According to CNBC, experts believe it could take up to six months after the end of the Covid-19 crisis for businesses to return to normal. 

The biggest task facing the world right now is stopping the spread of the coronavirus. But even when the global public health crisis is under control and global supply chain disruptions caused by COVID-19 end, many large companies expect that business will not return to normal for between three to six months

Read the article on CNBC

According to SDX Central, the semiconductor market is expected to shrink in 2020 due to the Covid-19 crisis. 

The semiconductor market is expected to contract in 2020 as the ongoing COVID-19 outbreak continues to cause disruptions to supply chains, according to an IDC report filed this week.

Read the article on SDX Central

In the wake of the faltering economy the Defense Department is increasing its progress payment rate to help companies get positive cash flow, reports Washington Technology.

Cash flow is always king for companies in the government market and that especially holds true amid the economic slowdown caused by both the coronavirus pandemic and efforts to slow the spread of it.

Read the article on Washington Technology

China’s digital delivery systems helped Wuhan keep essentials on store shelves, reports Harvard Business Review.

For the last month, China’s cities, with their empty streets and deserted shopping malls, have looked like the set of a post-apocalypse TV series.  

Read article on Harvard Business Review

Companies have in the past lost billions of dollars to counterfeiting, and the trend remains the same even with technologies that promise to solve this problem year in year out. According to a 2018 report by the Organization for Economic Cooperation and Development, approximately 2 trillion dollars worth of counterfeit goods will be sold globally this year. To many manufacturers, governments, and consumers, this spells doom because they will have to deal with counterfeiting and products, most of that they do not know where they originate from. 

There is, however, hope, thanks to cryptographic ID tag invented by researchers at MIT. This ID tag is small enough to be fitted on any product and can be used to verify the authenticity of items. With the help of these tags that come in different cost and size, the counterfeiting of products can be reduced drastically. Counterfeiters have complex routes and have managed to bypass checkpoints making it hard for standardization companies to verify the origins of products.

Tiny and capable

To get an ideal state of supply chain traceability, open-minded professionals are motivated to visualize the future and make steps towards this goal. Businesses through wireless technology industry are now able to use wireless ID tags to authenticate their assets. Unlike the tags that use radio-frequency identification (RFID), that are large and cannot fit into some products, the new MIT-invented tags are tiny and can be fitted to any objects including the smaller ones. They can be put on small objects such as medical and industrial products or components, chips, and automobile spare parts. They have advanced security measures such as built-in encryption schemes that protect the tags against cloning and hacking.

Unlike the RFIDs that are inefficient in terms of energy use, size, and security, the ID chip tags are just about a millimeter in size and use low power levels, thanks to photovoltaic diodes. According to the MIT scientists, ID tags also transmit data for greater distances using a technology that has a higher frequency than RFIDs. The scientists used algorithm optimization techniques that enable the ID to run a cryptocurrency-based scheme, that secures communication with low energy consumption. Called “tag of everything,” the chip can be used to track the logistics of every product at a low cost to ensure it is what it claims without hackers noticing.

According to Yazicigil, a visiting assistant professor at Boston University, the tag’s optimization of cryptographic code and hardware allows the scheme to operate on the energy-efficient tiny processor. This minimizes budget for power, that is associated with larger size processors. The challenge, however, might be the security, that is fortunately addressed by the elliptic-curve-cryptography scheme (ECC). The ECC combines both private and public keys to ensure communications are private.

The work of developing this technology started as a way of enhancing RFID tags that had shown  vulnerabilities. They were aiming at doing away with tags that were bulky and resulted in a high cost of manufacturing. They intended to come up with a technology that has a higher frequency above 100 gigahertz, that increases integration and wireless communication even at greater reader distance. The also wanted cryptographic protocols that allow the tag to be scanned by any reader and the data transmitted randomly. 

It is hoped that the new tiny tag that is inexpensive for manufacturers to implement will help in fighting counterfeiting, that costs the industry approximately $2 trillion in counterfeited goods globally. These losses are mainly felt by the US semiconductor industry, that loses more than $7 billion annually due to the counterfeiting of chips, according to Wasiq Khan, an MIT researcher.

