[INFOGRAPHIC] ROI of TMS

“Perhaps no other supply chain application offers so many ways to save more or drive value. But the main reason companies implement a TMS is to reduce freight spend.”
– ARC Advisory Group

A transportation management system (TMS) helps companies move freight from origin to destination efficiently, reliably and cost effectively. The recent report, “Return on Investment for Transportation Management Systems“, released by ARC Advisory Group, investigates what types of TMS implementations achieved a higher ROI. We used this data to create an infographic to show the ROI of TMS:

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  600 cities are likely to realise 65% of the global GDP growth by the mid-twenty twenties

12 Trends that are Shaping the Future of Logistics

Han Nabben, Damco - Logistics - Sep 16, 2014

World exports as a percentage of global GDP showed a continuous growth trend from the mid-eighties of the last century, until 2008. Since then the growth stopped.

Another indicator for trade, global capital flows between countries, achieved its highest point seven years ago. But times are changing. Growth will still be there, if you know where to find it.

According to McKinsey, approximately 600 cities are likely to realise 65% of the global GDP growth by the mid-twenties. By then, the growing cities are predicted to add up to $30 trillion to the world economy. Incomes in developing economies never rose faster or at a greater scale in history, and about a billion people are becoming part of consuming classes in roughly ten years’ time.

Macro-economic changes and shifts in trade patterns have their impact on global supply chains. They provide opportunities as well as challenges. Let’s have a closer look at some developments in logistics that are directly or indirectly caused by changes in trade patterns, in GDP growth or in customer behaviour.

• Growth patterns: Growth in the logistics industry is no longer driven by exports from Asia to North America and from Asia to Europe. It will come from elsewhere, and will be more fragmented, more unpredictable and more volatile. Economic and population growth will be increasingly centred in cities. Infrastructure is becoming a major determinant for growth.
• Flexibility: Meeting consumer’s requirements at multiple locations with multiple transport modes at different times requires a flexible supply chain that can adapt easily to unexpected changes and circumstances.
• Globalisation: International, mature and emerging markets have become a part of the overall business growth strategy for many companies. Going ‘international’ has become the standard and logistic solution providers need to enable that trend.
• Near shoring: As labour costs in Asia and transportation costs rise, increasing amounts of manufacturing are being brought closer to the end user.
• Multi-channel sourcing: End-consumers increasingly source via multiple channels, ranging from brick & mortar shops to e-commerce. The logistics industry needs to support multi-channel strategies of their customers.
• Information technology: The growing complexity and dynamism of supply chains requires increasingly advanced Information Technology solutions.
• Continuity: To be able to secure speed to market and to reduce risk of delays, alternative transport modes and routes are required to support the continuing trend of outsourcing of logistics services.
• Sustainability: Customers increasingly prefer products that are made and sourced in ‘the right way’; minimising business’ social, economic and environmental impact on society and enhancing positive effects.
• Compliance: Anti-bribery and corruption legislation is having an increasing impact on supply chains, since multinational companies demand that no facilitation payments are made during the export of their goods, yet still seek to source from low cost countries, which are often also at the bottom of Transparency International’s global corruption index.
• Partnerships: Manufacturers continuously search for supply chain innovations and gains through partnerships with logistic service providers.
• End-to-end visibility: Complete visibility of the entire supply chain aspires to achieve true demand-driven planning, allowing efficient response to changes in sourcing, supply, capacity and demand.
• Complexity: Supply chains are becoming increasingly complex and dynamic with sourcing locations being changed increasingly quickly and purchase orders becoming smaller and more frequent.

These developments will have their effect on day-to-day logistics, and companies will need to prepare for ‘the new normal’ in supply chain management. With all these changes, staying up-to-date on the latest trends in logistics is more important than ever.

If you are working in the retail industry and want to stay up-to-date on the latest trends in Retail Logistics, you might want to have a look at the recently launched Damco-poweredhttp://www.retaillogistics.guru. It covers the latest on all that’s happening in the world of supply chain management in the retail industry.

Don’t get tangled in your supply chain

• 17th November 2014
• Author Tim Adler
• Management

Businesses should never underestimate the complexity of supply chains when it comes to strategy execution, say experts. 

Supply chain management is becoming increasingly important as every business becomes an e-commerce enterprise. This kind of logistics covers purchasing, packaging, shipping, warehousing and customer delivery.

“Careful supply chain management has been instrumental in conception and growth of our business,” says Julien Callende, co-founder and chief operating officer of furniture supplier Made.com. “The bigger you grow the more complex the supply chain becomes. And the bigger you become, the bigger the impact on customers the smallest mistake becomes.”

