According to FreightWaves, Boox, a reusable packaging company, wants to make shipping more sustainable.

Reusable packaging company Boox aims to be part of a greater movement to make shipping more circular and sustainable.

Read the article FreightWaves

Apply data collected from the supply chain can make your business better, reports Venture Beat. 

A convergence of anomalous global events has made the age-old goal of reducing overall business costs simultaneously exceedingly challenging and more critical than ever.

Read the article Venture Beat

According to CRN, Dell Technologies bills itself as the world’s best supply chain. 

Dell Technologies’ top executives touted the $101 billion PC and infrastructure giant’s supply chain capabilities and ability to accurately tell Dell partners what’s in stock and when it could be delivered, which has become a “durable competitive advantage.” 

Read the article CRN

Tech companies see a future in working on supply chain innovation, reports the Economist. 

FORTO SEEMS an unlikely tech darling. It does not make gadgets, build the metaverse, forge cryptocurrencies or launch rockets. The six-year-old startup from Berlin, whose main business is arranging the transport of cargo from one place to an other, has nevertheless managed to raise nearly $600m from venture capitalists. 

Read the article The Economist

Supply chain issues are spread across industries and countries. For small businesses, it can be a challenge keeping popular items stocked and dealing with impatient customers if you have a retail outlet or an e-commerce store. However, you can still make things better if you can develop a concrete strategy to avert some of the problems and keep the operations of your business running smoothly. Here are some supply chain management strategies to get you started.

1. Select the right suppliers

As a serious business, you should have a list of requirements that your suppliers understand. Therefore, make your requirements clear to all suppliers from the word go. Select the ones that meet and adhere to established standards for equipment and services safety performance. Also, ensure they are capable of producing consistent quality.

2. Have multiple suppliers for every product

They say never put all your eggs in one basket. That applies to supply chains too. As a business, you do not want to disappoint your customers at any given point. To ensure things are always working and your customers are satisfied at all times, never rely on a single supplier per product. In fact, you should have multiple suppliers for each product to ensure that if one fails, another one can meet the requests. Many disasters and emergencies such as fires, floods or transport issues can affect fulfilment. Therefore, having various suppliers ensures you get what you need at all times.

3. Invest in continuing education

Most organizations nowadays have no resources to carry out reviews and improvements. However, those people you have in your organization must be properly educated on how to track and identify issues in the supply chain and quickly find solutions to address the identified issues. It can be difficult to select the right education and development programs for your teams. However, you can decide on a combination of in-house and external programs. As you embark on this mission, it is good to ask around and see where your staff are likely to gain the most value and look for practical programs.

4. Be flexible

With the unpredictability of the supply chain, you may never know when a certain product will become scarce or when a disaster can occur and affect the movement of products across the supply chain. Therefore, be proactive and anticipate problems in the supply chain at all times. Research on solutions to certain problems and alternative suppliers, from different regions. With such an approach, you will be able to sustain your operations and maintain your stock, even if a certain supplier is not able to fulfill your needs. Be creative and offer alternative options for your customers. Research the best alternatives that will satisfy your customers to ensure you always have something for them.

5. Encourage regular communication

Communication is an important component of any business without which customers will be unsatisfied and may opt for others. The same is true when it comes to suppliers. As a retailer, you do not want to get your suppliers off-guard in different areas. The only way you can ensure all your suppliers and customers are with you is through constant communication. Let them know what is coming and when. Let them understand your plans and build a dialogue, which is critical for trust. Through dialogue and continued engagement, your customers and suppliers will work with you and a strong relationship can be built.

6. Build mutual trust

Trust is an important thing to all businesses. Therefore, as a business owner, you must keep suppliers in the loop regarding the upcoming projects and count on them to help out. With proper and timely communication and transparency, you can build a strong coalition based on trust that can help you meet the needs of your customers.

The COVID-19 pandemic exposed the modern supply chains as just a house of cards that can collapse when they are put under pressure. Many businesses caught flat-footed by lockdowns and restrictions of movements have found the recovery process difficult to navigate. The clogged ports and shortages of materials resulted in backlogs across the supply chain hubs. While things are starting to unwind, trade channels continue to face challenges making it hard for operations to return to normal. Assuming that a new wave of the virus does not emerge, the worst-hit industries are expected to recover at the beginning of 2023 or the end of this year.

