3 / 2022 SOURCING REPORT 09050715202530 Contents Taking Stock By the Numbers Supply Chain Woes Force Industry to Rethink WitheLogisticsAdaptability:HeritageToughestSupplytheAttaboticsInvesting?WhereFollowingRemainsLogisticsVisibilityInventoryStrategiesMarketRedHottheMoney:isFlexportTurnstoAnttoSolveChain’sProblemsandGeodisGrowingItsCustomers 44344147 These Names Are Altering WarehouseHowFullTechAutonomousIn-HouseWayfairLogisticstheLandscapeOnLogisticsTruckShiftsIntoGearHighCanRentsGo?
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STOCKTAKING
Deliverr, which closed on a $250 mil lion Series E in November, uses predictive analytics to assist with inventory plan ning in warehouses.
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The company views itself as a competitor to Amazon Prime’s two-day delivery service, with a user base that includes sellers on Shopify, Amazon, Walmart and Wish.
■ ROBOTICS ARE RED HOT. In the lastest move, VisionNav Robotics, a global manufacturer of driverless industrial vehicles, announced a C+ round of more than $80 million led by Meituan and 5Y VisionNavCapital.Robotics, based in Shenzhen, China, said the funding will be mainly used to research new technology and innovative forms of product development, and to optimize product perfor mance, focusing on product stabil ity and standardization, as well as to promote large-scale implemen tation and localized delivery for globalThecustomers.companyis committed to applying artificial intelligence (AI), environmental perception, deep learning, servo control and other core technologies to industrial vehicles, providing autonomous ve hicles and flexible unmanned solu tions for intralogistics in factories and warehouses. So far, VisionNav Robotics said it has developed nine series of driverless industrial vehi cles and robot control systems. Since its last round of funding, VisionNav Robotics has acceler ated its globalization and set up marketing centers in more than 30 countries and regions. The company has successfully delivered more than 350 projects, more than 1,500 autonomous forklifts and un manned tractors, covering textiles, auto parts, tires, petrochemicals, tobacco, food, pharmaceuticals, 3C electronics manufacturing, e-commerce logistics, third-party logistics, printing and papermaking.
Shopify’s ambitions of building out a full-service logistics business gained trac tion with its largest acquisition to date of e-commerce fulfillment company Deliverr.
The deal is valued at about $2.1 billion and further builds on the Shopify Fulfill ment Network (SFN) as the company looks to be the go-to logistics company for sellers.
Li Luyang, CEO of VisionNav Robotics, said under the backdrop of geopolitical tensions and the ongoing pandemic, the robot industry has ushered in a year of “challenge” and is moving toward a stage of large-scale and standard ized delivery. VisionNav Robotics has gradually shaped the ecology around unmanned intralogistics, improved its integration with the supply chain and built a competi tive barrier for the company.
Last month, Pitney Bowes and robotic sorting systems specialist Ambi Robotics announced a $23 million deployment expansion of AmbiSort systems in Pitney Bowes’s U.S. e-commerce hubs. The AI-pow ered robotics will help Pitney Bowes speed parcel sortation to last-mile delivery providers, while improving productivity, accuracy and worker safety. –Arthur Friedman
—Kari Hamanaka
Robotics Revs Up SHOPIFY BAGS DELIVERR
SFN takes care of the activities that occur in the supply chain after an order is placed, offering competitive delivery speeds, a sim plified return logistics process and a new warehouse management system developed in-house that’s being used at a few of the company’s “key” locations, Finkelstein said.
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Robotics logistics has been seeing much activity of late. Boston Dynamics, a specialist in mobile robotics, announced recently that Stretch, its newest robot designed specifically for warehouses and dis tribution centers, is now available for commercial purchase. Part of a new generation of mobile robots, Stretch was introduced in Spring 2021 and has been in pilot testing with a select group of customers. All units scheduled for 2022 de livery have sold out, the company said, with strong demand from ear ly customers, including DHL Supply Chain, Gap, H&M and Performance Team-A Maersk Company.
“Right now, merchants have to fumble through this maze of freight providers, 3PLs, middle- and last-mile carriers, just to name a few,” Shopify president Harley Finkelstein said.
The warehouse technology will be rolled out across SFN by the second quarter, ac cording to DeliverrShopify.“pairsperfectly together” with SFN, “which is already fulfilling one million orders a month,” Finkelstein said. “And, what we end up with in the end is this mer chant-obsessed, end-to-end software and logisticsFinkelsteinplatform.”went on to add Deliverr is “software first” and asset light, making it an attractive acquisition for Shopify. The company is touting the buildout of a full-service logistics arm as a way for smaller businesses to navigate through the current supply chain operating environ ment and supply chains will only become more complex even after some semblance of normalization occurs, while also helping those same businesses compete with larger players in the market. That was also made clear when Shopi fy struck a deal valued at $450 million for warehouse robotics and fulfillment soft ware maker 6 River Systems in 2019. Notably, Shopify also participated in the February Series E round of digital freight forwarder Flexport, which totaled $935 mil lion and brought the company’s valuation up to about $8 billion. The strategic invest ment was Shopify’s first in Flexport, the lat ter having a long-term goal of streamlining global trade.
Request a demo now on Onewww.qimaone.comcollaborative platform for data-driven product quality and compliance management Prevent quality defects Automate reporting Track supplier performance Map your supply chain John!Welcome Defect SeverityFailure Rate one 8,995 Defects found 35984498899+2.1% Inspections by LocationInspections379 156281114 182721 5 8 4158 57.8% Defect Rate 5.7%-0.6% Beyond AQL Rate 38.9%+33.6% Pass Fail 67 38 61 56 4746 06-Jan29 20-Jan 03-Feb 17-Feb Inspections 35
7 / 2022 SOURCING REPORT Potential reduction in errors when utilizing AI-powered demand forecasting tools. 50% BY NUMBERSTHE $761 billion Estimated value of retail returns in 2021. 100150200500 2014 2015 2016 2017 2018 2019 2020 2021 89.1 183.8 119.9 134.2 116.2 142.7dollarsU.S.billoninVolume SHOW ME THE MONEY After a pullback in 2020, the value of logistics and transportation M&A deals rocketed higher in 2021. 99.8 219.1 Source: Statista
I nventory management has always been a substantial challenge for ap parel retailers, but with the seeming ly insurmountable supply chain sna fus of the last two years, it has been thrust to the top of the industry’s concerns.
Joe Schmitt, a managing director at AlixPart
Inventory planning now often requires systems that can determine where stock outs need to be replenished at the drop of a hat, all while accounting for factors such as available raw materials and finished goods, population in proximity to stores, upcoming weather patterns and the time taken to de liver from fulfillment centers to stores. With all of these factors in play, plat forms that can offer real-time suggestions and predictions based on various streams of data are a necessity.
A June 2021 survey from Coresight Re search pulled back the curtain on just how important artificial intelligence-based in ventory management systems can be for a brand’s top line.
As shipments from China remain stifled and goods stay stuck out at sea for weeks at a time, merchants have a choice to make: con tinue tracking manually or with legacy plat forms—or invest in technologies designed to provide merchandising teams with real-time inventory visibility.
Supply Chain Woes Force Industry to Rethink VisibilityInventoryStrategies
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If one were to scour recent earnings calls, it’s obvious that retailers and brands are stacking up on inventory to satisfy in coming consumer demand. Whether it’s department stores like Nordstrom, Macy’s and Kohl’s, athleticwear giants like Nike, offprice chains such as TJX and Ross Stores, or denim stalwarts like Levi’s and Abercrombie & Fitch, apparel and footwear are doing ev erything possible to carry more product.
ners, told Sourcing Journal in a December podcast that many retailers are essentially “buying blind” and too far out. “I don’t think anyone has a clear game plan moving forward around what exactly they need to do [to plan inventory,]” Schmitt told Sourcing Journal founder and president Ed ward Hertzman in the conversation. “I think the theme is really, ‘How can we be as flexible as possible while still being differentiated in the market?’ And that balancing act is what everyone’s trying to figure out right now.”
Given that inflation concerns could put a damper on discretionary spending at a moment’s notice, sellers cannot necessar ily afford to carry excess inventory just be cause today’s customer demand is high.
9 / 2022 SOURCING REPORT GLENN TAYLOR HOW NIKE, PACSUN, HANESBRANDS AND CALERES UTILIZE TECH TO OPTIMIZE INVENTORY ASSORTMENT.
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NIKE’S TECH ACQUISITIONS FORTIFY
Nike has been at the forefront of invento ry optimization in recent years as it began a larger pivot to direct-to-consumer sales. The athleticwear and footwear giant ac quired predictive analytics and demand sensing firm Celect in August 2019 to help improve its in-house localized demand pre dictions and better serve consumers on a personalized basis.
Increase in inventory position over same period last year.
RossLaurenAEONikeMacy’sKohl’sLevi’sTJXStoresNordstromGapInc.A&FAsos Urban Outfitters Boohoo 7% 14%15%16%18%20%22%23%23%23% 30% 42% 46% 51% Source: Company filings
Of 170 retail executives surveyed, more than 80 percent estimated their company lost sales of at least 3 percent due to alloca tion issues such as infrequent stock replen ishment. Unfortunately, the number only gets higher for some retailers—57 percent of the respondents said that at least 3 to 6 per cent of total sales were lost, while 18 percent said allocation issues negatively impacted as much as 6 to 9 percent of sales.
“Lost sales should be minimized. Will they happen? Yes, but if you’re using true science, it should be very much minimized,” said Prashant Agrawal, CEO of Impact Analytics. “The same thing with excess inventory. When you look at that, the allocation is pure sci ence. If you’re touching this too much, you’re already lost around this, and that’s what we see with teams. You really want them to make this the autopilot part of the process.”
Despite the data suggesting that alloca tion and inventory replenishment issues are a recurring problem, brands simply still ar en’t doubling down on the tools necessary to maintain the right balance. The Coresight report indicated that only 17 percent of sur veyed retail execs indicated they use more advanced forecasting techniques such as real-time machine learning-powered mod els. The highest percentage (37 percent) use Excel-based forecasting to calculate formu las, while 26 percent use statistical models such as time-series forecasting. Another 20 percent, still use manual, “gut-based” fore castingThatmodels.couldbe a costly mistake, as retail ers and brands that are putting more time and money into advanced forecasting are seeing results.
Ralph
REGIONAL DISTRIBUTION NETWORK
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A Coresight report indicated that only 17 percent of surveyed retail execs indicated they use more advanced forecasting techniques such as real-time learning-poweredmachinemodels.
In leveraging the Antuit.ai Allocation solution, Pacsun reduced the median num ber of miles needed to fulfill an order by 96.7 percent, cutting fulfillment costs and im proving delivery speed. The retailer said the implementation also resulted in more accu rate forecasting for its in-store and online demand, and a balanced inventory between stores and its e-commerce distribution cen ters, delivering higher sell-through rates, re duced markdowns and improved margins.
HanesBrands, which owns the Hanes and Champion brands, implemented the cuts af ter an internal strategic review of its supply chain technology and infrastructure to close out 2020. In February 2021, HanesBrands CEO Steve Bratspies unveiled the SKU re duction plans in the company’s earnings call, alongside the implementation of a new formal product life cycle management pro cess (the company has not publicly revealed which technology partners it works with for eachOverall,initiative).the moves were made to en hance product design and consumer focus and streamline product offerings, which in turn lowered costs, improved in-stocks also drove higher-margin SKUs. The firm also consolidated suppliers to cut costs, and it plans to add distribution capacity in the second half of 2022 and into next year to The Beaverton-based behemoth later ac quired data integration platform startup Da talogue in February 2021, with the intent to integrate data from all sources—whether it be the from the mobile app, the supply chain or enterprise data—in one standardized platform. Nike can leverage this centralized data to create real-time dashboards and pre dictive models, and synchronize data Wi-Fi access points or application databases to gain real-time inventory visibility.
AI PACSUN TO DOUBLE
COMPLETED SHIPMENTS, IMPROVE FORECASTING Ahead of the 2020 holiday season, Pacsun partnered with AI-powered demand fore casting and inventory optimization tech nology provider Antuit.ai to better leverage 100 of its stores as e-commerce fulfillment centers. With the tech in hand, the Cali fornia-based lifestyle brand unveiled it had doubled its completed shipments by better anticipating online demand and expanding its fulfillment network.
