Massive production delays translate to declines in company revenue and disgruntled customers. To mitigate the overall challenges caused by the pandemic and rising chip shortage, companies must turn to cloud adoption to streamline production and prevent future disruptions.

Let’s discuss how cloud adoption can help combat the chip shortage. 

Mitigating the impact of chip shortages

Migrating to the cloud can help companies avoid purchasing hardware components while still using critical infrastructural resources. According to Gartner, worldwide public cloud end-user spending will grow 23% in 2021 (to $332.3 billion) and reach around $397.5 billion in 2022.

Today, the cloud drives today’s digital organizations and is pivotal in an organization’s digital transformation journey; moving to a cloud infrastructure can help free up server capacity, which will take the pressure off organizations that would otherwise be waiting for new hardware.

The cloud also offers direct communication across borders and helps with transactions in real-time. Rapid communication abilities can help mitigate the ongoing effect of supply chain inefficiencies by addressing consumer concerns expediently, thereby improving customer sentiment.

Just as important, cloud infrastructure offers opportunities for enhanced analytics, unified metrics, and real-time tracking information that can soothe the pains of a blocked supply chain.

However, cloud migration isn’t a one-size-fits-all solution. Organizations may join the public cloud, a hybrid cloud, or a private cloud—all of which offer a variety of different benefits and limitations. 

Businesses need to ensure a smooth cloud transition strategy that considers specifics like organization scale and consumer makeup.

Successful cloud adoption requires strategy

The chip shortage and pandemic have clarified that professionals in the manufacturing, logistics, and transportation industries must be agile to stay resilient and navigate supply chain difficulties. The migration to the cloud requires new processes as well as cultural change.

Incorrectly adopted cloud infrastructure may lead to enterprise system failure; and other risks—such as security threats and tight compliance regulations—threaten organizations during the migration process. As such, businesses must strategize and prioritize a proactive plan for cloud adoption.

With cyberattacks at an all-time high and privacy regulations continuing to make waves in the tech industry, business leaders must ask themselves how to create an effective transition plan.

Looking ahead

As the pandemic continues to create concerns about demand patterns and supply chains—logistics, manufacturing, and transportation professionals must focus on meeting customer demand. Through cloud managed services, IT leaders have the opportunity to rebuild their IT infrastructure by moving previous hardware-based solutions to the cloud.

For manufacturers and shippers experiencing the impacts of the semiconductor chip shortage, it may be difficult to see the light at the end of the tunnel. Experts optimistically predict—and hope—the shortage will be alleviated by 2023. Until at least then, consumers can expect to see continued product delays while industries do their best to mitigate this material shortage through the adoption of pervasive technologies like cloud infrastructure.

South Korean technology company LG Electronics unveiled a new delivery robot that can serve both indoor and outdoor environments, which could be a game-changer for contactless delivery and services. The four-wheeled robot can adjust the gap between its wheels to self-adapt quickly to uneven terrain for a smoother ride.

Food delivery services could be on the menu for these new robots. Last winter, LG debuted its BaristaBot to serve coffee to workers at its headquarters in Seoul, and began using its CLOi robots to make deliveries from convenience stores to people inside its LG Science Park. In July 2020, LG partnered with Woowa Brothers and the Korea Institute for Robot Industry Advancement to develop robot waiters.

The robot was developed in conjunction with MIT Associate professor Sangbae Kim at LG Boston Robotics Lab. The company plans to test run the robot at the end of 2021. LG has already commercialized indoor delivery robots and tested outdoor delivery robots.

Big Tech Takeover

Big tech is the biggest economic winner during the pandemic, as global lockdowns push retailers, supply chains, and consumers to use their e-commerce and fulfillment services. As the digital wave continues, Amazon, Google, Apple, and Microsoft report record-breaking profits:

• Alphabet, Google’s parent company, reports a Q2 revenue of $61.8 billion, a 62% increase on the same period in 2020, and a profit of $18.5 billion, more than twice its profits in that period in 2020.
• Apple made a $21.7 billion profit for the three-month period ending in June 2021, its best fiscal third quarter in its 45-year history, boosted by strong sales of the iPhone 12 and growth in its services.
• Microsoft reports revenues of more than $46 billion for the quarter, an increase of 21% compared to the same quarter last year.
• Collectively, the market value of Google, Amazon, Apple, Microsoft, and Facebook is now worth more than one-third of the entire S&P 500 index of America’s 500 largest traded companies as their share prices soar during the pandemic.

Sony’s Picture-Perfect Automation Strategy

Sony predicts that robots will completely take over manufacturing for its cameras, TVs, and smartphones as the entertainment company tightens its focus on consumer electronics, providing services that keep consumers coming back.

Automated production lines could cut costs by 70% at Sony’s main TV factory in Malaysia by fiscal year 2023 compared to 2018, the company says. Sony also aims to use a combination of factory workers and robotics in its smartphone and camera manufacturing.

Sony will supplant the factory automation with a greater focus on online sales and data analysis, using artificial intelligence, to cut manufacturing costs, says Kimio Maki, head of Sony’s electronics businesses.

Sony has stabilized its TV losses in the past decade, shifting to smaller-volume, higher-end products. While the company continues selling to consumers, a meaningful part of its growth will also come from professional products, such as crystal LED displays for virtual video production and ball-tracking technology for the sports entertainment industry, Maki says.

Dell and Google Search for Hard Drive Recyclability

Faced with rare earth metal supply shortages and unsustainable mining practices, tech companies look to recycle used hard drives. At the same time, the Biden administration recently flagged government data center hard drives as a promising source of the rare earth elements, Grist reports.

An estimated 22 million hard disk drives age out of North American data centers each year. Data centers are the world’s largest consumers of those drives, which are one of the largest end-products for rare earth magnets. The United States generates nearly 17% of all used hard disk drives—the largest share globally, the report says.

If all these devices were recycled, they could supply more than 5% of all rare earth magnet demand outside of China, researchers estimate. Some researchers, tech companies, manufacturers, and recyclers have explored giving those materials a second life.

In 2019, Google, hard disk drive manufacturer Seagate, and electronics refurbisher Recontext collaborated to remove 6,100 magnets from Seagate hard drives in a Google data center and insert them into new hard drives. The results show that rare earth magnets can be reused on a large scale, and their carbon footprint was 86% lower than new ones.