 

                                                                                                          

3D printing technology has been in use in prototyping for years, but it is now making way into production process as well. Since supply chain management is a constant act of juggling that entails trying to balance the overall inventory and its availability and the changing demands, it is always hard to manage it without some form of innovation or help. However, if you think that this is difficult, wait until you encounter the challenge of managing spare parts. It is hard to anticipate when breakdowns will occur and when new spare parts will be needed.

With all these challenges, suppliers often find themselves looking for options. 3D has shown potential although few companies have taken advantage of this technology. A survey by Essentium found that one in five respondents use 3D printing for maintenance, repair and operations and the same number believe that its use in these areas will double in future. Despite the low usage, professionals believe that the technology will have a positive impact and will unlock value given the projection that more than half of businesses will use this technology in the future.

Keep it running

Maintenance and repair operations have many challenges that 3D printing has a potential of solving. For example, virtual models of different items can be stored in a computer database. This means that there is no need of storing physical components in a physical warehouse. Rather, the only thing that is stored is the raw materials needed for printing a given object. This may include packs of metal beads or plastic that can be used to 3D-print products on demand. This offers much needed solution to the challenges of unpredictability and inventory while at the same time minimizing waste due to this efficient manufacturing process.

3D printing is a precise process that entails building a product layer by layer. Unlike the traditional manufacturing that is subtractive, the 3D printing approach avoids material that often turns out to be scrap. A 3D printer can print repair parts based on demand and on site, reducing downtime and the cost of logistics. Such availability of 3D printers on site offers not only the reduction of cost but faster availability time too.

Keep changing

In addition to improving the ability to redesign the product, 3D printing also redesigns the supply chain. 3D printed repair parts can be available immediately in any location when needed. With the availability of a 3Dprinter that can be installed on site, a file of the model that needs to be printed can be downloaded. This realigns supply chain from spare parts point of view since warehousing and shipping are reduced or eliminated. With the cost of 3D printers expected to come down in years to come, they will be increasingly available in places where repair parts are needed. Transport costs will be lowered and so will the cost of 3D printer parts. The only item that needs to be transported will be the model that needs to be printed. This is the file that can be sent electronically over the internet to a customer who has 3D printing facilities.

While it is not a dispute that 3D printing shortens the supply chain when it comes to repair parts, justification requires a comparison between 3D printing and traditional manufacturing. This includes conducting a side-by-side analysis of the cost per item. Currently, 3D printing is still higher than standard production. However, it is already showing potential and cost will reduce in a few coming years as the cost of 3D technology comes down and laws governing this technology are made. Regardless of the challenges, supply chain will be changed for the better.

When the coronavirus (COVID-19) began; experts theorized how a potential pandemic would affect the supply chain industry. Months later as the coronavirus continues to spread with no indication of stopping – the supply chain and logistics community are starting to see just how quickly the virus can impact businesses both small and large.

While no supply chain community is safe – those that rely heavily on China and other Asian communities to manufacture, produce, or distribute their products will be the most effected by the disease.  With China accounting for a majority of the garment production (according to the World Trade Organization, China exported $161 billion dollars in apparel and $106 billion in textile in 2016) – the fashion industry has been struggling to keep up with demand as Chinese factories, are closed in attempts to keep the virus at bay.

Production is not the only part of the fashion industry taking a hit. Due to an outbreak of the virus in Italy – fashion designers are having to rethink how to market their clothing. Milan Fashion Week occurred at the same time that Italy is seeing a steady uptick on coronavirus cases. While fashion shows normally take place in front of an audience - Giorgio Armani streamed his fashion show online to an empty room to avoid any spread of the disease.

Big pharma is also expected to take a hit as the virus continues to spread. Many drugs are made from materials produced only in China. With factories shut down or not at full capacity – pharmacies may see a shortage of drugs. According to the director of FDA’s Center for Drug Evaluation and Research, Dr. Janet Woodcock – 72% of all active pharmacy ingredients are made in China. In a statement to Congress, she indicated that the shear number of APIs being made overseas could “creates vulnerabilities in the U.S. supply chain.” A few months later – her fears may actually come to fruition.