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HANESBRANDS, CALERES CUT SKU COUNTS TO FOCUS ON BEST-SELLERS
Forecasting doesn’t have to be the only area where fashion companies can look to opti mize inventory management capabilities. In an era where precision is everything and no product can go to waste, innerwear and activewear apparel company HanesBrands managed to achieve an impressive milestone in 2022, reducing its overall SKU count by 30 percent from the year prior.
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In leveraging the platform, Pacsun has cross-examined variables such as stock avail ability levels, picking and packing costs, shipping costs based on the location and proximity to the customer, markdown liabil ity and returns probability. Gaining more in sight into these variables enabled Pacsun to make faster, more efficient choices to meet shopper needs.
Using AI and machine learning capabili ties, Nike said it has since been able to de liver products faster and more accurately, all while bolstering its omnichannel fulfillment services such as buy online, pick up in store (BOPIS), ship to store, a “no rush” shipping option for consumers prioritizing sustain ability, and direct order drop service.
“As we continue building a digital-first supply chain globally to serve consumers more directly at scale, we have already tri pled our capacity to serve digital consumers in North America and Europe, the Middle East and Africa over just the past two holiday seasons,” said Andrew Campion, Nike chief operating officer, in a January statement.
The advanced demand sensing and in ventory optimization technology platforms have supported Nike’s recently expanded multi-node regional distribution network.
ENABLES
While Nike initially operated almost entire ly through centralized, national distribution centers in Memphis, Tenn. prior to winter 2020, the Swoosh has since built regional service centers outside of Los Angeles, Beth lehem, Pa. and Dallas.
Now that there is more of a hiring mar ket for capable employees who can work with more sophisticated demand forecasting and predictive analytics capabilities, today’s fashion brands have even more incentive to build out their inventory optimization investments in 2022 and beyond. With the right people and technologies in place, sell ers may be able to gain a slight advantage over their contemporaries even as supply chain constraints are expected to continue. grow its DTC business.
“You need to not only know what data to use, but almost as important is what data not to use, and really having a methodical
Part of what made the earlier Nike ex ample so successful is that the company al ready has a data-driven background. And the good news in apparel retail is that it appears brands are following suit in bringing in the right people to make this technology work.
“We can go further, by the way,” Bratspies said in the company’s most recent earnings call in February. “I don’t think we’re done. I think we have opportunities to continue to build and continue to grow in that space and be really Whiledisciplined.”HanesBrands—similar to many of its contemporaries—saw its total inventories increase 16 percent at the end of 2021, the company believes the SKU rationalization has further aided their team in managing the excessFootwearproduct.giant Caleres, which owns the retail banner Famous Footwear and brands across the shoe spectrum like Sam Edelman, Allen Edmonds, Vionic, Ryka and Naturaliz er, has taken a similar route to HanesBrands in deploying its “edit to win” strategy across its brand portfolio. Like the innerwear seller, Caleres is tightening its overall SKU count to enhance productivity and cut costs, “while building on the successful in-demand prod ucts that consumers want,” according to CEO Diane Sullivan in the company’s March earnings call. As of March 2022, the footwear producer cut back the SKU count of its owned brands by approximately 10 to 15 percent, Sullivan noted, with the potential for 10 percent more down the line.
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approach around that and how it plugs into the go-to-market cadence in your business,” Schmitt said.
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“Making this increase even more signifi cant is the fact that overall head counts con tinued to climb in 2021,” the report said. “In other words, the proportional increase of da ta-related employees on fashion teams was not a result of overall reductions in head counts. Thus, fashion retailers have made a demonstrative acceleration of these profes sionals onto their teams.”
A September 2021 survey from Nextail indicated that top fashion brands employed 40.3 percent more data-related professionals than they did in 2020, leaping from an aver age of 5.8 employees per $1 billion in revenue to 8.2 Thestaffers.studydetermined that Levi Strauss & Co. is the most “retail data-forward” of the 22 leading fashion companies researched, given the denim manufacturer a “retail da ta-forwardness” score of 27.4. This score is measured by the total number of data-relat ed professionals divided by the revenue of eachLululemonretailer. came in as the second most data-forward fashion company at 18.5, while Nike placed third in the metric at 18.1. Burb erry and PVH rounded out the top five in collected “data-forwardness” scores.
COLLABORATION, QUALIFIED HIRES CAN’T BE OVERLOOKED AMID DATA SURGE Having the right predictive forecasting and inventory optimization technologies in place can better help brands improve their interde partmental data usage. Retail analytics teams already have access to plenty of information, but they won’t be able to gather the most rel evant insights if they are not connected to the merchandising and buying activities.
Request A Demo Increase Operational Efficiency Effectively Manage Inventory Levels Increase Inventory Accuracy Improve Visibility & Service Master Omnichannel Fulfillment
GLENN TAYLOR A s the global supply chain con tinues to experience ongo ing port congestion and la bor shortages, more logistics firms are realizing that it may be more prudent to consolidate operations, pair up complementary departments and share technologies and shipping networks.
“By investing in first mile, middle mile and last middle and integrating them, we meet a clear customer demand.”
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—Narin Phol, Maersk North America
Pilot operates a transportation network of 87 stations and hubs across North Amer ica, through which freight is transported and distributed to end customers. The company mainly uses third-party truck ing providers, encompassing full truckload (FTL) and less-than-truckload (LTL) for both B2C and B2B distribution.
MAERSK/PILOT FREIGHT SERVICES AP Moller Maersk closed out 2021 with a $3.6 billion deal to acquire LF Logistics Holdings Limited and gain a larger physical foothold in Asia, and the ocean freight giant made moves just two months later with the acquisition of first-, middle- and last-mile logistics provider Pilot Freight Services for $1.68 billion.
The acquisition came as the accelera tion of e-commerce shopping required sup ply chains to ship more big, bulky items to businesses and homes alike. Pilot’s service includes heavy and bulky shipments with white glove service with a focus on expedit ed and time definite services.
Maersk operated 61 such stations and hubs across the continental U.S. and Cana da, but the Pilot deal gives it access to new centers in Alaska, Mexico and Cuba.
Sourcing Journal highlights five logistics acquisitions in 2022 that could shift how product gets from its origin to the end con sumer, and identifies which players may be gaining more traction within the industry.
MEDITERRANEAN SHIPPING CO./ BOLLORE SA Maersk isn’t the only freight giant wheeling and dealing, with Mediterranean Shipping Co. (MSC) scooping up African transporta tion and logistics titan Bolloré Africa Logis
THE TRANSPORTATION AND LOGISTICS INDUSTRY HAS SEEN AN ABUNDANCE OF M&A ACTIVITY OVER THE LAST 12 MONTHS. Logistics Market Remains Red Hot
“By investing in first mile, middle mile and last middle and integrating them, we meet a clear customer demand,” Narin Phol, regional managing director at Maersk North America, said. “This acquisition will add even more ex pertise and supply chain capacity to customers facing capacity constraints and multiple hand offs with providers in the B2C and B2B space.”
16 / 2022 SOURCING REPORT tics for a whopping $6.3 billion.
The Logistyx solution is built to manage the carrier certification process to keep cli ents in compliance, while also making it eas ier to compare and review spot rate options, which is especially critical in today’s capac ity-constrained environment where rates may be Logistyxinconsistent.clientscan now benefit from a combined portfolio that can expand ship ping modes beyond parcel, and also enhance upstream capabilities to better orchestrate manufacturing, distribution, channel and trade operations.
STG LOGISTICS/XPO LOGISTICS
E2open says Logistyx will help acceler ate the firm’s subscription revenue growth, while adding a carrier library of more than 550 global carrier integrations including UPS, FedEx, DHL and USPS, to its network.
In March, supply chain management plat form E2open Parent Holdings acquired par cel and e-commerce shipping and fulfillment software provider Logistyx Technologies for $185 million, including $90 million in cash. With the combination, E2open aims to build out its global footprint for multi-car rier e-commerce shipment management, offering companies a range of shipping capa bilities needed to scale and respond to grow ing market needs.
STG Logistics is bolstering its port-to-door containerized logistics capabilities in ac LOGISTICS IS SET TO CLOSE ITS ACQUISITION OF U.K. BASED WAREHOUSING COMPANY CLIPPER BOARDS PLC.
GXO
The deal includes Bolloré’s shipping, lo gistics and terminals operations in Africa, as well as terminal operations in India, Haiti and Timor-Leste. Like Maersk’s push into Asia, MSC gets itself a significant push into a growing market that can augment its current fleet of 600 vessels and 500 ports served. Bolloré Group operates in 47 African coun tries with 16 container terminals and seven roll-on/roll-off terminals designed to carry wheeled cargo. In acquiring Bolloré, MSC gets access to a network of 85 maritime agencies that processed 7,100 port visits last year on be half of the world’s largest shipping lines.
The company manages all administrative and customs procedures for its customers both before and after transportation, for im port and export, and also manages the car riage of goods to their final destination.
E2OPEN/LOGISTYX
Additionally, the acquired business oper ates three rail concessions across the conti nent in Burkina Faso, Cameroon and Benin. MSC may not be done there, with the freight company reportedly still interested in acquiring Italian airline ITA Airways, which operates a fleet of cruise and transport ships.
E N A B L I N G D A T A - D R I V E N S U S T A I N A B I L I T Y A N D S U P P L Y C H A I N T R A N S P A R E N C Y T r a c k s u p p l i e r p r o d u c t s , p r o c e s s e s , c o m p l i a n c e , a n d c e r t i f i c a t i o n s . P r o v i d e s u p p l y c h a i n v i s i b i l i t y t o c o n s u m e r s w h o w a n t t o k n o w h o w a n d w h e r e t h e i r p r o d u c t s a n d c o m p o n e n t s a r e m a d e S h o w c a s e y o u r c a p a b i l i t i e s w i t h p o t e n t i a l c l i e n t s . C o m p l i a n c e d r i v e n . C o n s u m e r c o n n e c t e d . TRANSPARENCY.SIMPLIFIED. A n o t h e r s u p p l y c h a i n s o l u t i o n b y n a t i f i c A G n a t i f i c . c o m BOMLER BY NATIFIC
Prior to the deal, STG operated a nation wide facility network comprised of 28 port locations totaling more than 5 million square feet. The company has more than 65 inland delivery partners who enable last-mile access to all major metro areas, the Chicago-based logistics firm says. “Once combined, the STG network will be able to handle a container from the in stant it’s ready at a port or customer facili ty to the moment each individual shipment arrives at its final destination, all the while providing customers full visibility and a sin gle source of accountability,” said STG CEO Paul Svindland in a statement.
GXO, headquartered out of Greenwich, Conn., handles warehousing distribution for global apparel giants like Nike, Zara, H&M and Abercrombie & Fitch. The company has a portfolio of more than 900 warehouses to taling 195 million square feet.
MAERSK HAS BEEN EXTREMELY ACTIVE ON THE ACQUISITIONS FRONT.
GXO LOGISTICS/CLIPPER BOARDS GXO Logistics, the contract logistics firm that split off from XPO Logistics in August 2021, outlined its proposed acquisition of U.K.-based warehousing company Clipper Boards plc in February. The deal, still pend ing regulatory approval, would be worth ap proximately $1.3 billion. Clipper specializes in e-commerce lo gistics and works with major U.K. fashion brands and retailers like Asos, John Lewis, River Island and Superdry among others.
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quiring the intermodal division of container transportation services provider XPO Logis tics for $710 million in cash. Already providing services including container deconsolidation, reconsolida tion, transloading, warehousing and even last-mile delivery, now STG will integrate the intermodal segment’s rail brokerage and drayage services through 48 locations with a fleet of 11,000 containers, 2,200 trac tors and 5,200 chassis.
For GXO, the acquisition could help the company build opportunities for both busi nesses in the e-commerce and online ful fillment. Additionally, the deal combines complementary service offerings, customer portfolios and footprints in the U.K. and Europe. In particular, with Clipper in the fold, GXO can expand its current geographic presence in Germany and Poland. The Clipper acquisition would be GXO’s first move into multi-tenant warehousing, meaning that it operates warehouses with more than one company’s products stored inside. GXO traditionally builds out and op erates dedicated facilities tailored to each client’s specific needs.