Dell also launched a pilot program with Seagate and Recontext to harvest magnets from computer hard drives with its take-back program, yielding 19,000 pounds of rare earth magnets for reuse.

While it may be a long time before the magnets are recycled on a large scale, the Biden administration may prioritize these efforts. Such programs could also help the electric vehicle sector develop its own rare earth magnet recycling process, the report says.

Technology Powers Back-To-School Shopping

Even with uncertainty surrounding the back-to-school experience, consumers will spend $37.1 billion on back-to-school shopping in 2021, the National Retail Federation predicts, a 9.4% uptick from last year. And 2021 is seeing an even greater demand for technology purchases, with parents wanting their kids to keep up. Back-to-school tech trends include:

Getting gadgets: Spending on tech gadgets is expected to grow 48% from last year and reach parity with computers and hardware, says a Deloitte report. Computer spending will be up 28% this year. Parents will splurge on gadgets for their kids, such as cell phones, tablets, wearables, and e-learning programs.

Tech over retail: Getting the latest wearables and gadgets is more important than having the most fashionable outfits this year, with spending on clothing and accessories flat over 2020. Many gadgets also reduce the necessity for traditional supplies, such as pens and notebooks, which will advance only slightly this year.

Tech-enabled shopping: Parents plan to curb in-store spending and increase their online spending, which is up from 37% in 2020 to 39% in 2021. More back-to-school consumers plan on using tech-enabled shopping tools this year, such as voice assistants, digital wallets, and buy buttons on social media. Many parents with children in school are now leading-edge millennials and trailing-edge GenXers, making adoption of these advanced capabilities easier.

Getting social: More parents will turn to social media to help with shopping, rising from 25% last year to more than 40% in 2021. They aren’t just interested in product offers; 42% visit retailers’ social media pages to determine if they are worthy of their business. This calls on retailers to make their branding clear across all channels.

That’s prompting many organizations to look “for better ways to keep products moving reliably around the world, reduce fuel consumption, evaluate carrier rates and eliminate empty miles through options such as backhauls and pool distribution,” says Nick Wilson, vice president of product marketing with MercuryGate International, a provider of transportation management solutions.

A transportation management system (TMS) can help companies navigate these conditions and boost performance. A TMS is a logistics platform that leverages technology to help businesses plan, manage, and optimize the physical movement of incoming and outgoing goods. Like many technology solutions, today’s TMS solutions often provide greater functionality at lower cost than their predecessors, allowing a wider range of businesses to benefit from them.

The market changes underway have heightened demand for certain TMS capabilities.

Visibility. In the early years of the TMS market, the goal was a “glass pipe” to see inventory at all times, says Jordan Kass, president of managed services for TMC, a division of C.H. Robinson. Now, this capability is table stakes. Shippers expect to monitor inventory throughout its journey, including when it’s in transit.

Efficient, reliable connectivity has also become critical, as it makes it possible for shippers and carriers to obtain updates in close to real time, Kass says. They then can quickly act to, for instance, mitigate the impact of a delayed shipment.

The ability to automate business processes has also become more important, says Kenneth Sherman, president of IntelliTrans, which offers a SaaS-based TMS.

The increase in supply chain disruptions has driven up the number of exceptions among shipments. To effectively handle them, companies need to automate as many processes as possible, so they have the resources to easily identify and handle exceptions.

Inbound logistics. Shippers also are more interested in getting involved in the management of the inbound side of their supply chains. “If you don’t get the raw materials or empty containers, nothing will be going out,” Sherman says.

Today’s TMS Technology

TMS technology is changing to meet these demands. It’s becoming more real-time, more predictive, more automated, and more visible, Kass says.

One sign of this is the shift from the early- to mid-2000s, when many TMS solutions connected to customers’ enterprise resource planning (ERP) systems and to carriers via electronic data interchange (EDI). Shipment updates and other information might transmit hourly or daily.

Today, most TMS solutions connect through application programming interfaces, or APIs. Updates typically occur several times per hour. The speedier updates allow for more informed decisions. In addition, it becomes possible to layer in predictive analytics, and more accurately forecast delays.

The shift to cloud-based, software-as-a-service (SaaS) TMS solutions simplifies deployment and reduces upfront and ongoing maintenance costs, says Chris Martin, vice president, shipper solutions, with Trimble Transportation, a provider of transportation solutions. SaaS platforms also typically are easier to integrate with other IT systems.

Some systems have been developed just for the small-business market, Kass says. Not only are they less expensive, but they often can be implemented without extensive IT support.

Companies that operate internationally can more easily find a unified technology platform that covers much of the globe. In the past, many organizations would have to “stitch together of patchwork of TMS solutions,” Kass says. That makes it difficult to reach one version of the truth.

Similarly, current TMS solutions are better able to manage today’s more complex supply chains, which often include multiple transportation modes, different geographies, and changing distribution channels. “A company should be able to leverage the TMS to solve evolving challenges and not limit business decision-making based on the functionality of the TMS,” Wilson says.

Smarter TMS Solutions

More TMS solutions incorporate tools that boost their intelligence. For instance, the TMS market is making greater use of artificial intelligence to increase efficiencies and reduce costs within shipper and 3PL operations, says Kate Leatherbury, director of domestic transportation solutions with Gebrüder Weiss.

By leveraging the Internet of Things (IoT) TMS solutions can monitor light, temperature, and location as goods are in transit. This helps ensure the integrity of each shipment. Say an IoT device detects light in the trailer after it has been sealed. That may indicate tampering or theft.

Companies also are looking for cost savings on freight management and ways to simplify their workflows, regardless of freight mode, Martin says. This is driving interest in TMS platforms that can provide options to source capacity, as well as control costs and service levels.

In another shift, more TMS systems design routes that allow drivers to return home at night more often, says James Peck, vice president and solutions advisor with Blue Yonder, a digital supply chain and omnichannel fulfillment company.

As part of this effort, the system might rework routes to minimize wait time, benefiting both drivers and the company. “A TMS can handle all sorts of business rules to help drive changes,” Peck says.

Given the continued growth in e-commerce, more shippers are looking to manage last- or final-mile and parcel logistics operations from within their TMS. Providers of TMS solutions might collaborate with last-mile specialists to provide visibility and optimize transportation plans across first, middle, and last miles.

