Innovative Solutions to Guard Against Supply Chain Disruptions and Challenges

Transportation and Logistics Disruptions

In a series of blog articles, the Product/Solution Marketing team explores innovative solutions to guard against supply chain disruptions. The following blog features insights gained from my discussion with Geetha Vidhyaprakash, Blue Yonder Director of Product Management, during a recent Blue Yonder LinkedIn Live.

Throughout the COVID-19 pandemic, we have seen the important role that logistics plays in the supply chain. Our logistics colleagues work very hard to ensure production processes have the inbound materials, move the output products and materials, and deliver to end consumers to make our lives easier. Despite the frequent disruptions, from major cross-continent ones to other sudden events, they work long hours and spend holidays to keep the supply chain and logistics network flowing.

Macro and Micro Disruptions

Terence: Geetha, since you talk to customers regularly, what are the key logistics disruptions and challenges they are dealing with?

Geetha: We live in a highly disrupted world today compared to five years ago. The COVID-19 pandemic forced us to stay home and caused digital transformations and an online buying boom. We have seen Texas freeze, which impacted all industries from petrochemicals to semiconductors to car manufacturing. We have seen massive hurricanes. Think Hurricane Harvey, for example, which prevented the accessibility of cities and prevented goods from moving in and out of cities. We are experiencing labor shortages in almost all industries, whether it is retail, manufacturing, or logistics. We see a shortage of truck drivers that is impacting the delivery of goods today. And the teams are also dealing with the effects of geopolitical conflicts and trade wars.

For example, the conflict in Ukraine is making it difficult to get wheat out of the country and could lead to food supply shortages, especially given Ukraine is one of the world’s largest wheat exporters. Another example is the Suez Canal blockage; approximately 12% of the global trade flows through the Suez Canal on massive ships like the Ever Given, which can hold up to 20,000 containers. We are still dealing with the knock-on effects that included port congestions vessels not being in the right place for their next scheduled journey. And most importantly, it just adds to the supply chain issues reeling from container shortages among the COVID-19 boom.

What is the result of all these disruptions? It is the return to reactive mode for most of the supply chain and logistics teams and an unprepared response to these disruptions. In a 2021 study on supply chain disruptions by Deloitte, 40% of CFOs indicated that supply chain shortages or delays increased their companies cost by 5% or more. And 60% said that year’s sales had either been reduced or will be as a result of these supply chain disruptions.

Terence: What do our teams do when these disruptions happen?

Geetha: They jump in. They replan to preserve profitability. They try to limit the customer impact. And all of that is only achieved through visibility, sophisticated and global optimization. And there’s a lot of human decisions involved in that as well.

While planners are all over these major disruptions trying to tune their optimizations on their networks, there are also micro-disruptions that happen on a day-to-day basis. There are traffic congestions and traffic patterns, equipment type versus specific road conditions. Planners are constantly thinking: Are there shipments reaching the customers on time? Are the trucks following the planned routes? Are carriers performing at par?

And what we see is that some of the small recurring disruptions typically get handled by the planners or skilled drivers. But the planners really need a way to expand scale and to be able to tackle it at a more global level.

Terence: All good points. I would add that additional motivation comes from customer-centricity and the explosive growth of e-commerce and omni-channel commerce, which bring new challenges to logistics operations.  

Looking for Long-Lasting Improvements

Terence: What are the medium- and longer-term improvements that logistics professionals are looking for to enable disruptions?

Geetha: First and foremost, logistics teams are working hard to prevent late deliveries that are caused by all the disruptions we discussed earlier. They are focused on improving their KPIs including:

  • Reducing Customer Acquisition Cost: Cost of convincing a potential customer to purchase your product/service.
  • Increasing Customer Retention Rate: What percentage of customers still shop with you at the end of a period compared to at the beginning of it. Most customers who experience a late delivery tend to abandon a business rather than stay on.
  • Improving Customer Lifetime Value:  This is the amount of money a customer spends on your business in their lifetime and goes towards the long-term viability of a business.
  • Brand Image: As omni-channel demand grows, if those parcels to be delivered to consumers are late, it will impact customer sentiment. In the e-commerce industry, if the items arrive late, customers may not purchase from the same retailer again. Many customers cannot differentiate between a brand and a retailer, no matter whose fault is it; if the deliveries are late, customers will associate it with the brand. Online customers will choose a competitor over a business if it has a poor delivery experience.

An older study by Voxware revealed that: 

  • 69% of customers are not likely to buy from a retailer if their purchased item does not reach them within two days of the scheduled delivery date. 
  • 14% of customers will stop buying from a retailer after getting late delivery once. 

Logistics teams and personnel are focused on the concept of fast and hassle-free shopping through e-commerce and prevent a customer having to go through the trouble of searching for their parcels.