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The company, with an $8 billion valua tion that CB Insights said made it the eighth largest supply chain tech unicorn as of the first quarter, sells a digital platform compa nies can use to track their shipments, man age orders, clear Customs and measure their carbon footprint.
A look at Flexport’s cor porate venture arm, Flexport Ventures, and its founder and CEO Ryan Petersen’s invest ment activities clearly indicates the compa ny doesn’t see itself as the sole solution to shippers’ supply chain challenges.
“Flexport Ventures’ thesis is that the world’s supply chain infrastructure needs to be rebuilt for the digital age,” the company said in a job posting, which went on to add, “Flexport has been a steward” of the digital charge and “is creating an ecosystem for oth er great companies to build on top of.”
A CLOSER LOOK AT THE TECH THAT HAS NABBED THE ATTENTION OF THE DIGITAL FREIGHT FORWARDER AND ITS FOUNDER.
WHAT: Online-based, 10-minute grocery delivery service AIRHOUSE ROUND: $11M, Series A
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AMPLEMARKET ROUND: $12M, Series A DATE: April 2022 INVESTORS: Comcast Ventures, Armilar Venture Partners, Flexport, Caixa Capital and angel investors WHAT: Artificial intelligence-backed selling platform NINJA DELIVERY ROUND: $2.8M, Seed DATE: March 2022 INVESTORS: Lachy Groom, Contrary Capital and Flexport
KARI HAMANKA F lexport says it wants to make global trade easy for everyone, and fueling the growth of other tech start-ups has become a criti cal part of that playbook.
In other words, if Flexport, which capped last year with revenue of $3.3 billion, doesn’t offer it, the company sees a strategic advan tage in being an investor in companies that do. To that end, Flexport Ventures ended the first quarter as the third most active investor in the space, CB Insights data revealed. Here is a look at the investments attached to the company or its executives since the start of the year.
Following the Money: Where is Investing?Flexport “Flexport Ventures’ thesis is that the world’s supply chain —Flexportforneedsinfrastructuretoberebuiltthedigitalage.”
SECUREFRAME ROUND: $56M, Series B DATE: February 2022 THE FLEXPORT PLATFORM. Current
Artificial intelligence-backed recruit ing platform with a focus on positions in retail, light industrial and distribution
billion$8
INVESTORS: Accomplice Ventures, Kleiner
valuation of Flexport.
21 / 2022 SOURCING REPORT DATE: March 2022 INVESTORS: DNX Ventures, Elizabeth Street Ventures, Gaingels, James Beshara, Re moteNative Ventures, Trajectory Capital, Flexport, Easypost and angel investors WHAT: E-commerce operations and logistics platform for direct-to-consumer brands KARGO ROUND: $25M, Series A DATE: March 2022 INVESTORS: Sozo Ventures, Founders Fund, Activant Capital, Flexport, Human Capital, Strike Capital, Lineage Ventures WHAT: Digital platform offering visibility into freight movements, facility operations POWERED BY PEOPLE ROUND: $1.5M, Seed DATE: March 2022 INVESTORS: Susa Ventures, Golden Ven tures, Flexport Ventures, J Ventures and the founders of DraftKings and Fabric WHAT: Online marketplace for wholesalers FREIGHTPAY ROUND: $2M, Seed DATE: March 2022 INVESTORS: Better Tomorrow Ventures, Defy, Flexport, Socially Financed, BAM Ventures WHAT: Freight payment automation software DELIVERR ROUND: $40M, Series C DATE: March 2022 INVESTORS: Activant Capital, 8VC, GLP, Ryan Petersen WHAT: E-commerce fulfillment SILQ ROUND: $17.6M, Series A DATE: March 2022 INVESTORS: F-Prime Capital, Flexport Ven tures, Eight Roads Ventures India, Surface Ventures and Forum Ventures WHAT: First mile visibility platform for fash ion companies OWNER.COM ROUND: $15M, Series A DATE: March 2022 INVESTORS: Altman Capital, Redpoint Ven tures, Day One Ventures, Ryan Petersen and angel investors WHAT: Digital platform for restaurants to manage online orders EMI LABS ROUND: $11M, Series A DATE: February 2022 INVESTORS: Merus Capital, Khosla Ventures, Flexport Ventures, FiDi Ventures, Lorim er Ventures, PrimeSet and Ryan Petersen among other angel investors
WHAT:
THE POWERED BY PEOPLE ONLINE MARKET PLACE FOR WHOLESALERS, FEATURING SMALL BATCH SELLERS HAILING FROM 50 COUNTRIES. A VIEW OF THE SILQ PLATFORM DASHBOARD.
PARSYL ROUND: $25M, Series B DATE: January 2022 INVESTORS: HSCM Ventures, Lineage Ventures, Flexport Ventures, GLP Capital Partners and Luna WHAT: Refrigerated cargo insurance and risk management software
WHAT: AI-backed software to help retailers, brands, suppliers and manufacturers with quality and compliance
23 / 2022 SOURCING REPORT Perkins, Optum Ventures, Gradient Ven tures, Soma Capital, Impatient Ventures, Gaingels, Kaiser Permanente, Flexport and angel investors WHAT: Security and compliance software COAST ROUND: $27.5M, Series A DATE: February 2022 INVESTORS: Accel, Insight Partners, Avid Ventures, Better Tomorrow Ventures, Box Group, The Fintech Fund and Flexport WHAT: Expense management software for vehicle fleet companies ANVYL ROUND: $15M+, Series B. DATE: Feb. 15, 2022 INVESTORS: B Capital, AlleyCorp, Company Ventures, First Round Capital, RedPoint Ven tures, Buckley Ventures, Flexport and Warby Parker and Harry’s founder Jeff Raider WHAT: Supply chain management software for sourcing, production and logistics among other activities AMITRUCK ROUND: $4M, Seed DATE: February 2022 INVESTORS: Better Tomorrow Ventures, Dynamo Ventures, Rackhouse Ventures, Flexport, Knuru Capital, Launch Africa Ven tures, Uncovered Fund and angel investors WHAT: Digital marketplace connecting ship pers and transport providers INSPECTORIO ROUND: $50M, Series DATE: January 2022 INVESTORS: Insight Partners, Ecolab, Match stick Ventures, Techstars Ventures and Flexport Ventures
PASSPORT ROUND: $39M, Series B DATE: January 2022 INVESTORS: TCV, Flexport, FJ Labs, Pure Imagination, angel investors, M13, Resolute and River Park Ventures
WHAT: International parcel shipping for e-commerce MEIGHT ROUND: $1.4M, Seed DATE: January 2022 INVESTORS: Faber Ventures, Grupo Lusiaves SGPS, Superlyst Ventures, European Institute of Innovation and Technology, Dispatch Ventures, Ryan Petersen, Unbabel founders and angel investors
WHAT: AI-backed platform to help trucking companies and drivers manage their fleets and fuel consumption
Kelvin Su: Many businesses today feel the need to “check the box” for digitalization, which to many just means recording data in a digital format instead of with pen and paper. But it’s crucial to have the right tools to process that data in a mean ingful way for management and end users. With the right data, presented in the right way, teams can make decisions driven by empirical data as opposed to an individual’s experiences, which are limited and could be biased. How can supply chain technology drive efficiency?
Many fashion companies don’t fully understand what digital transformation means or what’s possible with technology, rely ing instead on manual methods and anecdotal evidence. Here, Kelvin Su, founder and president of supply chain solutions provider LTLabs, explains why companies need to fully adopt a digital mindset within their operation, and why digital trans formation requires a total transformation of culture.
K.S.: Productivity, quality and non-productive time are all key variables to derive efficiency, and this is the number one met ric that reflects how a business is operating. When efficiency improves, instead of looking at cost reductions, businesses can increase their productivity at the same cost. This provides much more value as your fixed overhead costs remain consis tent, and any additional production will be reflected directly in your bottom line. Digital transformation puts data into the hands of everyone, and companies can engage in a cultural shift where management teams empower workers to make more decisions and judgements based on the data they have on hand. This further elevates your workforce and makes the overall operation more efficient.
What are some of the challenges for companies to adopt tech nology and embrace a mindset of change?
“ Digital transformation puts data into the hands of everyone.”
Sourcing Journal: Do companies jump into digitalization with out really knowing with they’re going to do with all that data?
MUST FULLY EMBRACE
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K.S.: Leaders in an organization need to fully understand the technology themselves, embrace it, lead through example and be consistent in their direction on utilization of digital tools. This is necessary to enact any kind of major change. To smooth the transition, LTLabs offers a modular set of products that lets companies start small then add on different products as they grow more comfortable with the technology. This allows them to phase the approach to digital transformation result ing in less of a “shock” to the workforce. Second, we place
strong emphasis on the User Experience (UX). We design our user interfaces according to best UI practices in the mobile app industry, reduce the number of steps required to perform a task, and integrate (or eliminate when possible) all traditional workflows as seamlessly as possible. Integration of technology to achieve common objectives is crucial. How can supply chain companies make sure this works seamlessly? K.S.: LTLabs provides APIs [Application Programming In terface] to allow for interaction with other applications. If businesses have their own IT teams which are capable of inte gration with our APIs, the possibilities for seamless transfer of data and one source of truth is vast. If not, we can provide the service to perform the integration for you. It is important for companies to utilize APIs so that we could eliminate manu al data entry and the exchange of Excel files (non real-time data), and ensure accuracy with a single source of data – this reduces mistakes and increases efficiency. A common analogy is one of ordering food: You wouldn’t order off the Jill’s Pizza menu if you wanted a burger from Jack’s Burgers, would you? You’d be met with confusion, and the kitchen wouldn’t serve up the dish you tried to order.
CORPORATE MIND-SETS DIGITAL TRANSFORMATION
“Attabotics is a lot more than just cool robots,” Gravelle will tell you, although he tacks onto that sentiment that they do
Attabotics—Scottthisdoesimprovementhave.youimproveincrementallythenetworkcurrentlyIncrementalnotsolveproblem.”Gravelle,
“That was the work I was doing when I got this crazy idea [for Attabotics],” he said. “So, my résumé is not typical for a tech entrepreneur.”
KARI HAMANAKA A n autodidact who studied nurs ing has modeled his warehous ing robotics company’s service offering on the leaf-cutter ant, with some promising results.
Attabotics Turns To the Ant to Solve Supply ToughestChain’sProblems
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Scott Gravelle’s Calgary-based Attabot ics has raised more than $125 million to date and nabbed the attention of retailers such as Nordstrom. But the founder and CEO’s ambi tions are much bigger as he looks to be part of the next wave of innovation that upends and transforms a supply chain being led down a new path by the demands of e-commerce.
“I just like to be a problem solver,” Grav elle said of what drew him to logistics. His career path may be unique within the supply chain technology space having joined the army to become a medic before studying nursing at the University of Cal gary. Budget cuts in Canada meant fewer nursing jobs, so he went into kitchen and cabinet making, followed by residential ar chitecture before starting a longboard- and skateboard-making firm, all the while learn ing about computer-controlled manufactur ing. The experience pushed him into digital manufacturing consulting.
Attabotics, at its simplest, makes ware house storage systems and robots that use the horizontal and vertical square footage within fulfillment centers. That’s where the inspiration from the leaf-cutter ants comes into play, particularly the ants’ ability to build nest systems underground so complex they can be comprised of thousands of chambers for storage. In the case of Attabotics’ pitch to companies, the end result of using this technology is a less obtrusive, or smaller real estate footprint, that can be located closer to the end user for faster delivery.
CEO AND FOUNDER SCOTT GRAVELLE DISCUSSES SUPPLY CHAIN TECH, CUTTING CARDBOARD FROM FULFILLMENT CENTERS, THE LAST MILE AND, OF COURSE, ROBOTS.
“There’s a lot of technologies that will
“The one thing that I’ve learned is a lot of people have tried to solve the problem of atoms just with bits,” Gravelle said. “It’s time now to focus on how combining the data and the goods, the bits and the atoms, together is where the real value propositions come in. There’s only so many software optimizations you can do in the supply chain. You’ve got to create a platform that integrates with in telligence to drive real value and real trans formation. And that’s really our focus. We’re tackling the atoms and the bits, but we’re tackling them together and that’s where the real advantage we believe will be delivered.”
