Essence Group, a leading provider of IoT solutions for the global security and care markets provided details of its aggressive supply chain initiative, that mitigated the global supply chain disruption caused by COVID-19 and ensured the continued supply of its complex multi-component products to key partner, Verisure, a leading provider of professionally monitored security solutions.

The well-documented effects of COVID-19 on global supply chains – including higher shipping costs; lower availability of shipping containers; employee health challenges; and the closure of borders from national lockdowns – provided an existential challenge to organizations dependent on just-in-time delivery of components.

In normal times, supply chain logistics generally work on an eight-month timeline for delivery of critical components. Thanks to its proactive resilience, detailed business continuity planning, and leveraging experience gained from past events, by the end of the first quarter of 2020, Essence Group had successfully mitigated the majority of supply chain disruptions to fulfil customer orders as expected.

Hagai Enoch, Chief Operating Officer of Essence Group, said: “As the world started to grapple with COVID-19 we went to our business continuity playbook and realized that we had move fast. We did not even entertain the thought that we would not be able to supply our customers, who rely on us to deliver on time.”

As early as mid-January 2020, when news of the emerging pandemic was only beginning to hit global news channels, Essence mobilized its business continuity response to ensure alignment on emergent issues and implement contingencies in the event of further disruption. At the heart of Essence Group’s strategy was to leverage existing relationships with component suppliers and manufacturers to share resources in order to deliver optimal solutions for customers. By dramatically increasing the size of orders and accumulating sufficient buffer stock, and using air transport rather than ships, Essence could continue supplying strategic partners, such as Verisure with the necessary volume of critical components to enable them to meet commercial commitments.

“Partnership with Essence has been instrumental in ensuring continued customer service for our existing and new clients,” said Cristina Rivas, Verisure Chief Technology Officer. “Essence Group’s initiatives to ensure we could continue accepting new orders gave us confidence that we would be able to keep our commitments. This has helped us to continue to strengthen our position as the leading provider of professional security products and services.”

“In spite of the COVID-19 pandemic, our global supply chain has performed extremely well in meeting the needs of our customers,” said Sharon Klainer Weizenbluth, Chief Strategy Officer at Essence Group. “This was achieved, while also protecting the health and wellbeing of both our employees and those of our supply chain partners.”

Robotics could help improve the supply chain, reports Supply Chain Brain.

Parts of the last 12 months have felt like a science fiction film. On one hand, a global pandemic is causing record-setting despair: travel is restricted, the economy is in shock, and people everywhere are either at home or managing a cautious return to activity.

Read the article on Supply Chain Brain 

De-risking the supply chain is possible with technology, reports Modern Materials Handling. 

Supply chain risk is such a huge topic right now that even our newly-elected president is talking about it—and acting on it.

Read the article on Modern Materials Handling 

Supply chain technology company Blue Yonder is planning a IPO, reports the Wall Street Journal. 

Software company Blue Yonder is planning to go public, the latest technology provider to look at a public stock offering as pandemic-driven upheaval in supply chains draws more interest to tools that help companies manage the flow of goods.

Read the article on Wall Street Journal

As vaccine rollout begins to catch momentum and countries show signs of putting coronavirus under control, attention is now being turned to the recovery of the economy and the sectors that have been severely affected. One of these areas is the supply chain, which forms an integral part of everyday life. The supply chain management will emerge differently from the pandemic, with transformation expected in transportation, logistics, and warehousing. Here are some most significant trends that you should expect in 2021 going forward that will influence companies and their strategic plans.

• Outsourcing

Last year, companies found out that outsourcing their supply chain activities and services is one way of reducing risk, enhancing flexibility, and minimizing cost. As we move towards the middle of 2021, we should expect outsourcing to be accelerated thanks to the pandemic's long-lasting effects. This trend will continue into 2022.

• Digitization

Digitization has been a refuge to many supply chain companies during the pandemic, and it will remain so going forward. Although the drive towards automation was already rising, the importance of digitizing operations has been reaffirmed by the disruption occasioned by the virus. As the pandemic intensified, the organizations that had implemented automation quickly responded to the demand while enabling productivity. This is the reason why you should expect more adoption of automation going forward.

