Skip navigation
2015

I interviewed Manelle Mairif who discussed How Trading Companies Offer Solutions for Small Producers .

 

 

 

 

 

Manelle, I’m looking forward today to hearing your views on how trading companies offer solutions for small producers.

 

Thank you. Trading companies are very helpful to small producers because we provide them with the tools to have their products exported. It’s very costly for them to hire people to do the whole exportation process and international selling, so as a trading company, what we usually do is have to do search to get the product across the border so other consumers can benefit from it.

 

Which part of the world does your company work in?

 

We work mainly in North America and Europe, but we’re located in Ecuador.

 

Regarding what trading companies can offer to small producers, do you have any specific examples?

 

Basically, I can talk to you about Quinoa producers, for example. Most Quinoa producers live in very far-away areas; they don’t really have a lot of access to logistics, so it’s very hard for them to sell abroad. Usually, what happens is that they sell to bigger Quinoa producers who take their production and mix it with their own, and they get a very small price for it; they don’t really get high prices for it. When a trading company buys from them, the trading company offers both transportation for them and a fair price for the production.

 

How is that done effectively?

 

Basically, in terms of cost reduction, let’s say we have three Quinoa producers. Instead of having them hire a trucking company themselves, you just use the same truck that goes to each farm and takes the product from them.

 

That sounds like an interesting business model. Where do you see the trends in the future regarding trading companies? Is it growing? Is it a service that will increasingly be demanded?

 

It depends. For example, if you have a trading company—most people think trading companies are just buying the product and reselling it with a margin, but it’s not really what trading companies should do. Trading companies should offer solutions for both the customer and the producers. It’s helpful for the producers because they get the product across instead of having their product labeled with another company, and it’s convenient for customers because they get several products all consolidated into one, so it’s more cost-effective. Trading companies should offer more services to their clients and producers.

 

How do you handle logistics for your customers?

 

I manage them internally in terms of national trucking companies. To be quite honest, I’ve been in the trade for years, so it’s really easy for me; I already know who to talk with, who to contact. What we do is consolidate the product here, and we just ship it in one big shipment for each customer instead of having several shipments from several producers sent; we just send one big shipment for them.

 

Oh, great. Where are your typical shipments from and the destinations?

 

Usually North America and Europe. Most of the products are in the Asian region. Unless the amounts are pretty big in terms of reducing cost, we’ll ship them to * (4:22—unclear) in order to have maritime shipments. It basically depends on the client and the amount.

 

Can you provide a brief background of yourself?

 

I’ve been working as a trader for over eight years. I started in the flower business, and I recently switched the products I’m offering. I changed the product catalog less than a year ago. I’m expanding to new products besides flowers.

 

Thanks for sharing today.

 

Right, thank you.

 

 

About Manelle Mairif


 

Manelle Mairif.jpg

Manelle Mairif


General Manager at A+Group


LinkedIn Profile

I interviewed John Vogt who discussed Potential Inefficiencies in Global Distribution.

 

 

 

 

 

 

Can you talk about what some of the inefficiencies you see are?

 

Dustin, thank you very much for the time to have a discussion with you. I’m expressing some feelings of my own. We deliver international and global movements, so we’re seeing more and more that there are very, very strong established lanes, and we get used to having a vessel leave the United States, going to Europe and vice versa. On a specific day, it takes 16 to 18 days, and it’s guaranteed to be there. What’s happening around the world is, we develop parts of Asia and parts of Africa and even some of the Kazakhstans and places of the more remote areas. We’re seeing a much less reliable service and, therefore, a somewhat less efficient service.

 

Partly due to the fact that these are developing lanes and partly due to the development of these lanes having less volume. But, of course, also by virtue of the fundamental problem that none of these are direct sailings. What you end up with is a very simple multiple transshipment point. As we get closer to these countries, so the frequency of movement and the guarantee of the frequency of that movement to be a specific day or time period deteriorates. What happens is we get used to hipping between Europe and America—very efficient, very cost-efficient, as well as just effective—and you get to these more remote bases with multiple transshipments and a lull of frequency and reliability of service in the lost pieces, what you end up with is a very less-efficient methodology of distributing goods.

 

That really means that inventory builds up either just before entering those countries or in the countries, and, therefore, it is more costly to be able to deliver goods with reliability and a good service level to these countries. We’re in a business that actually has to develop these capabilities and cater for them and be able to communicate both the fact that with you expect to get it to Europe in 18 days, plus or minus 1 day, you don’t have that same reliability and capability to get it to some of these more remote locations. We need to be careful that our clients and customers understand this very clearly.

 

Can you talk about where some places are specifically that you see some of these inefficiencies?

 

I think when you look at it, we see new manufacturing taking place in, for example, in Asia, in Vietnam. The frequency of vessels sailing out of that is not the same as one would get out of Hong Kong or Singapore. When you look, also, into the more remote places in Kazakhstan, in Iran, western and east Africa, these are hard places to get to with reliable, cost-efficient services, so these are the places that are going to have to develop the capability to do this. That means some of the lines and airlines are going to have to settle that they want to be in these places in the long-term and take the commercial initiative to actually set up these more efficient methodologies.

 

Thank you. Can you talk about why we’re having these inefficiencies?

 

Yes, well, I think when you look at the development of a trade lane—and I’m being fairly high-level on this one—development of a trade lane really needs volume; it needs consistent, repeatable volume. You hit the fundamental problem of a new area being developed with a big volume change, so what you end up with is two or three or four * (4:32—unclear) into the marketplace. There isn’t enough volume to sustain four or five carriers, so what you end up with is you’ve got to pay the penalty of the time while these carriers decide who’s going to be the dominant player in this market.

 

It also is very much dependent upon the end customers, who sometimes do this on a shorter-term basis and therefore create a surge, expect a service, and then it’s not a sustainable business or an entity there, so they fall away. Really, just a development of global trade. We will see it in marketable places, but in all of these more remote places all leading us to have very different standards, and we need to drive to better methodology than just accepting that it’s highly inefficient.

 

How can the inefficiencies be addressed?

 

I think it’s a little bit more rational thinking on the commercial side. Quite honestly, people need to look at this in a much longer term of, “I don’t have cargo today; therefore, I will no longer do it.” I will preface that with I have total sympathy and understanding of the * (5:56—unclear) carriers and air carriers who are struggling to make decent margins. Quite honestly, the garbage business and the companies that develop specific lanes and, therefore, dominate those lanes for a longer term, good or bad times, I think are the ones that will have the ultimate value to us and therefore eliminate those efficiencies or reduce them to the level where people are comfortable with being a service that’s appropriate for those areas.

 

Thank you, John. Can you provide a brief background of yourself?

 

Sure. I’m one of those people who worked in the chemical industry doing control systems and progressively moved into running companies. One of those companies was an import-export company with storage tanks. One day I woke up and looked at I could make more money and be a far better value service to the industry by including all of the international shipping of what would be L and G and LPG products and therefore became a ship-chartering specialist and we extended the company into a logistics company.

 

So, I was born as a logistics person. I developed that skill in multiple industries, everything from automotive to the pulp and paper, steel and aluminum and power. The only one I haven’t done extensively is pharmaceuticals.

 

I’ve just finished as a vice president of Halliburton, the second largest oil-services company in the world. I hold three degrees and one of them is a Ph.D. in logistics. Occasionally, I try to think about broader concepts of logistics than just the survival of the operation.

 

Thanks for sharing today. I look forward to talking to you again soon on another topic.

 

I look forward to it; it’d be very much enjoyable.

 

 

 

About John Vogt


 

john.jpg

John Vogt


President at WWBC LLC


LinkedIn Profile

I interviewed Ken Lyon who discussed Software Startups Seeking to Challenge Existing Logistics Software Vendors.

 

 

 

 

 

 

Looking forward today to hearing your views on an interesting topic about software startup companies and how they’re starting to challenge some of the existing logistics software vendors.

 

Yeah, Hi Dustin, it’s good to talk to you again as well. If we think for a bit about the way most companies have been deploying software across the industry for the past, I don’t know, fifteen, twenty years, something like that, some aspects of the industry have been very advanced in the way that they deploy technology and others less so.


But if I cast my mind back to say fifteen years or so ago, mainly it was the large corporations, the big multinationals, that were involved in the logistics industry, the big, global integrated UPS, DHL, Fed Ex, the major shipping lines and the airlines, and some of the big global freight forwarders that invested huge amounts of money in technology to enable their operations to work much better and bring efficiencies.

