transport Services, the Lowell, Arkansas-based intermodal trucking company. “We have to do these new things,” he said, and that means “we have to fix our old technology.”
E-commerce-related customer demands, especially the call for faster delivery, are driving innovation at J.B. Hunt, McDonald’s, Technicolor, and other companies. “We weren’t doing home delivery eight years ago and now we are, because customers pushed us in that direction,” Graves said. “We have hundreds of innovation projects to make us more efficient.”
“Things are happening fast now in technology,” said Tommy Barnes, president of project44, which hosted the summit. “Automation is a pillar of what we do, but we see transformation happening more quickly across the space. We need to think about change management. In the past, we talked about the need to change. Now we’re talking about how to do it.”
Who wants to be the next Blockbuster?
What one executive called “the flywheel” of change is spinning faster in the most transformative year for transportation in at least a decade. Strong US industrial and consumer activity has led to tight transportation capacity on roads and rails and substantial rate hikes and price pressure from carriers across transportation modes. That’s forcing even reluctant shippers to act.
“For these big companies to keep doing very well, they need to keep investing” in technology, said Bart De Muynck, research vice president at Gartner. “They have to do that because other companies aren’t going to be standing still. No one wants to be the Blockbuster of their industry.” Supply chain visibility, he said, is where the investment is taking place.
“You have to level-set where you are and create visibility” before you can effectively leverage data and automate processes to gain efficiencies, De Muynck said. The concept of supply chain visibility, however, is evolving fast as well, moving beyond the location of a truck, railcar, container, or pallet to embrace financial and shipping documents and transcend transactions.
“It’s no longer about dots on the map and I would argue it never was,” said Jett McCandless, founder and CEO of project44. “One of the neat things Amazon did was take the idea of transportation as a cost center and flip it upside down. Today, it’s the tip of the spear for customer experience.” Visibility, he said, “is about fixing the communications layer.”
“What really matters,” when it comes to visibility, “is what’s behind that dot on the map,” said Barnes. “The quality of the data is so powerful. You need that right information to be able to act and manage your supply chain and also to drive change in the future. You have to have great quality information as a foundation. Looking at a truck moving isn’t that important.”
Building a new communications layer using application programming interface apps, or APIs, has been project44’s goal from day one. The goal is to use that platform to gain greater real-time visibility and enable automation. Earlier this year, the tech firm added parcel shipping APIs to its existing truckload, less than truckload (LTL), volume LTL, and intermodal apps. Ocean is next.
“Best-in-class companies want end-to-end visibility, and to get that you have to connect all modules and modes and stitch your data together across modes,” said Barnes. “Ocean visibility is really important. Seeing your container at sea, that’s good, but most of your exceptions occur at the port. So we built this product to be more port-facing than anything else.”
The ocean software module, along with AI tools, is expected later this year.
Transparency and a clearer competitive advantage
Those “best-in-class” companies want visibility because their customers demand it. “We sit in between the producers and our customers,” said Dirk Martin, senior director of transportation planning at Univar, which distributes industrial and specialty chemicals. “Downtime for [a customer’s] processing facility is hundreds of thousands of dollars, if not millions per hour.”
Martin, whose company’s freight spending is about $200 million across modes, said his company’s investment in freight visibility technology was enabled by his ability to tether it to the needs of another department. “We used a Trojan horse,” he said. “We reached across to commercial, where we heard [what] customers wanted to hear in advance.”
The rapid shift in customer fulfillment expectations in the Amazon era was recognized as a leading factor pushing not just visibility, but transparency, a real transformation. “We seem to be approaching a level of transparency that historically our industry just has not had,” Matt Foley, director of carrier relationship management and pricing at Technicolor, said.
“Data [are] really leveling the playing field in terms of expectations,” Foley said. “We have to transparently pass this information between each other,” he said. That’s a lofty goal, but not unachievable. “In Europe, we actually see shippers who are competitors work together on multi-vendor platforms,” said Gartner’s De Muynck.”That’s a new mindset.”
That’s a tough mindset to cultivate, however, unless the need to compete exceeds and cancels out fear of collaboration. But as more companies recognize their supply chains as a source of opportunity for growth, rather than just a cost center, barriers to collaboration will drop.
Contact William B. Cassidy at firstname.lastname@example.org and follow him on Twitter: @willbcassidy.