• Nearshoring

While offshoring is a good thing, sourcing items from a far destination was proven by the pandemic to be a big vulnerability that can cause unavailability of goods. As such, many companies are moving towards near-shoring to mitigate impacts of disruptions such as those caused by the pandemic on the supply chain. This is making companies look for efficient ways to increase efficiency by redesigning their networks and implementing lean inventories. We should expect companies like those in the US to move their supply chains to countries like Mexico from East Asia to cut transport costs and make items available nearby.

• Ecommerce

The coronavirus pandemic has stressed the importance of online shopping in the modern era. Although ecommerce was already rising before the pandemic, its significance became evident during the lockdown, which limited in-person shopping. Online shopping will continue to increase faster than initially anticipated before the pandemic. This will speed up the adoption of ecommerce by retailers both large and small as they look for ways to remain operational post-pandemic.

• Intelligent forecasting

Consumer behavior changed drastically during the pandemic. This made historical trends that were used to forecast and manage inventory almost obsolete. As things come back to near-normal, many companies will rely on big data, artificial intelligence, and machine learning as they seek to better their forecasting abilities. These technologies will claim a big place in supply chains as organizations aim to become competitive in a fast-changing business landscape this year and in the future.

• Short and more complex product life-cycle

Companies are now under pressure to develop innovative products. For this to be achieved, companies need efficient lifecycle management processes. This includes emphasizing the management of new product introduction, discontinuation, design, and leveraging product and infrastructure characteristics. With the pandemic, these aspects are expected to change to address the emerging challenges that occurred during the pandemic and even after.

• Distributed product sourcing

 One of the biggest issues that the pandemic has uncovered is the overreliance on consolidation. As the virus affected different regions disproportionately, supply chains that came from a single source faced many disruptions. On the other hand, companies that were flexible and distributed were resilient and capable of adjusting to the changes. Post-pandemic, companies will increasingly adopt distributed sourcing to address over-reliance on a single source.

Simply put, a supply chain is made up of the activities or processes needed by an organization to deliver goods or services to a consumer. For any business that manufactures or deals with a product or a service, a supply chain of a given size is needed to avail them to the consumer. It begins with sourcing raw materials, manufacturing, and finally delivering the finished product to the customer. Supply chain management (SCM) entails overseeing and regulating the supply chain and ensuring that every aspect works as required. 

As witnessed during the coronavirus pandemic, the value of the supply chain to businesses and life, in general, is immeasurable. If it works correctly, it enhances efficiency in different areas such as production and shipping. It can also lead to better cost savings and improved quality control. Similarly, it can improve the inflow of cash, not to mention that it can ensure that you keep up with the customer's demands. All these are a source of competitive advantage. If not done correctly, inadequate management of a supply chain can be a cause of many problems for any business. It can lead to difficulties in accessing raw materials, delivery of items, and in the end, customer retention.

Now to the supply chain service, the supply chain service providers are simply the third-party logistics firms that can be hired to offer logistics services to other businesses. These companies handle different services or segments of the supply chain, such as manufacturing, distribution transportation, or inventory management, among others. Companies that offer these services are categorized as 3PL, 4PL, and 5PL providers.

The 3PL providers are third-party logistics providers that allow you to outsource logistics management from warehousing to delivery, therefore enabling you to do other tasks that are critical for your business. Some of the services that the third-party logistics firms offer include warehouse management and network optimization, among others. The Fourth party logistics (4PL) takes 3PL a notch higher and handles almost the entire supply chain services from raw materials to delivering the final products to the consumer. On the other hand, 5PL service providers provide nearly the same services as 4PLs. However, they cut the cost of operations by managing them and ensuring that the supply chain is reliable, effective, and responds to the customers' needs promptly.

 Benefits of supply chain services

For anyone who wants to hire someone to handle supply chain planning and logistics management, you must know the advantages of services they are getting. For instance, businesses will get quality expertise from specialized people. Logistics service providers have the necessary knowledge, resources, and money to properly manage supply chains. They are managed by top individuals, and they have existing relationships with suppliers, the right technology and processes. They have almost everything that a company would need to develop and run a world-class strategy. Moreover, the service providers will dedicate themselves to ensuring that all services are streamlined, and everything is within the required global standards.