Made.com launched in 2010, supplying furniture direct from independent designers to the customer. Gathering orders prior to production with a factory minimum of 50 units was key to its strategy. Its plan was to disrupt the giant furniture retailing businesses such as Ikea and Habitat. Revenue has grown by an average 120 per cent year-on-year since then.

Because three quarters of Made.com’s furniture is imported into Britain, getting the supply chain right and building in expansion plans was crucial.

Callede says: “If I have one piece of advice, it’s never to make shortcuts when it comes to supply chain or information technology. Always think where your company might be in two to five years’ time when your business has grown to 10 times its size.”

The suppliers you work with now may not be the same suppliers you work with in the future, he says. To avoid having to change suppliers mid-flow, Callede says that it is key to “partner with your partners”.

“There’s no such thing as a perfect partner – you need to help them do the job so they can provide what you need.”

Ocado is another e-commerce business where supply chain is everything. Founded in 2000, it is the world’s largest online supermarket, sourcing mainly through its rolling deal with Waitrose and Carrefour and delivering 180,000 orders per week. “In the e-commerce world pressure on supply chain is much greater,” says Ocado director of operations Mark Richardson. “Supply chain management is embedded into Ocado because that’s what the company is about. And supply chain sets strategy to an enormous degree because it’s where our costs are.”

Increasing the speed of and shortening supply chains is ever more important as the pressure to keep inventory down and reduce waste intensifies. Richardson says: “A couple of decades ago supply chain management was all about taking costs out of the system. Today it’s about speed of delivery and the level of customer service. You want it fast and you want it accurate.”

Ocado’s supply chain is different to most e-commerce sites because it does not supply shops, shortening the chain between customer and supplier. The logistics operation moves orders into Ocado’s two distribution centres – based in Hatfield, Hertfordshire and Tamworth, Staffordshire – and from there to the customer’s home.

Richardson says: “Everybody is trying to shorten the supply chain. Speeding up the chain is the problem everybody faces.

“Companies want to reduce the amount of stock they hold so they have to rely less on their forecast in favour of orders already taken. Everybody wants to have replenishment inventory more readily available.”

Ocado makes an effort to get its supply chain as accurate as possible so there is little wastage, says Richardson. The online supermarket claims that it has a wastage rate of just 0.8 per cent – a lot less than other retailers.

Logistics Spending on an Upward Trend

More Companies Outsourcing Transportation Management

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“Systems-based enterprise accounts constitute a significant part of the business for all major domestic transportation managers,” Armstrong said.

International transportation management is projected to grow 4.5% to $48.3 billion in 2014 from $46.2 billion in 2013.

Growth will be hampered by a slowdown in U.S.-Asia trade, Armstrong said, with ocean-freight container movement growing by single digits and airfreight volumes generally flat.

Dedicated contract carriage continues to grow modestly. Gross revenue is projected to increase 4.1% to $12.5 billion in 2014 from $12 billion in 2013.

“Driver shortages are keeping demand solid,” Armstrong said. “A heat-up in the economy and consumer spending could lead to dramatic increases in dedicated contract carriage as shippers struggle to manage capacity.”

Spending on warehousing and distribution is projected to increase 3.6% to $37.2 billion in 2014 from $35.9 billion in 2013.

Retailing is the largest industry sector that uses logistics services, accounting for $28.7 billion in spending in 2013, based on an analysis of data on more than 6,300 3PL customer relationships in the United States by Armstrong & Associates.

Technology firms ranked second with $25.5 billion in spending, followed by automotive ($12.8 billion), food and groceries ($11 billion), elements ($10.5 billion), industrial ($9.3 billion), health care ($8.6 billion) and consumer goods ($5.8 billion).

The global market for logistics, according to Armstrong’s estimates, reached $703.8 billion in 2013, up 9.5% from $642.8 billion in 2012.

The Asia-Pacific region remains the largest market for logistics services, with spending estimated to be $255.6 billion in 2013, up 22.2% from $209.1 billion in 2012. China accounts for nearly half of all logistics spending in the region, followed by Japan, India and South Korea.

North America extended its lead over Europe as the second-largest market for logistics services. Spending rose to $176.2 billion in the United States, Canada and Mexico in 2013, up 5% from $167.8 billion in 2012. The United States accounts for 83% of logistics spending in North America.

In Europe, logistics spending rose a meager 1.2% to $158.1 billion in 2013 from $156.2 billion in 2012. Germany is the largest market, followed by France, the United Kingdom and Italy.

Spending on logistics in South America, while much smaller in size, is growing rapidly with revenue increasing 11.4% to $44.9 million in 2013 from $40.3 billion in 2012.