The FDA assured the public that there is no shortage of drugs but an FDA spokesperson declared, "If a potential shortage or disruption of medical products is identified by the FDA, we will use all available tools to react swiftly and mitigate the impact to U.S. patients and health care professionals.”

The tech industry has also seen substantial set-backs in their supply chain. Many factories are located in China or other Asian countries that employ Chinese workers. While factories were originally scheduled to be shut down for a few weeks in January – some are not opening back up until March at the earliest. Products expected to be delayed are the iPhone, VR sets, and even cars.

Numerous tech conferences have also been postponed or cancelled due to outbreak of COVID-19 for the public’s safety. Due to numerous companies backing out of the Mobile World Congress over concerns of the virus – the show was cancelled. Game Developers Conference has saw a few key sponsors pulling out of their event as did Pax East.

The fashion, tech, and drug industries are experiencing delays in their supply chain at the moment – but it doesn’t mean the rest of the supply chain industry is in the clear. The coronavirus has the ability to cripple the global supply chain and logistics industries as it continues to wreck havoc in China and abroad.

The majority of the key trends in the supply chain for 2020 will be a continuation of what took place in 2019 and the years before. The industry continues to undergo significant levels of change whose intentions are to increase productivity, quality and efficiency of service. More is on the way taking into account digital transformation that is revolutionizing everything. This industry has become a backbone of many other sectors that see it as critical in realizing their goals. It is fast becoming a leading source of competitive advantage to many companies in the modern digital economy.  2020 will be another defining year for the supply chain industry and these are the predictions of what you should expect.

Machine learning will be widely adopted

Machine learning and artificial intelligence (AI) were buzzwords in 2019. As these concepts continue making way into many spheres of human life, the supply chain is ready to implement innovative AI and machine learning technologies that will accelerate processes. We should expect more of AI devices, software and applications in 2020 and beyond. Large amounts of data are prevalent now more than before in modern supply chains due to increased connectivity and enhancements in computing. Machine learning applies to different logistics technologies. It is now used to enhance warehouse management, supply chain visibility and robotic vision as well as planning. Fulfillment operations will benefit in the future as machine learning is applied more extensively in 2020 moving into the future.

Labor automation

Automation is an area that is growing rapidly in many industries. The same is happening in the supply chain, where different automation strategies are underway to reduce the cost of production and increase efficiency. Automation is expected to increase this year due to the anticipated shortages of blue-collar labor because of increased online shopping that is increasing demand for delivery drivers. Driverless trucks are now under development as a practical solution to the low number of delivery drivers. Other areas that will see increased automation of tasks are customer support, packaging, and warehouse management, among others.

Outsourcing

As globalization takes shape, companies will increasingly outsource logistics business services to companies overseas or to technology companies that enhance areas such as order processing, inventory, and tracking of shipment. Outsourcing has in the past helped in cost reduction while also assisting companies in getting the best talent and technology.

Blockchain

Blockchain has altered how financial transactions are conducted and is proving to be a game-changer in many other industries. Aspects that defined blockchain such as immutability, traceability, transparency and improved security saw some logistics companies integrating this technology into their operations in the past year. Logistics companies are highly likely to invest more in this technology in the future to enhance transparency and to trace packages from source to destination. Although some logistics companies have already embraced blockchain, 2020 will see more investments in this space as enterprises seek ways to enhance their operations.

Robotics

As competition in the supply chain domain continues heating up, logistics companies are looking for efficient and cheap ways of beating the competition. One such method is robotics that showed its importance in 2019. In 2020, robotics is likely to take over many repetitive tasks that were initially handled by human workers. Some of the tasks that robots have proven efficient in are packaging, warehouse planning, and inventory management. This year, robotics is expected to increasingly make entry to the supply chain sector as companies look for ways to increase competitiveness and leverage technology.