As we enter the crucial stage of this decade, outsourcing supply chain management will become a trend. However, this does not mean that companies will not look for ways to transform their supply chains. On the contrary, supply chain service providers can embrace technology for them to transform their operations digitally. Digitization allows a seamless flow of information and better decision-making. Before you decide whether to outsource services or not, you should first consider the type of business you are running and the size of your budget. If you have the right budget for this, you can outsource your supply chain management.

Putting an effective shipping strategy in place is one of the leading steps you can take to grow your business. In an era where many companies have invested in e-commerce channels, supply chain management and operations will be impacted largely by its online presence. Although there are many things that you must consider at different times of the year, the biggest ones are timely shipping and order fulfillment. In the future, retailers will need to have a robust merchandise shipping method to impress their customers or return if products fail to work as expected.

The coronavirus pandemic has changed brick-and-mortar shopping, and the change seems permanent.  It has led to the closure of stores, most of which might not reopen again. This means that the retail landscape will never be the same. You can see this with the move by several retailers that are closing their stores or filing for bankruptcy. Compared to brick-and-mortar, strip centers fared better during the pandemic. This has seen several retail giants such as Macy’s adopting it. It remains a question without a definite answer whether the traditional retail sector will recover. Something certain, however, is that businesses will look for alternatives. Some include moving online or adopting neighborhood shopping districts.  

Personalization is a trend that increased in 2020 and is likely to continue. The change influenced this trend in consumer behavior. Because of the many available options when making online purchases, consumers are getting used to making purchases from any device and ay seller. This is a trend that is likely to continue this year. To stay competitive, online retailers must provide personalized experiences for each consumer regardless of the channel or method to purchase items online. Retailers must be able to offer blended shopping experiences for the customers to choose whichever method they like.

To mitigate shipping and fulfillment issues, retailers must ensure inventory is well planned and demand forecasted. They must find a hassle-free way to return products efficiently if they don’t work as anticipated. A retailer that makes returns easy for the customers is the one that will sell more and retains customers better. Technology is an essential component in inventory management and at the point-of-sale. Platforms that integrates inventory and point-of-sale should be implemented to ensure inventory is managed correctly and data is correctly collected and analyzed to prevent discrepancies. Small retailers should consider offering curbside pickup and delivery options to attract customers. Use your own product data to plan and ensure that the stock levels are predictable to avoid surplus or scarcity situations.

If self-service tools are integrated into local delivery options, consumers will have the power to initiate a product return by themselves. This will make it cost-effective, fast, and efficient for the retailers and customers. Engaging tools that show fulfillment and shipment lead time based historical data will be necessary for proper communication and correct order fulfillment. Although more than 44 percent of e-commerce firms are already seeking payment technologies, checkout alone cannot solve the problem. Managing inventory and sales are also critical. Enlist technology in your operations to ensure that delays are eliminated, and customer experience caused by inefficiency is avoided. Technology can also help in tax compliance calculations. Tax software ensures that documentation that is required for taxation is kept. It can help in monitoring tax rules and, besides, saves businesses time.

Lastly, your retail company cannot succeed without the right marketing strategy in place. After you have implemented the right strategies such as software and product management, engage the right marketing professionals' services to popularize your services. You may find an influencer useful than traditional advertising.

Supply chains are volatile, with the potential to test the strength of any leadership to a great extent. In recent years, American leadership has struggled with ensuring the availability of essential products such as medicine, food, and computer chips. Last year, the coronavirus pandemic made things worse. It furthered the scarcity of items, most of which were needed during the pandemic, such as the personal protective equipment (PPEs) required by the frontline health workers.  For this reason, the White House has prioritized the creation of a more resilient supply chain that is secure and has the potential to deliver critical and essential goods. 

As shown by COVID-19, we cannot predict when a crisis will hit us- at least not all the time. However, we must ensure that we can manage the supply chain during the disruption from natural disasters or actions by foreign adversaries or powers. As it stands now, the American supply chain is vulnerable to most of these. For this reason, President Biden is vowing to direct his energy towards ensuring the supply chain risks are addressed. Making the supply chain secure and efficient can also be a source of well-paying jobs for communities across America, including people of color.

The Executive Order signed by President Biden on the 21^st of February is a crucial step towards securing the supply chain against various risks. The Executive Order directs federal Departments and Agencies to find ways of securing the US supply chains against risks and vulnerabilities. The resilience of supply chains will protect the country from future shortages of critical products. It will further America’s competitive edge and strengthen national security, critical for any industry and individual.

