Supply & Demand Chain Executive December 2019

SPECIAL SECTION: AUTOMATION IN THE WAREHOUSE Global Supply Chain Solutions Covering Procurement, Risk, the IoT and More

DECEMBER 2019

ON PACE — OR — AT RISK? Digital transformation has not only changed the stakes but the entire game.

INSIDE

2019 GREEN SUPPLY CHAIN AWARD WINNERS

Fresh new content daily at www.SDCEXEC.COM

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2019 SUPPLY CHAIN

12 th Annual

Supply & Demand Chain Executive

GREEN SUPPLY CHAIN AWARDS

The following are select companies recognized by this year’s award, honoring leading organizations that envision and implement strategies to support green or sustainable supply chain goals. Turn to Page 32 to read about the practical steps companies are taking—and other companies can take —to green their supply chains.

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December 2019 | Volume 19 | Issue 4

CONTENTS 20

The Next Wave of Warehouse Automation

24

Technology for Tracking Inventory

28

Warehouse Management Systems: What 2019 Tells Us About 2020

SPECIAL SECTION: Warehouse Automation

E-commerce is changing the game again for companies investing in automated warehouses and order fulfillment.

Today’s warehouses use more space and deal with more diverse products and product lines than ever before.

With continued growth in the WMS market, it’s critical to know how the technology interfaces with new automation.

SPECIAL REPORTS

FEATURES

10

COVER STORY Digital Transformation in Supply Chain— On Pace or at Risk?

Digital transformation has not only changed the stakes, but the entire game.

16

36

REVIEW CSCMP EDGE: In Review

36

As businesses look to improve their procurement efforts, they need to follow a consistent and proven path.

38

Supply chain professionals attended the annual premier CSCMP EDGE event in Anaheim.

30

38

From Truck Driver to Freight Broker

40

42

44

SOFTWARE & TECH Future Innovation in 3D Printing As additive supply chain improves, the winning use cases will continue to improve over time.

46

THE INTERNET OF THINGS Make Sure You’re Connected

Connected assets through IIoT offers not only transparency but greater possibilities.

WAREHOUSING Inventory Management Best Practices Gain visibility of your entire warehouse operation to uncover inefficiencies.

BLOCKCHAIN When Blockchain Meets Supply Chain of the Future Blockchain technology will get better in performance, scalability and security as greater participation takes hold.

SDCE announces the recipients for its annual SDCE Green Supply Chain 2019 award SUPPLY CHAIN winners.

42

SDCEXEC.COM

AWARDS 2019 SDCE Green Supply Chain Award Winners

PROCUREMENT Right Processes Lead to Great Procurement

EXECUTIVE FOCUS

PROFESSIONAL DEVELOPMENT Let’s Talk Employee Engagement When your frontline does the right things at the right time, you help them reach their full potential.

COLUMN 06

EXECUTIVE MEMO

12 th Annual

Exclusive online features and solutions for successful supply chain operations

www.sdcexec.com/21095899

Robots Versus Humans: Retailers Go to Combat www.sdcexec.com/21094491

Slavery in Supply Chains is an Increasing Concern for Businesses www.sdcexec.com/21102593

www.SDCExec.com | December 2019 | SUPPLY & DEMAND CHAIN EXECUTIVE

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EXECUTIVE MEMO

By John R. Yuva, Editor jyuva@ACBusinessMedia.com

YEAR END ALWAYS LEAVES QUESTIONS Whether it’s reflecting on the previous months or pondering what’s ahead, there are always questions to consider.

I

PhonlamaiPhoto/ istock/Getty Images Plus

n this, our final issue of Supply & Demand Chain Executive for 2019, we have a special section dedicated to warehouse automation. Where are you on your automation journey? E-commerce is driving many of the automation trends in supply chain. The question is: How do you prioritize and integrate automation into your operations to meet current demand while building the bandwidth to support the future forecast? Our special section beginning on page 20, helps answer that question.

One of the most exciting automation segments is robotics. According to Tractica, rapid growth in warehousing and logistics robots is expected to proliferate over the next five years, with worldwide shipments increasing from 194,000 units in 2018 to 938,000 units annually by 2022. Tractica anticipates the rate of growth to slow after 2021 due to the adoption of robotic systems by the major warehouse and logistics industry leaders.

Autonomous mobile robots (AMRs), in particular, are appearing in more warehouses alongside workers. John 6

Santagate, research director, service robotics for IDC, says each time automated robots move materials, there are data created about that movement.

“Organizations can now draw connective tissue across these processes that are historically disconnected from one another, begin to realign them and improve the future state of their operations by leveraging the digital signaling,” says Santagate. “Companies that succeed in this space are not going to focus on autonomous mobility, but rather that mobility as a function to capture information about their operation. The technology provides companies with greater value and data-driven insight beyond task-level automation.”

What is the future state of warehousing? Is it a dark warehouse operating with complete automation?

Not necessarily says Santagate.

“The future is an automationoptimized warehouse where the throughput and consistency of the products moving through it have designed segments built around the velocity and consistency of the inventory,” he says. “Build your automation strategy that way and begin to deploy different approaches to automation and robotics based on the movement of inventory.”

We end 2019 with a packed issue, including a cover story that poses several questions around digital transformation.

With another year in the books, we look forward to serving you in 2020.

Happy reading!

SUPPLY & DEMAND CHAIN EXECUTIVE | December 2019 | www.SDCExec.com

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December 2019 / Volume 20 / Issue 4

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T M I O T

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NEWS FROM ACROSS THE DIGITAL SUPPLY CHAIN

CHAIN REACTIONS

SHOPIFY COMPLETES ACQUISITION OF 6 RIVER SYSTEMS Shopify completed its acquisition of 6 River Systems in October, adding an experienced team in software and robotics to its workforce.

“By joining Shopify, we’re changing the game of fulfillment. Together, we will help thousands of businesses improve their fulfillment operations, with an easy-to-learn solution that can more than double productivity and improve accuracy,” said Jerome Dubois, co-CEO and co-founder of 6 River Systems.

The company is adding its cloud-based software and collaborative mobile robots, known as Chuck, to the Shopify Fulfillment Network—increasing speed and reliability of warehouse operations as well as empowering on-site associates with daily tasks, including inventory replenishment, picking, sorting and packing.

Yozayo/istock/Getty Images Plus

OTCSA DELIVERS CYBER SECURITY GUIDELINES FOR OPERATIONAL TECHNOLOGY Cyberattacks on critical and industrial infrastructure are on the rise, impacting operational reliability and business risk across all industries, including utilities, manufacturing and oil and gas. Meanwhile, threats to operational technology (OT) can disrupt operations, negatively impact productivity, cause ecological damage and compromise human safety.

The Operational Technology Cyber Security Alliance (OTCSA) was established to help companies address the OT security challenges that continue to put operations and businesses at risk.

The OTCSA mission is outlined: ❯ Strengthen cyber-physical risk posture of OT environments and interfaces for OT/IT interconnectivity ❯ Guide OT operators on how to protect their OT infrastructure Pexels based on a risk management process and reference architectures/designs which are demonstrably compliant with regulations and international standards, such as IEC 62443, NERC CIP and NIST 800-53 ❯ Guide OT suppliers on secure OT system architectures, relevant interfaces and security functionalities ❯ Support the procurement, development, installation, operation, maintenance and implementation of a safer, more secure critical infrastructure ❯ Accelerate the time to adopt safer, more secure critical infrastructures.

“OTCSA aims to bridge dangerous gaps in security for critical and OT infrastructure and ICS to support and improve the daily lives of citizens and workers in an evolving world,” says Satish Gannu, chief security officer, ABB and senior vice president, architecture and analytics, ABB Ability. “Industry collaboration to establish guidelines is required to quickly advance the posture of OT, which is already a decade behind IT when it comes to security.”

DATA WAREHOUSING MARKET TO EXCEED $30 BILLION BY 2025

The data warehousing market will see significant growth from 2019 to 2025 as technology enables a more efficient way of storage and analysis of enterprise big data.

The market will grow at a CAGR of over 15 percent because of Industry 4.0 and the increasing trend of cyber-physical systems in production facilities, which also led to the generation of huge data. The manufacturing enterprises are making huge investments in IIoT and integrating production management systems with data warehousing solutions for accurate and data-driven production planning.

North America is projected to dominate the data warehousing market in 2025 with a share of over 40 percent because of increased implementation of cloud services, robust ICT infrastructure and the rising popularity of big data analytics. Enterprises in the region are migrating from traditional data warehouse appliances to cloud-based solutions for reducing hardware dependency, increasing scalability and cost-effectiveness.

www.SDCExec.com | December 2019 | SUPPLY & DEMAND CHAIN EXECUTIVE

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FEATURE

By Caroline Proctor & George Fowler

DIGITAL TRANSFORMATION IN SU —ON PACE OR AT RISK? Digital transformation has not only changed the stakes, but the entire game.

A

s we draw the curtains on 2019, the responses to our survey “Digital Transformation in Supply Chain Planning—On Pace or at Risk” are illuminating. Beyond the survey results, we also see anecdotal evidence from our customers that transforming the area of supply chain planning can improve service levels while delivering considerable efficiency and productivity gains and cutting costs and waste. We also hear about “soft” gains, like improved planner morale, better work/life balance and the opportunity to do more interesting work.

However, despite all the demonstrable upside, a whopping two-thirds of the companies we surveyed are yet to execute digital transformation and only 7 percent are currently reaping the benefits. It would be wrong to conclude from this that digital

— Figure 1 —

What Stage of the Supply Chain Planning Digital Transformation Journey would you say your Organization is in?

EXPLORING - establishing the catalyst for change and ranking ideas by how well they fit business and existing supply chain strategies, organizational capabilities and the needs of the customer

26%

EVALUATING - includes evaluation (including hands on), estimating costs, project phasing, etc.

GAINING BROAD ORGANIZATIONAL SUPPORT - once funding is secured gain broad support from the supply chain organization, set up steering committees, etc.

EXECUTING - implementing and deploying technology while getting people to adopt the required processes and tools

32%

8% 7% 27%

REAPING THE BENEFITS - continuous improvement projects to scale and capture the full benefits 10

transformation is low on supply chain leaders’ agendas. Battling uncertainty on many fronts (see figure 1)—volatile demand, trade wars and tariffs and new business models—the 200 leaders we surveyed are understandably as eager to digitally transform as they are pragmatic in their approach.

CAUTIOUS ABOUT NEW TECHNOLOGY INNOVATIONS...

Supply chain leaders are not early to adopt disruptive and innovative technologies. That’s understandable. Failed deployments that impede the flow of food to tables, cars to driveways, and holiday presents to children can cause lasting reputational brand damage. Many technologies associated with supply chain transformation also require extensive (and often expensive) integration. Linking business IT systems to closed, legacy operational technologies can be particularly difficult.

Our survey shows that supply chain leaders are most readily embracing Internet of Things (IoT) and Robotics technologies, with 21 percent and 18 percent of respondents, respectively, running active projects. While both technology categories include a range of discrete solutions at varying stages of maturity, many are now proven and have reached mainstream adoption.

In the realm of AI and related technologies, digital assistants/conversational commerce and machine learning we see cautious adoption levels, with 16 percent, 14 percent and 14 percent of respondents, respectively, running active projects. Of those who plan to apply machine learning, 40 percent see it as a technology that could improve forecast accuracy.

This chimes well with a report Tim Payne at Gartner published last year entitled “Current Use Cases for Machine Learning in Supply Chain Planning Solutions.” In the report, Payne

SUPPLY & DEMAND CHAIN EXECUTIVE | December 2019 | www.SDCExec.com

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IN SUPPLY CHAIN — Figure 2 —

What are your Investment Plans for these Disruptive and / or Innovative Technologies?

21%

Internet of things

17%

Robotics

18%

Artificial intelligence

16%

18%

Digital assistants / conversational commence

14%

19%

Machine learning

14%

Augmented / virtual reality

12%

12%

Blockchain

12%

14%

Drones

12%

Digital twins Driverless delivery / transportation Project underway

19%

7%

12%

35% 57%

7% 5%

7%

12%

9%

12%

Within next 12 months

12%

12%

12%

Interestingly, we also find a link between respondents’ attitudes to change and legacy technology concerns. Thirty percent cited “Fear of Change” as the top factor holding back digital transformation. In a similar vein, “Risk Aversion”

45%

14%

10%

...AND HAVING TO REPLACE THE OLD

40%

14% 16%

9%

40%

12%

9%

5%

31%

16%

14%

10%

Under consideration (no planned start date)

16%

6%

22%

explained that end users “want to get better, more accurate demand plans that do not involve absorbing masses of demand planner time to accomplish.” According to other recent surveys we looked at, three of the top five reasons why organizations haven’t adopted AI are related to their inability to articulate a roadmap.