2020 is the year of change in the supply chain. The changes experienced this year will alter not only the supply chain industry but will also impact the manufacturing and retail sectors. While some of the above predictions are specifically focused on this year, the impact of almost all of them will be felt for many years to come.

For the first time in 82 years the hour of services (HOS) laws for truck drivers have been relaxed to help get needed supplies to struggling businesses and hospitals across the  United States. As the novel coronavirus or COVID-19 has turned into a pandemic and rumors of a lock down similar to that of Italy circulating – people are scrambling to get necessities at their local store whether that’s cleaning supplies, hand sanitizer, or toilet paper.

As stores run out of goods – it’s up to the truck drivers across the country to deliver products to ensure businesses run smoothly. According to the American Trucking Association – truck drivers are responsible for moving 71% of all freight tonnage in the United States enabling stores to restock their shelves and ensure hospitals can get the medical supplies they need to treat those effected by the pandemic.

The HOS laws were put into place in 1938 – limiting the amount of hours a truck driver can work. Those laws have been relaxed as of Friday March 13, 2020 for those drivers that are moving medical supplies, masks, and hand sanitizer to stores and hospitals.

In an official statement by the Federal Motor Carrier Safety Administration (FMCSA), the Acting Administrator Jim Mullen stated,  “Because of the decisive leadership of President Trump and Secretary Chao, this declaration will help America’s commercial drivers get these critical goods to impacted areas faster and more efficiently. FMCSA is continuing to closely monitor the coronavirus outbreak and stands ready to use its authority to protect the health and safety of the American people.”

According to the press release, critical goods include medical supplies and equipment including masks, gloves, hand sanitizer, and soap; food for emergency restocking of stores; and equipment, supplies and persons necessary for establishment and management of temporary housing and quarantine facilities related to COVID-19. The guidelines also include moving first responders and those who must be moved due to quarantine, medical or isolation purposes.

While the laws have been relaxed as of Friday, truck drivers must receive a minimum of 8-10 hours off duty once the transport has been completed. The report states that the reduced HOS laws are in effect until after the National Emergency has ended or on April 12, 2020 – which ever comes first.

In a statement to Business Insider, Sean McNally, the spokesperson for the America Trucking Association explained, "Waivers of this type are a common response by FMCSA to natural disasters and crises because trucks delivering food, fuel and medicine are a critical part of the response.” McNally went on to say, "This waiver will help keep loads of medicine, supplies and food moving as the country manages this current pandemic."

As the country scrambles to contain the virus from spreading further – state and federal government have restricted movement in the country closing restaurants, bars, and schools to try to “flatten the curve” or slow the virus enough so the healthcare system is not completely overwhelmed where sick patients are denied live saving care due to hospitals being at capacity.

To make sure healthcare system do go without the needed medical supplies to protect themselves and patients from infection – truck drivers are racing against the clock to delivers these products. Relaxing the HOS laws are one of the ways that truck drivers are helping combat the pandemic and doing their part to keep the “curve” as flat as possible.

The turbulent economy has lately made it difficult for field service and transportation businesses to thrive. The industry is morphing into an intricate space, meaning that it has become critical to gain an in-depth understanding of your transportation costs and how you can mitigate the rising expenses to improve your profit margin and keep your head above water.

There are many reasons why your transportation logistics costs are skyrocketing. For example, a lack of planning and transparency or bad decision making can lead to increased overall costs, failed delivery or appointment targets, unhappy customers, and ultimately a loss of business.

So, what should you do instead to reduce transportation costs? Well, here are five important things you should consider doing.

#1 Provide Your Drivers with Well-Optimized Routes

A bad route can make all your route planning efforts be in vain and your entire route could be a mess if you’re planning routes using a pen and paper. Poor routes also mean that your drivers will spend more time on the road being stuck in traffic and traveling longer distances which will skyrocket the fuel usage and expenses. When you add the overtime costs of your drivers spending more time than estimated on the road, the transportation costs look even worse.

So, instead, ensure you always provide 100% accurate and well-optimized routes to your drivers.