 

Then the more forward thinking companies at that time started to exploit the internet to enable their customers to engage with them much more easily from their own computer systems. This also served the purpose of cutting down the workload for the logistics companies, and you can’t really blame them for that. But essentially that required a lot of investment, and they gained the benefits in terms of internal efficiencies and to some extent, locking their customers in to working with them because they made it so easy.

 

Now as technology has developed and you look at how many, many companies in many industries have exploited the way the internet works and the ease with which the internet engenders communication generally, to some extent that helped those early adopters of this kind of technology. But in so doing, started to introduce certain aspects that they may not have been that happy with. So for example, if you’re a large company, a large logistics company, and you bought into the premise of the large enterprise vendors such as SAP, Oracle and so on, they did a fantastic job at colossal expense in automating a lot of the processes and procedures inside those companies.

 

But as business, and particularly supply chain operations, became more dynamic and more atomic, by that I mean processes that were lengthy and linear became broken down into smaller, more autonomous functions or processes, those very rigid but incredibly reliable enterprise apps were unable to adapt very well.


What you essentially had to do if you were in that position was invest even more money with your enterprise vendor to get them to help you try and change, or at least keep up with the changes in your business. And very few companies had the resources to do that, and to a large extent they struggled and you found a lot of departments just went into their own thing with some of the services that were becoming available on the internet.

 

So what I’m saying is that up until five, six years ago, the larger the company you were and the more resources you had, you had an advantage in terms of the information systems, infrastructure that you were able to put in place to enable you to be more effective and more efficient in the way that you engaged with your customers and your trading partners. But that has been changing, and so there I think is where the issue is starting to come about, I think anyway, from what I’ve observed.

 

Do you have any examples from other industries, how some smaller companies, software companies, are disrupting the industry?

 

Yeah, well it’s, if you look, for example, at some of these things I’m sure your listeners would have already come across, but if we just look at the local deliveries sector for a moment. A lot of people get excited about the last mile delivery and the ability to take advantage of that. Now it’s not that the guys that specialize in this, the postal services, the large express integrated carriers, DHL, Fed Ex, UPS and so on and so on and so on, they understand the challenges in trying to do this. It’s incredibly expensive, and the expense revolves around how you can make best use of your resources at the lowest cost to deliver to a random number of addresses, almost on a random basis. It’s very, very hard.

 

But some very smart people have developed technology algorithms and have exploited the availability of very powerful but very, very cheap information services available by the internet to look at a pool of, if you will, freelance subcontractors and coordinate and choreograph that random pool of subcontractors into being able to take those deliveries, almost on an ad hoc basis, and cover the last mile delivery. So if you look at companies like, for example, Shutl, which originated in the UK but was very quickly picked up by, I think it was eBay, who eventually acquired them, they received funding, amongst others, from UPS, for example, who understood the potential. What Shutl did was for the first time, exploited the free or spare capacity of local delivery companies that were sitting around waiting for jobs to come to them through conventional channels, and said look, you’ve got some free time.

 

If you’re interested, we can get you jobs. And then went to local retailers and said if you want to provide your customers with delivery within, say, a couple of hours of them buying on line, we can connect you to the pool of subcontractors we have and, although they’ll pay more money than they would for normal delivery, at least they’ll get it very, very quickly. So that was an example of a software startup that understood there was a gap in the market and applied technologies to try and do that.

 

If you look at other industries, the taxi industry, which has been disrupted by Uber, and everyone’s heard about Uber, irrespective of the merits of Uber challenging conventional taxi services in lots of cities around the world, the fact of the matter is that they are doing it, and because there is a demand from people that want cabs almost on demand, it provides a way to connect customers and a demand and everybody wins from that point of view. Now not everybody takes that charitable view of the situation, but all Uber is, essentially, is a computer, a suite of computer programs that matches supply and demand and a pool of freelance resources to do it.

 

To look at the manufacturing industry, where you’ve got the principle of 3D printing, which again is a technology that’s developing almost by the day, initially it started out with printing little oddities out of plastic material using heat in the printers, to now you find big industrial companies taking advantage of using metal, because they use a laser to heat metal powder, and from that formulate parts and manufacture products. It’s now possible for a small startup company to acquire a 3D printer or a suite of 3D printers at relatively low cost and set themselves up as a manufacturing facility that can manufacture pretty much anything, in comparison with, say, ten, twenty years ago where you had to tool for a specific industry and a specific product using specific materials, and there was a colossal capital cost involved.

 

That’s all been changed. Now before large, mass scale 3D printing takes hold, there needs to be several changes, particularly in terms of the law for intellectual property protection and so on and so on and so on. But the basic principle is a startup exploiting new technologies, a combination of software and technology to print or manufacture products, can disrupt the manufacturing industry in a whole range of ways. And so that’s an illustration this combination of general technology that’s available, smart entrepreneurs that can exploit software and low cost information systems infrastructure that can disrupt industries. And that, to me, is interesting, if not a little scary.

 

For these examples, how can they be applied to logistics and supply chain industry, and what results might come of this?

 

Well, that’s a really interesting question, because everybody kind of likes the rags to riches story or the notion of David going up against Goliath. But I think that it’s not so much missing the point, but looking for those kinds of stories may give the wrong impression. What do I mean by that? I was reading something the other day, it was a report done by an analyst from, I forget who it was, and they identified, I don’t know, forty or fifty software startups focused specifically on the logistics industry around the world that apparently were going to transform, or had the potential to transform the industry.

 

That may be true, but it was interesting going through the list that you saw most of those companies were focused on the challenge of last mile delivery. Now what that says to me is that did they collectively sit up one morning and say, oh my God, this is a big problem, we need to solve this problem? And they all rushed off to try and come up with a solution. Or were they already playing in the logistics arena, but as with most startups, they required capital, and the investors of that or the potential providers of that capital, i.e. investors, said OK guys, we think this is a big problem because we see lots of other companies getting funded trying to solve this problem. So you go after that and we’ll give you funding. It’s kind of for the herd mentality that you find a lot of investors, particularly venture investors, do.

 

But I think that there are more interesting challenges in the industry that technology can be used to resolve. So let’s think about some examples there. If you think about, there’s a lot of hype around this thing called the internet of things, IOT. In other words, because of the reduction in cost of technology, you’re finding lots of things have the capability to have very, very low cost sensors in chips embedded in them that can provide information about what the heck and where the heck is it. And in supply chain terms, that’s really important knowing where stuff is and what it is, to be able to track it and understand what inventory you’ve got on hand and so on and so on and so on.

 

So that’s great, but if you’re a conventional company, or even if you’re a young company and you’ve started out, you’re providing logistic services, and you’ve invested in some information systems to manage the orders, book transportation and so on and so on and so on, to all of a sudden have access to a torrent of data provided by all these devices right across the supply chain beeping and burping, providing new information almost by the second, if your information systems platform was never architected, much less constructed, to support that, that could present you with some challenges. So I think there’s opportunities for innovative startups to think about those kinds of practical problems, rather than stuff that may or may not be fashionable at any particular time based on what the industry press or the media is saying.

 

That’s not to say that the media gets it wrong, they don’t. But unfortunately, people that comment on this sector tend not to understand some of the nitty gritty challenges that real operators have to deal with. More to the point, the guys that are dealing with those challenges often don’t have time to talk to the press or to the media in general to enlighten them. But if you look at any supply chain operation, the challenges they face on a day to day basis, where the velocity of products moving through supply chains is increasing and continues to increase, the volatility of supply chains, in other words, demand fluctuations becoming much more variable, so you’re trying to deal with all those challenges at the same time as you give your customers information about what the hell is going on with their stuff and when are they likely to get it?

 

So having a bright group of developers in a small startup come and knock on your door as a logistic service provider, and they say hi, we’re going to help you, we’re going to change the world, and we’ve got this fantastic technology, they need to be very careful that they sit down and understand what the problems are that are confronted by these people, because you may come up with a really neat technical solution to a problem, but there may be lots and lots of other factors that prevent that problem, prevent that solution, even though it’s technically elegant, from being implemented. Legal issues, just pure operational stuff.

 

I was with a company the other day that their technology sits on the end of production line/shipping station, and as products roll down the production line they get to a point where they need to be prepared for the carriers to take them away for shipping, and they need to print the labels that the bar code scanners read, in other words, the bar code IDs, weigh the product, understand the destination and work out the appropriate codes and so on. Technically, the software to do that is not particularly difficult. But interfacing with a variety of printers that are around to do that, that’s not quite so easy, and takes an incredible amount of time.