Another result of the boom in e-commerce sales is increased interest in native parcel capabilities, Wilson says. These allow companies to evaluate parcel delivery options and identify ways to drive efficiencies and performance.

Many companies also are working to reduce their carbon dioxide emissions. Increasingly, TMS solutions will allow them to assess delivery modes against the emissions generated, Wilson says. They can choose the most environmentally-minded option, while also considering costs and meeting service agreements.

Dynamic price discovery (DPD) capabilities streamline the process of identifying a carrier for a specific load by providing real-time access to market rates. Rather than manually try to find the best rate, the solution reaches out to the carrier networks and marketplaces to access prices in real time, Peck says. Shippers then can make more informed load-tendering decisions.

More Partnerships

The ways in which shippers are purchasing TMS solutions is changing as well. For instance, some shippers want just one or a few features from within a TMS, such as the ability to create three-dimensional models of loads, Peck says.

Some TMS vendors separately offer components of their larger TMS solution. These often can be deployed more quickly and at lower cost.

At the same time, many shippers also want to connect their TMS to other solutions, like a warehouse management system (WMS), so they can leverage a broader range of information. Unifying these logistics operations also means that organizations can handle exceptions further in advance, when more corrective options are possible.

Looking ahead, “the prevalence of ecosystems that provide a one-stop shop” is likely to grow, Kass says. Technologies like artificial intelligence, predictive analytics, and visibility will converge, he predicts. TMS solutions will converge with other technologies, such as autonomous vehicles (AVs). This should reduce the driver bottleneck and increase safety.

Leveraging machine-to-machine communication between a TMS and an AV could help reduce the carbon footprint, Kass says. Eventually, it’s likely that TMS solutions also will be used to manage drone deliveries.

Until recently, TMS solutions had been deployed primarily as an execution platform. While that’s still critical, companies today expect more. And, they’re finding it.

“Users will look to their TMS for long-term planning and procurement, network insights, supply chain optimization, and end to end visibility,” Martin says.

Jeff McDermott, Senior Vice President of Transportation Management, GEODIS in Americas

Cloud Fleet Routing API focuses on the route planning phase of delivery and allows operators to perform advanced fleet-wide optimization, enabling them to determine the allocation of packages to delivery vans and the sequencing of the delivery tasks. Natively integrated with Google Maps routes data, Cloud Fleet Routing API can solve simple route planning requests in near real time, and scale to demanding workloads with parallelized request batching.

Across this spectrum, customers can specify a variety of constraints, such as time windows, package weights, and vehicle capacities. Cloud Fleet Routing can help carriers meet sustainability targets by reducing distance traveled, number of delivery vans, and CO2 output from computing.

Last Mile Fleet Solution focuses on delivery execution and allows fleet operators to optimize across every stage of the last-mile delivery journey, from e-commerce order to doorstep delivery. The solution also helps businesses create exceptional delivery experiences for consumers and provides drivers the tools they need to perform at their best. It builds on the On-demand Rides & Deliveries mobility solution from Google Maps Platform, which leading ride-hailing and on-demand delivery operators use around the world.

Where is the Most Demand? Selling

Where the Challenges Lie

Consumer demand remains strong, especially in the booming e-commerce sector. But companies can seize this opportunity only if they can move products quickly and cost-effectively. The Russia-Ukraine crisis further complicates the picture, pushing up fuel costs and driving fears of economic recession.

Tough times call for smart solutions. That’s why this is a healthy era for vendors of supply chain-oriented information technology. Shippers deploy logistics IT to better match inventory to customer demand, operate more efficiently, accomplish more with tighter resources, and gain crucial business intelligence.

To help manufacturers, distributors, retailers, and others understand how IT solutions can improve their operations, each year Inbound Logistics distributes a survey to a variety of logistics IT providers. Gathering data on the latest trends, we offer insights that logistics professionals use as they invest in new technology.

Once you’ve read this report on our latest survey, have a look at the annual Inbound Logistics Top 100 Logistics IT Providers. When you’re ready to add to your technology toolkit, this detailed guide will help steer you toward solutions that fit your requirements.

PLATFORM: How do you deliver your solutions?

Cloud solutions, also known as software-as-a-service (SaaS) or hosted services, remain the most popular format for logistics IT solutions. Among our respondents this year, 84% say they provide cloud-based solutions, while another 11% offer a combination of cloud-based delivery and on-premise installation. This means that 95% offer some kind of cloud option.

COST BASIS: How do users pay for technology solutions?

Many logistics IT vendors offer multiple ways to pay for their products and services. As more solutions move into the cloud, the transactional or subscription model is becoming more important. In 2022, 89% of vendors let users pay for their solutions by subscription, up from 80% in 2021. Slightly fewer than half—47%—can charge by the seat or user, and 41% charge a flat rate for the system. These figures are similar to last year’s. An increasing number of vendors—21% this year, compared with 15% in 2021—offer at least some of their solutions free of charge. This can happen, for example, when a third-party logistics (3PL) provider or other service provider includes technology in a larger service package.

INDUSTRY: What industries do your solutions serve?

As in 2021, the biggest demand for logistics IT is in the transportation industry: 91% of respondents say they serve transportation companies. Two other industries have seen notable changes. While 81% of respondents in 2021 said they served the manufacturing industry, in 2022 that number has risen to 88%. Have more companies—discouraged by the high costs and long delays inherent in supply chains that span the globe—brought manufacturing back to the United States, requiring new technology to support those redesigned supply chains?

We’ve also seen an uptick in the number of logistics IT vendors serving e-business, from 76% in 2021 to 81% in 2022. This is no surprise, given the continued surge in online shopping.

VERTICAL SPECIALIZATION: What verticals do your solutions serve?

The top vertical markets for logistics IT vendors in 2021 remain the top markets list in 2022, in generally the same order. But the percentage of vendors serving several of those industries has jumped. For instance, 88% of this year’s respondents say they service customers in consumer packaged goods (CPG), a 16-point increase over last year. Eighty percent of respondents this year have customers in the food and beverage vertical, compared with 67% in 2021. The survey also shows similar increases in several other verticals. Automotive and e-commerce both increased from 64% in 2021 to 75% in 2022. Apparel and textiles and electronics both rose from 59% in 2021 to 75% in 2022. The healthcare, biomedical, and pharmaceutical sector increased almost as much, from 59% in 2021 to 72% in 2022.