You can do this with an advanced technology solution, such as a route planner, which will automate the route planning process and make logistics management seamless. Such software will plan accurate routes while factoring in traffic, weather conditions, sunrise/sunset times, one-ways, avoidance zones, weight and load capacity, and more, within a minute. In this way, your vehicles will never run empty and your drivers will have balanced workloads and better routes. They’ll ultimately make more stops without you spending more on fuel.

#2 Monitor Your Drivers

Planning optimized routes may be the most important step, but it won’t have any impact on your costs if your field reps or drivers don’t follow it. They may make personal stops, idle vehicles for too long, brake frequently, or even accelerate harshly to make up for delayed deliveries or appointments. All such actions will inevitably lead to increased fuel expenses. Bad driving behavior can even lead to excessive fuel usage or cause road mishaps which means that the damage costs will also add up.

Therefore, you should track your drivers and vehicles and see what the drivers do on the road. To do this, you can use a GPS tracker to monitor your vehicles in real-time and set up speed alerts to get notified as soon as a driver speeds. A tracker can even help you protect your vehicles from theft.

Also, if you go for a route optimization software that comes with GPS tracking, you’ll get the best of both worlds: you’ll be able to plan routes and track the drivers’ progress.

#3 Educate and Reward Your Field Reps

Drivers and field reps are the most important stakeholders in transportation and you cannot reduce costs without their 100% involvement, even with the best process in place. So, let them know why it is important for the business to save on fuel costs as well as how they can contribute in keeping the expenses down. Then, reward them for fuel-efficient driving which will boost their morale and commitment to saving more.

A route optimizer will go a long way in helping you with this. Its reporting and analytics feature will give you the data you need to identify every fuel expenditure which you can then use to provide feedback to your drivers about their performance.

#4 Ensure Regular Vehicle Maintenance

One vehicle breakdown can jeopardize your entire plan and the downtime costs can vary from $448 to $760 per vehicle per day. Can you afford that?

Therefore, you should have a preventive maintenance program in place because regular vehicle inspections and maintenance will prevent breakdowns and keep your vehicles in optimal shape to provide better mileage and save you money. Also, you must change air filters, replace spark plugs, and change the oil and oil filters in regular intervals. Here are six vehicle maintenance tips you should be following.

Image credit: BraunS/iStockphoto.com

The reporting and analytics feature of a route planner we discussed above will also be useful here. It provides critical data, such as the total distance traveled, total stops, and the fuel used, which will help you identify when vehicles require maintenance. For example, if a vehicle needs maintenance every 2,000 miles, you can easily predict how soon it may need maintenance again.

#5 Focus on Reducing Failed Deliveries

Every failed delivery will put a dent in your profits. Your drivers may show up on time but it will still be for naught if the customer is unavailable. Such a missed customer will not only jeopardize your other deliveries or appointments but will also cost you more as your drivers need to go to that stop again.

One of the best ways to improve first-time delivery success is allowing your customers to choose their preferred delivery windows. This will ensure that someone will indeed be available at the location when the driver shows up.

You can also allow your customers to track their package delivery statuses or notify them when their packages are nearby. For example, Route4Me offers customer notifications and alerts feature that does just that. It also comes with a customer portal feature that helps customers monitor their own package delivery progress. You can even set access restrictions, depending on how much information you want to reveal regarding the visit, including custom fields, driver identities, and estimated arrival times.

So, what’s your strategy for reducing logistics costs? Do you have any other cost savings methods to add?

Blume Global expects to see big changes in the supply chain over the next few months and years. Here's what they see.

While shipment journeys are complex and fragmented, efforts to improve the flow of products will take precedence. 

All the data in the world doesn’t matter if you can’t execute on it. We’ve been talking about the potential of the digital supply chain for more than two decades. In 2020, the balance finally shifts from future potential to current benefits. Connected devices and IoT-enabled solutions are giving us more data than ever to make better decisions — connecting the legs of the supply chain path while simplifying information exchange. To improve the flow of products and information from point A to point B, we will see more shippers adding sensors on almost everything, not just the most expensive equipment.