 

The technology to do it is easy, but interfacing with just a huge different number of printers that there are just takes a lot of time. So the impression is with a lot of new technology that it just plugs in and works, which in some cases it does, but generally in production line environments or production environments, that’s not the case. It takes a long time just to work through, laboriously, to interface through a lot of these systems which are old or, if not that old, from some obscure company that’s not using standard technologies. And the companies using these printers are not going to throw them away. You, as a software supplier, have got to work out how you can interface to them. So that’s a very, very clumsy illustration of that great technology, unless it’s constructed in such a way that it’s easy to implement and there is a deep understanding of how the industry works and the challenges in the industry, there’s not going to be a happy ending.

 

So I think there’s a huge opportunity for innovation, and usually it’s young companies that can do this because they’ve got the energy to work 24 hours a day developing these systems, but they’ve got to do it in concert with the companies that they see as their customers. Unlike in the consumer realm, where you develop a new technology, young people or people that are interested in it say wow, that’s great, it’s a new app, I’ll just stick it on my phone, obviously everything’s wonderful. In production environments, manufacturing environments, logistics environments, we’re not quite at that stage yet. So the backdrop into which this innovation’s got to be introduced has got to be understood and there has to be some hand holding by both parties there to help it evolve as fast as it should. Sorry, that was a ramble.

 

Thanks, Ken, for sharing. Can you provide a brief background of yourself?

 

I’ve been involved in logistics and supply chain management for about thirty years now, primarily with information systems applied to operational challenges, initially as a freight forwarder, then as part of a large global integrator, and then as a partner in a software startup, or a couple of software startups. And now I’m, I sit on the advisory boards and boards of various companies that are involved in the industry in the UK and elsewhere in the world. So that’s pretty much who I am. And obviously I’m from London, because you can tell by my accent.

 

Thanks again for sharing.

 

That’s great, Dustin. Good to talk to you again.

 

Yep.

 

 

 

About Ken Lyon


 

238ef85.jpg

Ken Lyon


Managing Director - Virtual Partners Ltd


LinkedIn Profile

I interviewed Ofer Laksman who discussed The IT Chain of Supply as a Mix of People and Systems.

 

 

 

 

 

 

It’s nice to speak with you today, Ofer. I’m looking forward to discussing with you business challenges that are influenced by people, processes, and technology Can you first provide a brief background of yourself?

 

Yes, hello, Dustin. Thank you for the opportunity to introduce myself, the company, and the new technology and plot from the company developed. My name is Ofer Laksman. I’m one of the company cofounders and acting as the CEO. My background is that I was serving in the Israeli Air Force and then moved into the public-sector business.

 

In 2000 I started to work with worldwide vendors, companies such as Compaq/HP. In 2010, myself and four other partners, we decided that it’s time to change the way of how the IT is being contributed to the company and how the company is looking and understanding the importance of IT. I’m more than 20 years in IT. I did several activities—direct sales, channel distribution worldwide—and since 2010, I’m the CEO of the company.

 

What I would like to talk about today is how the business challenges are being forced, are being changed by three major topics. It’s, of course, the human resources, the processes that are part of the company regulations, policy, compliance, and, of course, the technology that’s surrounding us in every corner that we are moving. The kind of living that we have today is really changing rapidly. We see that everything is being moved and pushed into multi directions. The kind of information that everyone is looking for is to get information instantly, without any delay, and the kind of transparency and simplicity is a part of our DNA.

 

At the other end, the IT that is what we call the central hub of everything, since the beginning of manufacturing IT, the policy and operation concept has never changed, meaning there are many vendors, many people who need to operate in a very competitive environment. The force that is pushing the IT operation in order to be more efficient is pushing the company to make very strategic decisions.

 

Now, we know that IT today is a part of multi vendors, different approaches, different languages, and at the end of the day, you need those elements to be aligned together in order to operate and provide the best, efficient, cost-effective SLA for the business layer. This is exactly what we developed. There is some research in the market—one of them from PWC—that is saying that the investment in IT infrastructure, by the end of 2024, will be increased $78 billion. IT will become the major investment in the company—the second one; the first one will be, of course, human resources. At the end of the day, everyone understands that IT is a part of the business strategy.

 

At the other end, recent research that started in 2010—the results are really amazing—there is an increase of the cost-effective, or the downtime, the companies are getting are resulting because of the metrics of compliance of their IT. Instead of that, IT will be more efficient. The cost downtime for companies is increasing. We’re talking about something like $70 thousand per minute. The average that was mentioned in the article is, an average data center had one downtime failure a year that stood them approximately 86 minus, and the cost was above $700 thousand.

 

There are differences on one hand that everyone understands that IT should be a major asset for the company, and the other hand, we see that the asset is creating a lot of issues. This is where we came into the picture. We create the first, what we call, IT-collaboration system. We understand at the end of the day, the collaboration will be made with the integration of people, systems, and topology.

 

We created a layer that we know how to get information from the IT infrastructure to combine it and connect it into the business layer. From that point, what we’re concerned is not about the adaptation of the data center, but about efficiency. It’s more important that you be able to use current investment, current team to be able to provide the best value for the company with the lowest cost of money.

 

By the fact that we’re gathering the information into a single solution, we can identify the smallest changes that are happening in your data center and raise the flag before it will impact the business. Our topology is based on a new concept that we call a proactive approach rather than the traditional IT operation that it’s based on a reactive, meaning once you have the problem, then everyone will try to identify and solve the problem. Our mission is: Why solve the problem if you can prevent it in advance?

 

All of us understand that once you are walking in a proactive mode, meaning that the company will be more efficient in their competition, they’ll be able to provide the service more efficiently, and, of course, with a lower price of cost internally. The three elements that are really unique, as I mentioned, the proactive approach; the second one is that we are gathering information directly from the object; our system is totally independent, and we’re starting to make a correlation and comparison between the data the company knows compared with the data that we are gathering independently. This is where we can show them the differences in the data.

 

The third one is that we are converting the traditional IT language, what we call the dark side of IT, into a business language. We are helping the C-levels in the company, the CIO, CEO, CFO. We are translating the traditional language of IT into a more baseboard, more business concept. Based on that, we are creating the best efficient ecosystem between IT and the rest of the business unites. We are creating the same concept of the BI tool that everyone can understand and everyone can share the data. IT can share their concerns or success in a language that’s much more clear to everyone.

 

Recently, we saw a very nice ramp up in the recognition in what we’re doing. There are some competitions in the market that we started to win. For example, there’s a very well-known award called the DCS—Data Center—Award, and we’ve been announced as the roll-up; it’s basically the second best management platform for 2015 for data centers. The first company that won was four electricity and air conditioning. If we take on what we call IT data-center management, we are the big winners.

 

When you’re starting to see that the market is starting to understand what we’re doing, we have customers in Israel, and we are now in the stage of moving into the next stage and expanding our worldwide business to provide the best value a company can get for their IT and help them to increase their time-to-market business.

 

Thank you for sharing today.

 

It was my pleasure. Thank you so much for giving me the stage to talk about myself, the technology, our vision. Thank you so much for your time.

 

We look forward to staying in touch and learning more about how your company is developing.

 

 

 

 

 

About Ofer Laksman


 

ofer.jpg

Ofer Laksman


CEO, Co-Founder at Correlata Solutions Ltd.


LinkedIn Profile

I interviewed Richard Pagett who discussed Climate Change and Supply Chains.

 

 

 

 

 

 

How will climate change affect transportation in sub-Saharan Africa?

 

Thank you, Dustin, it’s good to be talking to you again. Sub-Saharan Africa is already being hit by climate change in such a serious way. Supply chains and transportation are just two of the things that are going to be affected. With the sub-Saharan Africa, a huge amount of freight is moved between countries—from west to east and across again. The roads are really critical to that level of transportation, and it’s roads that get affected by climate change.

 

Often, we look at a road and think it’s pretty solid stuff and climate change doesn’t have much of an effect, really. That may apply in, say, America or the U.K., but in Africa, very often the roads are not of the same consistency and structure as we find in western Europe and in the States. Very often, the surfaces are quite fragile, really. We have huge trucks plying the routes from the west to the east coast, and their weight ordinarily creates a lot of potholes and other surface damage to the average African road.

 

When we add climate change to this—principally in the form of extreme rain—then these potholes open up and can be the size of an SUV, huge things which damage vehicles. I would guess in any four-hour journey we’ll see maybe a dozen trucks—big ones—lying on their side, where their tires have split open, axles are broken, wheels have come off. It’s quite a routine occurrence. There, everything takes days to get fixed, so the guys who drive the trucks have to camp out, and it’s not particularly pleasant for them. Plus, local villagers might decide the shopping has come early and start to help themselves.