It’s why, Gravelle said, shippers need a platform that brings different technologies together.“There are way more problems that need to be solved and opportunities out there than there are companies there to solve them, so the demand is really high, but there’s no IBM,” Gravelle said. The reference is to the old saying that no CTO ever got fired from buying IBM, or no
AN ATTABOTICS STRUCTURE INSIDE AN ACCELERATE360 WAREHOUSE FACILITY.
One of the challenges once users get past the “gee-whiz” excitement of any new tech nology is the use case and the old saying that just because you can, doesn’t always mean you should. In the case of the supply chain, that rings even more true given the com plexity. With so many new technologies, there can be the headache of integration and chief technology officers grappling with de termining what tech plays nice with others.
26 / 2022 SOURCING REPORT make cool robots. Instead, he’s approaching the company from the main industry pain points facing modern day commerce. That includes every thing from the labor market and consumer expectations around delivery, to environ mental and sustainable considerations. That the ants are able to create such complex sys tems no one can see, offers hope something similar can be achieved for humans’ last mile systems, but the solutions won’t come from a single technology.
Numerous supply-chain start-ups have cropped up in recent years, pulling in bil lions of dollars in venture capital. Global supply chain and logistics technology invest ments totaled $9.4 billion in the first quarter of this year alone, according to CB Insights.
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William Wilcox: Our Garment Digital Twin™ process enables one user to create, edit and share 3D assets. In competitor systems, you need a designer, pattern maker and technical de signer who, in many cases, is not in the same location or time zone. What takes them days and weeks will take us minutes. How does your system take patterns and tech packs to the next level with technology while still integrating the human element?
W.W.: Our system is designed to “play nice with others.” Our approach is to be open to partnerships that will enable com panies to truly be more efficient. We do not want to invent ev erything. There are many companies out there with solutions that support a 3D workflow that we are happy to partner with.
DIGITAL
W.W.: Since we have not released product yet, I cannot share the names of the companies working with us in the beta pro cess, but know that scanning and a real virtual fitting room are part of our roadmap and will be available in 2023. By combin ing our Garment Digital Twin™ with a body scan of the custom er, we believe our solution will absolutely be lower return rates.
“ What takes them days and weeks will take us minutes.”
OFFERS PRECISION, SAVES
adjust grade rules to get a perfect fit. With our patent-pending approach, we examine the differences between the avatars with hundreds of measurements and adjust the pattern auto matically. While we fully support traditional grade rules, we are confident that after trying out parametric grading, you will never want to go back. Tech resistance can be an ongoing challenge in the fashion industry. How can your system still work with more traditional design methods?
Technology moves so fast. What does Clothing Tech have in the pipeline for the next iteration of 3D technology?
W.W.: Clothing Tech is the only 3D solution that offers parametric grading. This is a new automatic way of grading garments in 3D based on differences in the body measure ments between two avatars. There is no need to create or DESIGN TIME
Two of the major pain points in the fashion industry are due to design issues. One, development times are too long, often a year in advance. This leads to waste, unsold merchandise and discounts due to poor forecasting. Two, once apparel sales are made, whether at brick-and-mortar or e-commerce, return rates continue to plague retailers, often due to faulty fit. Some statistics show return rates at e-commerce companies at 45 percent to 50 percent.
Four years ago, a technology company named Hexagon tasked its founder, William Wilcox, to investigate industries they were not servicing and see if Hexagon’s wide range of technol ogy could help solve their problems. Here, Wilcox tells Sourcing Journal how his subsidiary company, Clothing Tech, offers solu tions with its patent-pending Garment Digital Twin™. Sourcing Journal: A company’s hope for technology is to save time, save money and save resources. How does Clothing Tech help its partner companies achieve this on all fronts?
W.W.: The Garment Digital Twin™ enables real-time apparel validation and design by automatically reading existing pat terns and tech packs and converting them into real 3D digital garments—a true twin—down to every last stitch, fit and design detail. More than a virtual sample, the Garment Digital Twin™ lets you easily edit and share in 3D while a pattern is altered independent of the user. We do the pattern making for you. Garment Digital Twin™ is the only true 3D CAD on the market. The ease of use means that no pattern expertise is needed—shortening the design process from days to minutes. Brands and retailers are increasingly concerned with design for all. How does your product allow them to easily adjust designs for more inclusive sizing?
“There’s a lot of technologies that will in crementally improve the network you cur rently have. Incremental improvement does not solve this problem,” Gravelle said. “There are very few companies that are thinking about the whole problem, the entire holistic problem and doing something about that.”
“The interest in retail real estate isn’t what to do with the old Sears stores,” Grav elleTheclarified.point is to take brick-and-mortar and pair it with automation to create what Grav elle described as hybrid ecosystems. In other words, a new generation mall that has a role in modern commerce. It also answers the questions around la bor. As expectations continue to increase around faster delivery models, pressures mount on human workers that cannot possi bly perform to the same level of productivity as a machine.
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one ever got the boot for playing it safe.
“Human beings are not pick and pack animals,” Gravelle said of the two main ac tivities that occur within a fulfillment cen ter. “The idea of having a person walking up and down aisles, pushing and pulling stuff is not a very human job, but we are spatial problemRobotssolvers.”havethe ability to create better ergonomics in the working conditions of hu mans in warehouses. It’s not so much a ques tion of will robots replace humans, but how robots help make the jobs within warehouses more, well, human. In other words, as Grav elle put it, “let the robots do the grunt work.” Robotics that allows for smaller footprint fa cilities can also bring fulfillment to more dense markets, opening up more jobs to people. Gravelle’s vision also speaks to sustain ability.“Parcel post was designed for sending stuff like shortbread cookies to Grandma at Christmas. It wasn’t designed to be the back bone of modern commerce,” he said. “It’s not efficient that way. So that’s where the big re thinkTheis.”logistics industry over the years has seen what efficiencies have come from trans formational innovations such as the ship ping container, the pallet, the forklift and the bar code.
The roadmap for Attabotics isn’t focused on bringing about incremental change. Rather, it’s on transformational change as the CEO put it. For example, Attabotics is talking to a number of retailers and other stakeholders about repurposing underutilized real estate and will be opening its West Coast pilot of fulfillment centers this year, looking to link with companies that want to make their real estate assets relevant in the digital age.
“It’s time for another one,” Gravelle said, “but that one has to be focused on single items for modern consumer expectations.”
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Sourcing Journal spoke with Bynum about natific’s technol ogies and the sustainable impact of digitalizing color creation.
Getting color correct and consistent through development the first time is of paramount importance, and ensuring that what is initially designed ends up in the final garment, shoe or textile is a long, global process.
Doug Bynum: Feasible natific Optimized Spectral Curves (nOSCs) from our Voodoo System have helped our clients execute seasonal palettes by having feasible digital color standards for product development. Our ColorWarehouse and WhiteWarehouse have always enabled brands, garment man ufacturers and mills to monitor production results remotely. The pandemic work-from-home requirements clearly demon strated the value of our cloud-based systems to our clients.
D.B.: Every fabric swatch shipment can be eliminated by using digital color standards and digital color assessment using ASAP, our web-based color development portal. If we assume the package is shipped 8,000 miles and weighs about one pound, then we can eliminate around 5.7 kilograms of CO2 emissions for every one-pound package shipped by air that distance. By eliminating lab dip submissions through online production monitoring and mill self-approval, the traditional lab dip process has been shortened by about 20 days. The digital process works. We’ve been doing this for 13 years, and millions of yards of fabric have been produced using our industry leading platforms and technology.
“ Every fabric swatch shipment can be eliminated by using digital color standards and digital color assessment.”
Technology is not a plug-and-play solution; you also need expertise and understanding to effectively use digital tools. How do natific’s eServices help provide clients with the right knowledge to improve color management?
Getting a product to market has traditionally involved a lot of travel and shipping of samples. What environmental impact can digital color management have on the fashion and textile supply chain? Can you quantify the sustainable savings?
HOW AND STREAMLINES COLOR DEVELOPMENT
D.B.: It used to take weeks to develop a new color standard and then another week or two to be able to start the color development process with suppliers. Today, natific is able to optimize a designer’s inspirational swatch and have the natific Optimized Spectral Curve to the mill in about a day. With natific Color Accreditation Program (CAP) and Color Certifi cation Program (CCP) qualifications, suppliers self-approve colors matched within tolerance and proceed to production in days instead of weeks.
D.B.: During the past two years, natific spent a great deal of time developing training for digital and visual assessment so our global clients could continue to meet customer expecta tions throughout a challenging time. Training new colorists or production quality control personnel is greatly supported by our multilingual eServices training and certification courses. Aside from quality benefits, how can digital color management help improve operations and lead times?
Sourcing Journal: As product development and production have moved online these past two years, how has natific worked with its clients to ensure consistency remotely along the supply chain?
Doug Bynum, CEO of digital color control company natific USA, noted that if companies attempt to manage color quality manually on an international level, it doesn’t just tack on weeks of time, but judgments become subjective rather than objective, and are open to human error. This can lead to inconsistencies. In contrast, using digital color technology such as natific’s solu tions can streamline the color life cycle, saving time, costs and resources. To date, natific has saved its customers more than 10,000 hours in the product development process, cutting up to six weeks off lead times, all while improving color accuracy.
NATIFIC SPEEDS
Color plays a critical role in consumers’ purchasing decisions. But it plays an equally important part in shopper satisfaction.
ON
AS SUPPLY
TO FLOURISH IN THE DIGITAL
The Tennessee fulfillment center, total ing 66,245 square feet, joins existing eLo gistics hubs in Indiana, California and New Jersey. The idea with the service, which launched in the U.S. last August, is to help online retailers that lack the volume or scale to still be competitive with larger names via services such as two-day shipping, which is possible for 91 percent of the U.S. mainland from eLogistics hubs. Brands are also able to store inventory, paying on a per cubic inch basis and don’t have to sign a contract or meet“E-commerceminimums. has really blown up, but the segment of e-commerce brands that are these start-ups, emerging brands, that segment is growing. We can probably thank a lot of the social media advertising or the ability to really target their customers in a meaningful way,” said Matt Barr, senior director of product strategy for eLogistics.
KARI HAMANAKA
O ne of the world’s largest play ers in the logistics space is out to help some of retail’s smallestGeodis,brands.the French com pany that assists other businesses with ev erything from supply chain optimization to contract logistics and distribution, contin ues to expand its eLogistics fulfillment ser vice for small- and medium-sized businesses with its latest fulfillment hub in Nashville.
Unlike many of the digital logistics, freight forwarder and other companies looking to up end the industry with their software solutions and visibility platforms, Geodis offers breadand-butter logistics at a certain scale that of tentimes can only be cultivated with age. CHAIN TECH START-UPS MUSHROOM, THE FRENCH LEANS ITS FULFILLMENT PROWESS AGE.
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LOGISTICS BEHEMOTH
Heritage Adaptability:and Geodis eLogistics Growing With Its Customers 7 052890735421
“So, we’ve put together a really strong solu tion that enables them to grow into scale, whether that’s going from one facility to two, whether that’s just needing more space or some parts of the space in a facility some parts of the year.”
“We’ve made significant investments in technology to allow new variations that come with e-commerce demand to be ab sorbed with the technology, meaning we’re less dependent on labor in a very tough la bor market to hit the peaks and valleys of a brand’s demand profile, particularly when we get to peak season,” pointed out Matt Street, vice president and general manager of Geodis eLogistics, Geodis Americas. “We can utilize the labor on things like custom ization and personalization that come with some of the needs of these start-up brands and be able to handle these demands by scal ing robotics and other technology.”
“We’re very scalable, so not only in loca tions but supply chain needs,” Barr said. “If, at some point, a DTC apparel brand catches fire or gets a PO from Walmart where they have to go into 42 Walmart facilities, we have the flexibility and scalability within Geodis to support that.”
In a highly competitive market where competition is fierce and billions of dollars are being pumped into supply chain technol ogy companies, Geodis sees its competitive advantage in its heritage.