In fact, every vertical market mentioned in the survey is now served by a greater percentage of logistics IT vendors than last year. Clearly, these vendors are finding ways to apply their technologies in a wider range of contexts.

SOLUTIONS OFFERED

The top supply chain solutions offered by IT providers in 2022 are those that support process improvement: 61% of survey respondents provide solutions in that category, up from 56% in 2021. The second most popular is electronic data interchange (EDI), although its position is slipping as companies adopt more advanced data sharing technologies. In 2021, 70% of our survey respondents offered EDI; this year, the number is 60%.

There has been an increase in the number of vendors that provide solutions for strategic sourcing (29% vs. 23%) and global trade management (26% vs. 16%)—both important functions given the challenges that COVID-19 and the conflict in Ukraine have posed to traditional sourcing strategies. There has also been a healthy increase in vendors that offer solutions for demand management, from 17% in 2021 to 28% in 2022.

Among applications for logistics functions, the most striking increase concerns capacity solutions. In 2021, 28% of vendors offered those; in 2022, the percentage has jumped to 43%. Transportation capacity has been in short supply over the past year, with rates rising accordingly. So no wonder more IT companies see opportunities in that area. Logistics solutions getting the most attention from vendors, however, include optimization, routing and scheduling, transportation management systems (TMS), load planning, systems for rating and bidding, and systems from auditing, claims, and freight payment. One category has seen a surprising dip: warehouse management systems dropped from 41% in 2021 to 34% in 2022.

Among the more advanced technologies that companies adopt to manage supply chains, one category has gained a great deal of heat in the past year: artificial intelligence (AI) and machine learning. In 2021, 35% of vendors in our survey offered such solutions; today the number stands at 54%. Advanced technologies offered by a smaller but still healthy proportion of IT vendors include big data management (38%), internet of things (IoT) or industrial internet of things (IIoT) solutions (26%), and robotics or automation (19%).

CHALLENGES: Which transportation/logistics challenges are most critical to your customers?

Companies always strive to drive down costs, and shippers always need to know the status of their freight. That’s why vendors in our survey named cost reduction and visibility the two top challenges faced by their customers. But in an era of soaring transportation and fuel costs, intense consumer demand, and long transportation delays, those two challenges have grown even more critical. In 2021, 78% of survey respondents named cost reduction as a critical issue for their customers, and 77% mentioned visibility. This year, 94% of respondents say that each of those issues keeps customers up at night.

Several other challenges are also causing significantly more pain than last year. Notable among them is capacity. In 2021, 58% of IT vendors named that as a crucial challenge for their customers. This year, as shippers compete for space on ships and trucks, and for containers, that number has risen to 81%. Also, in the era of the Great Resignation, there’s a striking increase in the number of vendors who say their customers worry about labor—46% in 2022, vs. 29% last year.

Other challenges that take up more room in customers’ minds these days include data management (69% vs. 57% in 2021), demand forecasting (47% vs. 32% in 2021), and sustainability or social responsibility (40% vs. 23% in 2021).

CUSTOMER BASE: During your last measurement period, did your customer base grow? By how much?

Nearly all vendors in our survey saw the ranks of their customers grow in their most recent measurement periods, reinforcing the notion that shippers want technology to help them in today’s complex supply chain environment. And that wasn’t just a token uptick: more than half of respondents—54%—reported customer growth of 15% or more. Another 21% saw their customer base grow by 10%, and 18% saw a 5% bump. Only 1% of respondents say they have lost customers.

SALES: During your last measurement period, were sales up or down? By how much?

While logistics IT vendors were welcoming new customers over the past year, they were also raking in new dollars. Fifty-seven percent of survey respondents saw sales grow by 20% during their most recent measurement period, an increase over 2021’s already-impressive 40%. Another 15% of vendors saw sales rise by 15%, and 16% of them saw an increase by 10%. Just 2% of respondents reported no change at all in sales, and only 1% noted a drop in sales—and that by just 5%.

PROFITS: During your last measurement period, were profits up or down? By how much?

While logistics IT vendors were bringing in more revenue, they were also sending more of that money to the bottom line. In 2022, 40% of respondents say their profits were up by 20% during their last measurement period, an even better result than the 30% who reported an increase on that scale in 2021. Ten percent of vendors saw profits increase by 15%, 25% saw a rise of 10%, and 11% saw a rise of 5%.

A significant proportion of respondents—12%—saw profits hold steady in their most recent measurement period. But only 1% of vendors noted negative results.

GROWTH: What led to growth in the past year?

A large majority of vendors in the survey—81%—attribute their growth over the past year to organic sales. Just 1% grew through mergers and acquisitions, while 18% say both of those factors helped to enlarge their companies.

Where is the Most Demand? Selling

We asked vendors where they have seen the greatest increase in demand for new logistics technology. Here’s a sampling of their observations:

• “We are seeing a lot of requests lately for complete optimization of supply chains from the inbound side to the last mile.”
• “No longer is there just a driver shortage; there is a worker shortage. AI, analytics, and automation can help LTL companies accomplish more with fewer staff.”
• “Automation of higher-frequency carrier negotiations in sourcing of ocean, air, and ground freight movement to respond to supply chain disruptions or to new changes in supply/demand. Optimization of carrier awarding in sourcing around sustainability goals. Optimization of sourcing decisions for mode-shifting freight movement (i.e. ocean to air).”
• “A lot of new software projects were put on hold in the beginning stages of COVID; things are starting to return to normal and new sales are increasing.”
• “We see growing demand across all the regions and verticals we serve, with the biggest growth coming in life sciences and consumer products.”
• “We see an increase in demand for a logistics platform that supports smarter operational decisions, integrating operational, tactical, and strategic decisions to make daily decisions in line with the tactical and strategic targets and parameters of the current scenario.”

Where the Challenges Lie

Changes sparked by COVID-19 and the ongoing rise of e-commerce pose many of the challenges that shippers confront today, according to quite a few logistics IT vendors who responded to our survey.

Take warehouse operations. “Warehouse capacity is extremely tight,” says Geoff Greenhill, director of sales at Camelot 3PL Software in Charlotte, North Carolina. As increased consumer spending drives demand for space, warehouse rent and construction costs are both going up, he says.