 

So, how does climate change affect transportation in sub-Saharan Africa? Chiefly, it’s got to be about rain, huge amounts of rain. We’re used to seeing the rainy seasons in, say, West Africa, but over time in the past few years, they have become late; they’re not when we expect. They’ve also become intermittent. At the beginning, they start and they stop. We’ve also seen torrential rain of unheard-of volumes hitting the places within just a few hours. And it’s not just like a flash flood; it’s real inundation because there’s just nowhere for the water to go. Typically, there are no drainage systems off the routes; rain just drains away off the road.

 

What we’re finding now is with extreme rain—very, very heavy rain—that any surface imperfection, any small potholes, any cracks, crevices are being hammered by rain and stones being thrown up by large trucks and big chunks of tarmac being split out and then further trucks creating more and more damage to the surface of the road. We’re seeing transportation delays of quite enormous proportions in sub-Saharan Africa, and that’s not to mention the problems of just transiting; different African countries having the right paperwork in place; going through all the checkpoints, of which there are many; and also people looking to ride on the backs of these trucks for free, which, obviously, is very unsafe.

 

Climate change is beginning to have quite a profound effect on transportation in sub-Saharan Africa, and there’s no great alternative because air transport—as anywhere in the world, is very expensive, so that’s not going to work. Secondly, the railway systems really aren’t there. Sub-Saharan Africa would benefit hugely from having viable, functional railway systems and networks to move freight around, but that’s probably two decades away. Most of the existing track that was put in place during the colonial era has been taken apart, it’s overgrown, it’s certainly not functional, so the railway system would have to be built from scratch. In the longer-term, I think that’s where investment needs to go, but for now, we rely on roads, and transportation by road, with climate change, is getting more and more perilous and longer and, therefore, more expensive.

 

How does climate change affect transportation on small islands?

 

Again, it’s all about the roads, but here, the roads are different; they’re not in the middle of deserts or large countries. By definition, roads around small islands are usually very close to the coast. That means they either get affected directly by storm surges which spread across the road from the sea or they get affected by heavy rain loosening the sides of the islands—the mountains, the hills—which then release boulders and come cascading down and damage the roads. The problem is a different thing, but it’s affecting the roads just the same as in sub-Saharan Africa.

 

In the islands, there are those that are mountainous islands—so, let’s say the Seychelles—where the roads are very, very close to the coast. They get affected by storm surges; they get affected by sand and boulders being thrown up from the sea; they also get affected by boulders and soil debris being washed down from the hillsides onto the roads, creating delays, damaging road surfaces, and also providing safety issues. In addition to that, because the traffic—the trucks and the buses and private cars—are having to travel relatively close to the sea, they, of course, get lots of spray anyway, and that’s causing a lot of corrosion. One has to look at doing corrosion protection on vehicles, which puts the prices up considerable.

 

The other thing with islands is not an island which is mountainous or where the roads are close to the sea, but an island, say, like, Tuvalu, where it’s barely a meter high anywhere. There are causeways between small islands and these simply, although there are sea walls, they could be overwhelmed by water, by storm surges, by high tides, even, with winds in the right direction, so there’s a risk there, as well, of islands being cut off.

 

That’s not to mention, of course, with sea-level rise and climate change that, over time, storm surges will affect more and more of the inland parts of the islands because the basic level of the sea is much higher. We’re starting to see serious cyclones or hurricanes, depending on where we are in the world, which are whipping up the sea, bringing in huge waves, and affecting transportation and road structures. Of course, you have the occasional tsunami, which is not affected particularly by climate change but nonetheless has a relatively similar effect.

 

How does climate change affect supply chains?

 

I think if one is relying heavily—and this would apply for both islands and sub-Saharan Africa and other places, in fact—if one has a long supply chain, complicated supply chain with lots of suppliers in that chain, then it only takes one supplier to have a difficulty with climate change either through a heat wave, through sea-level rise taking out a road, through a storm surge, through flooding, then one’s supply is interrupted.

 

The way to counter this is two ways: either having as short supply chain as possible, but also have many networks. A bit like the Internet, where computers, servers, all over the world are helping our e-mails get to one another, and if one or two go down somewhere, it doesn’t really matter because the Internet self-routes itself so that e-mails get to the destination. I can send an e-mail to my neighbor, but it might go via another town before it comes back.

 

I think that supply chains are a bit like that. We have to make lots of connections or backups so that we can ensure we always have the supplies when we need them but also to look at shortening the supply chain in the first place. I know that we talk a lot about globalization, but maybe we need to talk more about regionalization, particularly for places like Africa, which have got huge markets in themselves, rather than try to think about reaching out and sending products and produce to western Europe or America or the Far East, but actually looking within their own continent of a billion-plus people and looking at their markets there; they’re shortening the route from the production site to the consumer, and that, too, will have a benefit.

 

Thanks, Richard. Can you provide a brief background of yourself?

 

Thanks, Dustin, yes. Obviously, my name is Richard Pagett. I’ve been working on climate change for some time—since 1989, actually. I did the first calculations for sea-level rise and the number of people to be affected in Bangladesh quite a while ago; that was before we started really talking about climate change in any serious mainstream way.

 

I’ve been working on climate change ever since—in the Caribbean, in the Pacific, throughout Africa—not just sub-Saharan Africa, but throughout Africa—and in Central Asia and the rest of Asia. I’ve probably worked in, I suppose, about 135, 140 countries, so I have a fairly wide appreciation of climate change and how it’s affecting different countries and sectors. There is no doubt that something very, very serious is happening right now, and we’re starting to see some serious effects of climate change in heat waves, droughts, floods, extreme rain, all that sort of thing.

 

Thanks again for sharing today.

 

My pleasure.

 

 

 

 

 

 

About Richard Pagett


 

2b0e8c4.jpg

Richard Pagett


International Specialist


LinkedIn Profile

I interviewed Joe Lynch who discussed 3PL Sales Platform.

 

 

 

 

 

 

It’s been several months since we did our last interview. Today I’m looking forward to hearing your views on a 3PL sales platform. Before we start, can you provide a brief background of yourself?

 

Sure. First off, thanks again, Dustin. I spent most of my career in automotive. I was an engineer, and then I worked as a program manager in Asia. Eventually, I moved into some consulting, doing a lot of lean and supply chain work. I found myself being the general manager of a nonasset-based 3PL here in Michigan, where I live. Starting about a year ago, I started working with third-party logistics companies, transportation guys, logistics guys, helping them improve their sales through lead generation and some innovative sales strategies. I’ve been calling it a 3PL sales platform.

 

That’s interesting. The last time we talked, you were a general manager of a third-party logistics provider. Can you talk more about what you’re up to now?

 

While I was working as the GM of a 3PL, I was responsible for sales, and I had made some pretty good sales myself, but it was mostly through personal contacts I had made over a lifetime. When I tried to get my sales guys to be successful, I was not successful. I take responsibility for that; I wasn’t able to give them a process that worked. I started realizing it wasn’t necessarily a sales problem; it was a lead-generation problem. It was also not having a message in the market that made sense, that anybody knew about. There’s so much competition out there; you have to find a way to stick out; you have to find a way to gain that favorable attention and build your credibility while connecting with people.

 

What a 3PL sales platform is what I created with the logistics of logistics. It takes a little while, but what it is a combination of Web presence, content marketing, which is what we’re doing today—you’re a content marketer—content distribution, and a way to capture leads and start nurturing those leads from marketing leads and the sales leads and, ultimately, into more sales.

 

While you’re doing all this, you want to build your credibility, you want to get more leads, better-quality leads, and, ultimately, more closed sales. There’s still a big chunk of our market that says these are leads when all they are is a list of companies you bought. Somebody on Google says this is a sales lead. That’s not a sales lead; that’s just a name from Google. Sales leads are somebody you’ve reached out to, marketing leads, or somebody reached out to you and said, “I’m interested. Tell me more.” That’s what I’ve been up to.

 

What has changed? Why would 3PLs need to spend this time and money to create a 3PL sales platform?

 

The whole market has changed. The Internet has forever changed us as buyers and consumers. One time, there weren’t nearly as many options. Now, there are so many options out there. There’s a proliferation of new companies, new technologies, new services, and it grows every day. The Internet has really spurred on that growth. It’s hard to get your message out through this clutter. The world is busy and loud, and your message doesn’t get through.

 

Cold calling doesn’t work for most people, not to the extent that you want it to work. Sure, if you make a hundred phone calls a day, at some point you’re going to get through to people, but it’s not a sustainable way; mostly, what you end up doing is talking to voice mails all day. Also, with so many people doing it, it’s hard to stick out; it’s hard to make anything other than a price-driven sale, which is a problem.