The executive order directs a review to be carried out across all federal agencies within 100 days to find supply chain vulnerabilities for four key products: APIs, critical minerals, semiconductors and advanced packaging, and large capacity batteries such as those used in electric vehicles. In recent years, most API production facilitators (over 70 percent) that supply the US have moved offshore. This has left the country vulnerable. Similarly, minerals needed for the country’s defense and manufacturing have not been secured as needed. Within the 100-day review ordered by the President, the federal government will identify the vulnerabilities in these areas and design the near-term solutions that are needed to address the risks and vulnerabilities.

The order further calls for a comprehensive one-year review of a broader supply chain set within the US. The focus will be on six major sectors: the defense industrial base, information and communications technology, energy sector, transportation industrial base, agricultural supply chains, food production, public health, and biological preparedness base. The White House seeks to identify critical goods and materials needed in the manufacturing or production of other materials, manufacturing locations, and the availability of substitutes or alternative sources for critical products or items that can fill gaps in case of problems in the supply chain. Agencies are required to make specific policy recommendations that will address risks and give proposals for research and development activities.

While at this, the government must work in collaboration with others. This involves partnering with the external stakeholders and the American people. The Executive Order directs the government to consult widely with other stakeholders such as those in academia, NGOs, labor unions, territorial and tribal governments.

From all these, one thing is clear, the security of the United States is tied to the supply chain. Therefore, how we protect our supply chain is up to the policy-makers and everybody else. The Executive Order is the first step of identifying the opportunities to implement policies that will help secure supply chains, which are the backbone of American success.

Ghana became the first country to deliver Covid-19 vaccines by drone through a partnership with Zipline, an on-demand drone delivery service. CEO and co-founder of Zipline, Keller Rinaudo stated, “We are proud to be part of this significant milestone in Ghana where our drone logistics network is able to provide on-demand, last-mile delivery of COVID-19 vaccine at scale across the country.”

Located on the Western coast of Africa, most of Ghana’s population lives outside of major cities making it hard to reach using standard distribution methods. Further complicating the process, is the fact that the vaccines have to be stored and transported in 40 degree temperatures.  With average temperatures in March reaching the 90’s, Ghana had to be creative in getting the vaccine to vulnerable populations in inaccessible areas.  “For many countries, nationwide, equitable distribution — especially to remote and hard-to-reach regions — is a daunting challenge. But in Ghana, the established health infrastructure, and Zipline’s existing network, makes it possible to deliver to those regions quickly and safely,” explained the Senior Vice Presiden.t, Zipline Africa, Daniel Marfo.

Teaming up with UPS, Zipline began delivering vaccines via drone on March 2^nd. A total of 4,500 doses were delivered in 36 distinct trips. Zipline and the country of Ghana hope to deliver 2.5 million doses this way throughout the year. General Manager of Zipline Ghana, Naa Adorkor Yawson said, “We are honored to be doing this with our key partners, the Ministry of Health, the Ghana Civil Aviation Authority, Gavi, the Vaccine Alliance, and the UPS Foundation. With this intervention, we believe Ghana will be in a position to distribute the vaccine as quickly and equitably as possible.”

According to an Insider article, Zipline drones are battery charged and can fly up to 100 miles per trip. They are six feet long and have a windspan of 11 feet that can go up to 80 mph and carry four pounds of cargo. According to Zipline, once an order is received, a drone can take off in as little as seven minutes. During flight, the drone is monitored and fully automated. Instead of landing, the package is dropped while in the air - a small parachute cushioning it’s fall.

This isn’t the first time that Ghana has looked to Zipline to deliver crucial supplies in the fight against Covid-19. In the early days of the virus, drones delivered test samples to the cities of Accra and Kumasi. They also worked with the on-demand drone company to deliver personal protective equipment (PPE) during the presidential elections in December 2020 in under 48 hours.

Zipline isn’t new to delivering medical supplies and critical items with their on-demand services. Founded in 2014, Zipline has delivered everything from life jackets, vaccines, and blood donations to hard-to-reach areas of Africa, the Philippines, India, and the United States. They recently announced a partnership with Walmart to deliver health and wellness products in the United States within the next few years. According to their website they have made 110,248 commercial deliveries to date.

