Any small and mid-sized business can be challenged with online commerce, especially when a product goes viral in popularity among social media circles.  When the online commerce system encounters snafus, the results can be potentially disastrous.

Supply Chain Matters read an article hosted on Yahoo regarding this summer’s wildly popular swimsuit that actually sold-out before the official start of the summer swimsuit season. This swimsuit, a galaxy print bikini was termed the “fatkini” by various media sources and was designed in a joint collaboration between popular plus-sized blogger Gabi Gregg and retailer Swimsuits for All.  The online campaign was a rousing success until unanticipated demand exhausted all available inventory.  Unfortunately, due to a described “computer glitch”, the underlying online fulfillment system did not react in-time to the zero inventory condition and continued to book customer orders.

Gregg was forced to communicate to her blog followers the occurrence of this glitch along with the actual status of orders, noting that one style had sold-out while another was still in stock.  She also had to communicate the disappointing news that backlog orders could not be fulfilled this summer season because of the lead time and production practices of producers who tend to only produce swimsuits in seasonal cycles of capacity. As noted in the article, consumers would have nothing of the explanation and voiced their disappointments in further online circles. Online provider Swimsuits for All was also dragged into the fray having to issue statements apologizing for the fulfillment glitch. The article further intimates that Gregg does not have immediate plans to design more bathing suits with the online provider.

Once again, the takeaway for teams supporting online commerce is the critical importance of integrating real-time information flows among the online and back-end supply chain inventory and procurement systems.  Teams representing online marketing and back-end fulfillment need to closely collaborate and test for system stress points. This is always important but doubly so when dealing with seasonal products that can only be offered in specific time periods. Customers expect timely status of their orders, particularly when inventory has been exhausted.

A sell-out of any product is evidence of customer delight, but that perception can turn rather quickly when the online system has a very public glitch.

Our Supply Chain Matters DNA includes constantly being on the lookout and evaluating impacts of new technology applied to business problems.  Today, we came across an article citing a mobile smartphone app that we feel is brilliant.  It addresses the solving a business problem from both customer and supplier needs and requirements with a simple design with mobile platform use.

This “app” is called Hailo and it was designed to make hailing a taxicab within a major city easier and far more efficient. It was built on the design principle for being able to hail a taxicab in two minutes and was launched in London in late 2011. Here is a link to the New York City web site.

As noted in a write-up published in Entrepreneur cabs can spend up to 60 percent of their operating time cruising about looking for a fare. The architects of this app sought the direct input of both the people desiring to hail a cab and the drivers themselves. As the founders and designers note in the article, they needed to create both the best passenger as well as driver experience. Functionality helps drivers with important news feeds on traffic conditions and where potential pickup surges are located. Further included are a digital logbook and resource planning support needs designed by three cabbies with lots of practical driving experience.

This app is available for free download and U.S. passengers pay a fee ranging from 99 cents to $3, depending on city and time of day.   In international cities, drovers pay a 10 percent commission. The app can collect the fare via stored credit card data, crediting the driver or the taxi company.

According to the write-up, this service is now available in eight cities with the city of Tokyo scheduled for later this year. Hailo has supported rides for 3 million passengers and 30,000 cab drivers, and has amassed more than $50 million in funding to-date.

Not a bad track record for any packaged software.

What we were impressed with was the notion of solving the business problem based on provided the benefits for both sides of the demand and supply equation in such a brilliant manner.

Readers having utilized this app are welcomed to share their experience in the Comments area below this posting.

Prior to this week’s IBM Smarter Commerce Summit, Supply Chain Matters posed the question as to whether IBM has upped its game in B2B and supply chain technology solutions.  After two days of sessions, we found evidence that many of the end-to-end pieces of supply chain and Omni-commerce vision are beginning to fall into place but the roadmap to customer availability needs further acceleration. For that matter, clearer roadmaps would greatly assist.

To refresh our reader’s awareness, IBM has invested upwards of $3 billion in strategic external acquisitions to build out the various components of the Buy-Sell-Service and Market capabilities that make-up the IBM Smarter Commerce portfolio. The effort began three years ago, while the first public market presence for customers was two years ago in the first of the series of summits.  Major acquisitions for the supply chain and Omni-Commerce aspect were Emptoris for the Buy segment, Sterling Commerce for the Sell and network messaging segment, ILOG for enhancing Buy, Sell and Service needs, DemandTec for pricing optimization and a whole host of specialized vendors for predictive analytics to name a few. This year’s summit introduced a major new element, the unleashing of IBM’s corporate research and development efforts in coming up with potentially breakthrough approaches for the online Sell and Service aspects.