Starting in 2020, companies responded to the difficult moments inflicted by the pandemic by cancelling their production plans, only for the upswing in demand to blindside them. Furthermore, the containment measures and restrictions that governments came up with triggered labour shortages. It also led to factory shutdowns because of reduced consumer spending, affecting consumer goods and services.

As demands continue rising, manufacturers have resorted to raising capacity utilization rates as a way of responding. Since the start of this year, the US and German electronics manufacturers have raised their utilization rates by five and seven percent, respectively. On the other hand, the auto industry has not been able to keep up with the other sectors. This is due to the backlog of investment in industrial infrastructure. When the disruptions in the supply chain ease, we expect a faster clearing of backlogs. However, the surging fuel prices are also expected to reduce the recovery speed of supply chains. With these challenges, export-led economies have resulted in recovery being choked by supply bottlenecks which affect factories. Similarly, the surging cost of shipping and high fuel prices have led to inflation.

The omicron variants have become mild, promoting the governments to loosen the restrictions. This has resulted in positive outcomes for companies, as snags are slowly unwinding. According to a survey by the Institute of Supply Management (ISM), there are signs of improvements in the US labour and supplier delivery performance for three months running.

The severity of the disruption has affected global industrial production and the ability to accommodate consumers' strong demand, resulting in a drawdown in inventories because of demand. While the recent data suggest that the inventory bottlenecks have begun to ease in various sectors, there is an exception in some industries like the automotive industry, where there is a global shortage of semiconductors which hamper production. Due to the time it takes to build chip factories or expand existing ones, this is another challenge that emerged during the pandemic. While the challenges in this industry largely remain, around half of the respondents expect disruptions to their businesses to end only in the second half of 2022.

Most people expect that shipping pressures will lift off once the goods supply issues ease and capacity is built, leading to industrial output accelerating. However, this may not mean smooth sailing. Rather, there are challenges associated with labour shortages, which may affect recovery. In the US, recovery is underway although labour shortages are expected to continue, this will unwind as unemployment benefits are no longer available.

Although things will get better with time, any resolution will depend on the future developments that may affect supply chains and strain them. For consumers, it will be some time before they can experience what they used to experience before. However, they should not expect pre-pandemic levels in many aspects like pricing and availability. According to various executives in the manufacturing sector, they expect the prices of raw materials to rise.  

Supply chain is a complicated beast, and we can’t afford to skimp on the details (e.g. timeliness, quality, logistics, etc.) in our business operations. Despite the fact that the term is often used interchangeably with “dispatch”, it has a very different meaning and tends to be more about planning for delivery than about getting goods from one point to another on a defined schedule.

The supply chain works like this: each stage in the process of producing goods requires labor and materials which are sourced from different suppliers. In order to satisfy every customer requirement and get goods out of the warehouse to their destination on time, these suppliers must be able to deliver quickly.

This means that orders need to be prioritized by value and delivered according to the appropriate timeliness standards defined in each order (or contract). If you don’t prioritize your orders by urgency and deliver within a certain time frame, your customers will never get their goods delivered on time!

The importance of a defined schedule

The best prescription for delays is to create a schedule, one that is as defined as possible, so that one could predict the timing of shipments to a given destination and allocate resources accordingly.

For example, in the food industry, a single batch of shrimp might ship from China via two ports: one in Southeast Asia and one in India. The shipment might take five days to arrive at its destination in Singapore, and then another three days to arrive in India. In addition, a portion of the shipment might be held up at the port of origin until the receipt of cargo manifests and customs clearance procedures are completed. A further delay might occur when first-class or express services must be booked, which there isn’t enough capacity at the port to handle or pay for. Delays can also occur by design because demand varies from week-to-week or month-to-month; you know that your customer will need more product than usual during peak demand periods, but you don’t know what those peak periods will be.

However, if you have a fixed schedule — say that your next order of widgets will ship on December 1st — then it’s much easier to allocate resources correctly and predict when reasonable quantities might be available for delivery by December 31st.

Types of disruptions that can occur

The logistics industry has been plagued by complexity and regulations for a long time. When it comes to supply chain disruption, there are three main types: A) Risks in the supply chain that do not impact the business; B) Risks in the supply chain that impact the business; C) Complexity within the supply chain that impacts both.