 

I would also say our consumers—and this is for all of us—they’re very distracted. They’re getting lots of messages. They’re better-informed, also. No longer do we need the sales guy to come to our office and explain what’s going on in the industry. Now, shippers, consumers of all sorts, are online, looking for experts. And they find them. And that’s who they want to work with. They’re much more in control of the sales process. In fact, there is no more sales process; there’s a buying process, and the sales process had better align to it. What’s changed is the shipper and our business.

 

Can you talk about the benefits of a 3PL sales platform?

 

What we’re talking about here is a way to communicate with your market, communicate your expertise to that market. You want to be known as an expert; you want to be known as credible. People don’t want to be sold by a sales guy; they want to seek out an expert and buy from them. What a sales platform does is, it’s like a political platform in that it gets you noticed and gets your message out and lets you communicate and hopefully build a two-way communication platform between you and your customer.

 

I’d say the direct benefit is visibility. Again, cutting through that crowded market and actually being seen and being heard. You want to build a two-way communication with your market, and you communicate by being seen as an expert. Sharing your expertise across multiple channels; it’ll make you more credible, and that will lead to more sales.

 

Another thing we’re trying to do with the sales platform—a lot of people have done it; you’ve done it—we’re looking to build a tribe. It sounds a little trite these days, but you want to develop a following that respects your expertise, that thinks you’re credible, that might want to work with you. If you were to say, “I have a list of a thousand people who follow me, and they follow me because they enjoy my content, my articles, my Webinars, my e-books, or videos,” you’re going to do a lot better in the marketplace than somebody who doesn’t do that.

 

Ultimately, why do we want a 3PL sales platform? To sell. We all want to sell. People who build a sales platform are seen as more credible; they’re seen as experts; they get more, better-quality leads because the people came to them; and, ultimately, they can sell more.

 

Thanks, Joe, for sharing your views today on the 3PL sales platform that you’ve developed.

 

Thank you, Dustin, thank you very much for having me.

 

 

 

 

About Joe Lynch


 

314a615.jpg

Joe Lynch


3PL Growth Expert

The Logistics of Logistics


LinkedIn Profile

Website

I interviewed Arnold Kamler who discussed Research on Improving Ocean Freight Pricing.

 

 

 

 

 

 

Can you please tell us a little bit about your company and roughly how many containers you ship each year?

 

Our company is engaged in a couple things. Number one, the importation of complete bicycles from China. Most of it goes to either Los Angeles or the Port of Charleston right now. A little bit to New York. That probably is about 6,000 forty foot containers. The rest of the business adds up to about 500 to 1,000 containers. This represents our newly opened U.S. bicycle assembly factory in South Carolina. There are a lot of containers going to Charleston for that. We’re also warehoused in Charleston.

 

We also have a nice bicycle accessory business and we import mostly to two places. East Coast and West Coast, Charleston and in Los Angeles. We sell predominantly to the mass market, to the Walmarts, the Targets, Toys R Us, Academy Sporting Goods, Amazon, people like that. And all together, it’s getting close to about 7,000 forty foot containers.

 

How satisfied are you with the level of service that you get from your carriers?

 

If we’re not talking about pricing, the service on all the carriers is good. I mean, more or less the transit times are pretty reliable. I think we’ve had two claims in the last year, probably amounting to less than $10,000 in damage. So the information flow is good. The service is good on virtually all the carriers.

 

In particular, what is your experience with the carrier pricing practices or processes? What are the pricing related pain points that you have?

 

I’ve been in this business dealing with the steamship companies, believe it or not since 1972, at the very beginning of the containerization, with people like Sea Train from Japan and K Lines. The business used to be very stable. It used to be you would start the year, you would have the meetings with the steamship companies, I’m talking pre-NARA. You would negotiate with each company, it was a real negotiation on a company by company basis. Despite the fact that there were a lot of companies, typically we did the majority of our business with two carriers.

 

Now our volume wasn’t as large as it is now, but still basically there were two companies we did most of our business with. We negotiated the price once a year. Occasionally during the year you might add a new port and you might have a little bit of a battle for a few weeks on trying to get something done in the middle of the year. When the things started going really crazy was the group called the NARA.

 

Now they have the TSA. Before the TSA, there was a group called the NARA, and I’m not sure what that stands for. They would have the conference carriers and the non-conference carriers going way back there. The conference carriers all agreed that they would all have the same exact price from point A  to point B for one company. So in other words, Company A could negotiate a price of $2,000 from point A to point B. A similar company might be paying $300 more, $500 more, even for similar volumes. It had a lot to do with your ability to negotiate and long time relationships.

 

But that was, at the beginning of NARA when everybody would agree to do the same price. In order to get that price, you would have to meet with almost all of the ten or eleven carriers that were members of that group, and they would then load in crazy meetings that they would go all night long in Hong Kong. I wrote a very famous letter toward NARA expressing my frustration well over 20 years ago, where all the companies and all the sales representatives that we spoke to. This is the beginning of the pain.

 

"They all agreed to give us a price from Shanghai to New York and Shanghai to Los Angeles, and then I get a call from somebody wanting to come and say Arnold, it was defeated 11 to 1 in the vote. And what we realized is that the, there’s still a, so it started back then, there’s a basic distrust between the owners and their salespeople. The owners lie to their salespeople constantly and it’s gone on for 25 years. So the poor selling agent coming in talking to people, they get fed a line of garbage, never the real story. And then they go out and sell it. It’s a crazy industry, as I guess you’re coming to know, as to why people would invest a lot of money in this. I don’t know of a crazier business than the ocean."

 

How do you think the carriers could improve their pricing practices or their processes?

 

For the longest time, we had one price for one year, and we would agree. It was a real contract, it was a real service contract, a time volume contract, and if they would honor that we would honor it. But what started happening about five, six, seven years ago, is the moment business would get really good, they start rejecting your cargo.

 

"They start talking, well the spot rate is. I said, I don’t care about spot rates, we had a contract. I’m willing to honor my contract. And they look at me like I’m completely goofy."

 

But this is how I’ve done my business for 40 years, and suddenly they go no, no, we’re so bold, we have to a, charge you $1200 more per container. I said, but we have a contract. You’re supposed to carry, you know, fifteen of my containers every week at X price. How can you, you can’t raise the price. I can’t go to my customers with a 1½ percent increase. With that increase you’re stealing. So they started the game. So then what’s happened is they’ve created just a scenario right now where as a shipper, the moment the prices start to go down, you go like, screw you...I’m not paying $2,000. Somebody charged me $1,200.

 

It’s just combativeness, the relationship between the carriers and the customers. How to fix it? Step by step. Quote a price and live with it. And maybe give bonuses to the companies that honor their commitments. But at the same time, penalties. I mean, you know, things happen sometimes in business where you might lose a major customer, and so your volume goes down. That might be an exception you put in there. But assuming that your business volume, your overall numbers stay the same, each company, the companies will be entitled to share in a real damage if the volume contract is not met.

 

I’m prepared to live with that. But when I negotiate a price with a steamship company, I mean I’m no longer doing negotiating but...but right now you get a price that’s just like, well, OK, I wonder how long they’re going to honor this price?

 

So you asked me how to fix it. Show integrity. When you quote a price, live with it. I do. We sell almost two million bicycles to Walmart a year. If their business goes up 30 percent, I don’t raise the prices. It’s nuts.

 

 

 

About Arnold Kamler


 

1cb74aa.jpg

Arnold Kamler


CEO,

Kent International, Inc.


LinkedIn Profile

I interviewed Brad Forester Founder of JBF Consulting who discussed Adding Realism to Discussion of Supply Chain Technology.

 

 

 

 

 

 

I’m looking forward today to discussing with you the debunking of some buzzwords regarding visibility in omnichannel and, more specifically, bringing some realism to this discussion of supply chain technology. My first question is: What is the biggest barrier to generating return on investment of a TMS?

 

Thanks, Dustin, for having me on this call. I think the first thing that most companies need to clean up or look at is how they’re coming up with the definition of return on investment in the first place. I see a lot of companies put together these business cases with huge benefits and a huge return when, really, those are very aggressive types of numbers to hit, and they don’t necessarily create an implementation that will deliver on those benefits.

 

I think that, in addition to the actual implementation, too many companies focus on that first implementation of a TMS or any technology, really. Typically, those first initial projects are so constrained by time, budget, or by the system complexity that the advanced features are never really activated or turned on. In a lot of implementations, the client is left with having to do this work and figure out on their own after that initial implementation, and too many times it’s just not happening.