Few respondents reported having projects underway involving Drones (12 percent) or Driverless Transportation (7 percent), despite the considerable hype surrounding these technologies.

However, given their risks and relative immaturity, this is understandable. We believe these innovations will gather more steam after robust testing is complete and regulatory frameworks are defined (see figure 2).

SDC1219_10-15_Feature_JY.indd 11

15%

51% 65% 63% 59%

Within 12-24 months

Not planned at this time

— Figure 3 —

What Obstacles Stand in the way of Implementing your Supply Chain Digital Transformation Plans?

30% Fear of change 25% Data quality / lack of data 24% Risk aversion 23% People / skills deficits 22% Rigid technology infrastructure 20% Disconnect between IT and the business 18% No sense of urgency 18% Focus on cost cutting over investment to drive business objectives 15% Lack of investment / digital transformation is viewed as a cost and not an investment 13% Cannot prove the business case (ROI) 11% Nothing is holding our organization back 5% Obsession with a “big-bang” change

www.SDCExec.com | December 2019 | SUPPLY & DEMAND CHAIN EXECUTIVE

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FEATURE Key Drivers of Supply Chain Planning Digital Transformation Annual Revenue < $100 mm

Annual Revenue $100 to $500 mm

Annual Revenue $500 to $1b

Annual Revenue > $1b

Gain operational efficiencies

25%

24%

35%

53%

Evolving customer behaviors and expectations

28%

29%

26%

45%

Improve customer service

33%

18%

35%

39%

Drive business performance

24%

24%

22%

47%

Growth opportunites in new markets

32%

29%

22%

25%

Need to support new business models and revenue streams

19%

20%

22%

33%

Move from legacy on-premise systems to cloud solutions

8%

20%

30%

43%

Increased competitive pressures

13%

20%

22%

19%

Declining or stagnant business performance

4%

10%

17%

18%

— Figure 4 —

came in third at 24 percent. However, “Data Quality/Lack of Data,” was the second highest response at 25 percent. Twenty-two percent cited “rigid technology and infrastructure” as an obstacle (see figure 3). Our experience from working with hundreds of multinational companies indicates that supply chain leaders are risk averse and reluctant to change because of having to confront large-scale legacy data and IT infrastructure issues as part of digital transformation.

Also noteworthy is the perception in 15 percent of companies that digital transformation is a cost, rather than an investment. Thirteen percent of respondents said they couldn’t prove ROI business cases, while 18 percent said the focus on cost-cutting eclipsed the ability to drive business objectives. Although this is our first digital transformation study, we see anecdotally that this cost-centered way of thinking appears to be waning as more companies go public with their supply chain transformation-related ROI figures.

DRIVING TOP-DOWN CHANGE Given supply chain’s risk-averse nature, it comes as welcome news that executives and board members now recognize the role they must play in leading, not just sponsoring, transformation.

At 32 percent, CEOs are now driving the largest 12

percentage of digital transformation efforts, as are 18 percent of executive boards (see figure 4).

This certainly tallies with our experiences of some customers whose boards are actively involved in selecting supply chain planning software to support top-line business goals. Among these are the top three drivers of digital transformation in our survey: operational efficiency (42 percent); meeting evolving customer needs (41 percent) and improving customer service (39 percent).

We are concerned, however, that while topdown support is clearly strong, companies may be failing to communicate sufficiently with internal stakeholders. Going back to figure 1 on page — Figure 5 —

How are you Investing in People to Cope with Digital Transformation?

48% Hiring individuals with strong analytical skills 41% Internal growth/promotion 38% Hiring individuals with established supply chain backgrounds 32% Hiring new college graduates to train into roles 31% Retraining existing staff for new roles 18% Investigating ways to reduce human capital & maintain operations 7% Not reinvesting in individuals who leave

SUPPLY & DEMAND CHAIN EXECUTIVE | December 2019 | www.SDCExec.com

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10, only 8 percent of respondents were actively “Gaining Broad Organizational Support.” This could signal that organizations are either not spending enough time on this phase or skipping it altogether.

THE SKILLS GAP POSES DIFFICULTIES AND OPPORTUNITIES Given the current low unemployment in the U.S., along with scarcity of technical talent, it’s no surprise that 23 percent of those we surveyed (see figure 3 on page 11) said they were obstructed in their transformation efforts by people/skills shortages. While 18 percent of respondents are addressing this by investigating ways to reduce the need for human capital (see figure 5), 48 percent are actively recruiting people with strong analytical skills.

All this bodes very well for skilled, upwardlymobile supply chain graduates and professionals.

Forty-one percent of respondents said their companies were offering internal growth/ promotion as an incentive to retain staff. Thirtyeight percent of those surveyed said they were hiring people with established supply chain backgrounds and 31 percent were retraining existing staff into new roles.

All this suggests that companies’ moves toward automation do not appear to be happening at the expense of people. If anything, new technologies are deployed to handle repetitive numbercrunching work and elevating the roles of supply chain staff. Our survey responses reflect exactly what we see in our customer base: companies redeploying planners into new, often customerfacing service roles, promoting them, or being able to offer better work/life balance.

To illustrate, ToolsGroup customer Shamir Optical’s global supply chain planning manager, Nila Azura, who started her career as a data entry administrator in production planning, applied her wealth of acquired business knowledge and deployed an automated planning system. This was a key factor that led to her promotion.

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SIZE MATTERS In our survey, we found some surprising differences in digital transformation maturity

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axel2001/iStock/Getty Images Plus

FEATURE

Demographics & in relation to company size.

“REAL” DIGITAL Whereas in some business TRANSFORMATION Methodology areas, smaller companies are IS COMPLEX AND ToolsGroup, a leading provider more nimble and faster to INTEGRATED of service-driven supply chain embed new technologies, the As we reflect on the survey, planning solutions, partnered opposite appears to be true one thing has become clear: with Spinnaker, a supply chain in the realm of supply chain. the real capabilities and services company, to conduct Forty-one percent of large inherent benefits associated a survey-based research study companies (above $1 billion with this current wave of of North American supply chain professionals to understand in size) are currently executing digital transformation in where their organizations are digital transformation supply chain have kept pace in their digital transformation compared to only 14.9 percent with the hype and promise. journeys, what’s driving them, of the smaller (below $500 Given the pragmatic nature what challenges they are facing, million) companies. of supply chain leaders, this is and what technologies they are However, there is some encouraging. We expect that investing in. Between April and evidence to suggest that smaller as more companies succeed, July 2019, ToolsGroup and Spincompanies simply don’t have others will follow. naker surveyed nearly 200 supply the same urgency to transform Two points from the chain professionals from top CPG, as large ones. Only 8.3 percent survey reinforce our belief Distribution/Wholesale, Food and of small companies, for that corporate adoption Beverage, Manufacturing, and Reexample, said that a key driver will continue to escalate. tail companies as part of the study, titled: “Digital Transformation in was the move from legacy to First, supply chain leaders Supply Chain Planning— cloud solutions, compared to are rightly treating digital On Pace or at Risk?”

41 percent of large ones. That transformation as a complex, could well mean that many integrated initiative smaller companies already run (or started out with) involving people, process, technology, policy and cloud infrastructures and applications. metrics. This is one reason why we see some Large companies also reported a relatively companies pushing back on purely technologyurgent need to react to evolving customer led solutions, like “digital twins,” which can behaviors and expectations (45 percent, compared replicate existing problems. Instead of rushing to to 26 percent in the $500 million to $1 billion introduce disruptive and innovative technologies, group). The largest companies also had the we see these same companies building the greatest need to gain operational efficiencies and right infrastructure to properly implement and drive business performance (see figure 6). These maintain these technologies in alignment with are typical problems that large companies face as a operational business goals. They are also working consequence of their size. to hire skilled personnel to apply the technology 14

SUPPLY & DEMAND CHAIN EXECUTIVE | December 2019 | www.SDCExec.com

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FEATURE — Figure 6 —

profitably, and to incorporate change management principles to effectively embed these capabilities into corporate culture.

Second, efforts to realize the benefits of digital transformation are moving forward at pace. This survey clearly illustrates that the convergence of digital transformation technologies, AI, IoT and the like, have gained significant buy-in and investment from within the C-suite. The evidence shows that now is the time to execute on a strategy before opportunity and competitive advantage is lost. Digital transformation has not only changed the stakes, but the entire game.

Companies are rapidly experiencing that “Kodak Moment,” where they will have to immediately determine their own digital transformation strategy or potentially cease to exist.

The full research study and results are available on the ToolsGroup website www.toolsgroup.com/DT-survey.

Who is Leading/Driving Supply Chain Planning Digital Transformation in your Organization?

CEO

32%

Line of Business

19%

Board of Directors

18%

A Committee - No Single Owner

18%

CIO/CTO

16%

CFO

12%

Chief Innovation Officer

12%

Chief Digital Officer

10%

Chief Experience Officer Other

4% 10%

ABOUT THE AUTHORS CAROLINE PROCTOR is CMO for ToolsGroup, leading global marketing and communications.

She has more than two decades experience as a marketing strategist and team leader for supply chain and enterprise software companies Manugistics, JDA, JustEnough Software, RELEX Solutions and Deltek.

GEORGE FOWLER is a group vice president for Spinnaker’s Supply Chain business unit where he leads the firm’s Planning Systems Implementation and Managed Services Practice.

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FEATURE

By Mackenna Moralez

CSCMP EDGE: IN REVIEW

Over 3,000 supply chain professionals attended the annual premier CSCMP Edge event in Anaheim.

T

he 2019 CSCMP EDGE conference this September was one for the books as over 3,000 supply chain professionals from around the globe attended the event.

This year’s conference provided attendees the opportunity to immerse in high-quality education, networking events and collaborations with supply chain management leaders. This year’s trends included both innovative “process” ideas and utilizing the latest tools afforded to supply chain professionals—as well as inspiration.

The conference covered topics ranging from transportation, e-commerce, global sourcing, risk management and, of course, talent management.

“Our audience spans all generations and levels of experience with our youngest attendees being students from leading supply chain programs. We are also one of the last associations to formally partner with academia, and our academic members are featured presenters in many of our sessions,” says Rick Blasgen, president and CEO of the Council of Supply Chain Management Professionals (CSCMP).

Blasgen explains that CSCMP events typically feature the latest research in various topics, which are then discussed and debated. EDGE encourages attendees to make valuable new connections and leave with new knowledge of the industry.

He believes that every supply chain professional should be a CSCMP participant as the organization provides resources that are needed throughout people’s career.

“CSCMP will continue to deliver value to our community. Our members and community are everything to us. All the real supply chain innovations happen because of people—people who create new tools, better processes and meaningful change, for the better,” Blasgen says.

“These brilliant leaders come to EDGE to sharpen their knowledge, but also to hear from their peers in the industry—those who are shaping the business of supply chain management and willing to share their experiences and takeaways.”

EDGE is always looking for ways to innovate and new ways to deliver these experiences. For example, this year the event held an EDGE Townhall Series where C-level leaders were invited to present. The series proved popular and will be appearing at next year’s event in Orlando.

The organization will also develop its “track session topics” to ensure it’s bringing relevant, meaningful and the highest-quality individual sessions to attendees, customers and presenters.

KEYNOTE STANDOUTS EDGE held a video competition this year to select a moderator for its Tuesday Keynote

Image Credit: www.cscmpedge.org

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COMPANY BRIEFINGS Session “The Gig Economy and the Millennial’s Journey to Change the World.” After two rounds, Felisa Higgins, clinical associate professor and associate dean for the Smeal College of Business at The Pennsylvania State University, was chosen.

“To me, young people have accomplished so much in their lives. They have amazing stories in different ways, and they’re all trying to change the world—even if they don’t know that they’re changing it,” Higgins says. “I was excited to get the opportunity to pick their brain. I spent the last 12 and a half years of my life around millennials and post millennials. So, I thought I could bring insight that I’ve gained in the years that I have worked in higher education and trying to prepare young minds for the future and their careers. It seemed like an incredible opportunity I couldn’t pass up.”

Higgins believes that millennials are disrupting the supply chain on both sides of the equation, meaning millennials, as customers, are resetting all expectations in human endeavors.