LOCUS ROBOTICS INSIDE OF A GEODIS ELOGISTICS FACILITY. 7 052890735421
The company was founded in 1904 as a rail cargo transport provider. It’s now one of the world’s largest third-party logistics com panies, with revenue last year totaling $11.6 billion, based on current exchange rates. The company globally has more than 46,000 workers, more than 15,000 of those in the U.S. Its customer base is made up of mostly enterprise companies across retail, consum er goods, automotive, healthcare, technolo gy and aerospace and defense. However, e-commerce’s transformative impact on retail drove the push to make Geodis’ services more available to the small er companies that have proliferated in the digital age. The hope and the pitch to these companies is that Geodis has the infrastruc ture to expand with them.
“I think some of the competition, they’ve been in the software business for four to five years and want to start a fulfillment compa ny. So, they just don’t have the experience and the expertise that we do, and we can scale with the customer. We want them to be successful. We want to protect their brand,” said Eric Douglas, executive vice president of engineering and technology for Geodis in theStill,Americas.theconversation around technology implementation is unavoidable, and Geodis is making a number of plays in its warehous es to stay digitally competitive.
Geodis uses the Shyft app, which lets employees swap shifts and also allows for a more flexible workforce where hours can be picked up by workers based on what best fits their personal schedules. That’s something
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—Matt Barr, Geodis, eLogistics
“We’re scalable,verynot only in locations but supply chain needs.”
As for where Geodis is plotting its next real estate moves for eLogistics, they’re keep ing it close to the vest, with Douglas declin ing to get into specifics, citing competitive reasons: “We’ll see where that journey takes us. We’re going to be opportunistic. There are other markets that we’d like to grow in.”
“What I found with microfulfillment is that it addresses limited demands with lim ited product types, so it’s very much still a niche,” Barr said. “I think there’s more suc cess with that around food and beverage and CPG and so it’s not a solution for everyone. The cost of that real estate is high, you can only have a very limited number of SKUs within these smaller facilities. So, when you think about any number of SKUs that any apparel company has to have by color, by size, even if they carry only a few products, that SKU buildout can be very expensive.”
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32 / 2022 SOURCING REPORT that’s been deployed across its business, not just eLogistics fulfillment centers, and has been used for the past two-and-a-half years. Robotics have also helped with flexibility on the labor side, by adapting to different languages. The Locus Robotics’ LocusBots used in the company’s eLogistics fulfillment centers, among other facilities, is able to identify the native language of an approach ing employee based on an RFID tag. So, someone speaking Burmese or Spanish will be communicated to in the appropriate lan guage. The technology allows the company to employ a more diverse workforce and also streamlines the training process.
For now, all four eLogistics facilities are co-located with existing company facilities, which allows Geodis to pull from existing labor and other resources. That’s not to say future eLogistics facilities couldn’t be standalone buildouts, but in a tight industrial real estate market domestically, capitalizing on existing space helps.
Demand is high for warehouse and fulfill ment centers, especially as more companies seek out real estate that puts them closer to the end user for last mile fulfillment. While microfulfillment centers have been talked about in conversations related to delivery speeds, the question of what stock-keeping units make the most sense in each box and where to place those centers remains.
John Robinson, senior vice president, client engagement at Exenta from Aptean, told Sourcing Journal about how apparel brands and their suppliers must align their technology adoption, and highlighted the role enterprise asset management (EAM) can play in helping companies understand the performance of plant floor workers, and eventually optimize production.
J.R.: Getting their suppliers to adopt current technologies that allow for this transparency and collaboration is one of the biggest challenges facing fashion companies. With supply chain sustainability being such a priority, where has Aptean been making strides to aid brands in hitting their goals?
J.R.: Either through our enterprise-level EAM solution or our more streamlined computerized maintenance management system (CMMS) for smaller plants, Aptean EAM helps prevent unscheduled downtime with a platform that enacts various
IT’S ALL ABOUT VISIBILITY AT EVERY STAGE…FROM CONCEPT TO DELIVERY
J.R.: Aptean is striving to be part of the solution going forward, in part by offering purpose-built technologies that help clients go paperless, become more efficient and switch to more sustainable business models. We’re thrilled to be part of our clients’ digital transformations and helping them to achieve their sustainability initiatives.
As brands further seek to improve pain points across the supply chain, they will have to make further investments in their infrastructure, along with their vendor partners, so there can be a single version of truth within an automated report or inquiry. “ Now more than ever, every minute of production counts to fulfill orders and control costs where we can.”
preventive maintenance strategies. There are many factors contributing to slower fulfillment today globally such as supply constraints and staffing shortages, and EAM is geared to optimize production and manage the pain points around relying on your plant floor assets to perform reliably. Our analytics also tell users and executives where there are maintenance issues. This helps them put in place measures to avoid pitfalls and make the right investments in their opera tions. Especially now more than ever, every minute of produc tion counts to fulfill orders and control costs where we can. Where do you expect the next improvements in areas like Enterprise Resource Planning to come from? J.R.: A robust ERP solution enables brands to improve collab oration with their vendors and real-time visibility is the result of this. Fashion brands and vendors must work more closely together to implement features that allow for transparency and visibility. Currently, brands can leverage these technolo gies to access built-in reports like style trends, stock-to-sales ratio, product category and sell-through ratio results.
Sourcing Journal: Where have you seen the biggest recent developments/evolutions within supply chain technologies take place?
If it isn’t obvious enough by now, apparel execs must recog nize that running a successful supply chain operation requires having efficient, repeatable work processes that can be traced through the full product life cycle, from development at the factory to the retail store and online.
John Robinson: Having visibility from concept to delivery is critical for companies to manage their supply chain and be able to share in real time with their customers to avoid surprises and give world-class service. Exenta from Aptean’s technology is built to allow for transparency and visibility in every stage, from samples to the production stage, all the way to delivery of product.
What are the biggest deficiencies apparel brands continue to experience in the supply chain?
Aptean recently launched a new enterprise asset management (EAM) solution for manufacturers. How can this solution help fortify the supply chain?
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Today’s logistics winners are seeking to leverage data to provide the utmost trans parency to all parties, while at the same time, eliminate the additional costs that have been added as raw material price increases, freight rate hikes and time spent on the road adds up.
Like any freight forwarder, Flexport sells the transportation of cargo, but its primary product is a digital solution that interfaces with its customers and stakeholders. The company’s technology is designed to auto mate the process of tracking and managing shipments, down to the level of each individ ual unit of Viewersproduct.withaccess to the platform can generate ETA forecasts and see alerts if there is a delay in shipping, giving the ship per advanced warning without requiring them to send an email or pick up the phone. This is the major difference between Flex port and many traditional freight forward FROM GREATER VISIBILITY TO FASTER DELIVERY, THIS NEXT WAVE IS CHANGING THE GAME. Names Are Altering LogisticstheLandscape
he flurry of online shopping demands throughout the Covid-19 pandemic pushed the global supply chain to its limits and beyond, with brands learn ing quickly that it was becoming more of a struggle to transport a product from Point A to Point B.
While the constraints don’t seem to be easing up, players within the logistics indus try are looking to give brands a better peek behind the curtain so that they can have more accuracy regarding where their prod ucts are currently located, and give both retailers and consumers better insight into how long it will take to receive merchandise.
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Here are five companies that are altering the logistics landscape as we know it across ocean, air and rail freight, point-to-point distribution, micro-fulfillment, last-mile de livery and even in the distribution yard.
T
GLENN TAYLOR
FLEXPORT Flexport is a name that has gotten a ton of traction in supply chain circles over the past year, serving as a digital freight forwarder, global trading platform and customs broker that seeks to give importers more visibility into where all their goods are at any given moment down to the SKU level, as well as more control over the process to divert prod uct elsewhere when necessary.
The do-it-all freight forwarder is now valued at nearly $8 billion after generating a $935 million Series E funding round in Feb ruary, and serves more than 10,000 clients and suppliers, offering a range of services including ocean, air, truck and rail freight, drayage and cartage, warehousing and even management of areas including clearing customs and offsetting carbon emissions.
Flexport generated a whopping $3.2 billion in revenue in 2021, but perhaps more impor tantly, it turned a profit for the first time.
These
35 / 2022 SOURCING REPORT ers, which often still manage operations with manual processes.
This year, Project44 has continued to adapt with modern supply chain concerns, launching a Supply Chain Crisis Tracker that helps users monitor and share the effect of black swan events such as the Ukraine-Rus sia war and the Canada convoy protest on supply chains via regular updates on truck delivery
Flexport has gotten plenty of shine in the news in recent months, with CEO Ryan Pe tersen serving as the subject of a Forbes cov er story in February (The cover headline was titled “Can this Guy Fix the Supply Chain Mess?) and a 60 Minutes piece outlining the current supply chain struggles. Petersen has been outspoken about many of the problems he has seen in the current supply chain envi ronment, particularly at the West Coast ports.
Additionally,performance.Project44 launched a new Yard Solutions suite to help facility and op erations managers automate the trailer load and unload process with loading dock man agement and enhance yard forecasting and planning processes with predictive ETAs. Also, users can run reports to understand
PROJECT44
At its core, Project44 is a supply chain visibility platform, but it offers a carrier net work with more than 140,000 multimodal carrier integrations and 2.7 million trucks. The platform supports all transportation modes and shipping types, including air, par cel, last-mile, less-than-truckload, volume less-than-truckload, groupage, truckload, rail, intermodal and ocean.
In 2021, Flexport added order manage ment capabilities so that a client’s contract factories can alert them when an order is ready. That way the importer can more easi ly secure a container and its placement on an ocean freighter.
To close out the year, the company intro duced an Ocean Timeliness Indicator (OTI), which measures the amount of time taken to ship freight from the point at which cargo is ready to leave the exporter to when it is col lected from its destination port. As the company seeks to bridge the digital and physical gaps in the supply chain, it is pri oritizing partnerships that embrace technol ogy. For example, Flexport integrated an API portal from the Port of Rotterdam, which fea tures APIs that deliver port information, ETA predictions and ship arrival and departures.
Another major supply chain tech provider that has skyrocketed in relevance since the start of the pandemic, Project44 has a mis sion to help brands optimize the movement of products across the chain amid the con tinuedLikedisruptions.Flexport,Project44 has seen numer ous funding rounds, receiving a $420 million investment in January, marking the compa ny’s third major financing of more than $100 million since December 2020. In total, the technology provider has raised $817.5 mil lion, and is now valued at $2.2 billion.
The company now says it tracks more than 1 billion products annually across its transportation modes
The platform’s technology is built to help companies see how their shipments are moving through distribution networks and to help adjust in case of bottlenecks or changes in market demands. The company uses API technologies and other integra tions to collect information from numerous freight transportation and logistics providers and put it into a format that retailers, manu facturers and other shippers can use.
Flexport is even looking to dabble in ar eas like autonomous air freight, in which it already has committed to purchasing two 100T aircraft from Natilus, which are expect ed to test flight in 2023. The digital freight forwarder also linked with a small business lender to offer an accelerator program called ODX Flexport, with a goal of investing in 60 to 80 startups over the next two years.
In 2021, the company went on an acquisi tion spree of sorts, picking up ocean freight intelligence provider Ocean Insights and an other AI-based supply chain visibility tech nology provider, ClearMetal. The company made its biggest deal in the last-mile delivery space, acquiring delivery experience man agement platform Convey for $255 million in September. And most recently, the compa ny bought out Synfio, a Germany-based rail freight visibility platform, enabling Project44 to extend its barge visibility for inland water way segments throughout Europe.
In December 2021, the company received an undisclosed Series A funding round, giving Darkstore a $200 million valuation.
FastAF partners with brands through a wholesale and consignment basis. The ser vice is free for customers and revenue comes from the brands partnership deals. Starting in 2021, the app charged $9.99 in delivery fees for orders under $35 and orders over $35 will continue to have free delivery.
DARKSTORE Darkstore has an audacious, but interesting, concept for a mission, in that it wants to “make all of the world’s products accessible all over the world.” As part of its core aim, Darkstore launched a mobile platform in 2020 called FastAF, which serves as an online marketplace for brands that partner with Darkstore. The company says it offers thousands of prod ucts from more than 600 national and local retailers on the app, many of which aren’t available on other e-commerce platforms.