E-commerce fulfillment doesn’t need as much real estate space as traditional retail distribution. “But it needs more labor,” Greenhill says. Due to shortages across all industries, exacerbated by the pandemic, workers are hard to come by even at today’s elevated wages. Companies either spend more on workers or they spend on automation to close the labor gap. “Everything is pointing toward higher costs to operate,” he says.

Camelot helps control those costs by setting up more efficient warehouses, for example by integrating technologies such as robotics and automated forklifts, Greenhill says.

Customer demand for faster e-commerce delivery drives a need for better inventory management and visibility, says Padhu Raman, chief product officer at Project Verte, an Atlanta-based firm that offers a cloud-based supply chain platform powered by artificial intelligence (AI). “This challenge is more prominent right now, with changes in customer expectations.” As consumers demand a better shopping experience and greater convenience, brand owners sell through multiple channels to connect with as many customers as possible, he says.

Project Verte’s technology helps companies gain the visibility they need to streamline e-commerce fulfillment. “We provide a hub where they can integrate into the platform and get the data centralized in one view,” Raman says. Among other functions, the technology also helps shippers improve their parcel shipping, consolidating packages to save money on linehaul shipments and last-mile delivery.

For retailers who use supply chain technology from Inmar Intelligence, in Winston-Salem, North Carolina, the biggest challenges right now involve formulating strategies for the future, says Joe Marcaurelle, director of product strategy for the company’s supply chain division. “These retailers incorporated a lot of new processes and technologies during the pandemic to keep up with new customer expectations and stores not being able to be entered.”

Now they have a chance to determine which business trends applied only during the pandemic and which represent permanent change. “They’re starting to evaluate what technologies they need to bring them into the future of where they think the economy is going,” he says.

Inmar helps its customers stitch together various technologies—Inmar’s own and its partners’—to provide an end-to-end picture of their businesses, Marcaurelle says.

This phenomenon can be attributed in part to rising consumer goods demand. Sparked by economic stimulus and a large-scale shift in preferences from services to goods spending, U.S. retail sales jumped 17.9% annually in 2021. E-commerce sales, which had a record year in 2020, rose 14.2% to $870.8 billion and accounted for 13.2% of retail spending, according to the Census Bureau.

As a result, businesses have been tasked with trying to meet demand while navigating through an obstacle course of logistics disruptions. It’s fueling a spate of technologies aimed at building intelligence, smoothing out disruptions, and averting bottlenecks.

stirring up Intelligent Supply Chains

Ask analysts to name the most important development in supply chain technology in 2021, and they will likely say something about visibility. A host of disruptions over the past two years underscored the need for companies to know the status of their shipments in real time.

Meanwhile, tracking technologies such as radio frequency identification (RFID), Internet of Things devices, GPS, and electronic logging devices (collectively known as telematics devices) have created a brew of data, giving shippers a high-level view into their entire supply chain.

“There’s a convergence of capabilities creating a new phenomenon,” says Fab Brasca, executive vice president of industry and market strategy at FourKites, a supply chain visibility platform based in Chicago.

“The availability of cloud computing power and abundance of data, sprinkled with advancements in machine learning and artificial intelligence, has generated a cauldron of amazing innovation,” he says.

This confluence of factors is paving the way for supply chain intelligence that is predictive, not just reactive, Brasca explains. For example, take an ocean container that’s in transit. Visibility can warn a shipper that the container will arrive three days late. But, by analyzing historical patterns of data, a visibility tool could also help predict when the goods that are being carried will arrive at their final destination.

Taken one step further, visibility can help shippers foresee chokepoints and design a plan to deal with them proactively. “Understanding your goods in motion and goods at rest, and understanding where you might have potential bottlenecks, both forward-looking and as they happen, is what gives organizations agility,” Brasca says.

One technology that’s helping shippers get a closer look at their wares is a supply chain control tower—a data visualization platform that allows shippers to view inventory throughout its entire journey. Control towers can track data from suppliers, factories, and distributors, and can even incorporate information gleaned from weather reports or social media.

Blue Yonder, a supply chain solutions software company headquartered in Scottsdale, Arizona, offers control tower technology that helped medical product company Becton Dickinson reduce complexity after it acquired two other healthcare companies. The technology also helped Becton Dickinson manage skyrocketing demand for their products after the pandemic began, says Chirag Modi, Blue Yonder’s corporate vice president of industry strategy.

a pepper pot of Predictive Analytics

One way that shippers can use the large quantities of data being amassed is through predictive analytics. This is done by funneling data into algorithms to anticipate future events or patterns.

“Predictive analytics is the culmination of historical data around certain data points in combination with some form of machine learning model,” explains Azad Ratzki, chief technology officer at BlueGrace Logistics, a third-party logistics provider in Tampa, Florida. “For example, you can look at your shipments and determine when they will get from point A to point B by incorporating traffic, weather patterns, or previous data into a model.”

A consequence of the pandemic has been lingering materials shortages. Odyssey Logistics & Technology, a third-party logistics provider based in Danbury, Connecticut, says its shipper customers deal with raw materials shortages from metals to cooking oil. The shortages inevitably lead to an increase in urgent and short lead time orders, which is exacerbated when there’s limited carrier availability.

Analytics can help identify chokepoints and find transportation capacity to keep materials flowing, notes Charlie Midkiff, Odyssey’s senior vice president of global managed logistics services.

“We capture so much data with our clients,” says Midkiff. “We work with our shippers to create robust forecasts. If you can provide a forecast, then you will get in line for carrier capacity.”

One way Odyssey does that is by using analytics to assess order patterns and carrier acceptance rates. The results of a forecast can help to identify potential bottlenecks in getting materials to clients.

From there, Odyssey creates “mini-RFPs” to make routing guide enhancements based on data from a particular set of lanes. Shippers can see whether particular carriers are performing and adjust the routing guide based on the results of the analysis.

However, be careful not to implement predictive analytics without the proper expertise behind it, cautions Deanna Kaufman, vice president of sales at enVista, a software and consulting firm headquartered in Carmel, Indiana. “There’s an opportunity for companies to use predictive analytics,” she says. “But data science roles are hard to fill right now. There are tool packages out there that will provide insights, but unless a company can understand, interpret, and do something with that information, it won’t help.”

a puree of Disruptions

Trucking sector disruptions have been a near constant since the start of the pandemic. Meanwhile, demand for consumer goods has driven up the need for transportation services, says Gregg Lanyard, senior director of product management at Manhattan Associates, a supply chain software provider based in Atlanta.