She explains that the younger generations’ ability to adapt and set higher expectations is a result of having technology in their everyday life.

“We have lived in a life where the technology used every day wasn’t essential to operations. Because they’re digital natives, this is their natural habitat. It is natural for them to expect how they consume things to be digitally enabled,” Higgins says. “Their expectations on value creation, and being the receiver of that value, has created an environment where we all expect things to come to us faster, better and cheaper.

“It’s not that those of us who are older don’t have as high of expectations, but that the influence of technology and the expectations created from it show this as a millennial and post-millennial thing. However, it’s influencing companies to make changes to win over that consumer base.”

Meanwhile, the digital natives are entering the workspace and bringing their technological backgrounds and questioning how things operate. Higgins believes that millennials are able to transcend changes easier than older generations.

“Technology is allowing companies to respond and bring new, young talent in, and change and transform from the inside,” Higgins says. “It is also challenging the older folks to go back to the drafting board with ideas that we had for many decades.”

One of those ideas is Boxed, a mobile, membership-free wholesale retailer that offers delivery of everyday items.

“At its heart, Boxed is an online bulk retailer that provides a more convenient way to buy pantry and home essentials.

We charge no membership fees, have an extensive product

SDC1219_16-19_Feature_JY.indd 17

At CSCMP EDGE, Supply & Demand Chain Executive met with some industry-leading companies to discuss the supply chain function and what they are looking forward to in the coming decade.

Here are what some companies had to say:

RATELINX

W Launched its Data-as-a-Strategy (DaaS)

platform, giving shippers unprecedented access to real-time analytics to optimize logistics, automate processes and eliminate exceptions.

W The company is looking forward to

showcasing how its DaaS platform is transforming logistics for sophisticated shippers in 2020. It’s also looking forward to the increasing focus shippers will have for AI and machine learning in supply chain applications.

W The growing trend its customers should be tracking is the increasing need for clean data to drive success and ROI in systems that are leveraging automation, AI and machine learning. Clean data is imperative for positive and successful outcomes with these sophisticated systems.

ESRI

W Breaking down data barriers between

transportation modes—including trucking and rail. ESRI is helping leading organizations make inroads to digitize their logistics network and use that momentum to share data in a secure way even outside of their organization.

W Looking forward to growing the awareness of location technology within the supply chain organization to “turn on” visualization across their network.

W Believes that in the next decade

companies should always be analyzing performance data to find areas for improvement—whether that’s using sophisticated AI or simply evaluating reasons behind SLAs.

www.SDCExec.com | December 2019 | SUPPLY & DEMAND CHAIN EXECUTIVE

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FEATURE assortment, and offer free two-day shipping on orders over $49,” says Boxed CEO Chieh Huang.

“I like to say that Boxed gives consumers all the perks of warehouse shopping without the hassle of actually going to the store. From an app designed to be as easy as wandering aisle by aisle, to automating the fulfillment processes in our warehouses, to group ordering features and AI assistants, we’re constantly innovating to create a seamless, digital experience for our customers.”

“From a product supply standpoint, retailers are starting to put more thought into the brands they carry because consumer demand now changes rapidly. Every company from Boxed to Amazon must pay closer attention to their stock in the future, listening to their customers and catering to their demands and preferences,” Huang says.

“Distribution in the supply chain is becoming increasingly important. More and more, shoppers $ SAVE 200 REGISTRATION RATES* are expecting theirON goods to be delivered faster.

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“CSCMP WILL CONTINUE TO DELIVER VALUE TO OUR COMMUNITY. OUR MEMBERS AND COMMUNITY ARE EVERYTHING TO US. ALL THE REAL SUPPLY CHAIN INNOVATIONS HAPPEN BECAUSE OF PEOPLE—PEOPLE WHO CREATE NEW TOOLS, BETTER PROCESSES AND MEANINGFUL CHANGE, FOR THE BETTER.” — BLASGEN

3 ½ DAYS

Huang spoke during the same keynote session as Higgins. According to CSCMP EDGE’s website, on average, millennials will start their first business between the ages of 20 and 35— which is exactly what he did in 2013.

The company is changing the food logistics landscape by providing a seamless customercentric, omnichannel experience by meeting its customers where they already are: at home.

“I think we already have disrupted the wholesale market. We’ve consistently seen industry giants struggle to innovate and keep up in this digital era. By offering convenience and carefully curated products to consumers, and by providing strategic tech solutions and valuable customer data to CPG partners, we have established Boxed as a changemaking disruptor for not only shoppers, but also the wholesale industry at large,” Huang says.

Going into the next decade brings new opportunities to the supply chain, Huang points out. Like Higgins, he notes that technology is becoming increasingly crucial to the industry, as innovations like robotics make processes more efficient and give an advantage into improving the overall experience for consumers.

18

30+ HOURS EDUCATIONAL CONTENT

25+ HOURS

3000+

Image Credit: www.cscmpedge.org

DEDICATED NETWORKING

SCM PROFESSIONALS

It’s even possible that same-day delivery will become a norm in the near future, with companies like Amazon and Walmart already testing oneday delivery.”

Higgins also echoes Huang’s statements on how technology is going to be a major trend in 2020. However, it is still unclear as to how the emerging tech will impact the industry. In addition, sustainability will be a major standout as materials may become scarce in the future.

“As we see the integration of technology into the supply chain, we will see how supply chains become resilient as companies begin to build more buffers,” Higgins says.

Overall, CSCMP EDGE was another successful event and continues to be a premier conference for all supply chain professionals.

“At EDGE, you will find anyone who wants to learn about the latest trends and best practices in this exploding field. They all come to take part in the most innovative and exciting supply chain experience in the world. EDGE is built by members, for members, and all of those attending will walk away with ideas and connections to be utilized throughout their careers,” Blasgen says.

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11/25/19 8:43 AM

SPECIAL SECTION

By John McCurry

The Next Wave of

WAREHOUSE AUTOMATION E-commerce is changing the game again for companies investing in automated warehouses and order fulfillment.

M

arket trends have shifted over the last decade in a big way toward e-commerce. As online sales have grown, the demand is driving much of the developments related to warehouse automation and altering the way companies handle order fulfillment, industry suppliers say.

“The lead times and order profiles are becoming more and more aggressive with shorter fulfillment windows and quicker delivery times,” says Michael Pietras, executive sales manager at SSI Schaefer Systems. “Customers are creating the need for larger stock selection, more unique item offerings and more convenience.”

Pietras says tech and retail giants such as Amazon and Walmart have changed the landscape and, as a result, affected how automation providers adapt solutions to the market.

“It used to be that we were fulfilling orders for items going to retail establishments,” Pietras says. “More and more the shift is going direct to customers. Instead of an order of several cases of a particular product going to a store, now it’s a single piece or a couple of pieces going directly to a customer. Lead times are cut to 24 to 48 hours to get it to the customer, meaning the number of packages and orders to be fulfilled has increased dramatically. To do that fulfillment, the engines in the automation space have to be more robust and more intelligent.”

E-COMMERCE AND ADAPTABILITY Tom Rentschler, head of marketing, Americas, for Swisslog Logistics Automation, notes that the market is shifting away from what has traditionally been considered warehouse 20

automation. An earlier wave of automation was primarily mechanization featuring systems with miles of conveyers, sortation systems bolted to the floor, and long lead times designed for a welldefined volume of throughput. The reason those systems were popular is that most companies could reliably predict the growth of their business.

“What’s disrupted that, and what’s caused the adoption of true automation, is the explosion of e-commerce,” Rentschler says. “It’s the fastestgrowing segment of the U.S. economy and elsewhere in the world. E-commerce introduced extreme unpredictability, which proved problematic for mechanized distribution centers and their fulfillment of orders. Most companies did a poor job of understanding the effect that the growth of e-commerce was going to have on their business.

We have seen retail businesses, in some cases, wiped out or lose shareholder value. The megatrend is for flexibility and scalability for both distribution systems and automated warehouse systems. The key is adaptability, how to adapt to changing demand, whether it’s up or down.”

SUPPLY & DEMAND CHAIN EXECUTIVE | December 2019 | www.SDCExec.com

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EVOLVING TRENDS, GREATER SOPHISTICATION Norman Leonhardt, director of business development at Witron, says there is a new trend in automation every year, but not all are developed.

Last year it was automatic truck loading; this year it is micro-fulfillment centers. He says robotic picking may become a trend at some point.

“There are a lot of partial solutions that do not fully satisfy customer needs,” he says. “Anything that’s reliable and eliminates high labor costs is the next step in warehouse automation. Another trend is on the packaging side. Packaging is more designed for the customer, with transparent packaging or shiny images of the product. As we see online ordering increase, there’s less relevance in package appearance or in-store displays. Therefore, packaging could be more conducive to robotic picking.”

Pietras recalls that 10 or 15 years ago, automated technology catered to trains and carousels, which are still reliable for certain markets. However, e-commerce has driven a shift toward shuttle systems, matrix systems and pocket rotation systems.

“From our side, the main focus is providing hardware that supports these large systems, and the software that manages the orders,” he says.

For example, Pietras points to a recent e-commerce warehouse automation installation. A

SDC1219_20-23_Automation_JY.indd 21

customer in the apparel industry wanted to grow its e-commerce channel and design a building to house 1 million SKUs, handle 1 million units per day during its peak season and fit it all into 1 million square feet.

“Traditional solutions in automation would move specific pieces to a specific tote and then route that tote to shipping,” Pietras says, “but when you’re moving a million units a day, the number of packages going out would be too much for the system. Whether it’s the workstations or the conveyance around the workstations, or supporting the infrastructure of the system, you need to get more intelligent with how you fulfill orders.

“So, the next logical step would be to do a pick and sort, where items would go into batches of totes for order consolidation. That reduces the number of packages going out at one time and allows you to fulfill more orders in a shorter time frame. The issue with pick and sort options is that you have to pick, sort, consolidate and pack—four touches. The next advancement in the revolution of automation would be to go to a system that allows only two touches and still does fulfillment.”

Pietras says SSI Schaefer’s solution was to go to an “uber head” sortation system and consolidate the number of touches from four down to two.

“We implemented a large shuttle system that did pick and sort, and now we are working on what we call pocket sort and pack. That’s where we stand today.”

Pietras says there is growing demand in micro fulfillment for grocery chains, providing an evolutionary online grocery shopping experience for customers. The apparel industry, also faced with shorter lead times, is another big driver, as is the pharmaceutical sector. The challenges ahead include continually adapting to changing demands, either from the economic or customer landscape, and the way technology drives society.

“We have more conveniences that have become an integral factor to customers,” Pietras says. “We need to keep up with changing trends and how technology affects customers—how they interact with each other, how they interact with products, and how they acquire products.”

THERE IS GROWING DEMAND IN MICRO FULFILLMENT FOR GROCERY CHAINS, PROVIDING AN EVOLUTIONARY ONLINE GROCERY SHOPPING EXPERIENCE FOR CUSTOMERS.

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SPECIAL SECTION SOFTWARE TAKES THE LEAD Rentschler says that software has become almost more important than hardware. Hardware to some degree has been commoditized. All of the major providers of material handling automation have similar systems and the performance characteristics of those systems are not all that different.

“It’s very unusual for one company to have a true technological edge over another,” says Rentschler.

“What’s really differentiating is the software, and the ways that it can orchestrate the movement of product and process and people—together into one well-oiled machine. The hardware is a big part, but the software is really the brains. It’s how operators can mine not just data but intelligence out of their systems.”

Rentschler says with the advent of Industry 4.0, because of the sensors that are placed throughout distribution centers, there is an ability of subsystems and software to communicate in real time.

“We’re heading toward systems that can self-optimize. The system will understand how to improve itself because of the continuous communication that is taking place from the equipment level up through the host WMS ERP,” he says.

Swisslog is owned by German robotics manufacturer, Kuka, which makes robots primarily for manufacturing.

“We are starting to bring robots into picking operations in warehouses,” Rentschler says. “By combining the Kuka robot arm with a customized vision system, it can pick an item the same way a human could. It is able to recognize and pick different items. That’s a way for companies to augment and address the labor shortage that everyone is faced with right now.”

Grocery chains are really looking at automation for their new trend of e-grocery fulfillment. A lot of these companies are doing a combination of curbside delivery and home delivery, and all the major chains are looking into how to automate that unit of operation as it grows.

“We’ve got systems that are being implemented for a major grocery chain. It’s probably the hottest segment of the industry right now—e-grocery or micro fulfillment,” Rentschler says. “Some grocery chains are thinking about putting actual automation inside the store, keeping the fresh items around the perimeter of the store, but in the center have fulfillment of non-perishables and hard goods with something like an Autostore in the middle of the store.”