All products on the app are delivered to a consumer’s doorstep in two hours, but the company says that deliveries actually occur in an average of 27 minutes. Thus far, trial locations include Los Angeles, San Francisco and New York City, where Darkstore hosts a series of micro-fulfillment centers that host the brands’ products. And if a shopper wants to make a return, they can access the profile section within the FastAF app to request a return in the same two-hour span.
FILLOGIC While so many logistics providers are fo cused on improving supply chain issues and getting delivery to the consumer as quickly as possible, Fillogic is built on the idea that larger shopping centers and malls still have plenty of untapped potential to enhance the distribution ecosystem.
With FastAF, Darkstore wants to entrench itself within the culture of each market it en ters by partnering with local brands and cu rating product selection geared to each city. But the tech provider also has partnered with brands across the fashion spectrum including Nike, Carbon28, Everlane and Outdoor Voices. The company is aiming to become similar to a store by creating brand pages in the app and mimicking an aisle-browsing experience on the home screen. The FastAF app is de signed so that users also don’t have to go to several sites to find the products they want.
FILLOGIC OPERATES MICRO DISTRIBUTION HUBS ACROSS SIMON, TAUBMAN AND TANGER SHOPPING CENTERS.
In March, the firm launched a port intel ligence solution with real-time data on con gestion and container flow at all global ports. For example, when the Russia-Ukraine con flict emerged, Project44 data showed a 52 percent increase in export dwell times from Ukraine and an immediate 40.2 percent drop in daily peak TEU vessel capacity call ing at Russian ports. Similarly, vessels wait ing near Yantian spiked by 44.1 percent when the most recent Covid-19-related lockdown took effect in Shenzhen. These real-time insights are designed to enable companies to proactively keep their finger on the pulse of supply chain disrup tions, black swan events and their impact on terminal operations and the resulting shipmentProject44delays.claims its algorithms can offer granular location data of 11,800 berths glob ally, down to 20-meter precision.
Darkstore will continue its focus on devel oping proprietary technology to help propel FastAF in delivering products quickly from its micro-fulfillment centers.
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L.M.: With a wider range of products to meet the needs of a variety of brands, retailers and manufacturers, Lectra now leads with solutions that match what a company requires—no matter what objectives they have or challenges they face. Technology from the combined companies along with the knowledge and expertise of our integrated customer success teams give a more complete picture so that companies don’t merely talk about being connected, but can make it happen. This enhances response times and improves inventory in the specific company’s region. With technology, there’s always an upfront cost, but what are the financial and operational benefits of embracing innovation?
Compared to 2019, how would you say the fashion and textile industry’s attitude toward technology has Leonardchanged?Marano:
L.M.: Technology makes the entire value stream more efficient, therefore saving costs. Designing to cost means you can adjust on the fly, save on fabric and produce more efficiently. After developing the right collection at the right time, you can then use technology to optimize your materials, ensuring nothing is wasted, even when supply is a challenge. And with the right automated spreading and IoT-enabled digital cutting, you get
L.M.: Connecting the dots across the supply chain to elimi nate errors, overproduction and even produce on-demand is an essential element of sustainability. The most sustainable garment is still a waste if it is not sold and eventually worn.
STREAMLINING PRODUCT DEVELOPMENT STARTS WITH CONNECTED SUPPLY CHAINS
The pandemic has accelerated the need for technology to be nimble with supply chain changes and keep up with consumer demands. Technology has always been a target for many fashion retailers, brands and manufacturers, but recent years and needs have fast-tracked many companies’ implementation of these solutions. And those that have not adopted technology are struggling to survive.
Implementation of technology from 2D CAD connecting to 3D modeling also allows for less sampling waste with better visibility into how a garment fits and will be produced, which can not only save a company money but also prevent returns. Technology is no longer just about product development with a CAD system and manufacturing with automated cutting and spreading, but also about having a clear vision into your entire supply chain with a PLM system. This type of system allows data to be entered and shared with your entire value stream. It also allows you to make more informed decisions before you even plan a collection so you are not throwing away things that do not sell and making more waste than necessary. AI-based tools that can help you benchmark against competition and make more informed decisions are vital to a company’s health. Being a sustainable company that is socially responsible and transparent is no longer a trend but a ne cessity, and without the technology to connect the dots from analysis to production, your company values will not align with what the consumer demands.
Here, Leonard Marano, president, Americas at Lectra, discusses technology’s role in the product life cycle.
What is the relationship between supply chain technology and sustainability? How is digitalization driving improved environ mental performance?
To maximize product development efficiency, companies need technology solutions that support smarter decision-making and connected manufacturing. Following Lectra’s 2021 acqui sition of Gerber, the combined company now offers an expand ed suite of tools—ranging from CAD to the cutting room, to smooth planning and production for apparel and home goods.
the most accurate cut the first time. All of this technology saves money not only on materials but also on production labor.
Coming up on the one-year anniversary of Lectra’s Gerber acquisition, how is the merged company advancing product development efficiency?
Sourcing Journal:
Currently, the company has more than 450 retail centers in its network as part of its collaborations with major shopping centers. It now operates 30 micro-distribution hubs, but has plans to scale up to 45 locations. De spite its presence in these shopping centers, the Fillogic’s distribution hubs are designed to fulfill orders made at digitally native brands that lack a physical presence.
The platform’s rise comes as the demand for industrial real estate continues to soar and prices go through the roof. Rents for industri al real estate ended 2021 averaging $7.11 per square foot, up 11.3 percent year-over-year, according to JLL data. And from 2019 to 2021, companies that notched industrial leases for logistics and distribution purposes had the largest increase in activity, with lease deals rising 46 percent in the two-year stretch.
The issue surrounding many mall-based retailers is that they don’t have the resources on the back end to fulfill the majority of prod uct out of their stores in the way retail giants like Walmart and Target are capable of. To support this ambition, the Fillogic staff enters stores seven days a week, multiple times a day to aggregate the items necessary to ship out of its hub within the shopping center.
Fillogic aims to help retailers and shop ping centers convert underutilized space at physical locations into tech-enabled, mi cro-distribution hubs, potentially giving consumers a more convenient area to pick up products and giving last-mile delivery providers a better option to collect an item and ship it to a shopper’s doorstep.
Even though the platform is built to help retailers optimize their existing assets, in cluding their employees, a retailer can in stead opt to offload labor associated with picking and packing ship-from-store orders entirely onto the Fillogic team, which ideally can minimize associated labor costs as well.
Upon collecting this data, the company sorts the aggregated items by freight deliv ery network and ZIP codes for convenient, consolidated pickup by local parcel carriers, all of which are part of the Fillogic’s delivery provider network Ship-from-store(DPN).services provided by Fil logic can alleviate the costs that would typ ically occur from shipping these items from a distribution center that is miles away from the end consumer. Think of it like this: If a retailer can increase the percentage of on line orders being fulfilled out of their stores, transportation costs decrease after a small er percent of online orders are now coming from an out-of-state distribution center.
“When you think about it, e-commerce at scale is not cheap. If you’re going to go build more distribution centers in the mid dle of country, because you want to provide a wider assortment for your consumers, you’re only servicing off of one inventory in the middle of that country,” Fillogic co-CEO Bill Thayer told Sourcing Journal. “Retailers need to reach their consumer from their most valuable assets, their existing stores, their inventory and the people that service them. We provide a transactional logistics service that makes that more efficient.”
—Bill Thayer, Fillogic
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OUTRIDER Sustainability is a hot buzzword in apparel circles, but logistics players need to follow suit given the amount of climate impact the combination of ocean freight, air freight and intermodal transportation can have. One logistics company is looking to make fossil fuel-burning yard operations a thing of the past—and reduce the hazards that come with working in the field—by instead in troducing autonomous, zero-emission yard trucks to the freight transportation world. Outrider was built to keep freight moving efficiently, while maintaining employee pro ductivity in fully automating yard operations via a three-part integrated system of man agement software, autonomous vehicles and site infrastructure. With the cloud-based software, Outrider’s Mission Control team can manage autonomous yards to dispatch and monitor multiple trailer moves, either onsite or remotely. Additionally, the tech nology can work stand-alone or in concert with other supply-chain software. The system can autonomously hitch to and unhitch from trailers, robotically con nect and disconnect trailer brake lines, in teract safely with loading docks, track trailer locations, and centrally manage and monitor all system functions. The added benefit here is that a human being doesn’t have verify the connection manually, so it also doubles as a “Retailers need to reach their consumer from their most valuable assets, their existing stores, their inventory and the people that service them.”
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significant risk reduction for workers that are within the “Automationyards.iskey to relieving the infla tionary pressure on the supply chain,” said Andrew Smith, founder and CEO of Out rider. “Distribution yards are critical links in the supply chain and prime targets for automating the flow of goods between overthe-road transportation and fulfillment cen ters, warehouses, and manufacturing plants. Automating yards requires backing trailers of all kinds safely and precisely into parking spots and dock spots billions of times a year.”
Outrider’s area of coverage may seem niche in that it is largely focused on dis tribution yards. These yards include the space between a warehouse and a high way, where trucks often emit fumes while helping trailers into the right position for loading and then hitting the open road. But these yards are often an overlooked area of the supply chain that doesn’t often get significant attention. The technology has gained traction over the past year. Last November, Georgia-Pa cific confirmed that it had completed more than 1,000 autonomous trailer moves in its Chicago-area distribution yard.
Outrider says this “articulated backing” technology is fully autonomous, adheres to strict operational requirements, and is capa ble of seamlessly controlling a trailer through its full range of motion. With this technolo gy, the Outrider system is able to precisely back the diversity of semi-trailers that are used in the industry, including 28-foot, 48foot, and 53-foot dry van trailers, containers, and refrigerated trailers—all without teleop eration or other types of human interaction.
Additionally, the introduction of auton omous trucking options comes at a time when the trucking industry is in the middle of a years’ long labor shortage made worse by the pandemic. The American Trucking Associations estimates the country is short around 80,000 drivers — a number that’s ex pected to rise in the coming years.
To date, the company has raised a total of $118 million in funding, developed an exten sive patent portfolio and completed multiple pilot programs. The company says it partners with large, logistics-dependent enterprises that represent more than 20 percent of all yard trucks operating in North America.
Sourcing Journal: What areas of the supply chain could benefit the most from a tech makeover?
Nate Fleming: I would say that it’s not so much the need to focus on a single area in the supply chain, but more to drive visibility across all processes and teams—both within sup ply chain operations as well as adjacent areas like finance, product development and sourcing. Whether it’s geopolitical disruption or competitive pressure, global organizations must be knocking down silos in order to make decisions that best serve shared business outcomes.
Sourcing Journal spoke with Nate Fleming, chief marketing officer at multi-enterprise product and supply chain platform Bamboo Rose, on the technological gains the industry has made in this realm and what still needs to be done.
N.F.: We talk at Bamboo Rose about minimizing the bullwhip effect. This means providing transparency between teams and partners on when there might be shortages or delays so that colleagues can plan and adjust accordingly. In the context of production and improving delivery times, this means full visibility of when production runs are going to start and end so that transportation partners can be ready for that product.
Speed-to-market is a huge buzzword in fashion these days. How does Bamboo Rose help companies get to market faster and how can this save them money?
VISIBILITY ACROSS PROCESSES AND PARTNERS FOR SHARED OUTCOMES
N.F.: We’ve seen Environmental, Social and Governance (ESG) emerge as a top priority for clients across geographies and product categories. Since we’re a strategic business system, customers can balance their ESG goals with broader busi ness priorities on the platform. Digitizing sampling is a great example of this—clients can accelerate design cycles and eliminate time wasted on shipping physical samples while also minimizing the carbon output required to manufacture and ship the sample itself. The same client I cited above found that they improved the productivity of their sampling process by 60 percent on the system which in turn contribut ed to broader ESG goals.
“ We’ve seen Environmental, Social and Governance (ESG) emerge as a top priority for clients across geographies and product categories.”