“The rise in transportation demand leads to a rise in the need for capacity to haul that freight,” Lanyard says. “That means a need for transportation resources. We’ve seen shortages in those areas when demand spikes.”

As a result of the turmoil, Lanyard says some shippers are seeing a 200% increase in their use of spot rates. He recommends using a transportation management system (TMS) as a tool to keep products traveling smoothly across the supply chain in today’s market conditions.

A TMS can help manage volatile market conditions in a few ways—determining optimal routing and carrier selection, consolidating freight, or selecting the right mode for a shipment.

Part of how it accomplishes this is through transportation modeling. For example, Manhattan Associates’ TMS technology includes a “what-if” analysis tool that allows companies to simulate changes to their supply chains. By proactively modeling different disruption scenarios, shippers will be better prepared when change does occur.

TMS technology can help even after changes stop being theoretical. One example is carrier volume restrictions. In 2020, thanks to the e-commerce boom, parcel shipments rose at an annual rate of 37%, according to Pitney Bowes’ Parcel Shipping Index. That’s well above what carriers were prepared to handle. In such circumstances, TMS providers can help secure capacity by consolidating shipments, for instance, or looking into multi-stop truckload routes.

In 2021, grocery chain Hy-Vee used Manhattan Associates’ TMS platform to move perishable items through its distribution network efficiently. Modeling transportation network changes helped the grocer optimize orders and reduce transportation costs.

E-Commerce turns up the heat

In 2020, COVID-19 kicked off an e-commerce bonanza that hasn’t let up yet. In 2021, market research service eMarketer forecast that e-commerce sales would reach $4.9 trillion that year (complete historical data won’t be available until the end of 2022). The growing market presents new opportunities for shippers—and new challenges.

Kaufman argues that these changes can be seen as a chance for shippers to reimagine their supply chain, starting with demand planning. The trick is to have software in place to gain visibility into inventory and maximize customers’ purchasing experience.

“Many companies see an enormous opportunity in direct-to-consumer, but they aren’t set up for it yet,” Kaufman says.

“Using an order management system lets shippers make purchases and understand when they’re actually going to get the goods,” she adds. “It improves the entire experience all the way from planning and sourcing to fulfillment and consumption.”

GNC, a health and nutrition brand, used enVista’s Unified Commerce Platform drop-ship feature to grow the array of products the company offered online. In March 2020, in response to the pandemic, GNC added enVista’s order management system to deploy buy online pick up in store (BOPIS) and ship-to-store strategies.

delivery in an instant

A final piece of the puzzle is maximizing speed and efficiency within the walls of a distribution center. On top of the usual complexity that accompanies e-commerce fulfillment, retailers in 2021 were challenged to meet expectations for faster fulfillment—and to do so with fewer workers, to boot.

“Speed of delivery is becoming a top-of-mind issue for our customers,” says Kim Baudry, market development director at Dematic, a materials handling systems, software, and services supplier headquartered in Atlanta.

“As Amazon pushes the envelope, fulfillment times have dropped from two days to a few hours,” she adds. “Companies are trying to shorten cycle times to deliver products within that time frame.”

At the same time, warehouse labor has gotten scarcer and more expensive. The State of Warehouse Labor, published by staffing solutions provider Instawork, finds that 73% of warehouse employers struggled to attract enough labor in 2021.

Once employees are hired, they tend not to stick around, either. As of January 2022, the Bureau of Labor Statistics puts warehouse labor turnover at 43%.

This is where automation enters the picture. Technology such as automated storage and retrieval shuttle and robotic piece picking are becoming increasingly prevalent to turn inventory faster and compensate for labor shortages.

One example is Landmark Group, an apparel retailer servicing 2,200 stores in 24 countries across the Middle East and Southeast Asia. Landmark uses Dematic’s garment-on-hanger and inter-aisle transfer systems to speed store replenishment and direct-to-consumer fulfillment. The technology has helped them move items into their distribution center and sort products for delivery to stores faster, while reducing reliance on manual labor.

Technology can also be used to optimize what labor there is at a distribution center. AutoScheduler.ai is an artificial intelligence tool that orchestrates production schedules within a warehouse setting. It works by creating mathematically optimized strategies for manual decisions (what trailer needs to be in what door or what inventory can be crossdocked), and then integrating the plan with a customer’s warehouse management system, says Keith Moore, chief product officer.

Let’s say that a team wants to avoid detention charges at a facility. Not only would employees have to factor in multiple truck’s arrival times, but they would also need a plan to unload inventory that accounts for outbound shipments. In that scenario, AutoScheduler could generate an optimal unloading schedule instead of having a staff member plan one out.

Procter and Gamble has used AutoScheduler technology to reduce workforce planning time from eight hours to 20 minutes per day.

Leaders are facing a pivotal moment, as they confront the twin needs to plan for the worst while remaining agile. One top challenge will be “investment in digital and driving toward autonomous supply chains,” finds Ernst & Young’s Future of Supply Chain report. And 52% of executives surveyed state that autonomous supply chains either are here or will be by 2025.

As a result, organizations are encouraged to digitally transform their operations with lights-out, hands-free and self-driving technologies. Doing so will optimize supply chains, make supply chain professionals’ jobs easier, and deliver needed products more effectively.

It’s time to roll up our sleeves.

1. Natural Language Processing
The branch of artificial intelligence that helps computers understand human speech and writing patterns, natural language processing was predicted to rise from the least funded subcategory in 2018 to the highest funded in 2021. While it didn’t get the top spot for all of 2021, it did get there for a short while in Q3 and managed to raise $5 billion throughout Q1 to Q4.

2. Special-Purpose Acquisition Companies (SPACs)
SPACs saw a huge rise—double that of 2020—with more than 500 companies going public in this way, including Aurora Innovation, the $2-billion SPAC run by former Google and Tesla executives. They’re working to revolutionize the future of transportation with innovative self-driving technology.

3. Cybersecurity
Due to the boom in work-at-home life, cyberattacks were rampant. Investing in cybersecurity training for employees, as well as top cybersecurity programs for all employee devices, is now imperative. The prediction of the surge in cybersecurity training was spot on, with a 53% increase from 2020.