Leonhardt says developing fully-automated warehouses have become Witron’s bread and butter the last few years.

“This is a warehouse where there is no touch necessary, the only time anyone is touching any product is when something gets stuck on the conveyer belt,” says Leonhardt.

“Operations managers will correct some faults. Sometimes there needs to be some kind of manual depalletization to remove product in poor condition. All the steps from receiving to shipping are automated.

It’s our main technology, called order picking machinery (OPM), along with our multiple other technologies for piece picking, traditional catalog fulfillment and now e-commerce fulfillment.”

Leonhardt says many of Witron’s customers are looking at automation as a way to achieve labor reduction.

“Companies are looking for the accuracy of the picking, to make sure at least 99.9 percent of the shipments are correctly done,” he says. “A lot of companies are seeking to change packaging. Nowadays it seems like we are shipping a lot of air, because small packages get put into bigger packages. That is another factor people are looking for right now.

“Transparency throughout the supply chain is another. To know where item “x” is right now. Is it at the supplier, is it at the warehouse, or is it on the way to the customer? If an item is not at the store to be picked up, when can it be at the store, when is the next delivery of these items happening? Knowing that data is a major factor nowadays.”

ABOUT THE AUTHOR JOHN MCCURRY is an Atlanta-based writer specializing in logistics and manufacturing.

He is a former editor of Air Cargo World magazine.

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Be innovative • Be committed • Be successful

WE’RE HEADING TOWARD SYSTEMS THAT CAN SELFOPTIMIZE. THE SYSTEM WILL UNDERSTAND HOW TO IMPROVE ITSELF BECAUSE OF THE CONTINUOUS COMMUNICATION THAT IS TAKING PLACE FROM THE EQUIPMENT LEVEL UP THROUGH THE HOST WMS ERP.

It takes more than sound technology and know how to plan and realize the best logistics systems.

For every task, the right solution WITRON‘s storage systems offer a cost-efficient and ergonomic solution for every application across all industries regardless of the branch, whether it is handling large-volume or small-volume articles, whether the article range is small, broad, or inhomogeneous, whether maximum dynamics is required, or a continuous work process is needed.

It doesn‘t matter if the products are picked into totes or cartons, onto trays, pallets, or roll containers, or other dispatch units. All warehouse solutions – whether highly automated, semi-automated, or manual – are modular and based on standardized system components.

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About WITRON Since 1971, WITRON Integrated Logistics designs, realizes and operates customized logistics and material flow systems that generate sustainable competitive advantages for its clients. WITRON has all the decisive key elements of a successful project under one roof: logistics design, information and control technology, mechanics design and production, as well as functional responsibility as general contractor for logistics.

The WITRON Corporate Group has 3,100 employees worldwide. WITRON’s annual revenue in 2017 amounted to 635 million USD. Aside from it’s headquarters in Parkstein, Germany, WITRON has offices in Arlington Heights, Illinois (USA), Toronto (Canada), Venray (The Netherlands), Stoke-on-Trent (UK), Madrid (Spain), Strasbourg (France), and Singapore.

WITRON Integrated Logistics, Inc. 3721 Ventura Drive Arlington Heights, IL 60004 Phone: +1 847-385-6000 info@witron.com

www.witron.com

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Find all facts and features about our logistics systems under www.witron.com

11/25/19 1:31 PM

SPECIAL SECTION

By Mary Shacklett

TECHNOLOGY FOR

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INVENTORY Today’s warehouses use more space and deal with more diverse products and product lines than ever before.

I

n 2018, commercial real-estate firm CBRE reported that for every $1 billion increase in e-commerce sales, an estimated 1.25 million square feet of warehouse space was needed to keep pace with demand.

CBRE predicted that e-commerce-generated warehouse demand could grow by an additional 191.2 million square feet from 2018 to 2020.

However, it is not e-commerce alone that is generating increases in warehouse space and operations. So, too, are increases in product diversity and SKUs that warehouses must track.

These SKU numbers are unique to each store, or customer, of the warehouse—and they are exponentially multiplying as new product lines and product variations come online to satisfy the demands of a market where customers want more product differentiation and variety.

In this highly dynamic environment, warehouse systems and managers must be able to track inventory from time of arrival to time of disbursement. This includes every move of inventory that occurs on the warehouse floor— and can extend to track and trace visibility of merchandise that is being transported from the warehouse to final destinations.

To monitor these variegated product and warehouse demands, new developments in barcoding, packaging and tracking have gained traction in 2019 and will be critical to the success of warehouses as we head into 2020.

Here are the key technology innovations that 24

have occurred in barcoding, packaging and transportation, and that have the ability to take warehouse efficiency and performance to new levels.

BARCODING AND SCANNING There is a plethora of barcoding, QR (quick response) coding and RFID (radio frequency identification) solutions available today that can be adopted in warehouses, depending on the types of food and beverage goods a warehouse stores and processes.

A single barcode strip can be read by a scanner, while also being fairly secure and less expensive to implement. However, the more robust, two-dimensional QR codes can contain more information and are popular with consumers because they can carry product information such as where a head of lettuce was grown, or what the specific ingredients in a frozen entree are. The drawback with QR codes is that they also have security risks. There is the potential to embed malicious website addresses.

At the other end of the spectrum is more expensive, highly secure radio technology like RFID, which has its advantages in some warehouse environments because it doesn’t require line-ofsight scanning like barcodes and QR codes. The downside of RFID is that RFID radio signals can be disrupted in the warehouse by forklifts, smartphones and other warehouse activities.

Warehouses use RFID when line-of-sight scanning is difficult, but a growing number are migrating to the optical scanning abilities of QR labeling, which can work with smartphones and not the more expensive RFID readers.

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The other element of coding and scanning is the printed labels themselves that are affixed to warehouse racks, pallets, containers and boxes of foods and beverages.

The dynamism of e-commerce is forcing warehouses to continuously shift racks of products around, and to relabel racks as product mixes change. Peeling off labels and continuously replacing them is a time-consuming activity, so new label technology that uses better and more flexible adhesives is more efficient.

Warehouses are also moving to multicolor labels because these labels can be used with tiered racking systems to improve processes for slotting, picking and overall inventory management.

“In a warehouse environment, the right use of color makes a label stand out so it’s easier for workers to see from a distance,” said Kurt Wagner, a production design engineer for ID Label, a producer of custom labels.

being kept at proper temperature and humidity levels to prevent spoilage.

Improved packaging also lends itself to new warehouse workflow concepts that involve robotics and automation.

One approach, known as palletization, consists of placing bulk or packaged goods on pallets for storage and handling. The pallets can be equipped with sensors for tracking and tracing, and also for purposes of inventory management. They also work well with automated robotic systems, which more warehouses are adopting.

The conversion to pallets for goods that historically weren’t palletized, has made it easier for autonomous robots on the warehouse floor to move goods from area to area, and even to sort smaller items into boxes for delivery. These robots can move freely throughout the warehouse without manual intervention, and can easily be taught new routes as warehouse locations and routes change.

PACKAGING AND ROBOTICS

LOGISTICS AND TRACKING SENSORS

To facilitate efficient warehouse operations, packaging must be light but able to protect food and beverage from damage. Packages must also be trackable and traceable, and amenable to automation.

In this area, 3D-printing technology has been a transformative influence.

With 3D printing, packagers can test new designs by creating them with computeraided design (CAD) software that is capable of producing physical package prototypes. 3D printing is not yet at cost points that make it available for widespread use, but it’s beginning to transform packaging for food and beverage in cost effective ways that improve warehouse operations.

Packagers have also worked on “smart packages” that embed tracking sensors for food and beverage as they travel through the supply chain, including the warehouse. In some cases, packages are equipped with RFID technology that sends out constant signals on product location in order to prevent theft.

Collectively, these technologies are contributing to improved supply chain visibility for warehouse operators. Sensors can also monitor food and beverage in the warehouse to ensure that they are

There are warehouses that opt to run their own logistics, while others employ 3PL providers to handle the transport of goods to and from the warehouse.

In either case, warehouse managers want to know the status of products as they enter and leave the warehouse and, in some cases, what happens to products along other points of the supply chain.

This is an area where sensors reporting location and condition of goods come into play. They provide visibility to everyone along the supply chain, including the warehouse manager.

“This technology is especially helpful to warehouse managers who work with multiple 3PLs and must make the decision as to which 3PL to employ for a particular shipment route,” said Ajay Rane, vice president of global business development for Sigfox, an IoT network provider.

“By installing a tracker inside a container at the warehouse, a manager can tell which routes trucks take, and determine which 3PLs are most efficient on which routes. This reduces transportation costs and speeds time to market.”

THE CONVERSION TO PALLETS FOR GOODS THAT HISTORICALLY WEREN’T PALLETIZED, HAS MADE IT EASIER FOR AUTONOMOUS ROBOTS ON THE WAREHOUSE FLOOR TO MOVE GOODS FROM AREA TO AREA, AND EVEN TO SORT SMALLER ITEMS INTO BOXES FOR DELIVERY.

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SPECIAL SECTION “We’re seeing a lot more transitions of scanning on and off the truck,” added Jay Steinmetz, CEO of Bar Coding, Inc, which develops barcode, RFID and mobile solutions. … “Cubing of pallets and image systems are validating that the appropriate equipment is being delivered to the appropriate location or appropriate truck.

“In addition, technology using RFID is allowing customers to collect all the appropriate route keys for the delivery of goods at night when there’s nobody at the customer site to receive them.”

MODERNIZING WAREHOUSE OPERATIONS Warehouses have and are adopting new technologies in barcoding, packaging and logistics—ever mindful of the demand for quick and accurate service as volume and space demands climb with e-commerce sales.

The key is investing in the right types of technologies that fit each warehouse’s operational situation.

“Prioritize your warehouse practices by optimizing for return on investment,” said Steinmetz. “Make sure the systems you’re putting in place are well documented and will be supported. Validate that the equipment and technology being deployed has a long life cycle and is being backed by a company that can be

MICROLOCATION:

The GPS Successor Driving Greater Visibility and Efficiency in the Warehouse

By Raghav Gupta

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there in the long-haul.”

The value of vendor support cannot be overestimated. Most warehouses lack deep knowledge of new systems and technology hardware. Vendors can assist in proofs of concept and in establishing ROI formulas for the goals the warehouse sets for itself. Vendors can also take charge of configuring their solutions for the needs of a particular warehouse, and in supporting the migration to a new technology.

“Advanced technology comes at a price,” said Steinmetz. “You need to have the ability to not just understand the technology but to maintain the technology and have the intellectual support to manage the implementation over the long term.”

For most warehouses, it makes sense to take the modernization process step by step—and to never consider the addition of a new technology or solution without a specific business goal in mind, with metrics to measure achievement of that goal.

Common goal target areas include efficiency, cost reductions, optimization of workflows and space, error reduction, reduced warehouse workflow times and inventory control.

“Make sure you have the resources to manage and monitor the operations of the equipment and solution you deploy,” said Steinmetz.

“Also, utilize the latest algorithms for reducing deadheading and optimization of merchandise

FROM ITS START AS A MILITARY POSITIONING SYSTEM, GPS has served as the foundation of hundreds of applications ranging from global shipment tracking to fleet management. In the supply chain, GPS allows manufacturers, distributors and consumers to track their shipments at any given moment, down to the vehicle’s exact location. However, despite this pinpoint visibility outside, things become a lot murkier when one ventures inside the four walls. Warehouses and fulfillment centers lack visibility into their operations. How efficient are my forklift drivers’ routes? How could we have prevented an accident between our tugger and our AGV? Can our associates be more efficient in their picks? These are common questions that are hard to answer in today’s warehouse.

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throughout the warehouse.”

Finally, work for greater mobility and agility in your warehouse operations.

SKU numbers from many different suppliers will continue to multiply.

E-commerce will continue to fuel warehouse space demands. Product demands will become more fluid and will require frequent relocation of warehouse bins and racks.

In this environment, techniques like dynamic slotting, where product locations within the warehouse are allowed to change and bins are refilled with any random product that can fit into the bin, might be employed. Along with this, there should be a means of tracking inventory with automation and sensor-based technologies.

“We see the use of artificial intelligence, robotics and dynamic slotting increasing the efficiencies of everyday warehouses,” said Steinmetz. “However, for technologies to work like AI, robotics, barcodes, RFID and packaging

advances, the warehouse’s human staff must be prepared and trained to use the new technologies.”