Two years ago in the first summit, the overall messaging was clearly slanted towards a CIO and IT audience.  This year’s summit left no doubt in our mind that the IBM marketing machine can right itself to today’s changed market needs. The messaging and audience was targeted for line-of-business and solutions selling addressing business problems. IBM executives and product marketing now speak in the language of end-to-end supply chain. More subdued however was overt messaging related to public and private clouds buying options.

In our attendance at both general and executive briefings, coupled with some general sessions, IBM is on the way towards embracing the integration of the front-end selling to the back-end value-chain response.  The most premiere enterprise technology provider has also become more pragmatic regarding the reality that not all customers will be total IBM shops, and that there are the clear realities of prior investments in legacy ERP or best-of-breed software that needs to be enhanced. Keynotes during day one were broad and visionary while day two included more of the required end-to-end accounting of how each of the Smarter Commerce components can interact.

Our one on one sessions uncovered the internal IBM discovery of the key linchpin that enables tomorrow’s more responsive and adaptable supply chain, that being the information network the spans the entire supply chain.  In the specific case of Smarter Commerce, that discovery was that the many roads surround the capabilities of the Sterling Commerce messaging and information integration network.  What we assessed as Sterling Commerce capabilities three years ago have clearly changed, bearing the mark of additional IBM development resources. The voices of existing high profile and influential Sterling customers have added to these efforts.  We extend a shout out to that community for your openness and perseverance.

In the all-important area of supporting both direct and indirect sourcing and indirect procurement process and predictive analytics capabilities, our perception is that Emptoris is leading the charge up the value-chain to all important integration to Fulfill, Sell and Service. Our current perception is that Emptoris is further into this journey than perhaps SAP and Ariba. Emptoris is also reaching out to the broader elements of ILOG business rules, predictive analytics and other areas.  We secured a commitment from IBM executives to keep us updated on this roadmap journey and we look forward to a subsequent update in the fall.

The other area we would like to mention is IBM’s introduction of cognitive based computing, namely Watson and other components, into the Smarter Commerce portfolio. We witnessed some extraordinary demonstrations of a Watson learning system supporting customer service processes.  An application which IBM has named Augmented Shopping Advisor, developed by its research labs in Haifa Israel monitors consumer movements within a retail store via the presence of a mobile device, and actually assists consumers (with their permission) in making a smarter product selection.  IBM executives disclosed that the application was actually running in the vendor showcase area and monitored the various movements of attendees as to which patterns and which kiosks were visited.  The possibilities to integrate this capability for supply chain sensing of product demand and replenishment are exciting.  In perhaps the same context, if you believe that sales and marketing teams drive you crazy in product forecasting and integrating to a single product demand plan, wait to they get their hands on augmented shopping and online experience capabilities.

We have many more detailed notes to absorb and thus we close out this initial impressions commentary with our key takeaway.  You, the supply chain and Omni-commerce professional will have many more enhanced technology tools in your arsenal in the not too distant future.  The all important question, however, are which partners will you decide to invest in.

There are a slew of product announcements and studies that were spawned by this year’s summit and most can be viewed on the IBM Smarter Commerce Blog site.

Stay tuned for further Supply Chain Matters impressions from this year’s Smarter Commerce Summit.

In the meantime, if you have specific questions, send us an email or call.  Contact information can be found on our main web site.

Bob Ferrari

We have an update to our early April posting regarding the threatened labor strike at Amazon.com distribution facilities in Germany.

The Financial Times and other media report that a one-day work stoppage actually occurred yesterday in three separate distribution centers located in Germany.  About 500 workers took part in the work stoppage at the Leipzig facility, while several hundred more were reported as joining a work stoppage among two distribution facilities near Bad Hersfeld.  Striking workers demand to be paid at a similar rate to other mail order retailers while Amazon maintains that German staffs are logistics workers and are paid according to prevailing rates of that sector.

FT and other European business analysts are messaging this action as the most persistent reputational challenge faced by Amazon. No disruption in shipments was anticipated in this one-day action but tensions obviously remain.

As individuals progress in either a supply chain or product marketing career, they tend to learn the importance of understanding the various nuances of corporate business culture and for being astute in reading into executive level communications. Those of us who have acquired many years of practical business experience have sometimes learned this lesson the hard way, but, once learned, always retained. Regardless of your experience level, when the CEO provides a direct, unfiltered message, than all had better pay close attention to that message.

A couple of weeks ago, enterprise technology provider IBM reported a very uncharacteristic and unanticipated fiscal earnings and profitability surprise. Revenues were down 5 percent and profitability slipped 1 percent. The next day, investors punished IBM stock in an 8 percent decline, eroding $19 billion in market value.  As we have observed in the recent case of Oracle’s reported fiscal performance, management blamed this poor performance on the company’s sales teams, indicating it failed to close a number of pending hardware and software deals.  One of the company’s most senior executives was immediately re-assigned. As we noted in our Oracle related commentary, in the area of technology, poor sales performance is often a symptom of other problems.