4. The Cloud
Using desktop apps like Word in the cloud is now the way of the world. This magic cloud has become the biggest thing in desktop applications, and according to Gartner, is expected to continue growing to reach $482 billion in 2022. In addition, more cybersecurity monitoring tools will also be moving to the cloud to become less prone to hacking.

Let’s look at some of them:

The pandemic

COVID has changed the way we do business. Companies that had moved to the cloud before the pandemic had an advantage over those that had not. Matt Twomey of Electrical Terminal Service explains why being in the cloud helped him and his employees when the pandemic hit in this video. Having systems like email, ERP, and customer relationship management (CRM) in the cloud allows employees to work from anywhere with internet access.

Data security

According to an article on The Techportal.com: “It is estimated that at least 1,000 new variants of ransomware were detected on a daily basis, and some nations were subjected to a dramatic increase in attacks. The United States has seen a rise of at least 125% in ransomware attacks, while the UK surpassed that with a surge in cases that exceeded 225% compared to previous years.”

Moving your systems from on-premises to the cloud allows you to take advantage of the billions of dollars the major hosting companies like AWS spend on digital security.

Growth & costs

A cloud-based system grows as the company grows. You only pay for what you use. With an on-premises solution, your company is responsible for purchasing and maintaining the hardware necessary to store your data.

As the business grows, the need for additional hardware and IT professionals to maintain them increases. Distributors can save upward of 30% or more on total cost of ownership by moving to the cloud. This move frees up valuable IT resources to drive innovation in other areas of your business like improving customer experience. Lastly, growth with innovation like artificial intelligence or AI is easier and less expensive in the cloud.

Always operate on the most current version

With a cloud-based multi-tenant system, you always have the latest version with the newest capabilities. Bringing an on-premises system down to upgrade to the next version introduces unnecessary risk into a distributor’s business.

Real-time access to data and inventory

How often do sales reps have to call the distribution center to see if an item they are trying to sell is in stock when levels are lower? How often is customer-specific pricing not immediately available? Storing your data in a data lake for immediate updating and retrieval makes your people more efficient and enables them to serve your customers better.

At the NAW 2022 Executive Summit in Washington, D.C., I asked Adam Isenberg, VP of Strategic Partnerships at the National Association of Wholesaler-Distributors, why he thought it was important for distributors to move to the cloud. He said, “Distributors find themselves squarely in the center of the supply chain. As technology demands from both customers and suppliers continue to increase for distributors, their ability to adapt and invest in new technologies to maximize efficiency, transparency, and profitability is key. Many firms throughout the $6-trillion distribution industry have migrated their technology to the cloud with measurable success.”

The bottom line

To cloud or not to cloud? The benefits of cloud are compelling: the ability for employees to work from anywhere, data security from ransomware attacks, ability to grow and only pay for what you use, no upgrade disruption, and access to data in real time. You decide.

“Siloed and incomplete data is limiting the visibility companies have into their supply chains,” says Hans Thalbauer, managing director of supply chain and logistics at Google Cloud. “The Supply Chain Twin enables customers to gain deeper insights into their operations, helping them optimize supply chain functions from sourcing and planning to distribution and logistics.”

Digital twinning in manufacturing was an advancement beyond the initial wire frames to solid 3-dimensional representations or a “digital twin” of the product. It was, and still is, an effective manufacturing tool for product development, improvements, or “what-if” scenarios.

Five years ago, twinning evolved beyond products to processes—including creating digital representations that model running supply chain operations. That evolution required sophisticated and expensive hardware and software to manage the number of moving variables in supply chain operations, and the added complexity of adding a 4th dimension (time) to the process.

The expense and investment was worth it to those that could afford it because having a twin of your business operation gives you the ability to stress test your supply chain in advance of any imaginable disruption. You also get a way to suss out incremental improvements without disrupting your current running operations.

The pain of pandemic disruption, e-commerce growth, consumption explosion, supply shortfalls, ghosted workforces, and cost and scarcity of transport lift has motivated many to explore twinning their supply chains, and now, thanks to Google, they can afford it.

More companies will soon be able to build digital supply chain twins by assembling and organizing data to get a complete view of their suppliers, inventories, weather and more. Supply Chain Twin is partnered with the Google Supply Chain Pulse module. Used together with Twin Pulse, users get live dashboards, analytics, alerts, and collaboration connections in Google Workspace.

Gaining greater insight and optimizing functions is not all this offering will do. Allowing you to stress your operations and come up with preemptive plans and workarounds can mean the difference between shutting down and survival.

THE PROVIDER
Enterprise software corporation SAP and its SE Cloud Platform Blockchain and Analytics Cloud solutions.

Casebook Study: What’s the Catch?

The San Diego-based shelf-stable seafood brand has put the power of supply chain visibility into the hands of its end customers. Shoppers browsing the frozen fish section in some U.S. supermarkets can pick up one of Bumble Bee’s Natural Blue Anova yellowfin tuna packets, scan a QR code with their mobile phones, and see the entire history of the fish back to when it was caught by an Indonesian fisherman and received at the processing plant.

“We want to educate consumers on the path their tuna takes, and we offer ways they can do a social audit and see the sustainability aspects of our products,” says Tony Costa, Bumble Bee’s chief information officer. “The blockchain initiative is a continuation of that.”

Trace my catch

Bumble Bee started its consumer-focused “Trace My Catch” supply chain visibility program in 2015 with its core product, albacore tuna. It eventually extended the program to its salmon and sardine product lines.

At the Trace My Catch section of Bumble Bee’s website, consumers input a code from the can or pouch. The site retrieves a long list of information specific to the product including: fish species, fishing method, the ocean where the fish was caught, vessel names and countries, fishing trip dates, and processing location.

The long tail of traceability back to the point of origin is a growing concern among consumers, who began questioning where their food comes from and holding food companies responsible for their supply chain practices.

In parallel to this external uptick in corporate social responsibility momentum, Bumble Bee took a look internally and decided to overhaul its supply chain operations in Fiji, one of the company’s prime areas of tuna supply. Through this effort, Bumble Bee was able to capture greater amounts of sourcing data, which started the ripple effect of more efficient reporting, better information-gathering techniques, and increased supply chain visibility—much of which could be served up to consumers via the catch-to-can website.