This is one reason why it makes sense for warehouse managers to proceed methodically by making changes in an orderly way that gives staff time to get comfortable with new work processes. If this doesn’t happen, staff will find “workarounds” to these processes that will erode some of the areas of gain that the technology was designed to deliver.

At the end of the day, any new technology must be able to integrate with existing systems, whether the new technology is in barcoding, packaging, robotics or logistics. The integration pertains to the systems in your warehouse and your company, and may also require compatibility with the systems that business partners such as 3PLs are using—in other words, any organization that is integral to the success of your own warehouse operation.

Enter Microlocation. Microlocation, and full-stack software-based solutions like the Humatics’ microlocation platform, work where GPS doesn’t, enabling high-precision tracking and navigation applications. These technologies provide warehouse operators 24/7 visibility into the movement of their forklifts, autonomous mobile robots, tuggers, tow carts, associates and containers to allow for safer operation and higher productivity.

location data via industrial-grade UWB and other sensors, Humatics enables better insight into the ins and outs of the warehouse, lighting up parts of the operation that would otherwise go unseen and enabling operators to better optimize material flow.

The Humatics microlocation platform creates and ingests location data from mobile assets in a facility to create a digital picture, driving the insights necessary to achieve higher safety, better asset utilization and greater productivity.

Dwell time. Driver scoring. Fleet utilization. The list goes on. By providing ultra-precise vehicle

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ABOUT THE AUTHOR MARY SHACKLETT is the president of Transworld Data, a technology analytics, market research and consulting firm.

Prior to founding the company, she was vice president of product research and software development at Summit Information Systems.

Automation starts with visibility. As warehouse operators invest in more automation, the need for a microlocation platform enabling “indoor GPS” will only grow. With payback periods of 12 to 18 months, warehouse operators investing in microlocation platforms will not only achieve a quick return on investment but future-proof themselves in the process.

Raghav Gupta is chief operating officer for Humatics.

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SPECIAL SECTION

By Mary Shacklett

WAREHOUSE MANAGEMENT SYSTEMS:

WHAT 2019 TELLS US ABOUT 2020 With continued growth in the WMS market, it’s critical to know how the technology interfaces with new automation.

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n 2019, warehouse management systems (WMS) vendors continued to make advancements in easy to navigate user interfaces (UIs). They also advanced the deployment of system capabilities on a plethora of mobile devices, and in the production of more cloud offerings that simplified deployment and system support for companies. This continued WMS cloudification made WMS investments and price points more attractive to customers.

WMS vendors also continued their focus on interoperability in the mobile and Internet of Things (IoT) worlds, aiming for as much “plug and play” compatibility as possible with smartphones, voice-activated systems like Alexis and Siri, robotics, barcoding/labeling, and track and trace IoT devices. As a complement to baseline WMS software, artificial intelligence (AI) and analytics were added to enhance informed decision-making for warehouse managers, and also to interact with increased amounts of warehouse automation. All of these WMS moves were needed as a response to the market pressures that warehouses were feeling.

WAREHOUSE MARKET PRESSURES Just what market pressures were warehouses feeling?

In 2019, some of the primary challenges for warehouse managers were time management, inventory tracking and accuracy, and supply chain communication, especially with logistics providers. Products (and SKU numbers) continued to multiply and diversify in warehouses, placing more pressure on inventory tracking and management systems, and also in meeting the expectations of customers.

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On top of this, the market demands for increased warehouse capacity and space, and for the ability to rapidly juggle inventory allotments for online and in-store markets, complicated inventory management and workflow throughput processes.

The inventory shuffling between online and instore product allotments, which was subjected to dynamic swings on a day-to-day basis, presented one of the most formidable challenges.

“In these cases, the order management systems that companies use don’t adequately segment sales by online and physical classifications,” said Kevin DeLine, senior solutions specialist in Netsuite’s Supply Chain Center of Excellence. “On any given day, the forecast can change. It can go from a 60/40 apportionment of inventory between online and in-store sales to a 70-30 mix because of an online promotion. This alters your picking plans, but you still need to control your labor and transportation costs.”

To meet the challenge, many warehouse operators began adopting wave picking, which shortens the order schedule to whatever is happening in a given day. This improves communications and accuracy in warehouse operations, and more closely aligns what is occurring in the warehouse with what’s happening in sales, production and deliveries to customers.

Mobile device deployments, robots and operational automation also continued to move forward in warehouses in 2019. The thinking behind these implementations is that they will deliver more flexibility and reduce errors in operation that are introduced by humans, because the operations the automation and robots perform is repetitive and amenable to processing by machine. The automation also speeds time to market for goods.

As a response to the growing fluidity and dynamism of warehouse schedules and workflows, and additionally the move of warehouses to

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more automated systems, WMS system vendors focused on delivering more APIs (application programming interfaces) for integration with warehouse robotics and automation.

THE MOVE TO A SMART WMS In 2019, WMS providers also added more AI and analytics to their systems.

“WMS systems are working with AI to expedite the processing of orders which are routed to warehouse operations the moment they come in,” said DeLine.

The automation itself includes the incorporation of automated storage and retrieval systems (ASRS) that automatically place and retrieve products and pallets from one warehouse location to another. The ASRS automation gives the warehouse process repeatability, flexibility and better inventory accuracy. It can also operate on very heavy loads and in refrigerated environments that are unfriendly to humans.

“These systems are complemented with other automated technology such as robots that look like moving pizza pies, and that can traverse the warehouse floor to bring back pallets or racks of goods to human pickers who pick from the pallets and pack the goods,” DeLine said.

PLANNING FOR 2020 Key drivers of corporate investment in WMS systems are the need for automation to reduce costs and to keep up with a rapidly

Yozayo/istock/Getty Images

changing supply chain; a focus on improving (via automation) the order picking and material handling processes in the warehouse; continued interest in migrating in-house legacy WMS

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systems to the cloud; and the expansion of WMS capabilities to areas that have been historically neglected, such as yard management.

As warehouse operators consider how best to upgrade their WMS systems and warehouse operations, there are a few best practice recommendations.

Fit your WMS plans to your business. “It’s important to configure your WMS system for your business,” said DeLine. “In some cases, you may need to modify your WMS system to fit the business and, in other cases, you may need to alter business operations to take advantage of WMS system capabilities. If you’re going to a wave concept for your order planning, for example, your overall set of business rules may need to change.

“In other cases, integration with other systems and their ability to use AI can assist you with affinity analysis in the orders that you receive from your customers,” he explains. “For instance, if your warehouse history tells you that a blue medium-sized tee-shirt is the most popular item, you can place the tee-shirts in an easy-to-access location of the warehouse to facilitate rapid picking by using affinity analysis.”

Train your employees to handle the exceptions.

“Too many companies, when they add new WMS capabilities or alter warehouse operations, spend time training their employees on the everyday processes,” said DeLine. “The knowledge of how to handle these exception situations prevents bottlenecks and keeps warehouse operations flowing.”

Listen to your employees.

Employees in the warehouse are the ones on the front lines and are likely to have ideas on how to improve processes for greater efficiencies and effectiveness. It’s important to listen to them and to engage them in the process of workflow and system reformation.

This generates buy-in and enthusiasm from the people “on the ground” in the warehouse. It’s’ one of the best “shots in the arm” a new WMS implementation can receive.

BETWEEN NOW AND 2025, THE GLOBAL WAREHOUSE MANAGEMENT SYSTEM MARKET IS EXPECTED TO GROW AT A 16 PERCENT COMPOUND ANNUAL GROWTH RATE (CAGR)

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2019 GREEN SUPPLY CHAIN AWARDS

By Editorial Staff, Supply & Demand Chain Executive

FINDING SUSTAINABILITY

Within the Supply Chain Supply & Demand Chain Executive announces the recipients for its annual SDCE Green Supply Chain award winners.

2019

SUPPLY CHAIN

12 th Annual Sixteen-year-old environmental activist Greta Thunberg had the globe talking about the importance of sustainability this year as climate change became the topic of several headline-inducing political debates.

Though the teenager’s call for sustainability gained recognition worldwide, it is an issue that the supply chain profession has been addressing for several years now.

The 2019 recipients of Supply & Demand Chain Executive’s Green Supply Chain Award have made it their goal to make their supply chains more ecofriendly, focusing on ways to reuse or recycle items throughout their operations. Each company proves its commitment by creating solutions that not only improve the environment, but also its bottom line. Those that made notable additions this year are listed below.

3GTMS

www.3Gtms.com 3GTMS’ transportation management solution (TMS) uses proprietary routing algorithms to help customers increase the efficiency of their routes.

The technology responds in real time to dynamic routing factors and ensures that customers are maximizing route efficiencies no matter what last-minute changes may occur. As more customers implement the solution, fewer miles have been reported because of more optimized routes and truckloads. In addition, the company’s clients now have the ability to consolidate more orders and deliver them in the most cost-effective manner possible in terms of miles driven and money spent.

thitivong/istock /getty images plus

ALOM

www.alom.com Supply chain sustainability and environmental protection is a core mission in ALOM’s internal operations. Two years ago, the company focused its sustainability efforts on technology solutions to increase the efficiency and speed of order management, which reduced transportation costs and distance traveled for both supplied materials and orders shipped. Meanwhile, the company has kicked its sustainability program into high gear, opening a 50,000 square-foot production and fulfillment facility in Indianapolis to meet growing regional demand, further shortening fulfillment times to Midwest and Eastern destinations.

Within a year, ALOM outgrew its available capacity and has since moved to a new 160,000 square-foot building. When ALOM first signed the lease, the building was just a cement slab floor with tilt-up cement walls and a roof. This provided the company’s operations planners with the opportunity to design the facility from the ground up and incorporate high-efficiency, energy-saving technology. The company will be monitoring energy usage closely in the months ahead, with sustainability a key metric of its report.

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CASS INFORMATION SYSTEMS INC.

www.cassinfo.com

Cass Information Systems provides solutions through the utilization of technology to obtain cost and process efficiencies for its customers. These solutions help them meet green supply chain goals, which include accelerating the amount of electronic data interchange (EDI) between customers, their freight carriers and Cass. This results in a reduction of paper transactions and maximizes EDI without sacrificing controls and accuracy. In addition, the company’s centralized business intelligence manages the supply chain more efficiently and provides further positive environmental impact for its customers.

MILLIONS OF ORDERS PROCESSED DAILY When selecting an e-commerce provider, choose an industry leader.

SSI SCHAEFER is the most innovative automation solution provider for e-commerce supported by a fully integrated software suite.

ssi-schaefer.com

CLOUDLEAF

www.cloudleaf.com Supply chain waste includes the obvious areas that appear on the balance sheet, such as materials and energy.

By reducing waste along the entire supply chain, secondary waste can also be disposed. Cloudleaf is working to close the visibility gap into supply chain waste, which they estimate averages 20 percent for most companies. This blind spot can account for preventable waste anywhere in the supply chain. Cloudleaf has developed a true endto-end solution that increases waste visibility. The company is currently working with companies in various industries to increase waste visibility, while reducing costs so that all can benefit. www.cloudleaf.com

DSC LOGISTICS

www.dsclogistics.com

DSC is committed to the sustainability of its customers as well as their customers. DSC has a goal to eliminate waste and cost within its supply chain, making sustainability a core component of its strategy.

The company has reduced utility metrics on average by 8 percent year over year across all locations in the DSC network. To maintain its goals, the company has created a monthly transportation consolidation status report, which tracks and evaluates its activity. In 2018, DSC achieved an 11.6 percent reduction in carbon emissions.

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FULL-SERVICE PARTNER SPECIALIZING IN: • • • • •

WMS Software & Controls Storage & Retrieval Systems Shuttle Systems Custom Automation Solutions AGV’s

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2019 GREEN SUPPLY CHAIN AWARDS ELEMICA

www.elemica.com

Elemica helps customers improve and achieve their measurable sustainability goals through the automation of manual processes, reducing the usage of paper. By automating business processes for sourcing, procurement, order management, inventory and logistics, the company has streamlined operations, boosting efficiencies and reducing errors. The company’s Elemica Move for Logistics Management helps its clients lower their carbon footprint and fuel usage by optimizing shipments and loads. In thitivong/istock /getty images plus addition, it allows businesses to connect and collaborate with all logistics service providers so trucks are shipped fuller and to the right location. Successful first-time deliveries lower costs by eliminating the need to use expedited freight, eliminating wasteful idling of trucks and lowering carbon emissions.