Maximized capacity and minimized empty miles.

We will see a more concerted effort to reduce waste in the supply chain. Eliminating the empty miles and excess CO2 emissions will become a bigger focus for smaller companies as larger organizations use it as criteria when selecting supply chain partners. Major manufacturers, shippers and carriers have the clout to move the rest of the market. Smaller companies will invest in sustainable initiatives and the reduction of carbon emissions as a cost of working with major companies. 

Better technology and planning will close the gap between planning and execution. 

Traditional, long planning cycles don’t align to the expectations of today’s consumers. In addition to moving products, companies must deal with the added expectations from customers around product availability and expedited delivery — and in short, customers want what they want, and they want it now. While the Amazon effect has elevated customer experience across the board, it has also resulted in companies stockpiling trillions of dollars of inventory - a cost that very few aside from Amazon can justify. As a result, we can expect to see fewer companies stockpiling inventory and more focusing on improving inventory management and execution.   

The American Transport Research Institute (ATRI) conducts an annual report on the operational costs of trucking. In its 2018 report, ATRI found that trucking companies traveled over 9.4 billion miles in 2017 and 20.7 percent of all those miles were empty. The industry can do better.

It has become essential for LSPs to be able to securely collaborate with their customers, carriers, and other service providers on a neutral digital platform. Accessible data and predictive analytics will remain key competitive differentiators. By establishing a centralized, digital repository that provides the same access to all reliable data across the supply chain, retailers can promise improved customer experience, competitive prices and a higher quality offering.

Low- or no-cost TMS-like solutions will become a priority for motor carriers.

Motor carriers are a critical link in the supply chain — yet they are the most dispersed and least connected of transportation modes. While they carry a huge volume of cargo — more than 70 percent of domestic tonnage— the vast majority are part of small organizations: 90 % of firms operate six trucks or fewer (source: American Trucking Association). Carriers, LSPs and shippers need to embrace solutions that provide low- or no-cost TMS-like solutions that empower even a single-truck firm with access to logistics and supply-chain networks.

Smart technologies will decrease the amount of time it takes for an invoice to be processed.

Currently, LSPs, freight forwarders and shippers need to wait weeks/months for invoices to be processed, which impacts their bottom line. But, with the increased investment in and use of smart technologies by companies along the supply chain, the amount of time it takes for an invoice to be received and paid will significantly decrease. This will also lead to better and stronger relationships between companies along the supply chain. 

Artificial Intelligence will reach its potential by becoming domain specific.

The potential productivity gains from AI are anticipated to be anywhere from $13.7 trillion to $15.7 trillion by 2030, according to the McKinsey Global Institute and PricewaterhouseCoopers, respectively. The next phase of AI success happens when technical capabilities are matched with industry-specific expertise. We are at a significant inflection point in the adoption of AI-enabled solutions. Linking domain expertise and data with technical innovation is necessary for technology to reach its full potential to deliver measurable, effective results to the companies that implement them. 

Tariffs and trade woes mean new supply chain opportunities in Southeast Asia. 

Bigger, more sophisticated supply chains will seek out new primary sources. In part due to the tension over tariffs with China, companies are moving their supply chains out of the country and building up new footholds in Southeast Asia. Aside from tariff concerns, companies are looking at overall cost of business and the availability of resources to meet their needs.

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Blume Global CEO Pervinder Johar

 

 

 

Almost everything that we buy in stores; what we eat, wear or entertain ourselves with at home, go through a supply chain. This makes businesses that make these products among the top GDP contributors. However, the main problem that companies in this sector face is the high cost of moving products through a supply chain from one point to another. That is the leading reason why many companies are looking for ways to improve their supply chain processes and save money. Emerging technology is a perfect answer to this.

Thanks to the advancements in artificial intelligence (AI) and blockchain, a distributed ledger technology, augmented reality (AR), is now transforming how businesses manage supply chains. AR helps truck drivers, warehouse employees and managers to keep track of products from source to destination. It also ensures that products are tracked from the moment they leave a factory to the time they arrive at a warehouse. Augmented reality allows users to superimpose digital elements on the real-world using their devices such as tablets, computers, cellphones, and head-mounted displays or digital glasses.