Innovating in Food Supply Chain: Big Data and Optimization Based Decision Making

Posted by admin on Nov 13, 2014 in Blog | 0 comments

The use of big data as a strategic tool is increasing. And it’s no different in the food industry. As gathered in an article published in Innovation Excellence, 60% of the senior corporate executives from Fortune 1000 companies reported in a 2013 survey that they had recently implemented at least one big data initiative in their companies. Within the food supply chain, big data is gaining ground in areas such as security and traceability management, customer service, or production improvements. An analytical approach to the different sources of information that a company handles allows them optimization-based decision making, which in turn leads to revealing opportunity areas to innovation and an improved and sustainable supply chain. Here are examples of how big data is impacting food businesses.

More safety and better traceability

The latest years’ news on food frauds as well as different research about food contamination has proved how difficult and time consuming the traceability of food sources and the confirmation of food product authenticity are. SAP and Tru-ID, a new member of the SAP Startup Focus program, are working on DNA-based verification testing and product authenticity certification to introduce more transparency and accuracy into the food supply chain, helping companies identify the source of the adulteration among their suppliers. This tool shall permit food companies to increase the quality and safety of their products while reducing risks of contamination.

In a similar line of work, IBM has created a system that automatically identifies, contextualizes and displays data from multiple sources to determine contamination provenance, as indicated by the company in this article.

More sustainable agricultural systems

One of the companies that have made positive steps in this line is Intel. Working around the concept of precision farming, they want to create an accessible and reliable platform for worldwide scientists. As stated in this information published byTechRepublic, Intel is collaborating with academia and research institutions for applying big data analytic solutions to significant and world challenging problems.

Precision farming aims to increase the world’s food supply by measuring and responding to field variability for crops. The tools for doing so are sensors to monitor the crops, the implementation of smarter farm machines, cloud technology, GPS, webs compiling useful information, and the creation of specific software to analyze the collected data. This can lead to the increasing the farming capacity or a better use of hydraulic resources or risk related to weather conditions assessment, for instance.

A good example is Agralogics, the so-called “the Internet of food”. This software combines weather data, satellite images, and other operational insights to help schedule harvests and provide information for those growing or consuming foods, among other things.
Apart from Intel and Agralogics, Monsanto, Dupont Pioneer, John Deer and small farmers in different parts of the world are moving towards a data-based agriculture as well. They look for trust in data aggregation and predictive analytics, as mentioned in this other article published by Tech Republic.

Also IBM has put its confidence in the power of big data to create a more sustainable food value chain. They talk aboutsmart food and, as referred in this post, they have their own project regarding the big data agriculture tendency: Deep Thunder by IBM Research. “Measurements of the weather and soil, including data from sensors dotting a farm, multi-spectral images of fields taken from satellites or airplanes, characteristics of irrigation systems, requirements for fertilizer and pesticide coupled with precise weather predictions can help optimize a farmer’s decisions about what to plant, when to plant, when to water, when to fertilize and when to harvest”, they say. 

Better customer services

Under a completely different perspective, McDonald’s resorted to Big Data to change their organization into a more information-centric one that makes data-driven decisions. Since this decision was taken, McDonald’s tracks and analyzes vast amounts of data to better understand what is happening in their restaurants and identify and implement the best practices overall in their food establishments. This way, they are able to improve their company as well as their customers’ experience.

They started creating multidisciplinary leading teams to, finally, extend to the whole organization their data strategic model.

These examples show how more and better-quality circulating information can help to connect different areas of the food supply chain, making it shorter and more efficient, or improve specific links.

Asda aims to bring fresh produce supply chain forward six hours

13 November, 2014

Will Green

Asda is aiming to bring forward its fresh produce supply chain by six hours so stores are ready to fill home delivery orders earlier in the day, says vice president of supply chain Gavin Chappell. © IGD

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Asda is aiming to bring its fresh produce supply chain forward by six hours so stores are ready to "rock and roll" at 3am.

Gavin Chappell, vice president of e-commerce and supply chain at Asda, told a conference the firm currently planned it so stores were fully stocked with fresh produce by 9am, but demand from consumers for earlier home deliveries was changing the landscape.

Speaking at the IGD Supply Chain Summit, Chappell said the busiest time in their stores for staff was 5am as home deliveries were prepared, and that the 7am delivery slot was the most popular with consumers because it left the rest of the day for other activities.

“I need the store to be ready to rock and roll at 3am,” he said.

Chappell said the three factors of location, time and certainty were critical to a successful online business, with customers wanting goods in particular locations at a time they could depend on.

“For the vast majority of shoppers shopping is a chore, so we need to find ways of saving customers' time,” he said.

“We need to think of a supply chain that gets products to customers not where they shop, but where they are.”