FLEET ADVANTAGE

www.fleetadvantage.com

Fleet Advantage serves companies within the supply chain by providing a turn-key asset management solution for companies with corporate transportation fleets. The solution encompasses many facets of sustainability, including optimizing vehicle specification, specifying lighter components and allowing for longer maintenance intervals, while disposing of pre-owned equipment to a secondary market for more fuel-efficient vehicles. The software allows organizations to leverage data analytics to lower fuel costs by monitoring various metrics in fuel economy, thus conserving fuel resources while also reducing emissions, lowering costs and creating a cleaner environment. vitpho/istock/getty images plus

JAGGAER

www.jaggaer.com JAGGAER provides a software platform for end-to-end management of all supply chain and procurement processes and spend categories. The company assists in implementing these processes for its clients to help meet their sustainability strategies at key points in the supply chain. Meanwhile, JAGGAER can help its clients’ green supply chain strategies on projects across the globe by providing a technology platform that enables customers to adhere closely to local guidelines and directives.

NOODLE.AI

www.noodle.ai Noodle.ai’s mission is to create a world without waste using advanced Enterprise AI®. Current systems are failing to give supply chain leaders precise predictions and probabilities, leading to excessive amounts of waste. The company provides an Enterprise AI application to its clients that uses a sophisticated proprietary machine learning algorithm to predict and optimize critical operational variables. This allows managers to make better decisions while using both internal and external data.

Noodle.ai’s applications are intuitive user interfaces to help educate leaders on what actions they may take to reduce buffer sizes, be more responsive and increase flow.

www.noodle.ai

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2019

OPENTEXT

SUPPLY CHAIN

www.opentext.com OpenText is a global provider of cloud and software-based Enterprise Information Management solutions. A core part of the companyâ&#x20AC;&#x2122;s offering allows customers to fully digitize their supply chain operations through digitized, paper-based transactions in combination with EDI and electronic fax-based solutions. By helping companies digitize their supply chains, OpenText is helping them significantly remove paper-based transactions from internal and external flow, reducing CO2 emissions.

12 th Annual

THE RAYMOND CORPORATION

www.raymondcorp.com

The Raymond Corporation has prioritized incorporating sustainability into its supply chain by several measures. The company has upgraded its software and controllers to an automated logic and lighting controls programs to zone and control factor and office lighting, heating and air conditioning based on utilization. It has implemented sustainable packaging using sustainably sourced materials, while also dedicating five workers to minimize the waste stream. Raymond has also established a program with its Sales & Service Centers to recycle metal skids and cradles. The program takes shipping cradles, sorts the metals, palatizes them and ships them back to the cradle manufacturer. The recycled metal is then used on new shipping cradles, thus preventing reusable materials from ending up in a scrap yard. To date, over $200,000 in rebate checks have been sent to multiple sales and service centers from the cradle manufacturer.

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2019 GREEN SUPPLY CHAIN AWARDS OTHER GREEN AWARD WINNERS A. DUIE PYLE www.aduiepyle.com

HOLMAN PARTS DISTRIBUTION www.holmanparts.com

AIRSEA PACKING www.airseapacking.com

HUB GROUP www.hubgroup.com

ARENA SOLUTIONS www.arenasolutions.com

INTEL intel.com

ASIA PULP AND PAPER www.appcanada.com/web

JARRETT www.gojarrett.com

AUTOSTORE www.autostoresystem.com

KEEN www.keenfootwear.com

AVETTA www.avetta.com

KUEBIX www.kuebix.com

BDP INTERNATIONAL INC. www.bdpinternational.com

LLAMASOFT INC. www.llamasoft.com

BERGEN LOGISTICS www.bergenlogistics.com

LOG-NET INC. www.LOG-NET.com

BOXZOOKA www.boxzooka.com

LUMILEDS www.lumileds.com

CHAINALYTICS www.chainalytics.com

MRV ENGENHARIA www.mrv.com.br

CHEP www.chep.com

PENSKE LOGISTICS LLC www.PenskeLogistics.com

CONTROLANT www.controlant.com

PEOPLES SERVICES INC. www.peoplesservices.com

CROWN EQUIPMENT www.crown.com

PINC www.pinc.com

CT LOGISTICS www.ctlogistics.com

RELEX SOLUTIONS www.relexsolutions.com

DIAGEO NORTH AMERICA www.diageo.com

RYDER SYSTEM www.ryder.com

ELITE TRANSIT SOLUTIONS www.elitetransit.com

SARASOTA COUNTY GOVERNMENT www.scgov.net

ENVISTA www.envistacorp.com

SOURCE ONE, A CORCENTRIC COMPANY www.sourceoneinc.com

FARMDROP www.farmdrop.com/london

SUPPLY CHAIN OPTIMIZERS.COM www.supplychainoptimizers.com

FOOTPRINT www.footprintus.com

TRANSPORTATION INSIGHT www.transportationinsight.com

FUSION TRADE INC DBA FUSION WORLDWIDE www.fusionww.com

UNEX MANUFACTURING www.unex.com

GLOBALTRANZ www.globaltranz.com HEATHROW AIRPORT LIMITED www.heathrow.com HIGHJUMP www.highjump.com

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VAI www.vai.net WESTFALIA TECHNOLOGIES INC. www.westfaliausa.com XSENSE www.bt9-tech.com

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2019

SCHAEFER SYSTEMS INTERNATIONAL INC.

SUPPLY CHAIN

www.ssi-schaefer.com

SSI SCHAEFER has helped numerous companies meet sustainability initiatives with its reusable packaging. The company allows its clients to trade in old packaging products and receive a credit toward new reusable packaging solutions. Clients can then go to the ssitote.com/sustainability website and submit a plastic recycling request. To date, SSI SCHAEFER has had numerous clients take advantage of the program, which allows shipping directly to a recycling facility. Reusable packaging is then implemented within their supply chain, keeping materials out of landfills.

12 th Annual

TRINITY FRUIT COMPANY

www.trinityfruit.com

Trinity Fruit Company is a member of the Sustainable Packaging Coalition (SPC) as well as the How2Recycle label program. This program offers unique labeling on packaging, showing clear and concise instructions about a productâ&#x20AC;&#x2122;s recyclability.

This educates the companyâ&#x20AC;&#x2122;s consumers on how to recycle its products and empower them to focus less on deciphering recyclability and more on enjoying the product. Since joining the programs, Trinity Fruit Company has begun to eliminate unnecessary plastic packaging of its products and is also evaluating alternatives for single-use plastics.

www.trinityfruit.com

MAKE YOUR

Manufacturing Supply Chains CONNECTED & SUSTAINABLE Join the Network Now...

For more information www.elemica.com www.SDCExec.com | December 2019 | SUPPLY & DEMAND CHAIN EXECUTIVE

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SPECIAL REPORT PROCUREMENT

By Julie Sampson

RIGHT PROCESSES LEAD TO GREAT PROCUREMENT As businesses look to improve their processes and procurement efforts, they need to ensure they follow a consistent and proven path.

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very supply manager wants to get procurement right, and will lean heavily on learned or innate skills to do so.

Procurement managers have to be detail orientated, persistent, patient, flexible and creative. Just because a particular approach happened to work one time, they shouldn’t think it’s always going to work that way. But beyond these and other abilities that define great procurement, the glue that keeps it all together, that adds up to more than the sum of the parts, is process.

In this article, we’ll look at process as the means to beating even higher-than-average procurement performance. Here’s an approach that all purchasing managers should consider. With the right improvements to processes, major cost savings can be gained in procurement, reducing waste, improving visibility and enhancing transparency.

UNDERSTANDING THE FOUNDATIONAL VALUE OF PROCESS IMPROVEMENTS Processes vary greatly from one enterprise to the next, but every company depends on them.

Improving current processes in the procurement function may seem like an obvious tactic. But processes need to be informed by relevant, accurate 36

information, and most companies have not yet upped their technological sophistication to know what to change and be able to drive changes with relevant, accurate information.

While plenty of businesses have a functional or practical understanding of the workflows involved, they lack the ability to put their processes through a fine enough filter to MicroStockHub/iStock/ Getty Images Plus identify factors invisible to the naked eye, then make the necessary changes that will generate the desired improvements.

DEVELOP A DEEP UNDERSTANDING OF YOUR BUSINESS It’s hard to get to an impartial, actionable perspective on a company’s own current processes. And the introspection required can even be overwhelming. It might also seem pointless on the face of it if everyday operations seem to be going well and taking no action doesn’t seem to be harming the business. However, gaining this view, a high level of self-awareness, to the extent that it becomes possible to improve processes, will have an unquestionable payoff.

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SPECIAL REPORT PROCUREMENT

WHY DATA AND ANALYSIS MUST SUPPORT THESE IMPORTANT CHANGES

ck/ s

HOW TO DRIVE PROCESS IMPROVEMENT The key here, is data. Best practices rely on strong context and data for consistent, productive application and resultant positive change. Broadly speaking, the following four steps can quickly lead to both the discovery of potential problems and effective resolutions in the context of process improvements: ❯ Find where the actual process differs from the intended process. ❯ Discover the strengths and weaknesses in the process. ❯ Determine what the process should be and the most effective avenues for change. ❯ Develop metrics to measure improvement and success.

Making confident, objective determinations and holding a high degree of confidence in those results is vital for improving the procurement process. Businesses need both data and analysis to inform and guide process improvements.

They should be looking at factors such as control weaknesses, inefficiencies or expense leakages.

When they have a handle on these, they can then develop metrics to document and measure change in the future.

Having key data points and actionable information will help drive improvements to procurement activities. Having access to internal data allows for direct, fact-based comparisons to current best practices within a specific industry or across the entire economy. Once that has been arrived at, cost reductions can be realized through straightforward concepts, such as locating unnecessary or duplicate steps in the procurement process as well as consolidating purchasing, reducing the supply base, negotiating, and avoid defaulting to the tried and true—those skill sets outlined above. Specifically, supply managers can confidently:

❯ Locate unnecessary duplicate steps in the procurement process. ❯ Consolidate purchasing ❯ Reduce or increase, depending on the circumstances, the number of vendors a company works with ❯ Prioritize and strengthen relationships with high-value suppliers.

BENEFITS REALIZED THROUGH PROCESS IMPROVEMENT The payoff that stems from rewiring the procurement process, albeit not complicated, is powerful.

It includes cost savings, reduction in wasted employee time and effort, increased visibility into operations, and the ability to compare current operations to past activity.

The creation of metrics is crucial because it creates a process of consistent benchmarking and comparisons, allowing for a greater degree of insight and ensuring that decision-makers are consistently informed going forward.

As businesses look to improve their processes and procurement efforts, they need to ensure they follow a consistent and proven path. Data analytics is central. With this in place, organizations position themselves to sustainably and reliably improve both processes and procurement, two key factors that can make or break an enterprise.

ABOUT THE AUTHOR JULIE SAMPSON is director of payment integrity at AArete, a global consultancy specializing in datainformed performance improvement.

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SPECIAL REPORT BLOCKCHAIN

By David Cahn

WHEN BLOCKCHAIN MEETS

SUPPLY CHAIN OF THE FUTURE undefined/iStock/Getty Images Plus

Blockchain technology will get better in performance, scalability and security as greater participation takes hold.

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any experts highlight blockchain’s potential to transform business processes, making data used in the supply chain more available, immediate and transparent, as well as having the ability to improve the overall customer experience. But will it? How will blockchain meet the challenges of tomorrow?

There are many enterprise consortia with “proof of concept (POC),” but it doesn’t yet have buy-in from partners or customers, and/or proof of scalability. The supply chain of today and the future faces daunting challenges, and unless blockchain technology can address them, the technology will not be successful beyond the current infatuation of today.

Supply chains in the future will be characterized and challenged by: ❯ Rising supply chain costs for products and services ❯ Increasing customer mandates for faster and more unique fulfillment ❯ Getting new personalized products to market quicker ❯ Achieving an end-to-end view to planning

❯ Accomplishing complete supply chain visibility ❯ Dealing with the move to a service-based consumption model and its upstream implications ❯ Balancing sustainability and innovation with demand.

To align with these future supply chain challenges, blockchain must significantly evolve. Today, the performance of supply chain execution on blockchain is extremely insufficient and the cost of transaction processing is high. Application program interfaces (APIs) need to be upgraded to Open APIs enabling trading partners to connect and participate on the blockchain quicker, more effectively and efficiently. Smart contract development and testing will need to support greater complexity, security and collaboration in rules and deployments. Blockchain will also need to incorporate more complex planning activities and utilize real-time demand. Finally, the speed of which blockchain executes more complex contracts and actions will need to improve.