AR is used in warehouses to enhance the process of locating products and package them in boxes. This has reduced the cost of the pick-and-pack process that is the most expensive part of warehousing largely because of the high costs of training. AR glasses allow rookies or new workers to navigate a warehouse and identify a specific product that they need in the shortest time possible. These glasses simplify searching and training by creating imaginary lines on the floor of a warehouse, making work easy for new employees. This can be helpful to temporary employees who are hired to help during peak holiday seasons. They are used by companies to shorten the learning curve through constant feedback on how employees are doing and where they need to improve.

AR makes picking and packing like a game where workers collect items before time lapses. It not only makes it enjoyable but also reduces errors by more than 40%. Some AR glasses are used to provide an overlay of items on shelves; therefore reducing time required to locate an item. DHL, a leader in the supply chain industry, for example, came up with Vision Picking smart glasses in its warehouses that have increased productivity by more than 15%.

Augmented reality improves workforce productivity, safety, compliance and quality of service. It offers information that the employees require at just the right time. With AR and virtual reality, supply chain specialists can handle operations from anywhere. This means that companies will not have to employ people from one location or bring a contractor to the site. Rather, they can employ remote workers who are cheaper from any part of the world without incurring additional costs needed to fly them to a job site.

The last-mile delivery to customers is one of the most expensive undertakings in logistics. Through AR however, companies can cut costs by half. A report by DHL indicates that drivers spend between 40% and 60% of their day searching their trucks for the correct boxes to be delivered. However, with the help of AR, they can eliminate this by identifying, tagging, sequencing and locating a box rather than having to remember how their vehicles were loaded and where specific boxes are found in their trucks. 

While many conversations have been around how humans will lose their jobs due to automation, it is becoming evident that automation will introduce new opportunities and make work easier for humans. AR for instance will enhance efficiency, make work safer and increase productivity.  For the supply chain, AR is gaining momentum and has shown how employing this technology will provide a return on investment in each process through reduction of errors, increasing safety, enabling collaboration, and maintaining compliance. This will be a starting point for any company that wants to compete in the future.

Transacting business in the supply chain generally means communicating orders via EDI formatted files or some other equally rigid set of rules. The reasons are easy to understand; order times are critical and specifications for orders are complex so their formats need to adhere to formats that can be instantly read by computerized systems.

EDI requirements may be rigid but they change frequently so there’s some reason to believe that there is in fact, flexibility within the order process. But getting the details wrong causes errors and costs money. How will this tight connection fare in the age of what’s called ‘Industry 4.0’ as new technologies are brought into the mix? Is it possible that the long-standing EDI format will be replaced by directly connected machines (IoT) that avoid the details of creating and processing orders? Or will the deeply embedded format keep business at a slower pace than might be possible if things changed?

Industry 4.0

Internet of Things (IoT) is impacting manufacturing, shipping, warehousing, delivery, and even customer support by adding smart devices to things that have traditionally been, well… dumb. Dumb in the sense that they don’t communicate or have any way to sense their surroundings. That’s changing rapidly as we approach the widely touted 50 billion IoT devices expected to populate the earth by 2020. Whether any particular company wants to move toward these automated pipelines is as moot as those who declared they were not abiding by Walmart’s demand to implement EDI years ago.

Manufacturing facilities around the globe are adding smarts to their machinery or replacing old machines with newer and smarter ones that can go beyond the basics of their intended functions. They are attached wirelessly directly to their company’s management and ERP systems and communicate their current status. They take instructions about manufacturing conditions to adjust their speed and can even sense variations in the materials they work with and adjust their actions to create products that meet required specifications.

The data passed between those machines and the systems that control them amount to magnitudes of data that never existed meaning that traditional manufacturing facilities that operated manually and on a completely analog basis are becoming digital factories. The data itself presents both issues and opportunities for every point along the supply chain because it’s now possible for the end customer to be aware of the status of the product they expect to purchase, and for the manufacturing machine to know how many units it needs to build to meet demand.