So, in 2014, when Bumble Bee acquired Florida-based Anova Food and began integrating it into the fold, it was clear to company executives that Anova’s Natural Blue frozen line would also be included in the company’s track-and-trace footprint, but with better technology.

“This all started as a supply chain visibility and optimization project,” Costa says. “When we acquired Anova, we knew we wanted to expand it to include the Natural Blue product line as well.”

During the past few years, Costa visited remote villages in Indonesia, one of the sources of yellowfin tuna, to see how the fish were being caught and how it moved through the processing plant, seafood inspection and health safety facility, and then into a finished good.

Combating IUU Fishing

During his trips there, a unique opportunity presented itself. The Indonesian government, the Indonesian Ministry of Fisheries, and MDPI (Yayasan Masyarakat dan Perikanan Indonesia), a nongovernmental organization focused on creating responsible and sustainable fisheries activities in Indonesia, wanted to collaborate on a pilot project. The goal was to use technology-based traceability systems for small-scale fisheries and, over the long term, combat illegal, unregulated, and unreported (IUU) fishing activities.

Indonesia is considered the world’s largest producer of tuna with the most abundant tuna fisheries in the world. However, IUU fishing-incurred losses to the country are estimated to be as high as US$3 billion annually, according to the International Pole & Line Foundation. For several years, the Indonesian government has been taking steps to reshape the fishery sector, and a chance to work closer with Bumble Bee came at the right time.

Bumble Bee’s catch-to-can coding system, though, is limited. It requires users to take extra steps to input the code into a website. Costa says the company wanted to take a different approach with Anova’s products, and thought scanning a QR code would make the process more efficient all the way through the supply chain.

An important piece also needed upgrading—the underlying technology to expand the kind of visibility Bumble Bee wanted both for its own supply chain and sustainability requirements and for its end customers, shoppers in supermarkets.

Costa thought this phase of the traceability program might be a good use case for blockchain, an advanced technology that could follow all the steps involved from the ocean catch to the consumer’s shopping cart. He called SAP for help.

“We wanted transparency all the way back to when the fisherman caught the fish, took it back to shore, and registered his catch with the fish buyers, who take it to the processing plants,” Costa recalls. “We thought blockchain might help us provide the level of detail we wanted. I called SAP because of its blockchain expertise.”

Betting on Blockchain

There has been a great deal of hype around blockchain technology and its promised capabilities for everything from cryptocurrencies to, you guessed it, supply chain management.

Blockchain is a database shared across a network of computers; records added to the chain become difficult to change. Blockchain allows companies like Bumble Bee to store data and create a tamper-proof supply chain history. Each participant in the chain can share and see that history, according to SAP.

In fact, Bumble Bee is the first food company to incorporate SAP blockchain technology into its production.

“The supply chain itself is a great source of use cases for blockchain because companies have so many business challenges where this technology can be applied,” says Richard Howells, vice president of SAP’s Solution Management for Digital Supply Chain group. “The key is to identify these business challenges, add the technology and go from there, not the other way around.”

For Bumble Bee, which is dependent on many supply chain pieces beyond its own walls, SAP’s Cloud Platform Blockchain and Analytics Cloud services ensure continuous data accuracy and integrity.

“Bumble Bee has been able to track and trace across its supply chain for a while, but blockchain brings it to the next level,” Howells says. “When you don’t own the whole of your supply chain and rely on many partners to provide data, blockchain secures the integrity and authenticity of the data from multiple sources, without compromising their private information.”

Although Bumble Bee’s supply chain is complex and relies on many individual fishers in remote areas and across geographies, layering the blockchain technology into the supply chain and ERP was not too complicated, Howells says. Mobile phones, in fact, are the enablers, allowing people throughout the process to easily add their relevant pieces of information.

SAP and Bumble Bee began designing the project scope and tracking capabilities in September 2018, and by December the pilot program was off the ground. The program officially went live in February 2019, and was announced publicly in March 2019.

By the end of 2019, Costa expected blockchain to have been used to track and trace 800,000 cases of yellowfin tuna products. To date, Anova’s Natural Blue fair trade-certified ahi tuna steaks are found in several retail chains, including Albertsons, Hy-Vee, Price Chopper, and Safeway.

Bumble Bee also plans to roll out the blockchain solution to its supply chain practices in Thailand and Vietnam, and Costa sees potential for it to be used across the company’s entire product portfolio. By November 2019, some of Vietnam’s suppliers were using blockchain on select products, and Thailand was expected to come on board by the end of 2019 or in early 2020.

“The goal is to quickly get this out to the rest of Indonesia, and then bring it to other regions,” Costa says. “Technology, in this case, is not limiting supply chain participation. It’s getting everyone to contribute.”

Editor’s Note: In November 2019, Bumble Bee Foods filed for bankruptcy protection in the wake of mounting debt related to a 2017 federal price-fixing case and agreed to sell its assets to Taiwan’s FCF Fishery Co. for roughly $925 million. As of press time, the company was operating as usual and the SAP project was in full effect.

Casebook Study: What’s the Catch?

Challenge

Bumble Bee wanted to extend its “Trace My Catch” sustainability and traceability program for canned products to its frozen fish brand, Anova. But instead of requiring end customers to type a can’s code into a website, the company wanted a more modern approach using mobile phone-scannable QR codes and blockchain technology.

Solution

SAP’s Cloud Platform Blockchain and Analytics Cloud services.

Results

• Visibility of Bumble Bee’s Anova yellowfin tuna supply to the point of origin in Indonesia.
• Blockchain-enabled traceability of 800,000 cases of product by the end of 2019.
• A collaborative project between Bumble Bee, SAP, the Indonesia government and Ministry of Fishery, and a nongovernmental organization MDPI (Yayasan Masyarakat dan Perikanan Indonesia) focused on achieving responsible and sustainable fisheries activities in Indonesia.

Next steps

Roll out a similar track-and-trace blockchain project with Bumble Bee Anova’s Thai and Vietnamese tuna fish suppliers, and explore ways blockchain can be applied to other Bumble Bee products and brands. Suppliers in Vietnam are already using blockchain for some of the products produced, and the company anticipates onboarding blockchain to suppliers in Thailand by early 2020.