To meet future supply chain goals, analytics capabilities will also have to be added to blockchain activities. Today there aren’t any analytic capabilities on a distributed ledger; instead, it requires a hybrid data warehouse or data lake. It will also be critical to enrich data into a canonical model for trading partners to share data faster.

ADOPTION RATE NEEDS GROWTH Today, the blockchain adoption rate has to grow, as current participation is

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SPECIAL REPORT BLOCKCHAIN

WHAT’S NEXT IN THE EVOLUTIONARY CYCLE OF TECHNOLOGY?

lower than 5 percent of enterprises in pilot projects. In fact, Gartner predicts that through 2022, 80 percent of blockchain initiatives will remain at a POC or pilot stage. Most blockchain projects are just small use cases where companies are trying to prove the benefits and value of blockchain.

The vision for the future use of blockchain is that it must expand to support supply chain issues and create value through tokenization.

For example, the ability to order a personalized product, like a car, and have the demand captured instantly, which ripples down through the supply chain with the ability to see future customer demand across multiple entities and partners.

Blockchain tokenization could occur based on the number of participants on the blockchain and the volume of orders coming through it. Or, in the case of an automobile purchase, a token could be based on consumer personalization, driver safety,

Blockchain technology is seeing a similar growth cycle, like the way the internet did. While the internet bloomed from intranets and extranets to be a de-facto standard for e-commerce enablement, blockchain technology will go through an evolution from transferring money to transferring value with algorithmic enrichment. There are multiple pivot points that the technology needs to go through, especially around tokenizing assets and the establishment of legal and regulatory frameworks to realize the true potential.

At a recent Gartner Conference, there was a discussion about a health care company application where people could tokenize the value of their own digital asset (e.g., medical record) by selling the asset to insurance agencies, other doctors, health clubs and the like. If the

BLOCKCHAIN WILL NOT BE WIDELY ACCEPTED UNTIL IT CAN ENGAGE QUICKER WITH CUSTOMER DEMANDS AND PROVIDE THE TOKENIZED VALUE TO ITS COMMUNITY. accessories added or miles driven.

Today, there is no multi-enterprise planning on a blockchain network; you have to capture demand signals for each upstream signal separately.

There is a need to coordinate demand and supply, along with issues that can occur after an immediate new product launch. For true blockchain network execution, digital supply networks have to evolve. Blockchain will not be widely accepted until it can engage quicker with customer demands and provide the tokenized value to its community.

person lost weight or did something to gain better health, they would get more tokens. So, the value of a person’s asset would increase as they improve the asset.

This type of proof of value needs to be extended to blockchain before it will be suitable for mass adoption.

People need to see the value in the blockchain. Blockchain brings value to the supply chain today by providing traceability and offering security and transparency of data.

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WHAT BLOCKCHAIN BRINGS TO THE INDUSTRY Blockchain provides consensus, immutability and security—the very things that are necessary for reliability and integrity in a supply chain. There is no dispute in the blockchain regarding transactions because all entities on the chain have the same version of the ledger. Since every transaction is recorded on a block and distributed across multiple copies of the ledger over many nodes (computers), it is highly transparent. It’s also highly secure since every block links to the one before it and after it. There is not one central authority over the blockchain, and it’s extremely efficient and scalable. Ultimately, blockchain can increase the efficiency and transparency of supply chains and positively impact everything from inventory management to proof of delivery to invoice payment.

But blockchain needs to interact with machine learning, artificial intelligence, and the Internet of Things to orchestrate a quick and completely autonomous supply chain.

In the meantime, as supply chains continue to evolve and become more responsive to customer demands, blockchain technology will get better in performance, scalability and security through more projects as greater participation takes hold.

Value will be created and tokenization will be monetized in the blockchain using creative ideas. We have years of alignment to realize pervasive adoption, and we are on our way.

ABOUT THE AUTHOR DAVID CAHN is the global director of marketing for Elemica, the leading cloud-based Digital Supply Network for the global manufacturing industry.

www.SDCExec.com | December 2019 | SUPPLY & DEMAND CHAIN EXECUTIVE

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SPECIAL REPORT THE INTERNET OF THINGS lvcandy/DigitalVision Vectors/Getty Images

Connected assets through IIoT offers not only transparency but greater possibilities.

By Jennifer Eisenbart

MAKE SURE YOU’RE

I

CONNECTED

n the world of supply chain digitization, there is little doubt that the technology offered by the Internet of Things (IoT) is rapidly progressing from a want to a need.

New and increasingly inexpensive technology has caused the IoT to expand, with Statista expecting the number of connected devices to rise from 23.14 billion in 2018 to 75.44 billion in 2025. The IoT—and more importantly for the supply chain, the Industrial Internet of Things (IIoT)— promises a world that is not only a connected place, but a place where those connections deliver optimized performance through artificial intelligence analysis of connected assets.

“There is a movement, or an evolution, that is occurring in the manufacturing space where customers are becoming more and more demanding to have access to that data,” explains David Gustovich, senior director of Manufacturing Center of Excellence and the former founder and CEO of IQity Solutions, now acquired by NetSuite.

“The market is responding,” he added.

CONNECTING ASSETS The potential of the IoT in connecting assets can be easily summed up in discussing, for example, lift trucks. According to Kevin Paramore of Yale Materials Handling Corporation in an Internet of Things webinar with Supply and Demand Chain Executive, there are numerous sensors in lift trucks that track a variety 40

of data, including whether the truck is in forward or reverse, or lifting or lowering as well as fuel consumption, battery state of charge and the like.

“Many people are unaware of the data that can be extracted,” Paramore said. “There’s a lot of granular data that is available coming off these lift trucks. Whether it be in a distribution center, warehouse, outdoor environment or outdoor application, all these truly mean something. The data really comes together to provide a holistic view of the situation. Those data sets can be bridged together into a large decision-making platform.”

Assets in the IIoT can include sensors that detect everything from temperatures or airflow in a reefer trailer or container to a monitor in a semi-trailer truck that measures speed, miles or time driving. The sensors then transmit the data to another device, which allows companies to track the data—often in real time— and make decisions.

With simple devices entering the market at low prices—and LTE-M and NB-IoT providing reliable, lower-power, secure transmission of data over distances—more and more companies are finding the information easily at their fingertips.

The more devices that enter the supply chain means the more data that companies have available. That data can be critical when tracking temperature fluctuations in a reefer trailer or usage of a lift truck, but also monitoring automated processes for inefficiencies and costly breakdowns.

SUPPLY & DEMAND CHAIN EXECUTIVE | December 2019 | www.SDCExec.com

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SPECIAL REPORT THE INTERNET OF THINGS

their own proprietary analytics and addons to purchased items.

“Ultimately, they built some proprietary data connectivity and capability into their equipment,” Gustovich explained. “The owner of the equipment wants you to come to them and use whatever incremental value-added services they provide to gain access to that data.

“There are incremental costs that you have to pay that OEM to license access to the data that the equipment is gathering,” he added.

“Now companies are using IoT to create that unified strategy that’s connecting these different layers within the manufacturing environment,” Gustovich said. “When you think of the trend from a macro point of view, that’s where companies are moving to now and will be for the foreseeable future.

“By connecting the investments they have already made…it’s now giving them a more holistic view and a much more powerful analytic capability,” he added.

COMPETITIVE ADVANTAGE

“By connecting the investments they have already made…it’s now giving them a more holistic view and a much more powerful analytic capability.”

Gustovich has also spent time talking about IoT and how it can enable companies to bridge the gap in globalization. Manufacturers, especially in the United States, he explained, have been hit hard by globalization.

“IoT is a way for them to bridge that gap,” he said.

But Gustovich said that companies need to look specifically at what they need and not try to do everything at once.

“Just because you can, doesn’t mean you should,” Gustovich explained, saying that there can be dozens of data tags depending on the type of equipment a company is working with.

“Not all of those data tags are important for you to have screaming and being processed into an IoT platform,” he said. “So that’s a great application of the 80-20 rule. Focus on those 20 percent of the data tags.

It’s going to provide 80 percent of the business value for you. Begin to connect those data tags first. What you’re doing is focusing on those critical few elements that give you the greatest impact to your business as it relates to gaining visibility and control costs.”

From there, a number of solutions exist for businesses, Gustovich said, including companies that are developing

— GUSTOVICH GROWING OPPORTUNITIES With the growth of the IIoT as well as connected assets, companies must also be willing to address the additional bandwidth and internet speed needed. Through a variety of ongoing technical upgrades in the field—including the use of LTE-M, NB-IoT and even 5G technology— companies are making the leap.

“Most companies are recognizing they need dedicated high-speed internet lines,” Gustovich explained.

“Also, depending upon the IoT software platform, the better designed platform would allow different configuration options to help aggregate and manage the speed and use of bandwidth.”

Gustovich cautioned that the

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technology and its applications are still in a growth and discovery phase.

In a recent NetSuite and Oracle survey, it shows that only a small percentage of companies are on board with IoT technology.

“We’re still very much in the early innings of the IoT evolution,” he explained. “We recently did a survey with our customers and it was a very small percentage of companies that we’re currently working for that have any level of critical investment or capital being applied to IoT or blockchain-type technology.”

As much as IIoT and connected assets are going to be a competitive advantage moving forward, though, Gustovich stressed that he didn’t want to see the human aspect of the supply chain eliminated.

“I have mixed emotions about how much technology should play in terms of automating or eliminating or reducing the workforce,” said Gustovich.

“The reality of it is that it’s a trend that is occurring. It’s one of the reasons why people are concerned about how pervasive artificial intelligence becomes.”

Gustovich also made it clear, however, that with the large amount of data coming in, artificial intelligence solutions will be key to analyzing all the data.

“It’s moved from science fiction into the realm of science now,” he explained. “That’s the whole thing with IoT, bringing it into a common unified database that creates better visibility and awareness that allows companies the analytics and the AI. “It’s about creating the proper notifications and workflows that can escalate things to the appropriate resources as close to real time as possible so you can be more proactive in responding to issues before they become a major item.”

www.SDCExec.com | December 2019 | SUPPLY & DEMAND CHAIN EXECUTIVE

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}

EXECUTIVE FOCUS

{ WAREHOUSING}

By Craig Moberg

INVENTORY MANAGEMENT

BEST PRACTICES Gain visibility of your entire warehouse operation to uncover inefficiencies and select the ideal tools for inventory optimization.

B

usinesses with excellent inventory management processes can fulfill orders faster, more accurately and more efficiently. With accurate inventory, companies don’t have to carry overstocks to handle shortages and backorders and out of stocks don’t exist. Inventory management practices that are exceptional reduce waste while creating satisfied customers.

Companies with poor inventory management processes have too much stock of the wrong items and too little of the fast movers, so out of stocks are rampant. They have low visibility into what is going on within their operation. For example, recently I ordered three appliances in a package deal from a home improvement chain.

I received confirmation that all three items were in stock and would be delivered to my home on a specific date. The date arrived, and two of the items were delivered, but not the third.

In checking with the store, the item I’d ordered was out of stock at the location near my house but was available across town. The store would make sure that the appliance was delivered in a day or two. To make a long story short, the item was not in stock in the store across 42

town, or any store nearby, because the company didn’t have a good handle on its inventory. I finally got the third item—weeks later—but I was not a happy customer.

IMPROVING INVENTORY MANAGEMENT PROCESSES Companies need visibility into their inventory—a centralized view of all of their stock at each location—so that orders can be filled quickly. Inventory management and order management software exist that meet these criteria.

But often this software is expensive.

However, here are other things a company can do to improve its inventory management processes.

Some businesses think that increasing inventory turns will improve their inventory management processes.

While this may generate more free cash flow, it often comes at a price (e.g., increased transaction costs, and more receiving, inspecting, put-away and the like.). The solution is to have the proper equipment and processes in place to turn inventory quicker and fulfill orders faster while reducing operational costs.

ACCURATE INVENTORY COUNTS It is essential to have an accurate count of all your inventory and to

know the location of that inventory.

Receiving areas need to have an accurate count of inventory coming into the warehouse. The inventory then needs to be moved to the appropriate storage. Placing inventory is not guesswork. It needs to be correctly positioned for orders to be fulfilled properly and to eliminate out of stocks. If you need to increase order picking rates and improve space utilization, analyzing the movement of your inventory and slotting the position of inventory is a must.