Flexibility stretched

Every participant in the supply chain is being armed with more data than they have ever encountered. Their first challenge is to collect and store it; in itself a mundane IT task of managing storage and connectivity. But what is done with that accumulated data as it passes along the chain is what will define the next generation manufacturer, transport company, retailer, and even the end customer. Those that devote the time and resources to understanding, then imagining how Supply Chain 4.0 will look.

It’s been a while since Walmart first insisted that its suppliers moved to its digital order process. Back then the prospect of using EDI rather than fax or phone to place orders seemed like a technological hurdle. And in fact it was a significant hurdle that plenty of suppliers bucked against. But today Walmart’s tactics have become accepted and electronic order processing is no longer the pariah it once was. Now the retailer is making another mandate to its suppliers. But this time it’s not about what but where.

Amazon’s Web Services (AWS) has been the go-to supplier of cloud based software deployments and an overwhelming number of companies have put their online software there. It’s easy, reliable, and competitively priced. But now that Amazon is competing directly with Walmart for retail business Walmart doesn’t want the digital guts of its business hosted on a competitor’s site. That’s understandable, and in fact in 2014 the company moved its entire ecommerce presence to the cloud - and not Amazon’s cloud.

Our colleague Steven J. Vaughan-Nichols explains the move and strategy here. 

So where’s the mandate?

It isn’t enough that Walmart hosts its own data away from AWS. The retailer doesn’t want its suppliers hosting its data and the transactions they process on its competitor’s cloud either. The most recent mandate instructs suppliers to move their systems off AWS. They’re apparently fine with alternate cloud vendors like Microsoft Azure who are not direct competitors, but Amazon is a no-no. 

To be clear, the mandate (for now) is directed at tech providers. So product suppliers who host their own systems on AWS may not be affected. But the move may turn out to indirectly impact product suppliers if their EDI service providers host their applications and data on AWS.

The ripple effect

Amazon has done a great job of delivering cloud computing facilities that make it easy for companies to deploy their software services. In fact it may be the default choice for smaller EDI service providers because they can concentrate on developing their systems and delivering high quality customer support while leaving the heavy lifting of server farms and data centers to Amazon.

If your EDI provider has received a mandate letter from Walmart to shift its cloud hosting services you can bet they are scrambling to meet whatever deadlines are being required. Their revenue is reliant on delivering their customers’ transactions (your transactions) to and from Walmart and every other trading partner you deal with. And because of the depth and breadth of Walmart’s vendor base nearly every EDI service provider has connections to Walmart.

Be proactive

Don’t know if you will be affected? Ask your EDI service provider where their applications are hosted and how they are responding to Walmart’s mandate. Either your provider will need to change or you will need to change your provider if you want to keep your business relationship with Walmart.

 

Moving EDI data around the globe is old hat to most of the folks reading this ec-bp newsletter. Managing the connections and translations can get complex and picky when it comes to the details of the files and the changes that need to be incorporated into translators to make processes flow properly. For most EDI practitioners, their roles are fairly well defined and fit well with established concepts. But as mobile devices take over I think the line between what is EDI and what is associated with end user interaction is changing.

 

EDI is a significant source of big data. Of course that's no shock to anyone dealing with data storage or a VAN bill, but when you consider the volume of transactions and the number or companies involved, it would seem that there is a wealth of data in those transactions. The data now covers (depending on the trading partners) every aspect of the order process, from initial P.O. to final payment, with plenty of status updates along the way. So, what can be learned from all the data? It turns out that when looked at as an aggregate and put through the right analytical processes, there's plenty to be learned - and predicted.

Being able to use the data created by both the supplier and customer to understand the sales cycle can be a great advantage to both companies who are looking to make the most of their resources in an increasingly competitive environment. The addition of CPFR (Cooperative Planning, Forecasting, and Replenishment) can go a long way to maximizing margins and minimizing mistakes.