Mitigating disruptions

The supply chain, from raw materials to products to end customers, is the backbone of any successful business. It’s a finite and complex system that is difficult to predict and manage. Predictability has, in fact, been a very important driver of success in the industry since time immemorial. This is because supply chain isn’t just about moving goods from one place to another on a defined timetable; it’s also about moving goods on an unpredictable timetable.

So here are several ways that the supply chain can fall prey to disruptions:

1) Shipment errors – shipments can be lost or diverted by unexpected weather or shipping delays. In this case, timing matters more than anything else. So what happens when there is a sudden increase in demand (e.g., for a new product)? There is little time for the risk managers or risk assessors at fulfillment centers to react and respond to such an unforeseen spike in demand before an urgent shipment runs out of stock that could lead to massive price increases for customers and higher input costs for suppliers – both of which could have disastrous consequences for the company’s bottom line.

2) Warehousing disruptions – As production moves from one warehouse or facility to another within the same region, warehouses become increasingly complex as physical space becomes increasingly constrained. For example, inventories can be moved by truck across different regions, elevators can be used instead of workers walking up and down stairs as they move materials around warehouses and back into inventory bins, offices may also find themselves being relocated between different facilities within their region with no real coordination among regional partners operating in proximity with one another when doing so. Defects then become more likely as parts get moved between warehouses over time as they are frequently reused due to modularity improvements made by manufacturers over time as well as reusing existing parts when possible (e.g., new tires).

3) Logistics disruptions – Distribution hubs become physically congested due to rising supply chains (elevators may not work with trucks carrying products!). In this case too timing matters more than anything else: Ideally all suppliers would have access to the same low-cost transportation network so they could move their raw materials around efficiently without having them stop suddenly every few miles; meanwhile transportation costs are often fixed per shipment so there isn’t much room for error if your supplier unexpectedly decides not take part in your

The future of the supply chain

The supply chain is the backbone of business. Without it, business would grind to a halt. In fact, if your company depends on the entry of raw materials into your store or warehouse in a timely manner, you’re an easy target for hackers.

The forces that lead to supply chain success are not always straightforward. The main driver is speed of delivery (which can be measured in minutes). But it also has to do with the timeliness of suppliers: if they deliver late, you lose out on a good deal; if they deliver early, you lose out on making money at all.

To truly define your company’s supply chain strategy and implement it into practice, one needs to hold a thorough analysis of their current relationship with suppliers. In some companies, this may take months or years; in others, even decades — no matter how long it takes. One thing that is certain though: this analysis should be done far earlier than when the relationship between supplier and customer first begins. It should happen before any new products are introduced or orders are placed (early enough so that both sides have time to adjust). Otherwise, there is a risk that a supplier will simply walk away from any deal as soon as their vendor account balance grows too large.

No matter how effective you think your supply chain is, there are areas that you will want to closely monitor to ensure they are as highly effective as possible to enable things to run smoothly. While doing so, note that a timely response to important events within the supply chain can make a substantial difference between lagging and leading the pack. But how can you ensure that you know every important detail of what is going on in the supply chain and take advantage of this knowledge to remain on top? This is where supply chain monitoring becomes crucial every step of the way.

What is supply chain monitoring?

Supply chain monitoring is the process of tracking operations within the supply chain. It starts from the time when raw materials or parts are ordered from suppliers until the delivery of the final product to the customer. Monitoring is part of supply chain management. The management process entails various activities like monitoring logistics and evaluating supplier risks. The goal of monitoring is to avoid adverse effects on the operations.

Examples of supply chain monitoring activities

Supply chain monitoring is made of various activities. Some of them include locating and tracking the assets, which can be raw materials, final products, and human resources. With the advances in the Internet of Things and other related technologies, tracking and monitoring have been made easy. Data from IoT sensors can offer companies real-time information on inventory and increase supply chain visibility.

An example is monitoring the temperature of products to ensure they are of top quality. For instance, pharmaceutical products like the COVID-19 vaccines need regular monitoring to maintain certain temperatures. Otherwise, the vaccines will be spoilt. For these vaccines, like in some other products, monitoring the condition while in transit is important to ensure efficiency. On the other hand, companies need to ensure that suppliers do not pose risks by ensuring that the risks from the suppliers are detected early enough. Therefore, supply chain monitoring is important because it gathers intelligence on potential risks by screening partners and suppliers for possible issues. The importance of screening events at this point is to learn about certain events that could impact the supply chain. These can include events like natural disasters, accidents and consumer-related problems.