He said the majority of customers were not making dedicated journeys to collect groceries but doing so while running another errand. “Eighty-four per cent of customers are saying they are doing something else during click and collect,” he said.

Referring to picking up goods from different locations via means such as lockers at stations, he said: “Lockers are going to be a big part of the landscape in the future because they provide that certainty. Once you get that text message [to say your shopping has been delivered to that location] you are locked and loaded.”

He added: “Customers are definitely changing the way they shop and the supply chain has definitely got to change. E-commerce shows up your vulnerabilities."

Chappell said it had taken five decades to optimise the traditional retail model. “We will not have 50 years to optimise the e-commerce model,” he warned.

What It's Like Inside One Of Amazon's Massive Warehouses

• JILLIAN D'ONFRO
 

• NOV. 28, 2014, 1:20 PM

REUTERS/Rick WilkingAmazon CEO Jeff Bezos

Tis the season for holiday shopping.

Black Friday followed by Cyber Monday and then several more weeks of last minute holiday shopping make for the most lucrative time of year for online retailers like Amazon. 

Already, Amazon's Thanksgiving sales were up more than 25% year-over-year, according to ChannelAdvisor. 

Amazon's magic happens inside its more than 90 fulfillment and sortation centers located all around the world. There are 50 in the US alone, with 15 more sortation centers completed by the end of 2014 (the company spends billions of dollars on its infrastructure). 

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

Amazon calls its warehouses "fulfillment centers" or FCs. It also has sortation centers, where prepped packages are sorted before being shipped to individual post offices. Note all the loading docks in the FC below:

Google

Amazon's "Peak Season" happens around the holidays.

Screenshot / YouTube

Source: Amazon.

During Peak (November through December), employees sometimes work 12 hour days.

sippingtea

Source: Amazon. 

Most are hired through a contractor, not by Amazon itself. This year, the company hired 80,000 seasonal workers for its sortation and fulfillment centers.

Reuters

Amazon warehouse workers pack boxes at their stations.

Source: Amazon.

Generally, FC employees get paid between $11 and $14 per hour.

Screenshot / YouTube

Source: NBC. 

Amazon's largest fulfillment center is in Phoenix, Arizona. It's so big (1.2 million square-feet) it could hold 28 football fields.

sippingtea

Source: NBC.

Working in an Amazon warehouse is, as you'd expect, very physical work. Employees need to be able to lift up to 49 pounds and stand or walk for 10-12 hours per day.

Reuters

Source: Amazon.

They may walk between 7 and 15 miles every day inside the warehouses.

Getty

Source: Financial Times. 

Products in Amazon's FCs aren't organized by type. Instead, identical products are scattered throughout the warehouse, to minimize the distance workers will have to walk to find what they need.

Reuters

Source: Wired. 

Each time someone orders something on Amazon, that order will get pinged onto an employee's handheld scanner or "pick mod." It will direct them to the areas where each item is located. Employees scan the item, place it in a tote, scan the tote, and then send it on a conveyor belt for shipping prep.

Screenshot / YouTube

Source: Wired.

The warehouses' conveyor belts move fast. The one in Campbellsive, Kentucky, handles 426 orders per second.

Reuters

Source: CNBC.

"Pickers" are the ones putting all the products someone has ordered together in totes. "Packers" then put those products into Amazon boxes.

Getty

Amazon packers are told to "treat every package like it's someone's Christmas present."

Screenshot / YouTube

Source: Amazon.

Algorithms determine the right type of box for each order.

Flickr / Malamud

Source: Wired. 

Generally, software plays a huge role in the fulfillment centers. Anything that can get optimized or automated by an algorithm, is. "An Amazon fulfillment center is like a giant robot," according to Wired.

Matt Cardy/Getty Images

Source: CNN. Source: Wired. 

Employees are expected to be incredibly efficient. Their pick mods will tell them how long it should take them to retrieve each product.

Screenshot / CNBC

Source: CNBC. 

Some employees have said that Amazon tracks their every step throughout the fulfillment center and will put them on alert if they're not as productive as their counterparts.

Reuters

Source: CNBC. 

Others have complained that because the warehouses are so massive, they waste their breaks just walking to the proper areas.

AP

Source: Gawker.

To enter and exit each day, employees pass through metal detectors. In a recent lawsuit, workers in a Las Vegas warehouse said the security screening at the end of the day can take as long as 25 minutes. Amazon contests that postshift security takes "little or no wait."

Screenshot / CNBC

Source: The New York Times.

A few years ago, a source told us about some of the strict rules at fulfillment, like that employees aren't allowed to wear lipstick, and they can only drink water from clear bottles so floor supervisors can tell what the liquid is.

Rexall

Source: Business Insider