 

We’ve been working a lot with our clients in the transportation-management system space, and a concept that we’ve kind of come up with through discussions with our clients is around this gardening analogy where you can’t just design and build a perfect vegetable garden; you actually have to do some work after it’s done in order to have any value come out of it. That’s resonated well and I think the analogy’s just easy in that clients can understand that after that first implementation, that’s when the actual work starts. We help them figure out how to do it and how to get the value after the technology’s already been implemented.

 

And why is cloud/TMS becoming so popular?

 

I think for a lot of those same reasons. From a technology standpoint, these on-premise systems or on-premise TMS where the client will actually license the technology and install it on their own servers, there’s a lot of complexity in those implementations. These products are very mature, they’re very feature-rich, and the implementations are lengthy and complex. I think that a lot of clients have gone through that, and they’ve realized that they’re just not mature enough from an IT standpoint or a business stewardship standpoint to really get the most out of those systems in the implementation.

 

A lot of them turn to service-based technology—SaaS, cloud, whatever you want to call it—as a way to help ease the burden of the implementation time, the implementation complexity, implementation costs. Companies kind of see this as a way to faster return on investment even though it might be a smaller, addressable return just because the SaaS tools are relatively much newer than the on-premise tools—from a transportation standpoint, anyway—and they’re not quite as feature-rich. You might expect a lower return on investment for cloud-based technologies but a faster return on investment, which might be the key there.

 

Also, I think the new cloud technologies could add additional benefit over on-premise in that they do add a network-effect component for those who are truly multitenant TMS, like Cloud Logistics, like Lean Logistics; they have some potential to add value over and above the on-premise TMS.

 

Why is this ability [think you mean "Visibility"] such a difficult goal to achieve?

 

I think this goes back to that gardening and stewardship concept we use with a lot of our clients. The old way of implementing a TMS is just to come up and stand up to technology. We’ll do a current-state business-process analysis, and, essentially, what we’re doing in that old-school methodology is replicating existing business processes.

 

When we talk about visibility, that visibility kind of buzzword is difficult to achieve because visibility needs to be interdepartmental. We have business functions from planning, forecasting, manufacturing, or sourcing, movement or the transportation, and then fulfillment and returns; each of those functions within an organization might have their own systems—might have several different systems—that all have different goals and objectives. They also have, probably, different sets of master data, different transactional data, and the departments that run those applications will probably have different goals, different objectives, different measurements within their organization.

 

When we talk about visibility, we’re typically talking about physical product movement or tracking the physical product as it goes through those business functions and through those systems, if you think of those things linearly. The challenge comes from—like something as simple, for example, master data. A SKU might be totally different to your demand forecasting tool as opposed to your warehouse-management tool. When you look at the TMS in its own bubble for that movement component of the physical product moving, you may not have SKU-level information at all. But when you ask an organization like a retailer or consumer-products company how they want to track end-to-end supply chain visibility, it’s usually at the SKU level. It becomes very challenging to harmonize all of those functional elements and sift them together from an integration standpoint to really achieve that end-to-end visibility objective.

 

How are visibility and omnichannel similar to a transportation function?

 

I think omnichannel is kind of another one of those real topical type buzzwords. Omnichannel and visibility are very similar in that they all require a significant amount of cross-functional integration, and not just from a technology standpoint like technically integrating systems—that’s challenging—but also integrating the functions. If we have customers who are placing orders online for a retailer who can then also come into the store to make a return and possibly purchase items from a brick-and-mortar store and then have a return going back through the post, being able to tie all of that together requires many different systems to be integrated, it requires many different functions to be integrated, and I think that omnichannel retail is just an extension of visibility challenges but from an execution, at an execution level, where visibility is kind of a passive tracking or an active tracking, depending on how you want to look at it.

 

We’re now adding, with omnichannel a transaction; there’s a buy, there’s an order, there’s a sell order [Brad: this was unclear a little...I meant a "buy order" and a "sell order", FYI]. There is some sort of customer at the end of that, whereas with visibility, we’re kind of looking to leverage the information within our organization to support multiple functions. Omnichannel is harder because it adds that transaction element.

 

My final question is: How can shippers leverage their TMS to become more carrier-friendly?

 

I think we go back to the gardeners’ methodology concept. This works well with regard to shippers or large shippers who use TMS—technology transportation systems—to go back and really look at things from a strategic standpoint. If one of their strategic goals as a shipper is to become a carrier-friendly shipper, then the department needs to figure out what they can do within the TMS to help them achieve that objective.

 

The easiest way for me to explain that is through a client analogy. I worked with this large apparel retailer for probably 15 years or more. They implemented a TMS many years ago, over 10 years ago. The first piece of their implementation was to bring in inbound transportation; they currently run inbound on their TMS. For whatever reason, phase two never happened, where they were going to do an outbound TMS deployment on the same platform.

 

Over the course of 10 years, they’ve run an operation where their inbound carriers are running on a different process from an invoicing and payment standpoint than the outbound carriers. When you consider that the outbound carriers are probably the same carriers hauling their freight on the inbound side, then you’re running into a situation where you’ve got a number of large carriers who handle your freight for both inbound and outbound who are on totally different payment and invoices processes because you installed inbound in your TMS, never got around to deploying it on the outbound for whatever reason, and now you have a carrier who’s looking at this as, “If I’m going to now haul freight for you, in my bid, my rate has to reflect the extra cost—presumably—of doing business with you, because I have a different process for hauling your inbound freight versus your outbound freight, and I have to accommodate for those things from a cost standpoint.”

 

I think the ultimate output of that is that it just decreases that favorability, that subjective component that carriers use to grade shipper favorability and carrier friendliness of their policies. I think in this regard, looking at things from a systems-landscape standpoint, tying them with your company’s strategic goals and then the logistics or transportation organization’s, support of those organizational goals, all of those things have to be integrated and harmonized so the TMS is able to give you that carrier-friendly perspective that your company needs in order to secure capacity, reduce freight rates, and things like that.

 

It’s essentially just a matter of rolling up your sleeves and doing the work and not just relying on that initial implementation to drive all the value out of your TMS.

 

Thanks, Brad. Can you provide a brief background of yourself?

 

Sure. I attended Michigan State University. I have a degree in transportation and logistics. I spent a few years working on the carrier side at FedEx Ground. I spent a few years as a shipper at Lucent Technologies, managing multiple-facility transportation organization. I then moved into software, where I spent several years at a company called Manugistics, which is now JDA Software, doing consulting and implementation work, as well as product marketing within their transportation-management systems application.

 

Back in 2003, I started up my own consulting business, JBF Consulting. Since 2003, we’ve really focused on implementation of transportation-management systems. We recently brought on a new partner, Mike Mulqueen from Manhattan Associates. Mike is now running our transportation-strategy practice. We’re really focused on transportation as our niche, transportation-management software as our specialty from an implementation standpoint.

 

Thanks again for sharing today.

 

Thank you, Dustin, I appreciate the call.

 

 

 

 

About Brad Forester


Brad Forester is Founder of JBF Consulting, a unique technology consulting firm focused on supply chain and logistics management


 

0af8850.jpg

Brad Forester


Transportation Management Systems (TMS) Consultant & Implementation Expert

 

LinkedIn Profile

I interviewed Mick Jones who discussed OMNI Channel.

 

 

 

 

 

 

My Background

 

My name is Mick Jones, and I am the Vice President for Global Logistics and Supply Chain Strategy for Lenovo. I have spent the last 8 years in Lenovo in a number of roles - managing the $1Bn Global Logistics and Sourcing network operations, managing the end to end supply chain operations from procure to pay, setting and leading supply chain strategy, developing Supply Chain Analytics and developing the physical network and processes to help enable some of that growth and the fundamental changes in demand that we are seeing from our supply chains. For the last 18 months I have been the business leader for the acquisition and integration of the IBM X86 business supply chain.

 

Prior to that I worked at a senior level in DHL, Danzas and Exel leading the development and operation of new products, creating large global customer solutions, leading the development of business sectors and developing joined up thinking globally across Freight, Transport and Final Mile operations

 

For those of you that don’t know Lenovo – we are the biggest PC maker in the world and the third biggest maker of PC+ devices – that’s PC, Server, Mobile and Cloud. For the last 2 years we have been the fastest growing PC organisation in the world. In 5 years we have trebled our size – it has been an absolute blast!

 

What Drives you / What makes you tick?

 

What drives me and continues to drive me is the way that the supply chain and ALL of the elements and players in the supply chain are accelerating towards change – some willingly and some not so – and are having to face up to some VERY different panorama’s in the very near future. This is going to be an amazing few years for supply chain and I am fascinated by the way that some of the key changes will impact the players. To me Omni Channel is the result of one of those key changes – the changing consumer.