Terence: How important is sustainability in the equation nowadays?

Geetha: Logistics operations are regarding the environment more, especially in reducing carbon footprint. Re-delivery attempts result in increased carbon footprints or greenhouse emissions.  According to the Environmental Protection Agency (EPA), almost 27% of all carbon footprints in the U.S. is due to logistics, which includes e-commerce logistics and delivery. The focus for many companies is to have a more sustainable delivery to limit the impact on their carbon footprints.

Innovations and Machine Learning Will Save the World

Terence: You and the teams are working on innovations that can ease the lives of many logistics professionals. Can you share with us some of these innovations?

Geetha: We’ve developed quite a few innovations and native SaaS modernizations over the last two years that would benefit the logistics teams:

  • Load Building: Build inventory aware loads and provide optimal containerization plan for the loads through the use of optimization capabilities.
  • Dynamic Price Discovery: A software service that enables real-time rate discovery and tendering to dynamic capacity providers who are onboarded and certified as part of the Blue Yonder Network. They may be utilized by shippers as freight transportation providers and enables shippers to secure market driven freight rates.
  • Transportation Modeling: Easy-to-use SaaS application to determine the best way to operationally set up and run an existing transportation network through the use of optimization and analysis capabilities. This enables planning for future business and contributes to profitability analysis.
  • Transportation Smart Planner: This is our new and simplified UI for Transportation Planners residing on Luminate™ Platform on Azure. We have an improved simplicity paradigm for load planner visibility to KPIs and load plan adjustments, decreasing time to resolution and improved customer service and cost improvements. With prescriptive resolution recommendations where planners can enable pre-defined workflow resolution for common load plan editing tasks, including underutilized load efficiency and scheduling failures.
  • Carrier Collaboration: Seamlessly connect multiple carriers with a single, always-on service. It enables complete tender-to-deliver transactional workflow seamlessly with our Transportation Management System (TMS).
  • Parcel: Tender to deliver workflows for booking, track and trace, delivery confirmations are now supported in TMS with direct integration to Carrier Collaboration. Through the Blue Yonder network service we are now providing UPS and FedEx connectivity out-of-the-box in Carrier Collaboration.
  • Routing guide functionality: It enables planners to define priority rules for carrier and service selections. The rules can be based on geography, customer, division, and logistic group, as well as additional constraints by dimensions such as weight, volume, pallets, and container size.

Terence: AI and ML are spoken about all the time. What are the innovations in this area that you can share?

Geetha: A McKinsey study called “The state of AI in 2021” reveals that across organizational functions such as HR, Marketing, Supply Chain, Product, and Service Development, respondents report higher levels of cost decreases from AI adoption in the pandemic’s first year, while revenue increases held steady. 27% of respondents report at least 5% increase of EBITA attributable to AI. AI’s prospects remain strong. Nearly two-thirds of the respondents say their companies’ investments in AI will continue to increase over the next three years.

This is exactly the vision we took to introduce ML enhancements. AI/ML has become an integral part of future roadmap and our goal is to provide best-in-class, ML-enhanced optimization and execution, promoting intelligent supply chain response powered by the native SaaS Blue Yonder platform service. We see AI/ML playing a key role where systems sense, learn, adapt, and either provide recommendations or take actions both in terms of workflow changes as well as day-to-day decisions. ML add-ons integrate to planning and execution lifecycle and add to existing TMS solution and practice; these learnings can then be fed back into the optimizations for decision support.

Luminate Transportation Insights, a Blue Yonder solution, utilizes ML-enabled predictive analytics to assess factors that impact on-time delivery of loads and provide decision support based on preventive supply chain risk management. Let’s imagine an ML model can learn from all the corrections that initial plans have been subject to during execution, either through tacit knowledge of a driver or particular load/equipment/road combinations and conditions. Then new plans, to be executed shortly, can be “preemptively corrected,” therefore, limiting the risks of lateness and maximizing the opportunity to achieve significant ROI.  

This AI-assisted predictive scheduling is aimed to help plan, for example, better sequenced and timed loads, which have less disruptions, less delivery failures, and have a balance between productivity, safety of the personnel that are delivering the goods and the quality of deliveries. In today’s dynamic, disruptive omni-channel environment, customers need a modern supply chain platform that helps deliver with a competitive edge and enables customers to predict, pivot and fulfill faster. Our vision is to have customers gain end-to-end control and extended supply chain visibility from international to last mile, enabled by connected, real-time edge data and networks to Blue Yonder’s Luminate Platform and other solutions.

More Insights to Come

In subsequent blog posts in this series, we will explore innovations in warehouse execution, micro-fulfillment, omni-channel commerce and fulfillment, control tower, supply chain planning, and Luminate Platform!

Original Article Posted on BlueYonder

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