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N.F.: It’s exciting to see our clients achieve faster time to mar ket as well as cost savings and reduced administrative burden as fundamental ROI vectors once they’ve gone live with Bam boo Rose. There are countless examples across our platform of how we help in these areas, but a lot connect back to leverag
One client, an $18B+ department store, ran an ROI analysis on their product development processes with Bamboo Rose and found that their style setup had accelerated by 40 percent by tapping into work from past seasons. Digital sourcing and sampling not only save time and money but also helps the environment. Explain your current initia tives and what’s next in this area?
ing historical data year over year. Once clients have access to data around product specifications and purchase orders from past seasons, they can reuse that data year over year to accel erate design cycles, while also analyzing the historical data to understand how they can continually improve their processes.
How does better vendor visibility into production readiness improve on-time deliveries?
For decades, supply chain leaders have relied on siloed legacy systems and manual approaches to collaboration and trans actions across the partner ecosystem, but the events of the last 24 months have exposed this approach as outdated and vulnerable to macro-market disruption. In fact, according to an EY report, only 10 percent of supply chain executives felt pre pared for the impact that the pandemic had on their processes and operations. Now, however, executive teams and boards understand the importance of digitizing and connecting sup ply chain operations to remain resilient to global events that impact access to supply as well as consumer demand.
t was a fortuitous thing for home goods and furniture marketplace Wayfair that it decided several years ago to build out its own logis tics service. That network, which it named Castle Gate Logistics, will now play a key role in the company’s entrance into permanent, phys ical retail. CastleGate is already integral to the company’s online marketplace.
I
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Wayfair In-HouseOnLogistics“Six
CastleGate solves a few problems specif ic to Wayfair. The company typically ships large and bulky items that can’t go out with small parcel delivery, oftentimes requiring two people to move. That’s coupled with increasing consumer demand for fast de livery and product damages being a bigger headache than returns in the furniture realm. Those pain points are what prompt ed the Wayfair team to begin building the third-party logistics service. Wayfair started with fulfillment centers and then built out the last-mile transporta tion system before moving upstream into the middle mile.
“We have this infrastructure that facil itates all other purchasing,” Shah said of CastleGate’s role.
KARI HAMANAKA
Wayfair is one of a handful of industry companies that have taken control of their supply chains in various ways.
American Ea gle last year acquired AirTerra, started by a former supply chain executive at Nordstrom and Walmart, and then followed that up with its purchase of Quiet Logistics for about $360 million in December. Other retailers took a different approach, such as Target and Cost co chartering their own ships to bypass port congestion. Amazon, meanwhile, continues to build out its Fulfilled by Amazon logistics network for sellers on its site. Logistics, for Wayfair, is just another ex tension of customer service, whether it’s the 16,000 suppliers it works with or the end user of the products sold on its site.
NIRAJ SHAH DIVES DEEP ON THE “BESPOKE MOUSETRAP”
“Six years ago, we made a concerted effort to build out our own end-to-end logistics be cause, in our category, if you don’t control logistics, you can’t control the customer ex perience,” Shah said.
years ago, we made a concerted effort to build out our own end-to-end logistics because, in our category, if you don’t control logistics, you can’t control the —Nirajexperience.”customerShah,Wayfair
Niraj Shah, the CEO and cofounder of the Boston-based online retailer, speaking re cently at a conference in Long Beach, Calif. Said that having CastleGate will help by of fering a fulfillment network for all its future stores. The first of those will bow later this year with two under the AllModern brand and one under Joss & Main, all located in Massachusetts. Those stores will be followed by a Wayfair door next year, which is expect ed to command a much larger footprint. Plans call for all five of the company’s brands, which also include Birch Lane and Perigold, to debut their own stores over the next two years.
Opening those doors doesn’t change how Wayfair manages its supply chain. Instead, the existing logistics infrastructure supports retail, the CEO pointed out.
WAYFAIR BUILT TO SOLVE THE PAIN POINT OF MOVING PRODUCT WITHOUT DAMAGING GOODS.
ONLINE
CastleGate, while beneficial to Wayfair, isn’t a solution for everyone.
“By building the whole thing, we optimize for the total, instead of for each function,” ShahThesaid.company also has a policy that elim inates duplicate products, which is a chal lenge common in online marketplaces that aim to provide inventory to accommodate as many personal preferences as possible. What results, oftentimes, is a messy browser expe rience difficult to navigate, Shah said. Keep ing an eye on stock-keeping units ultimately benefits the entire supply chain.
The CEO pointed out that in 2014, when Wayfair went public, it had about $1 billion in revenue and continues to roughly double its business every two to three years.
HOME GOODS BEHEMOTH WAYFAIR PLANS TO INVEST IN BRICK AND MORTAR RETAIL THIS YEAR.
“The vast majority of our volume does not yet flow through our network, and over time we think there’s a large opportunity to increase that,” Shah said.
“The cleaner the catalogue is for the cus tomer, the easier the supply chain gets to manage because, otherwise, the supply chain gets increasingly complicated when you have multiple suppliers supplying an item,” he said.
“It’s like a bespoke mousetrap for our spe cific type of goods,” Shah said of why there is no interest in selling its services. “It’s not a generalizable service and we’re focused on servicing our suppliers with that need that they have.”
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Given Wayfair’s 2 percent share of the market in the U.S. and Europe, the company still views itself in the early days of its growth. While the service is working well for Wayfair, the company has no plans to offer CastleGate to outside companies.
“Without volume, you can’t have this type of finesse,” he Additionally,said.CastleGate doesn’t fulfill all of Wayfair’s logistical needs. Under a quarter of its volume comes from the shelves of its fulfillment centers. The rest originates from supplier warehouses.
Much has been discussed about the need to digitize the sup ply chain, and data is always considered a major centerpiece of the transformation. But in reality, brands are sitting on a plethora of data that is often too burdensome to sift through.
What steps do many brands neglect in trying to improve the auditing and inspection processes?
Sebastien Breteau: According to QIMA’s Q2 2022 barometer, the most recent sourcing disruptions led brands to accelerate the diversification of their sourcing locations from China to countries like India and Bangladesh. But brands still often lack visibility into their supply chain, leading to more trust and transparency issues. Supply chain managers receive scattered data from differ ent factories, which makes it impossible to measure perfor mance without any actionable insights. This means many fashion brands take a reactive approach to address risks.
We are also investing in growing our service capabili ties, for instance with the recent opening of our new testing laboratories in Vietnam and Bangladesh. Overall, we will keep developing services and solutions that bring transparency and traceability to global supply chains and help our 17,000 clients make products their consumers can trust.
Where have the biggest recent developments within supply chain technologies taken place? S.B.: There is a lot of exciting innovation coming up for supply chains, from 3D printing to blockchain. But in fashion’s supply chains, we need to focus first on moving away from the widely used pen-and-paper approach. In our space, this comes with interesting new features such as voice recognition, which save inspectors’ time while they perform inspections and audits. When used smartly, such as for measurement checks, we found that it saved up to 50 percent of inspectors’ time.
SUPPLY CHAIN
Sebastien Breteau, CEO and founder of supply chain compli ance solutions provider QIMA, tells Sourcing Journal about how brands can better analyze reliable data, and improve product quality control and supply chain auditing.
Where do the next improvements in product quality control and the supply chain auditing process come from? S.B.: Data is the next frontier for product quality control and auditing. Being able to leverage accurate data collected along the product manufacturing journey to make better decisions and move to a predictive approach to quality risk—that’s the improvement the industry needs. With actionable analytics, risk-based processes automation and advanced machine learning, brands can improve product quality as they—and their vendors—can identify where and how to reduce and prevent defects. During auditing, compli ance officers will gain visibility into their suppliers’ production methods, ensuring more sustainable sourcing.
MAKING THE MOST OUT
S.B.: When quality and compliance managers try to improve their processes, they often neglect the importance of col lecting reliable data and onboarding their suppliers under a single source of what’s expected. By using scattered processes to collect production data, managers end up with non-stan dardized reporting, which gives no possibility to analyze performance metrics over time. In today’s fragmented supply chains, implementing a single digital platform to assign the right quality and compliance process to the right team, whether internal, factory staff, or third-party agencies like QIMA, is a necessary means to effec tively improve audit and inspection programs.
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Sourcing Journal: What are the biggest deficiencies apparel brands continue to experience in the supply chain?
QIMA recently had a massive investment round. How will this investment aid in the company’s growth? S.B.: We put a lot of effort and ambition into the development of our technology solutions and applications, particularly in QIMAone, our collaborative quality and compliance software. It allows all brands, retailers and manufacturers to collect re liable data and collaborate efficiently to help prevent product defects and achieve total transparency. OF YOUR DATA
IntoTruckAutonomousTechShiftsFullGear
odiak Robotics’ self-driving trucks are pushing the boundar ies of where autonomous truck ing can go as adoption of the technology also speeds along.
Transportation Secretary Pete Buttigieg said as much in January when he spoke at the Consumer Electronics Show in Las Ve gas, announcing a set of principles that fo cuses on building a competitive transporta tion system that still supports workers. Buttigieg went on to tout in a speech to the American Association of State Highway and Transportation officials the need for “embracing new innovative technologies that are really going to shape the future of what it means to get around communities and get around this country.”
Kodiak’s announcement is the latest in a flurry of activity around autonomous truck ingAuroratechnology.Innovation said its self-driving technology would be used by Werner Enter prises on a Texas route running from Fort Worth to El Paso. Wilson Logistics, which late last year sold its West Coast trucking business to an affiliate of retailer Ashley Furniture, said in March it would work on six autonomous freight lanes with Locomation in the Midwest before deploying more than 1,000 autono mous trucks. TuSimple said last month it was looking to hunker down on its U.S. self-driv ing business as it explores a sale of its China division. Waymo, a unit of Alphabet, and UPS said in November they would begin testing autonomous semi-truck deliveries in Texas. The partnerships come as the Depart ment of Transportation (DOT) also looks to embrace new technologies on the road.
“The business case on the trucking side is very clear in terms of economic benefit, increased capacity utilization.”
The Mountain View, Calif.-based compa ny is launching a Dallas-Fort Worth to Atlan ta self-driving route with trucking company U.S. Xpress, representing an expansion to the East Coast.
“Trucking is definitely moving forward at
The two companies late last month com pleted four roundtrip tests made along the service route. The trucks ran 24 hours a day at a total distance of roughly 6,350 miles.
—Ashok Divakaran, Monitor Deloitte
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“We believe it is the furthest east any com pany has delivered to multiple loads using autonomous technology,” Kodiak founder and CEO Don Burnette said in a statement Monday. “Having the capacity to sustain 24/7 operations across the more than 750 miles between Dallas and Atlanta—two of our na tion’s busiest freight hubs—represents a giant step forward for Kodiak and for the [autono mous vehicle] trucking industry as a whole.”
KODIAK ROBOTICS’ PARTNERSHIP WITH U.S. XPRESS IS THE LATEST IN A RACE TO PUT MORE SELF-DRIVING TRUCKS ON THE ROAD.
The need for autonomous trucks is cer tainly there, creating a pathway to quicker adoption than self-driving passenger cars by comparison, pointed out Monitor Deloitte principal Ashok Divakaran.
KARI HAMANAKA
K
Labor unions have promoted careful con sideration of technology’s impact on drivers, while also raising safety concerns.
45 / 2022 SOURCING REPORT a slightly faster pace than on the passenger side, and I think there are a variety of rea sons for that,” he said. “One is that the busi ness case on the trucking side is very clear in terms of economic benefit, increased capaci ty utilization. Another is cost savings.”
The Federal Motor Carrier Safety Ad ministration (FMCSA) said Nov. 23 it plans on publishing updated rules for automated driving technology in commercial vehicles when it comes to maintenance inspections, repair and other elements.
REGULATORY ENVIRONMENT
Supporters of vehicle autonomy have long argued the technology could improve freight handling efficiencies, while also re ducing the number of accidents on the road.
Congress has a unique opportunity to miti gate these impacts before they happen.”
There’s recognition that the technology is coming, Deloitte’s Divakaran said. It’s a mat ter now of codifying safety standards, partic ularly to assuage any public safety concerns, while also creating a roadmap for autono mous industry companies.
The House Subcommittee on Highways and Transit held a hearing in February to further explore autonomy on U.S. roads. The hearing, called “The Road Ahead for Au tomated Vehicles,” pooled viewpoints from labor, academia, safety and autonomous ve hicle technology companies.
“I think regulation, overall, is good,” Di vakaran said, “and the industry views it as good because what the industry needs is a standardized, predictable framework that they can use to base the way they handle the rollout.”