What can you detect through monitoring?

Supply chains can suffer the most in case a disruption occurs. For instance, disruption can cause a delay in the delivery of raw materials from suppliers creating a domino effect and causing unfulfilled customer orders. This can hamper customer satisfaction, sales and income on top of damaging business reputation. Through monitoring, enterprises can identify disturbances in the areas below:

Equipment repair

Equipment is naturally subject to problems caused by wear and tear. However, an unplanned breakdown of equipment can halt operations and result in losses. With IoT sensors, you can identify the problems even before they occur.

Logistical issues

A common cause for disruptions in the supply chain is related to logistics. Factors that may affect logistics include natural disasters, traffic congestion and adverse weather conditions. However, with technologies like sensors and Global Positioning System (GPS), challenges can be identified, and new routes relayed to ensure products reach where they are needed.

Cyberattacks

Cyberattacks have become a menace to many industries, and supply chains have been identified as the most dangerous areas where hackers and malicious people can wreak havoc. This calls for monitoring. Enterprises need to monitor the integrity of their systems and suppliers and prepare for possible cyber threats.  

Failure to deliver

Detecting delays in delivery is challenging yet important for everyone in the supply chain. Therefore, predicting the performance of partners or suppliers can allow better business decisions to be made. With the help of machine learning to track news and collect data about suppliers, this can be made possible. You can determine whether certain suppliers are reliable and whether they have been involved in major incidents and events that can affect performance.

Last Thursday, Georgia Governor Brian Kemp declared a State of Emergency amid supply chain disruptions. The executive order went into effect on Saturday April 16^th. As a result of the Covid-19 pandemic and an already stressed supply chain – Georgia has not been able to recover as quickly as they had hoped.

The five-page executive order declared -  “Despite the state’s successful mitigation of the public health impacts of COVID-19, Georgia supply chain has yet to fully recover and is still experiencing severe disruptions.”

Price gauging was also prohibited under the order (or the act of charging customers an exorbitant amount of money amid a crisis) for goods and services like food and fuel with the order calling it “detrimental.” 

In his order - Gov. Kemp also suspended the number of hours that commercial truck drivers can work "to ensure the supply chain for all supplies, goods, and services throughout Georgia is uninterrupted." The official document was quick to point out that drivers should not operate a vehicle while they are sick or tired.  Truck drivers must also be given at least ten hours off before being required to return to work upon notifying their motor vehicle carrier of fatigue.

The order also raised the weight and height limit of a given truck or trailer from 80,000 pounds with a maximum width of 8 feet, 5 inches for 5-axle trucks to 95,000 pounds and 10 feet allowed truckers to carry more goods at one time.

The order lasts for 30 days and is set to expire on May 16, 2022.

The supply chain crisis is a global issue and is affecting the entire United States. Since 2020, the country has been facing a supply chain shortage that has caused massive headaches for government officials as shelves stay empty and inflation ticks up across the country.

President Joe Biden recently pledged support for truckers through the federal Trucking Action Plan. In a press conference late last year President Biden spoke directly to truck drivers stating – “You all quit, everything comes to a halt.”

The Bipartisan Infrastructure Law also pledged investments for roads and bridges as well as higher pay for truck drivers. Biden went on to say, ““This country will be counting on you more than it ever has. So, you should be able to count on us to keep investing in you and your families.”

U.S. Transportation Secretary Pete Buttigieg pledged - “We must do more and do better to recruit more people into the job and to support them so they choose to stay in the job.” He went on to add -
“And, that’s more than saying thank you, it is concrete, specific actions to help our trucking workforce thrive in this career. To make sure that trucking jobs are as high quality, as safe, and as well paid as they ought to be.”

As many truckers retire – it has created a shortage of drivers – roughly 80,000. According to the American Trucking Association this is an all-time high in the industry. To alleviate the need for drivers the Biden administration has begun to discuss plans to reduce the amount of time it takes for drivers to get a commercial license while recruiting future drivers across the United States.

