Chain of Thought

Are Consumers Passing Suppliers on the Road to Connectivity?

I read in this morning’s Wall Street Journal that GM is finally taking full advantage of its OnStar capabilities and will soon be turning its cars into “Smartphones on Wheels.” A 4G package will give a driver visibility to the world via Facebook and Twitter.

Smart supply chain managers have to start thinking about how they’ll serve these rolling consumers—or maybe even consider joining forces with them.

Dawn Salvucci-Favier, vice president of global solution strategy for RedPrairie, believes the cloud platform is bound to open up such collaborations. You may recall that RedPrairie is the warehouse management system (WMS) company that recently acquired JDA, a leader in the global supply chain software market. I talked to her recently while doing research for a supply chain visibility feature coming up in MH&L’s March issue.

“With capacity shortages and driver shortages, shippers will take advantage of the ability to share that capacity, whether through continuous moves across enterprises or even sharing trucks,” she said. “Then the next big thing will be leveraging the secondary value of the data residing in the network for rate benchmarking and service level benchmarking.”

That means network providers offering indexes to community members on the transportation market rate in certain lanes or the current service levels. Shippers will be able to access transit times and claims ratios for particular carriers in a particular market. These capabilities will be major contributors to a shipper's transportation spend management and risk management.

Salvucci-Favier described one distributor customer that is managing several customer businesses through its transportation management system (TMS). They’re actually using both their TMS and WMS in an integrated fashion to give customers a visibility portal through which they can see the entire life cycle of their orders, whether inbound or outbound, including vendor managed inventory activities.

A CPG food and beverage customer of hers is using hosting to manage inventory visibility and traceability for corporate hold and recall purposes. By putting all of their inventory and order data on the cloud platform they have the visibility to do holds or recalls when necessary and they can store this data for seven years in the vendor’s data storage house.

Another cloud-based platform for managing business across global trading partner networks is E2open. I talked with Michael Schmitt, the company’s senior v.p. of product management and marketing, and he agrees that governance, risk and compliance will make the cloud platform attractive to many shippers as global trade regulations get more confusing. It can help shippers not only assess risk but also deal more easily with consequences.

“You can identify who your supply base is, the products which might come under a new regulation, and identify the trading lanes affected,” he told me. “From that you can extrapolate your risk. In the event you go to court, if you have these measures in place that on a weekly or monthly basis measured what was happening and you had it on a database that was auditable you could reduce any fines.”

And if you’ve struggled to see any business value for Twitter and Facebook, Schmitt offers this scenario:

You have a shipment scheduled to come in through the Port of Oakland and you get a lot of chatter through tweets and articles that “Occupy Oakland” is going to shut down that Port next week, you can assess what you have in transit right now that you can’t change, what’s about to be in transit that you can reroute, and what would be the costs associated with doing these things.

What makes this work is a database of key terms that you would build, each of which has an assigned value. You could then target a select number of bloggers, websites or other key sources pertaining to your business, alerting you when these terms pop up in the blogosphere. This is called “predictive visibility,” and social networking is its enabler.

So it looks like GM is opening the door to the global community of ideas a little wider to accommodate mobile entrants. But logistics managers seeking to drive through that portal will first have to haul their warehouses out of the 20th century. Many of them are still trying to get upstairs buy-in for entering the cloud platform.

Tom Kozenski, vice president of product strategy for RedPrairie, says warehouse management has always lagged transportation management where visibility is concerned.

“The people using WMS systems seem to be the last ones to embrace things like centralized applications and EDI partnerships,” he said. “The WMS market share on the cloud does not compare to TMS and other applications yet but I think we’re at the tipping point. Once you go to cloud you can also get more easily into a collaborative interaction with customers, suppliers and carriers and utilize cloud computing integration services to get your extended network connected to your WMS. This gives visibility into what’s being ordered, into where inventory is and whether it’s in transit. Then there’s the TMS side to collaboration with carriers and suppliers, setting up appointments and confirming shipments and tracking inventory.”

Imagine being able to do that on your drive in to work. Hands-free, of course.

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