 

OK so what is OMNI Channel?

 

So I wanted to talk to you about Omni Channel Retailing – though we should be calling it Omni Channel Supply Chain – as it ‘belongs to’ all of us in the value chain!

 

Imagine this! You want a new pair of Nike’s so visit your favourite retailer’s website. As you enter the site, it drops cookies on your browser. Next thing you know, you’re seeing a television ad promoting deals available via the retailer’s mobile app. And before you know it, you are accessing information on your mobile device and then visiting the brick-and-mortar store. As you wander through the store, in-store systems recognise you, andyour mobile guides you to the correct part of the store to suit your preferences, offers you personal ‘deals’, you look up products online and perhaps even scan a QR code in search of a deal. That is the world that we are stepping into – the world of the omni-channel consumer!

 

In my day we would say that’s all very ‘Star Trek’ … now days the Youth just shrugs its shoulders and carries on …. Oh, how dreams have forged into reality!

 

My real interest came from a recent panel I was on in Amsterdam that included a Retailer, a 3PL and myself – a manufacturer – to talk about the progress and the status of Omni Channel. The discussion became quite – I think you might call it ‘lively’ – as we discussed the impact of Omni Channel on the end to end supply chain – with each member of the team defending the impact of the approach on their specific ‘link’ in the supply chain.

 

Let me try and start by defining Omni Channel – it is difficult – it means many different things to different organisations – but let me have a go.

 

Omni channel represents an operational state – that principally manifests itself at the retailer / consumer interface - where organisations offer a seamless experience for buying products regardless of the channel or the device they are using – consumers engage with the seller in a physical store, on a website or mobile app, through a catalogue or through social media. They can do that via a phone, a tablet, a laptop, a desk top TV or a smart TV. In its purest form it represents true consistency and continuity in customer experience across the entire front line of the retailer. It’s real lineage comes through multi-channel retailing, via cross channel retailing. Look up the Latin words for the three – Omni or Omnus means ‘all or universal’, Multi or Multus means ‘many’, and Cross or Crux means to ‘go across’.

 

If that confuses you – I read this on a blog recently:

 

‘(Omni Channel)..BOTTOM LINE: The Customer wants what they want when they want it. They want it where they want it and at a price they want to buy it at. They want to buy it through any medium and delivered to any place. If you don't have it in stock then you had better make sure it gets to their house tomorrow morning (or this afternoon) ...... or they will go and buy it from Amazon .... Who WILL have it .... WITH free shipping…’.

 

That is a great description - it shows the complexity of the omni-channel revolution and it shows the competitiveness of the market that we are moving into! It also shows the impact that Amazon as a leader is having on the market place – where Amazon go others will (have to?) follow!

 

So why is Omni-Channel so Important to Retailers and to the Supply Chain?

 

So what are we ALL suddenly, inevitably and relentlessly moving down this Omni Channel track?

 

The growth of the internet, mobile technology and social media has created increasingly fragmented sales channels, and an even more fragmented supply chain

.

Until recently bricks and mortar retailers have responded to this by developing a multi-channel approach to retailing – operational and supply chain operations running separately for each channel.

 

HOWEVER ‘Tech Savvy’ consumers are now demanding a seamless and integrated customer experience across all available shipping channels with a consistent brand experience – they expect more and they are pretty vociferous about it on Social Media. That means that that those that want to compete need to are having to fundamentally change the way that their businesses are managed – systems integration, changes to operational models and integration of replenishment and other fulfilment flows of product  …. And complete customer centricity and a knowledge that one bad twitter experience can go viral in minutes!

 

So firstly I would say that there has been a touch of good old fashioned technology driven Democracy in the value chain – it happens every now and then– where the consumer is driving the response and not just dealing with outputs that retailers want to provide! If you want to interact with these consumers at a time and place and on an interface of their choice, then you have no choice.

 

Secondly online is where the customers now spend their time ‘hanging out’: I read a recent poll that outlined that 84% of consumers couldn't go a single day without their mobile device and 76% have access to more than one digitally connected device!

 

Then there are the new shopping habits - same set of poll results as above: 29% of US Internet users would buy everything online today if they could and 48% of all purchases in 2014 will be impacted by the web - either purchased online or researched online prior to buying in-store

 

In a recent LCP report that identified why retailers are moving down the omni-channel path, the explanation was that principally it is in response to a need to ‘simply compete’ (remember my earlier comment – where Amazon go others have to follow).

 

Of course there has to be a positive reason that counters pure survival! So there is sales growth through ease of consumer interaction and the ability to personalise and enhance customer service. In the past retailers have increased sales opportunities by moving into new geographical markets or products – now they are down the same on the electronic frontline.

 

Add to that the fact that the leaders in this market are developing increased margins on their operations by improving availability, reducing markdowns and extending ranges.

 

So that obviously gives a number of challenges to the supply chain – what are the key challenges that we all face?

 

We have talked about that change in the model – the way that consumers are changing their behaviour and driving ‘difference’ - the way that the likes of Amazon are driving competition to react and respond to their sprint forwards. Big changes and big challenges for all of us in the supply chain!

 

If I refer back to that recent panel that I sat on – the one in Amsterdam with a 3PL, a Retailer and a Manufacturer!Our discussions really focussed on whether in this inexorable move towards Omni Channel we were opening Pandora’s box.

 

If you know your Greek Mythology once opened Pandora’s Box can’t be closed, and it lets lose chaos and complexity on an unsuspecting world.

 

First let me say that I am not a Luddite – I accept the changes that are happening to us – they are inevitable and they are a natural phenomenon – but the industry has to get together as a whole and look at the implications and impacts that come from these mega-shifts along the entire chain. Typically we are not good at this – major disruptors – like Amazon – come along and change things for ever and we spend our time arguing about the way forwards, protecting our margins and passing the buck, and the cost, to someone else further up or down the chain, not solving the problem that we all have.

 

Speed has been seen to be important to the Consumer – the time between order and successful delivery. The consumer demands shorter and shorter lead times from the retailer. That is often driven by what the disruptive market leaders are offering not what the consumers are requesting. Lower lead time mean that more inventory is needed close to the point of sale, later configuration and finishing of products, smaller loads and hence lower vehicle fill (and an impact on sustainability of the chain). With 65% of the global GDP soon to be sitting in Cities, operational capability is needed in more urban areas – and the likes of Amazon need to set up their eerily named ‘Dark Stores’ to hold inventory, enable 2 hour delivery and take returns in major cities. As we move towards same day delivery the e-comm retailers start to compete directly with the bricks & mortars retailers like Walmart, and omni-channel takes yet another strange twist!

 

Traditionally organisations have been able to use a number of methods to shape demand at the consumer end. By offering next day or two hour delivery, omni-channel organisations are creating a scenario where the consumer no longer sees a value judgement in whether they require products quickly or not. So suddenly the ability to manage demand and hence manage flows within a fixed capacity disappears, and operational pressures drive operational costs upwards.

 

Our mega-connected consumers are getting more choice – offer one consumer adelivery during the advert break in 'Game of Thrones' and via Social Media that becomes the norm for you and then for all of your competitors! We end up being forced to offer infinite choice to consumers and creating earlier and earlier cut off times for orders - normally at no extra cost (that’s the other thing that Social Media slowly erodes!).

 

We therefore build enormous complexity into our supply chains but struggle to pass that cost on to the rest of the chain! Try putting the lid back on that! Just imagine the Bullwhip impact of speed and choice on the rest of the upstream chain – omni ‘infects’ components, manufacturers, re-sellers and Logistics providers - as they attempt to cope with cost, speed, inventory implications – probably with little cost passed on from the consumer end of the chain.

 

And all of our supply chains are like sealed systems – you add complexity and performance at one end and the cost impact of that has to go somewhere – like a balloon – you squeeze one end and the air has to go somewhere, and typically the impact of that re-positioning is a cost that occurs somewhere else in the value chain. And the granularity of the deliveries means that the cost is rising everywhere.

 

There are some chinks of light that show that the major disruptors are having to find other avenues to charge the cost onto the consumer. Go into the major player’s web sites and you will see a number of things happening:

 

  1. Next Day Cut Off times are becoming earlier and earlier – indeed Amazon manages it’s cut-off times based on demand and availability.
  2. Delivery charges are creeping up – minimum spends have been introduced and minimum spend thresholds have been raising over the last 12 months
  3. The free next day delivery for a fixed annual fee option (Prime is one example) has been increasing dramatically – in some cases it has nearly doubled in price.
  4. Some sites now feature ‘No Rush’ options – where you get a future discount based on NOT accepting next day delivery.