In the logistics sector, one of the constant occurrences and unwritten rules that one must keep in mind is that disruptive forces are always at play. These uncertainties and disruptive forces reshape how organizations think about technology, business conduct and how they look into the future. For the logistics industry, market trends affect the sector significantly. The trends range from new technologies to regulations, strategies and tactics needed to ensure compliance. With these trends having a significant impact, adaptation is needed to remain competitive in tough markets. Only companies that embrace the latest trends and use them to capitalize on both the traditional and established technologies are the ones that succeed.

Here are the trends you need to be prepared for in the logistics sector.

RFID

The Radio Frequency Identity (RFID) chips have gained fame for over a decade. They promise to offer real-time tracking of containers and products and provide information. However, although most companies have invested in RFID, they have not seen a return on investment (ROI). While RFID can be expensive for logistics companies, it plays a crucial role in visibility, which is currently a game changer in the industry. RFID systems can provide precise location and data in real-time when integrated well.

Blockchain

Today, nobody in the world can talk of new trends without mentioning blockchain somewhere in the conversation. This is an area that has seen a lot of focus from almost every industry, including the logistics sector, where it is changing fortunes. In 2022, for example, it is expected that the worldwide spending on blockchain solutions will reach 11 billion US dollars, according to Accenture. The supply chain has been a steadily increasing trend in the global logistics space for the last few years. Successful adoption of blockchain will automate the logistics sector, remove third parties and reduce the cost of operations.

Omnichannel shipping

Omnichannel order fulfillment is a new reality in the logistics space. This is emerging as a key area at a time when customer expectations in the retail industry are increasing. According to Harvard Business Review, the changing customer demands drive retailers to offer more omnichannel solutions to raise customer loyalty. This goal is to provide a seamless and easy approach to shopping, no matter if it is to be done digitally or in-store. Due to the omnichannel trends, the evolution of last-mile shipping methods has raised the complexity of the supply chain.

Big data

Big data has been proven to be one of the biggest success stories of many industries, including logistics. UPS, for example, the biggest success story in the logistics sector, has succeeded in big data through its data collection, analysis, and forecasting strides, resulting in efficiencies and cost savings. With the increasing installation of sensors on trucks to measure speed, braking, location, and idling time, there is a need for a technology that collects, stores and analyzes it to offer crucial information for decision making. Such information can be useful in decision-making.

Warehouse automation

The automation market has grown significantly over the past decade. According to a 2019 report, it is expected to grow at a CAGR of 12.6% over the next five years, making it one of the key trends in the supply chain and logistics industries that must be closely followed. With automation, warehouses are cutting costs while boosting productivity and efficiency through technologies like a robotic arm, automated storage and retrieval (ASRS) and automated guided vehicles (AGVs). Amazon, for example, is a leading example of companies that have embraced automation. This will save over $18 billion in operating costs annually. Furthermore, automating transportation will reduce overall delivery costs by over 40%.

The global logistics business has grown tremendously over the years in both size and complexity. Keeping track of everything and ensuring a smooth motion and fewer obstacles is a massive challenge. Although some may think that container shipping is effective and has a few challenges, they also have problems. As a shipper, the best way to minimize risks during shipping is to ensure transparency by tracking shipments closely. With real-time end-to-end visibility, you can avoid unpleasant surprises regarding the location of your container. Here are some challenges associated with container shipment.

1. Lack of clear communication strategy

Miscommunication is one of the biggest challenges in container movement. This is often the case when you rely too much on carriers and freight forwarders for updates. There is a possibility that poor communication between you and your customers can occur, which can be catastrophic to your relationship. In a society where customers are increasingly demanding real-time visibility over the movement of their shipments, proper communication is integral in the entire chain of supply.

The solution to these issues is to use proper container tracking systems that track shipments in real-time. Such systems also share tracking data with the customers for their specific shipments. With this information, the supply chain is made transparent, and trust is built.

2. Security concerns

Security is a key concern for transport and logistics companies. With shipment passing through many hands before reaching the destination, it makes it a target of malicious individuals. This makes security a key challenge that must be addressed accordingly. Shipments can be compromised from any point, be they at the storage facility or during the exchange to another truck. Without visibility, the security procedure can be broken, and products can be compromised. The solution to this is to keep track of the shipment at all times. Real-time movement and auto-update can help you discover possible delays and follow-up.