The coronavirus pandemic has affected every industry in the world in ways never experienced before. It has forced governments and other authorities to take stringent measures to control the spread of the virus. Some of these measures include lockdowns and restriction of movement of people and goods. With these restrictions, the demand for goods and services has gone down, and the supply chain has been substantially affected. As the vaccine rollout gathers momentum, what remains to be seen is how the supply chain will perform after the pandemic.  

The trade restrictions are nothing new. There have been some restrictions before, such as the U.S-China trade war and trade sanctions that increased economic nationalism. However, those are minor compared with the one caused by COVID-19. These restrictions have led to shortages of pharmaceutical and medical supplies, which are in need now more than ever due to the persistence of the infections. As a result of this, manufacturers are under pressure to increase their domestic production while those overseas are looking for ways to ship their products to their customers in time despite the pandemic. Despite these challenges, there is one advantage that the pandemic has brought- it has exposed weaknesses in the current supply chain that needs to be corrected in the future.

The challenges during COVID-19 showed that the interdependence or global nature of supply chains is a weakness as much as it is a strength. They highlighted that most organizations are not wired to manage interconnectivity in case of disruptions and adverse impacts. In short, the pandemic has shown us that if companies are to be resilient in the future and thrive, they need to change.

Beyond the economic and operational challenges highlighted by the pandemic, no change has been experienced yet. However, we expect that the changes in our supply chains will happen faster than it would have been the case had the pandemic not occurred. As a starting point, companies must recognize the shifts in customers, business operations, workforce and technologies. Although we still do not know the pandemic's long-term effects, what is clear is that it has helped fast track the necessary shifts in customer value and requirements.

Post-pandemic, many companies will likely change their strategies regarding supply. As it has emerged, relying on one company to supply products leaves your network vulnerable. It is even worse when the supplier that produces a given item is in one country. A disruption in such a scenario will be disastrous. Stand by identifying where risks lie so that you can develop a plan to protect yourself from them. As we advance, you will need to map your supply chain. The process should entail distribution facilities and a transportation hub. The goal of mapping is to categorize suppliers as either high-risk or low-risk. Identifying these risks gives you the information needed to diversify sources or stockpiling, which is necessary to address potential disruption.

The easiest way to address the problem of dependence even after the pandemic will be to add more sources in locations that will not be vulnerable to risks, regardless of whether they are low or high-risk. This has proven successful in the past, mainly when the US-China trade war forced companies to adopt a “China Plus One” strategy of spreading production between countries in China and other Southeast Asian countries such as Vietnam, Indonesia and Thailand. From now on, reducing dependence on one country such as China will reduce the risk of completely failing to deliver in case of a pandemic or other disruptive events. Although it will be a good thing, reducing dependency on China will not be easy on some products.

In a nutshell, although the pandemic has damaged many things, it has exposed lots of vulnerabilities that must be fixed if we are to stand future risks and disasters. Although we should not depend so much on globalization, we should not completely back away from it as it has its strengths. However, we should never depend too much on some countries and routes for the supply of products.

Modern logistics is not only complicated but challenging as well. As such, shippers must be prepared at all times to identify the roadblocks that hamper their productivity and solve them in time.  With regard to outbound logistics management, logistics firms must navigate through hurdles raging from end-user demands to change in operational costs.

Below are some logistics roadblocks that affect smooth and effective logistics programs that must be avoided if delivery of service is to succeed:

• Failure to understand policies

Policies are always necessary for the effective running of operations in any organization. However, failure to understand your own policies and procedures concerning inbound freight and how needs can be solved can become a challenge. Most companies have inbound shipping policies that help reduce issues associated with safety, job accidents, and inventory controls. The biggest roadblock here is vendors who do not understand the policies and procedures. This can be solved by having access to strict, high-quality instructions on how shipments should be handled. Such can be handled by an effective logistics guide that details how specific scenarios can be approached.

• Lack of effective TMS solutions

According to Peerless Research Group, almost half of supply chain companies have no plans to use or even pursue transport management systems (TMS). This means that these companies have challenges when it comes to the management of inbound and outbound cargo. On the other hand, while approximately 54% of logistics firms run metrics regarding inbound cargo, these metrics may be lacking. While there are many systems that can manage inbound logistics, some stakeholders see no value in them or lack proper metrics and TMS.