IBM CEO Virginia Rometty has since delivered what business media has characterized as a rare event in IBM culture, a company wide reprimand.

Ms. Rometty recorded a five minute internal video message to all of IBM’s employees which the Wall Street Journal characterized as “salting praise with blunt comments about speeding-up the shift to new computing models and getting back on track.” The WSJ reported that it reviewed this video and that the CEO message indicated: “Where we haven’t transformed rapidly enough, we struggled.  We have to step up with that and deal with that, and that is on all levels”

In essence, this CEO’s message is that IBM is not moving fast enough to take advantage of dynamic market and customer needs.  When that message comes unfiltered, direct from the CEO, it had better be perceived as a call to action and accountability to achieve stated milestones, and that there are perhaps too many layers of management to achieve program and customer deliverables.

Since 2011, Supply Chain Matters has been commenting on the various acquisitions that IBM has made for the purpose of building broader and deeper capabilities concerning its Smarter Commerce suite offerings.  We have been impressed with the thinking concerning the strategic purposes of these acquisitions, but candidly disappointed at the overall timetables of progress in overall application to application and cloud based integration directed at solving customer business challenges. The various pieces of a broad B2B and supply chain management support capability are all present but the cohesion appears slower. This very week, SAP is conducting its combined ASUG-Sapphire customer conference and has already announced SAP HANA Enterprise Cloud. Oracle continues moving in the direction of applications deployed on both public and private clouds.

Next week, IBM will be hosting its Smarter Commerce Global Summit 2013 in Nashville, and Supply Chain Matters will be in attendance. The Summit is billed for “attendees to hear smarter ways to put customers at the center, including ways to synchronize the supply chain, optimize inventory, personalize promotions, micro-target marketing, increase relevance and exceed customer expectations at every touch point.” That in a nutshell, is a tall order of expectations and implied deliverables.

Thus, in the spirit of CEO Rometty’s charge, we will spend a lot of our time quizzing and evaluating how quickly IBM is progressing in its broad Smarter Commerce tactical rollout plans concerning the Sell, Buy, Service and other faces of B2B and supply chain technology offerings available for customers.Today, in advance of next week, IBM announced a major agreement with L’Oréal USA for expert procurement services using an advanced cloud analytics application to transform the way L’Oréal USA buys from its network of North American suppliers. The effort is characterized as a unique combination of IBM research, services and software delivery. 

Our goal during the Summit will be to provide our readers our assessment of overall cohesion and integration of various applications, and how they will make a difference for customers. We do not portend to be a blog solely for the IT community and thus our bias will be a perception from the broad functional audience of supply chain management.

If you happen to be attending this Summit as an IBM customer or partner, please seek us out and share your impressions.

Stay tuned.

Bob Ferrari

In late February, Supply Chain Matters posted a commentary regarding the increased scrutiny being drawn toward global online fulfillment provider Amazon and its labor practices. We brought attention to a full page article published in The Financial Times describing the temporary labor practices in place at Amazon distribution centers in both Germany and Great Britain.  The FT article described how a global employment agency under contract to Amazon, handled all global based employee recruiting, scheduling of work shifts, and compensation of workers, while employees expressed openly their beliefs that working at an Amazon fulfillment center was like working in a “slave camp.” To add more negative publicity, a German public television station also aired a documentary in February that showed security guards conducting unannounced spot-checking of living quarters, searching workers for pilfered food, with certain security guards wearing black uniformed clothing associated with German neo-Nazi groups.

Because of this European media coverage Amazon was forced to cut its ties with a German based security firm contracted to oversee security conditions at its German based fulfillment centers during the Christmas holiday period.

Over this weekend, The Financial Times reported a newer twist to increased scrutiny, (paid subscription required or free metered view) that being the working conditions at German distribution centers. Employees at the Amazon Leipzig center have apparently voted to strike for higher pay.  About 540 0f the 1200 full-time staff of the Leipzig facility are members of a trade union that is now threatening this action. It was not quite clear when the strike action would commence, and as FT points out, it would be the first-ever reported labor strike at an Amazon facility. With about 9000 full-time employees, German trade unions have targeted high profile companies such as Amazon to drive membership and public awareness of labor issues.

For its part, Amazon stated to FT that the compensation of workers at its German logistics center was “at the upper end of the prevailing level in the logistics industry.” None the less, Amazon faces yet another challenge concerning its European based fulfillment operations.

Bob Ferrari