3. Delayed product delivery

Customers have become highly demanding and always want to receive their items in time. Therefore, product delivery time is an area of expectation for everyone. With the fame that next-day and same-day delivery services are gaining, long-distance shipments are increasingly becoming demanding. Therefore, timely delivery of shipments will continue being a challenge, as customers increasingly demand faster delivery. This is even worse during peak seasons when demand is high. At such a time, customer satisfaction is compromised.

4. Capacity crunch

Although air transport has advanced over the years, ocean or sea transport continues to drive global trade more than any other mode of transport. However, with the ever-increasing volumes of shipments caused by disruptive events such as the COVID-19 pandemic, the available space and capacity to handle shipments often shrink. This leads to inconsistencies in schedules, which affects companies and product delivery.

5. Infrastructural issues

With the increase in shipments and the emergence of bigger ships in the markets, infrastructure is failing to catch up with the rapid expansion. Some ports lack sufficient space or facilities where containers can be placed. This has made infrastructure one of the key concerns in transport and logistics, especially in developing nations where deliveries are increasing but ports are not equipped to handle the growth.

6. Changing customer behaviour

With many transport and logistics companies around as well as many manufacturers, customers have increasingly become demanding. The availability of many alternatives has led to improved services, which gives power to suppliers to choose whomever they want. The changing customer behaviour has put pressure on shippers who need to improve their services to meet the new demands.

Over the past few years, the global appetite for electric vehicles (EVs) has been rising. However, the question that persists is the viability of EV batteries, mainly in the supply chain sector. As the talk about climate change and environmental conservation increases, demand might also rise so fast in the near future, and the supply chain might have difficulty coping with such a huge demand.

According to research, 30% of all vehicle sales by 2025 will be hybrid electric vehicles and EVs. For this reason, vehicle manufacturers are doing their best to meet the demand for EVs. This has been due to the carriers in the supply chain resorting to running clean vehicles. It is important that electric vehicles are allowed to transform the supply chain industry. This article contains some trends in the emerging electric vehicles market and looks into how they will affect the supply chain sector.

Rising demand for electric vehicles

The demand for electric vehicles in the supply chain has shown no signs of slowing down any time soon. This comes at a time when most car shippers are starting to change their fleet in favour of EVs. This could mean that the number of automobile manufacturers that produce EVs will rise to merge or exceed the traditional ones in the future. The demand for these vehicles has increased shipping costs, which comes as transporters plan to increase the clean fleet to promote a clean environment. Here are the trends.

1. Limited supply of lithium

Lithium-ion batteries are used to power electric cars. This underscores the importance they have for the EV industry. However, there have been concerns about whether there is adequate lithium to support the increasing demand for these vehicles. Because of the increase in the demand and consumption of lithium-ion batteries, there have been reports that lithium is running out worldwide. This is not good news considering the critical role it plays in the EV industry.  For the supply chain industry, it is even worse, especially for car transporters. Industry professionals have already pointed out the possibility of lithium running out by 2025, which is a worrying revelation.

2. Consumption

Consumption has been one of the leading concerns for vehicle transporters across the world. Because of the high costs of gasoline of shipping trucks, car shipping costs have risen. However, with the change to a more energy-efficient fleet and electric vehicles, the cost of shipping will reduce. Energy-efficient trucks are known for low consumption of gas and less pollution. This is a good thing for the environment considering the recent campaigns to mitigate pollution and pollution-related diseases. With the advancement in the EV sector, efficiency will be crucial, and the environmental pollutants will be minimized substantially.  This is what car transporters want to achieve.  Like many other industries, they are interested in contributing to a cleaner environment while keeping up with the regulations.

3. Changes in the value chain to support change

When the electric vehicles craze takes charge, everything in the sector, starting from manufacturing systems, vehicle ownership and environmental care, will need consideration and overhaul. Fundamental changes that include removing traditional components such as gearbox and combustion engine, new car modules and adapting the traditional elements like air-conditioning units, brakes and steering systems will be necessary to meet the new changes. While these changes might take some time before completion, they are indeed happening one way or another.

As things are, the supply chain industry is one of the sectors that will be transformed significantly by electric vehicles. The industry will see a significant change in trucks, although this has been happening gradually. As the call for environmental conservation continues rising, car transportation companies will replace their fleets with environmentally-friendly vehicles.

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

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

Industry 4.0

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

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

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

Flexibility stretched

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

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

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

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

So where’s the mandate?

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

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

The ripple effect

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

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

Be proactive

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

 

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

 

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

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