 

So what do we need to do about it?

 

Giving the consumer the levels of choice that we are now doing certainly ups the ante. The dominance of social media in marketing and consumer expectation means that one failure to meet these enhanced expectations becomes critical.

 

So somehow the players in this arena have to make sure that their backend capabilities align with their front end offering. Large parts of the back-end are typically outsourced. In some cases that is driving the larger retailers in the omni channel market to develop their own in-house capabilities. A pretty poor commentary on the existing available service provider capabilities.

 

Choice and the impact of next day is forcing us to look carefully at where we hold our inventory and how much and how accessible that is to the big centres of population. Cities become the battleground – Uber type models for transport start to have a say – City Logistics propositions become key once again.

 

Our networks need to become more agile and more flexible – optimisation of the network will become a bi-annual process not a 5 yearly one – investments will need to pay back in less than 12 months.

 

Speed of fulfilment and the increasing range sizes demanded, will force us all to look carefully and critically at our forecasting and demand strategies, and the ways in which we allocate orders. We need to increasingly rely on big data and analytics to give us improved forecasting and the ability to make more informed decisions.

 

The growth of 3D printing might give us some respite whilst significantly changing the spare parts supply chains. Certainly we will all have to brush off the old concepts of near sourcing, late postponement and Configure to Order downstream in the chain and closer to the customer (I am sure that some clever consultant will give these new names and start selling them back to us).

 

The Internet of Things will give us more intelligent demand sensing if we are to believe all we are told, but it’s down side is the 1000 times increase in the data that we are expected to handle. Certainly we will be expected to offer improved, more granular, more dynamic and probably intelligent visibility of product status and location.

 

The skills that we will need on our side in this new frontier will change – global and cultural, strategic vision, breadth of working knowledge across and along the chain, analytics and data management will all play their part in the new ‘super-heroes that will run these operations.

 

Finally one area that becomes an absolute essential for us all – wherever we sit in the end to end value chain – is going to be Collaboration. We have to look at the impact driven by the consumer as an entire supply chain organism, with fairness and trust. Share inventory information, share demand data, share networks, look collaboratively at problems and issues and come up with joint solutions – operational and commercial.

 

 

 

About Mick Jones


 

Mick.png

Mick Jones


Vice President Global Logistics, Supply Chain Strategy & Network Transformation at Lenovo


LinkedIn Profile

I interviewed Andrea Stroud who discussed Modernizing Procure-to-Pay Processes that Enable Indirect Spending.

 

 

 

 

 

 

It’s good to speak with you again, Andrea. I’m looking forward today to hearing your views on the topic of modernizing procure-to-pay processes, which enable indirect spending.

 

Thank you, Dustin; it’s a pleasure to speak with you, as always.

 

Thanks. My first question is: Can you talk a little bit about APQC’s recent procure-to-pay research study?

 

Absolutely. APQC’s recent research study, we actually partnered with Oracle to look at procure-to-pay practices at organizations and how they’re improving their indirect spending by modernizing efforts with different technologies. The primary focus of the research, as I mentioned, is indirect spending, which, for those not familiar, is the procurement of the payment for goods and services commonly bought for consumption by internal stakeholders rather than external customers or clients. For this study, we actually surveyed senior executives working in procurement and accounts payable at 132 large, global firms.

 

Are organizations today investigating the benefits of streamlining their procure-to-pay processes?

 

Dustin, that’s a good question. Here at APQC, we’ve seen an increase in interest from organizations that are looking to improve their procure-to-pay process. After seeing this surge—and we get a ton of requests from our members, because we are a membership organization. We had a ton of requests, so we decided to dig deeper into the topic, so we conducted this study. Every day we see a growing number of organizations that we talk to and work with and look to investigate the benefits of streamlining their process models that enable them to modernize by adopting technologies like e-invoices or self-service portals for employee requisitions; some are adopting workflows to accelerate invoice processes.

 

A good example, one of the organizations that we interviewed that actually went about investigating the benefits of taking steps to streamline its process was Woodward, Inc., just to kind of give you an example.

 

Woodward actually integrates technologies into fuel-combustion fluid and electronic control systems for aerospace and energy markets around the world. When interviewing this organization, we found out their financial management and indirect services groups planned to shift from paper-based invoice management to automated invoice processing using software from OpenText. We also found out that they’re working to implement an e-procurement system, which involves cloud technology that would be used by their 22 sites worldwide. This will provide better visibility into the process and, therefore, get better visibility on bottlenecks. It also improves the experience for their internal customers. That’s just one example of the many organizations that we talked to and that we see making changes every day.

 

I mentioned some of Woodward’s motivating factors, like the bottlenecks and visibility and internal customers, but we found some other factors in our research as well. Our research has shown that factors behind modernization of procure-to-pay processes are driven by organizations that are wanting to improve service to internal customers, as I had mentioned with Woodward customers, cost efficiencies—and that means reducing cost, which is always important to the process owner—staff productivity, policy enforcement and controls, the ability to identify and reduce maverick spending, and the collaboration with vendors. Those are very important factors.

 

When organizations are looking to decide when they want to modernize their procure-to-pay processes, where do they start?

 

The vast majority of organizations we survey are moving to modernize their procure-to-pay processes; they actually begin their journey in the realm of indirect procurement, so that’s why this study actually focused on indirect procurement, because many start at that very point. It actually makes sense as a good starting point for a lot of organizations, because the process of developing a proof of concept is pretty straightforward in the area of indirect procurement or indirect spend.

 

Are organizations using cloud-based solutions that enable their procure-to-pay?

 

This is an interesting question. I’ve actually been asked about cloud-based technologies so much in the past couple weeks, and it continues to come up in our research. Whether I’m looking at procurement, logistics, procure-to-pay, it doesn’t matter; cloud-based technologies continue to come up.

 

What we’ve seen is, although some organizations have moved to the cloud, based on our research, we’ve found that the vast majority of organizations do not currently use cloud-based technology or solutions to enable their procure-to-pay process. Many procurement and finance executives remain concerned about the data security. The majority of survey respondents who said they do not now use cloud technology, they actually said the perception of security risk was a barrier they couldn’t even overlook. Organizations are very terrified and they collect so much customer information that data security is an area of concern.

 

I do, however, think that over the next few years, you’re going to start to see organizations being a lot more open to cloud solutions, especially since cloud-based solutions can play a key role in modernizing an organization’s procure-to-pay process. It not only reduces the cost of deploying enterprise application, but it also incorporates modern technologies that provide capabilities that were not previously available in legacy systems. A lot of it has to do with things like social collaboration, intuitive user experiences, embedded analytics—which is actually really important to organizations; they’re looking more at analytics these days—and support for mobile devices. Mobility is becoming more important as well.

 

Cloud-based solutions are going to continue to be an important factor that are going to enable procurement and accounts payable to collaborate more effectively. It’s going to help not only collaborate more effectively, but work efficiently and reduce overall operation costs. As time goes on, the lower cost of ownership of cloud solutions is also going to be appealing to many organizations. I think that fear factor is going to decrease, and the organizations who are lacking the experience or the knowledge to get started are going to get with third-party vendors to actually help them get there and get on their feet and get started and get the help they need.

 

We’re actually really excited about organizations that are looking to improve their procure-to-pay processes. We see that collaboration is going to be a very important factor in this. One of the things that really came out of our research—because, again, we were looking at modernizing and automation and those different aspects, but we were also looking at the collaboration aspect of everything, so it was always interesting to see at the different organizations how much the financial-services group—or accounts payable group, rather—was actually talking to the procurement group. How often they were actually communicating, whether the process owner was in the procurement space or financial-services space, or if someone was actually playing in both areas.

 

I mentioned we had 132 respondents. Some of those were in procurement, and some of those were in accounts payable. Some of those were actually in both groups. I think you find a lot more standardization when you have someone who has oversight of both processes, both the procurement and accounts payable process, whether you’re looking at indirect procurement or direct procurement.

 

Thanks, Andrea, for sharing today.

 

Any time, Dustin. I really appreciate speaking with you. I’m always happy to talk to you about new topics and new research, and it’s always a pleasure. I look forward to future conversations.

 

 

 

 

 

About Andrea Stroud


 

AAEAAQAAAAAAAAKYAAAAJDZkZWY5ODNlLTM3MmItNGUyMy1hZjg1LTY4YzJjYmMyZmNkNg.jpg

Andrea Stroud


Research Program Manager APQC

 

LinkedIn Profile