• Overdependence on metrics

Although metrics are critical in developing a strong inbound logistics management, the truth is that they should not be seen as a solution to everything. A major problem that several shipping companies face is that once they have these platforms, they depend too much on them in determining the effectiveness of their logistics programs. It is important to seek education from other sources such as your employees and vendors when trying to develop policies and procedures that impact the safety and effectiveness of your operations.

• Communication breakdown

Any successful logistics program or even company must have open and transparent communication throughout the supply chain. Sadly, communication breakdown is real, and some of the logistics firms often lack proper and clear communication in their internal environment- where departments fail to communicate with clarity. Most organizations still use outdated traditional platforms to communicate. These communication gaps causes missed deliveries, issues with inventory control, accounting problems, and lost businesses.

• Lack of collaboration between departments

Collaboration between departments is crucial in the management of outbound products. However, there is often a disconnect between departments, which leads to a loss of cost-saving opportunities. This leads to the rise in inventory levels or failure to meet the customer's demands and loss of profits. Shippers can maneuver this by removing the silos, which causes inefficiency. Doing so enables a better flow of procurement products and orders.

A final word

As a logistics firm, ensure that customer service is key. Any strategy that fails to solve customer problems would crumble. Saying “the customer comes first” does not solve anything. Instead, logistics companies must identify the needs of every customer and roadblocks that can affect service delivery. Since every customer has different needs, logistics companies cannot use a blanket solution to meet the demands of all the customers. Take advantage of TMS and ensure there are no silos that may hamper communication and decision making in the organization.

The United States Department of Transportation recently issued two new rules regarding drones, aimed at keeping the public safe. The Federal Aviation Administration released a press release on December 28^th  that outlined the newest rules regarding Unmanned Aircraft (UA) or drones.

Under the new rules, all drones must have remote identification ensuring that law enforcement and national security the ability to identify the drone. The remote identification will act as a type of “digital license plate.” The guidelines state that operators are expected to carry their remote pilot certificate and identification when deploying their drone ready to present it if asked.

The second rule would allow small drones to fly over people and moving vehicles as well as at night under certain circumstances. 

"These final rules carefully address safety, security, and privacy concerns while advancing opportunities for innovation and utilization of drone technology," Secretary of Transportation Elaine L. Chao stated.

The Association for Unmanned Vehicle Systems International applauded the FAA’s new rules and regulations. The President and CEO Brian Wynne explained that the new regulations “will have additional untold benefits for American society."

Those who use drones recreational are not too keen on the new FAA guidelines. Some called them confusing while others complained that the cost would prohibit some people to fly drones recreationally. “This was done to benefit companies like Amazon while making it harder for small operators,” complained @AltFawkes on Twitter.

According to the press release, unarmed aircrafts are becoming the “fastest-growing segment in the entire transportation sector.” With 1.7 million registered drones and 203,000 FAA-certified remote pilots,  these rules offer drone operators flexibility that has been sorely needed. 

If the end goal is to use drones to solve the “last-mile delivery” problem – the FAA guidelines are one step closer. FAA Administrator Steve Dickson explained, “The new rules make way for the further integration of drones into our airspace by addressing safety and security concerns.” He added the rules, “…get us closer to the day when we will more routinely see drone operations such as the delivery of packages.”

Drone technology has been lucrative as it’s seen as the future of the supply chain industry. Supply chain giants like Amazon, UPS and Walmart have been scrambling to test the latest technology so they are ready when drones become widely used.

In November of 2019, UPS Flight Forward successfully delivered their first prescription delivery from a CVS pharmacy in North Carolina to a patient’s home nearby. “This drone delivery, the first of its kind in the industry, demonstrates what’s possible for our customers who can’t easily make it into our stores,” former CVS president Kevin Hourican said at the time.

The new FAA drone regulations will take effect 60 days after they are published in the Federal Register next month. From there, manufacturers will have 18 months to start producing drones with remote identification. Operators, have an additional year after publication to start using these drones with remote identification.

For general inquiries on these new regulations and other UAS inquiries, please call 844-FLY-MY-UA or email the FAA.

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.