Slotting is the process of allocating products (SKUs) to locations in a warehouse according to business rules

SUPPLY & DEMAND CHAIN EXECUTIVE | December 2019 | www.SDCExec.com

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T

WAREHOUSING

Chaay_Tee/iStock/Getty Images Plus

much-needed space, but appropriately locates the fastest-moving items in the right location to speed fulfillment.

PROPER EQUIPMENT FOR BETTER INVENTORY MANAGEMENT To improve management of inventory, you need to look at the equipment you have in your warehouse. Large, massive warehouses often use expensive automation to move inventory from receiving to storage, and from storage through fulfillment. But other solutions exist that are less expensive and work just as well. These include carton flow, pallet flow, tilted shelving and the like.

Carton flow racks have a high order-picking rate of up to 150 picks an hour, but combined with a pickto-light system that uses lights to show workers what items and how many to pick, you can increase pick rates by three-fold. Flow racks allow warehouses to store a mix of fastmoving and slow-moving items in the same rackâ&#x20AC;&#x201D;allowing pickers to quickly pick a variety of items from the same area. Tilted shelves help speed order picking too. With tilted trays or knuckled tracks that present products to pickers, allowing them to see what they are picking, you can improve order fulfillment times and eliminate errors.

Using a first in, first out (FIFO) system, you can improve your bottom line by cutting down on lost product due to spoilage or missed expiration dates. FIFO means newer products are stocked behind older merchandise.

This system improves storage and picking because both operations can take place at the same time with loading occurring in the back and picking from the front.

and product characteristics. Effective slotting requires an understanding of a companyâ&#x20AC;&#x2122;s business and goals, taking into account the physical size and aspects of the warehouse, current and future material handling equipment, SKU makeup, seasonal capacity changes, worker skill sets and customer service levels.

Slotting supports the movement of SKUs, whether fast or slow moving.

It also improves throughput so that customer orders can be delivered on time. Effective slotting can also reduce product damage, improve worker productivity and speed fulfillment.

Proper slotting not only provides

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REDUCE WASTE WITH LEAN PROCESSES Excellent inventory management practices reduce waste while creating satisfied customers. These wastes include waste of time, space and travel. Look holistically at your entire operation to understand where the location of inventory for customers and suppliers resides. Drive waste out by optimizing inventory at every point in the supply chain.

Keep track of lead times and leadtime variability and look for ways to reduce them. For example, putting popular products close to the ends of aisles helps order pickers get to and pick those items much faster. Bringing products to workers reduces travel times and searching for products to complete an order.

Inventory management is a complex operation that is not to be taken lightly. Various methodologies exist to manage inventory, from FIFO for perishable items to just in time and more. Whatever methods you use in your operation depends on what your inventory consists of and how fast your customers want their orders. Regardless of the inventory methodology you select, it is important to gain visibility of your entire operation to uncover wastes that can slow processes, to use the best solution for the job, and to slot your inventory optimally. If you do all this, you can assure your customers will be happy and your business will grow.

ABOUT THE AUTHOR CRAIG MOBERG is a product manager at UNEX Manufacturing, Inc., a leading provider of order picking, storage and material handling solutions for distributors, retailers and manufacturers.

www.SDCExec.com | December 2019 | SUPPLY & DEMAND CHAIN EXECUTIVE

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EXECUTIVE FOCUS

{ SOFTWARE & TECHNOLOGY}

By Greg Thompson

FUTURE INNOVATION IN 3D PRINTING As everything within the additive supply chain improves, the winning use cases will continue to improve over time.

I

n recent years, 3D printing has exploded in manufacturing, but now that the original hype has faded, the industry is turning its attention to using the technology for scale. There are unique roles and benefits that 3D printing can play in manufacturing, and the industry is now undergoing a shift where additive manufacturing aligns with accelerated development cycles, customization demands and the digitization of manufacturing, leaving customers keen to take advantage. The following are trends that will continue to drive the 3D-printing space forward.

Czgur/iStock/Getty Images Plus

new manufacturing method into their assemblies to eliminate costs and unnecessary materials, optimize performance and simplify the overall supply chain.

SUPPLY CHAIN MODERNIZATIONS

As 3D printing continues to evolve, the accompanying standards, regulations and As 3D printing overall supply THE EVOLUTION OF 3D PRINTING continues to evolve, chain must grow along with it.

When 3D printing the accompanying Already, the new first emerged onto breadth of products the scene, its main standards, regulations is calling for its focus and problem modernization. to address was and overall supply Traditional prototyping. Now, chain must grow manufacturing from this historical methods have use and adoption, along with it. well-understood manufacturers technological processes with recognize the advantages that 3D more universally known design printing offers, and mind-sets are considerations than additive starting to shift from single part and manufacturing. One major challenge prototyping to leveraging additive will be documenting the additive manufacturing as a production solution. processes to hold similarly consistent In fact, the benefits of additive reach standards (e.g., part dimensions, far beyond single parts into the broader microstructure and machine value chain, with manufacturers now applications), while accommodating considering 3D printing as an early the customization that draws industries option that gives them design freedom in droves. The adoption of 3D printing in end-use parts. The new challenge as a solution hinges on confidence for engineers is when to adopt this

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SUPPLY & DEMAND CHAIN EXECUTIVE | December 2019 | www.SDCExec.com

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SOFTWARE & TECHNOLOGY

3D-Printing Risk Management & Standardization One element of supply chains we all implicitly require is confidence.

Scale and redundancy is one component, but additive’s current charge is to develop a common understanding of process characterization.

in this new supply chain. And while there is still a great deal of knowledge to gain, manufacturers can expect to see a version of the new supply chain emerging in the next few years.

As a prototype solution, 3D printing was primarily concerned with dimensional tolerances and surface aesthetics, while replicating the final material properties as close as possible. Once you consider additive processes as a manufacturing method, risk and requirements increase substantially.

The need is easy enough to state: reasonably predict the outcome of a process on a part’s dimensions, properties, stability and performance in a given application. However, in a still-emerging industry, with a wide range of technologies and approaches, the number of combinations involved with “the process” can be daunting. This is a big reason why the industry is still working through this relatively nascent step.

INNOVATION OF 3D PRINTING ECONOMICS The evolution from prototyping into production also demands that the economics for 3D printing become more desirable for manufacturers. In the past five years alone, the level of engineering innovation in machine and materials has escalated as the industry works to remain in-step with growing manufacturing trends. Much of the discussion and efforts within additive manufacturing forums revolve around improved material properties, better prices, more efficient machinery and less cost variability. Continued investments from historical experts, along with major new entrants such as HP and GE, will be vital in continuing to drive this innovation and economic interest.

Most are aware 3D printing isn’t just a single technology, varying among photopolymer resins, thermoplastic extrusions, sintered powders of plastics and metals, and many more. For materials, one must consider their chemical composition, powder size distribution, number of lots used in a build, and the number of times a lot gets used. Furthermore, there are choices of how to orient and support the part along with hundreds of parameter choices that vary laser speeds, power, layer thickness and scanning strategy. Within these build environments, temperatures, humidity, oxygen levels, and even airflow can lead to variations in outcomes. Post-process steps such as heat treatments or plating, and even the order in which post-process steps are applied, can alter the microstructure of the final part.

Obviously, controlling for, testing, and documenting these impacts is cost and time intensive. However, while working with many different industries and uses, it must be done for a range of performance environments. We are already seeing early adopters and applications cross this threshold, and with the corresponding attention from numerous regulatory bodies, supply chain experts can likely expect to see more robust industry-wide standards in the next two to five years.

DIGITAL MANUFACTURING CUSTOMIZATION While design complexity has been at the helm of additive’s major benefits since the beginning, it remains especially important as overall product life cycles continue to shorten and demands for customization drive faster and wider product development requirements. 3D printing plays a unique role in this effort, given the swath of options it offers manufacturers with adaptability to changes, design complexities and speed. This flexibility combined with 3D printing’s application in higher-mix parts with increasingly lower volumes per design will see early adopters. For example, expect to see the medical, aerospace and automotive industries continue to

expand while even more industries gravitate to this technology.

The future of 3D printing is bright; as it continues to evolve and grow, the industry is already seeing the numerous opportunities where additive can expand to an even larger breadth of application. Contrary to what some believe, 3D printing will not be a takeover or replacement of traditional manufacturing, but rather an augmentation. As everything within the additive supply chain

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improves, the winning use cases will continue to improve over time, as well. While design mind-set, supply chain modernization, economics and customization are top of mind, software optimization for production design and process automation are innovations on the horizon. Manufacturers are already planning for these next feats.

ABOUT THE AUTHOR GREG THOMPSON serves as global product manager, 3D printing for Protolabs.

www.SDCExec.com | December 2019 | SUPPLY & DEMAND CHAIN EXECUTIVE

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EXECUTIVE FOCUS

{ PROFESSIONAL DEVELOPMENT}

By Carol Leaman

Let’s Talk EMPLOYEE ENGAGEMENT When your frontline does the right things at the right time, you help them reach their full potential.

I

n the September issue of Supply & Demand Chain Executive, we explored changing your approach to training and the importance of microlearning. This month we tie it together with employee engagement strategies.

Giving employees the knowledge they need to perform is one half of the performance puzzle. The other?

Engagement. Keeping employees engaged has been shown to make a marked difference in business outcomes.

Companies with engaged employees outperform their disengaged competitors by up to 202 percent. Then there’s the raw cost of productivity drain from disengaged employees. By some estimates, an engaged workforce could save $550 billion per year across the U.S. alone.

Now consider that about 70 percent of American workers report that they aren’t engaged, or are actively disengaged on the job.

Training is a huge part of employee engagement. Support for employees’ growth and development is one of the top reasons people stay with a company.

And training done well results in employees who go beyond just the basic lessons they need to take—they start expanding their knowledge voluntarily and performing better.

That’s a sure sign of engagement.

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IT’S TIME TO TRACK You have learning technology that helps employees learn and remember, and collects millions of different data points along the way. Now what happens?

Real-time data gives you insight into how learning directly impacts key business metrics. You can see exactly which training topics translate into behaviors and performance—and act on them.

Data can help identify skill gaps, which is increasingly important as the workforce evolves. Whether it’s among baby boomers, millennials and even Gen Z, or between experienced hires and those coming from nonmanufacturing sectors, or even among part-time, full-time and consulting arrangements, training needs to be flexible. Knowing what those needs are and where gaps exist can help bring everyone to the same level of performance.

It can also help hone in on the most effective programs. When you can pinpoint exactly which programs are working and which aren’t, you can make informed decisions about what to scrap, what to change and what to keep. Then, you can track how those updated programs are performing in an iterative way.

With a workforce that’s more diverse than ever, data matters more than ever. Data helps you not only identify those gaps and differences, but also act on them.

HOW TO IMPLEMENT A MODERN LEARNING PROGRAM Ready to get started on a tech-based, data-driven training program that improves the bottom line? Here are four steps to set you on the right path:

1) Establish goals.

Identify the results you want to achieve.

Replace outdated training goals like participation rates and test scores with the business targets your company has—from reducing scrap to increasing throughput and everything in between.

2) Identify behaviors.

Work backwards from those targets.

Pinpoint what people have to know and do to achieve those results. Once you’ve identified key behaviors and foundational knowledge, you know what areas your training needs to support (and what mistakes it needs to fix).

3) Understand workflows.

Watch how your frontline works.

How do they spend their time? What tools and resources do they use? By understanding their daily routine, you’ll be able to find the right moments to introduce learning into the mix.

4) Partner up.

Bringing in a new training program or overhauling an old one is a lot of work. Don’t be afraid to ask for help. A trusted partner can help you introduce microlearning into your organization and get programs up and running faster to save time, effort and resources.

In a fiercely competitive economy, success and failure ride on the decisions your employees make every day. When your frontline does the right things at the right time, you help them reach their full potential.

You also help your business get ahead.

If you aren’t already tracking your frontline learning and development efforts, now’s the time to start.

ABOUT THE AUTHOR CAROL LEAMAN, MACC, FCPA, is an awardwinning thought leader with an impressive track record of successfully leading tech companies.

SUPPLY & DEMAND CHAIN EXECUTIVE | December 2019 | www.SDCExec.com

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Each year, Supply & Demand Chain Executive recognizes individual and corporate leaders in the global supply chain. Plan now to enter your company, executive or a cutting-edge client or vendor in one of these industry-leading recognition programs.

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The annual SDCE 100 is a projectbased award that recognizes leading software and technology providers that are helping transform supply chains with their products and services.

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