A WAYMO VIA AUTONOMOUS TRUCK.
The AVIA represents the autonomous ve hicle industry and was started by Ford Mo tor, Waymo, Lyft, Volvo and Uber.
“AV technology will not only make our roads safer, but also can transform our trans portation system by making it more acces sible, efficient and sustainable,” said the Autonomous Vehicle Industry Association’s (AVIA) general counsel Ariel Wolf in testi mony during the hearing.
The push for the technology comes amid a truck driver shortage that the American Trucking Associations estimated at around 80,000, along with e-commerce and on-de mand delivery pressures placed on the trans portation system.
Meanwhile, the federal government is trying to stay on top of the technology in creating uniform safety standards.
“The impact that AVs will have on work ers is still unknown,” Doug Bloch, political director for the International Brotherhood of Teamsters Joint Council 7, said in his hearing testimony. “But attempting to tackle these issues after the fact is not acceptable.
Divakaran, who leads the firm’s connect ed and autonomous vehicles business for the U.S., also pointed to the Sun Belt, in places such as Phoenix and Dallas-Fort Worth, that see a high volume of commercial trucks. Prac tically speaking, the weather conditions in those areas—sunny and open roads are ideal for self-driving trucks—are one of the reasons those routes have been used in so many pilots.
Bloch went on to use the example of Teamsters members working in California canneries, with membership at one time numbering about 100,000. He blamed au tomation for membership plummeting to aboutOverall,15,000.regulation is not likely to stem the deployment of self-driving trucks, but will help clarify how companies can strategize around their deployment of the technology.
Andreu David: The residual effects of the pandemic forced the entire industry to rethink “tried-and-true” strategies when it comes to the sourcing supply chain. With visibility, we are able to forecast, build appropriate strategies as needed, and then pivot. While supply chain diversification has always been important, the past year taught us that diversification can also support various company goals, including working toward an enterprise’s sustainable and social-good goals. Visibility supports traceability and transparency. What digital solution has become a must-have for a smooth supply chain? If a company is just getting started with
CIRCULARITY
Fashion has seen seismic shifts over the past two years—from supply chain disruptions to evolving consumer trends. Look ing ahead, industry connector and event organizer Informa Markets Fashion has a macro view of the industry’s evolu tionary adaptations and market shifts expected in the coming years. Sourcing Journal spoke with Informa Markets Fashion president Kelly Helfman and Andreu David, vice president of SOURCING at MAGIC, about the digital trends brands and retailers should look out for—from the rise of online selling to technology’s role in waste reduction.
SELLING
While companies and consumers became more tech-savvy during the pandemic and retail buyers converted to online wholesale purchasing, brands and buyers are happy to be back in person with live trade events. There is nothing like it. Given the numerous supply chain disruptions, what is the importance of visibility technology?
A.D.: Any digital technology that supports reduction of sam ple making highly supports sustainability. Making one sample involves many steps that have both a direct and indirect effect to producing waste, and harming the environment and facto ry workers. There are huge environmental costs we all need to consider—from electricity used in manufacturing, such as cutting and sewing, lighting and machine power to the water waste and contamination through dyeing, washing and finish ing. Not to mention, the microparticles and chemicals that are harmful to workers and pollute our waterways and atmosphere. In this respect, virtual design and sampling has countless benefits for the social good. Because fashion is a tactile industry and garment fit is more important than ever for consumers, we cannot eliminate sampling altogether, however, our journey should be to make smart decisions on where in the process we can possibly replace and reduce—whether that be one colorway or fewer prototypes. It all contributes in the end.
Sourcing Journal: The pandemic ushered in more online buying—both in wholesale and direct-to-consumer. How has this trend progressed, and what types of back-end technologies are companies investing in?
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A.D.: Depending on the company size and products, I would recommend an optimized product life cycle management (PLM) system. At the most fundamental level, PLM is the strategic process of managing the complete journey of a prod uct—from initial ideation to development, service and then disposal. An advanced PLM system enables you to monitor all your products and business strategies in one place. What role can technology, such as 3D sampling or virtual de sign, play in making fashion supply chains more sustainable?
Kelly Helfman: Over the past two years, we have seen an in crease in live selling and buying from both brands and retailers. With the increase of various platforms and services that can handle the technology and logistics of live selling on behalf of brands, it truly tackles both B2B and D2C models for a brand. With the ability to have immediate feedback and consumer engagement, we see companies updating their e-commerce tech solutions to answer this need. Omnichannel and seamless consumer access are at the forefront, so marketing, sales and customer service technologies that improve and/or accelerate their consumer visibility and loyalty have become important.
“ Virtual design and sampling has countless benefits for the social good.”
LLCHOWARDFASHION/HAILLEYMARKETSINFORMAPHOTO:
TRENDS –
FASHION’S TOP TECH FROM TO digitalization, where should they begin?
The revised forecast was attributed to the pace of rent growth, which exceeded the company’s expectations in the first quarter.
Moghadam confirmed available supply of industrial buildings is low in the markets where the company does business. However, other markets, the CEO said, have “already hit that threshold of rent increase and rent increase is flat…. I can’t think of any of those in our port folio, but I’m sure there are markets like that.”
How High RentsWarehouseCanGo?
PROLOGIS CEO HAMID MOGHADAM WEIGHS IN:
“Yes, there is a limit to how far industri al rents will grow,” Prologis co-founder and CEO Hamid Moghadam told analysts on an earnings call earlier this year. “There’s a limit as to how far the prices of anything can grow, but if you look at the factors that are contrib uting to this tremendous growth in indus trial rents, there are many, including supply and demand to start with, which you’re deal ing with a market that’s 3.5 percent vacant.”
Rent in coastal markets for Prologis prop erties is expected to increase roughly 25 per cent this year. That compares with about 15 percent for inland properties.
“Property fundamentals are stronger than expected,” Chris Caton, managing director of global strategy and analytics, told analysts of the thinking behind the revised forecast.
TERRITORY.”
The real estate development company, which owns 4,675 buildings across 19 coun tries, has a rosy outlook on the warehouse market as it increased its rent growth fore cast for the year to 22 percent, up from the previous guidance of an 11 percent rise.
Caton went on to point out the U.S. is outperforming other markets the company has property in and that is being driven by coastal areas such as New Jersey, Pennsylva nia, Baltimore, south Florida and Southern and Northern California.
The executive went on to point to the confluence of factors continuing to support rising rents. That includes increasing con struction and land costs, pushback on new industrial development in some parts of the country and the broader rise in costs across the supply chain.
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KARI HAMANAKA W arehouse rents will even tually hit a ceiling, but that’s not being seen in the roughly 1 billion square feet of logistics real estate com prising Prologis’ portfolio.
It’s a landlord’s market with demand for warehouse and fulfillment centers catering to companies’ e-commerce logistics and faster delivery needs.
“THE IS IN UNPRECEDENTED
MARKET
Asking rents for industrial nationally rose 11.3 percent last year from the prior year to $7.11 per square foot, according to JLL. Meanwhile vacancy stood at 3.8 percent, the first time the rate dipped below 4 percent.
“We’ve never had market conditions like we have now. We’ve never
Prologis—Hamidlevele-commercehadatthisofimportance.”Moghadam,
“If I were betting right now, I think we will increase that guidance as we go throughout the year,” Arndt told analysts. “But, at this point in time, with what’s going on in the world, we just think it’s prudent. But [the unchanged forecast] is not related specifical ly to entitlements now, but that is, for sure, a headwind in the future.” PA.
Prologis chief financial officer Tim Arndt called the pushback in getting projects en titled, or approved, in some communities a headwind, but said it hasn’t yet impacted the company’s forecast on new construction.
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The CEO went on to say the market is in “unprecedented territory.”
INSIDE A PROLOGIS WAREHOUSE LOCATED IN EASTON,
Pushback in some communities against construction of warehouses and other types of industrial uses has become a point of contention amid the general shortage of space. A number of cities in Southern California’s Inland Empire region have im plemented temporary moratoriums on de velopment. The San Francisco Board of Su pervisors in February introduced proposed legislation that would apply stricter zoning requirements on parcel delivery facilities, or buildings used for last-mile fulfillment.
“Some people actually used to say indus trial rents are never going to go up—but industrial rents do go up…but they’ve nev er grown at these levels,” Moghadam said. “We’ve never had market conditions like we have now. We’ve never had e-commerce at this level of importance. We never had resil ience becoming such a big factor. We haven’t had these bottlenecks in the supply chain that clog up the network. And we haven’t had inflation and shortage of materials and labor and all that in terms of bringing on ad ditional [warehouse] supply.”
California Assembly member Eloise Gomez Reyes (D-Colton), also in February, intro duced legislation that would create buffer zones of at least 1,000 feet between indus trial projects of 100,000 square feet or more and schools, homes and other places.
Prologis in the first quarter started con struction on 32 projects totaling more than $1 billion. Arndt went on to say the company is exercising some restraint in its construc tion forecasts as it monitors the global sup ply chain and Ukraine.
The fashion industry was notoriously slow to leave manual methods behind, but have companies finally switched mindsets to more advanced solutions? How does CGS answer those needs?
How is CGS using Augmented Reality (AR) to benefit the fash ion industry supply chain?
Paul Magel: The pandemic served more as an acceleration than an innovation event in the fashion and consumer goods industries. Many companies had already launched e-com merce, supply chain digitalization and other initiatives before the pandemic hit to address the many changes taking place in consumer behavior. The big difference is that what they initially expected to accomplish over a five- to 10-year period suddenly was needed in as little as five to 10 weeks. So, we don’t see most of these as stop-gap initiatives because they were not only required but, in many cases, already underway.
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RAMPING UP TECHNOLOGY FOR FASTER ROI be reimagining plant operations, reducing production costs, fostering collaboration or onboarding and training new asso ciates, it provides step-by-step guidance for many supply chain operations. On the retail side, it puts training and knowledge at the fingertips of associates and managers as they work to improve in-store merchandising, increase sales, reduce returns and enhance customer engagement.
How can companies use technology to align and measure Key Performance Indicators (KPIs) among internal and external teams? P.M.: Identifying and tracking KPIs is among the most important benefits our technology provides. The opportunities are evident throughout design and development, production, logistics, fulfillment and retail processes. We learned that making KPIs easy to access and use is perhaps the most critical factor in re alizing these benefits. That’s why we pre-package our solutions with more than 500 industry-specific, pre-configured KPIs and reports with role-based dashboards that are easy to customize to individual business and individual role needs. With new laws hitting the fashion industry, compliance is more important than ever before. How can technology help?
P.M.: Considering the laws already regulating consumer safety, and the scope of legislation currently under consideration, it’s apparent that even more significant regulatory changes will soon impact the fashion and consumer goods industries focusing on operational transparency, environmental responsi bility and social accountability. Technology plays a vital role in compliance by enabling the visibility and transparency need ed to identify, track and manage all aspects of the business, including raw material inputs, product content and components, production and sourcing activities, labor practices, logistics, mar keting, advertising and sales. From a technology perspective, full compliance is best achieved through fully integrated, end-to-end enterprise solutions that provide complete process transparency.
From increased regulations on the fashion industry to a pandemic that accelerated technological initiatives already underway, Paul Magel, president, business applications and technology outsourcing division, CGS, explains why companies need technology more than ever.
P.M.: Companies that want to win going forward are em bracing technology like never before. Digital transformation has become essential to success as companies work to drive growth, streamline operations, plus improve the customer experience and service, transparency and sustainability. All our technology offerings and services are pertinent to streamlining and digitizing the supply chain. This includes tra ditional solutions like Enterprise Resource Planning, Product Lifecycle Management and warehouse management. In addi tion, B2B platforms, predictive analytics, and real-time tools are highly relevant to enhancing decision-making in the cur rent business environment. We have recently focused consid erable efforts on minimizing the wait time to see the benefits. This includes reducing implementation time and focusing first on their most relevant needs to get the fastest possible return on investment. These initiatives help our customers improve supply chain agility and resilience.
Sourcing Journal: The pandemic forced most companies to ramp up technology. Will these changes become permanent?
P.M.: Our Teamwork AR solutions improve learning engage ment and retention across the entire enterprise. Whether it
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