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Breaking SCM Tech News: Oracle Augments SCM Cloud Suite with Agreement to Acquire LogFire

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Oracle has announced that it has signed an agreement to acquire LogFire, a provider of Cloud-based warehouse management applications. Upon closing, the addition of LogFire will complement the logistics, warehouse management and Omni-channel fulfillment capabilities of the Oracle SCM Cloud product suite by adding augmented warehouse management capabilities.

As those who deal with supply chain execution technology readily know, warehouse management systems (WMS) have in the past been highly customized to support business processes. Thus they have been difficult to implement in terms of overall time, and expensive to operate and maintain over time. The introduction of Cloud-based technology that provides more configurable options vs. hard-coding, is thus important, as is the ability to support business and transactional scalability.

LogFire features a built-for-the-Cloud technology platform providing an integrated warehouse, inventory and workforce management platform claiming easy scalability with increased volume and complexity. Business process support is noted as:

  • Inbound receiving and putaway
  • Enterprise inventory management
  • Outbound allocation and store receiving
  • Real-time reporting and analysis
  • Material handling
  • Workforce management

LogFire further supports the capability for retailers to transform any site (warehouse, distribution center, storefront, kiosk, garage) into a robust fulfillment center in supporting direct ship from store or fulfillment node support capabilities including on-site inventory visibility.

The company was founded by Diego Pantoja-Navajas after spending more than a decade designing and implementing supply chain solutions for some of the world’s largest retailers, CPG manufacturers, food service companies and 3PL providers. Currently this WMS provider has 40 existing customers stemming from a combination of retail, consumer goods, third-party logistics and E-commerce industry settings. Among lighthouse customer names are Glad, Sears Canada, APL Logistics, Ryder and InkaFarma.

LogFire, currently headquartered in Atlanta, additionally provides added international presence with offices in Chile, Peru and India. The technology provider was already a recognized Oracle Gold Partner and thus there were already business, organizational and technology integration relationships.

According to informational releases and an industry analyst briefing, Oracle plans to continue to invest in LogFire’s functionality and capabilities while providing eventual integration to the existing Oracle SCM Cloud product suite. Oracle’s SCM development teams are currently reviewing existing product roadmaps and will be providing additional guidance after closing. According to statements, LogFire’s existing management team and employees will become part of the Oracle SCM Cloud organization. Oracle SCM executives further indicated that the attraction to LogFire stemmed from the ability to support large as well as growing supply chain execution needs, the company’s existing capabilities in supporting Omni and multi-channel customer fulfillment needs and of-course, its native Cloud platform.

Oracle has provided an additional information resource for existing LogFire customers which can be viewed at this designated Oracle web link.

Our initial Supply Chain Matters viewpoint is that this is another important and key acquisition for Oracle. We were the first to declare after last year’s Oracle Open World conference that from our lens, Oracle had developed one of the broadest cross-functional supply chain management, public cloud based applications currently available in the marketplace. That stated, we noted qualifiers in that this public cloud suite provides standard functionality as opposed to the ability to support customized customer business needs. Oracle is obviously now addressing the need for deeper business support needs particularly in the all-important WMS and supply chain execution area.

The acquisition, when completed, has the potential to provide a stronger basis to compete with existing best-of-breed WMS providers while providing an added advantage of integration to a broader totally Cloud based enterprise support suite.

Obviously there will be more information to be shared further into this process, and we will keep both Oracle, LogFire and all of our other readers informed. This acquisition announcement comes just before this year’s Oracle Open World that begins in a mere two weeks. The previous blockbuster announcement of Oracle’s planned acquisition of NetSuite, coupled with the latest announcement relative to LogFire, provide for some rather interesting conference buzz relative to Oracle’s ongoing commitment to a comprehensive Cloud technology suite.

This author will be indeed attending the upcoming Open World so do stay tuned for further blog commentaries.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group LLC and the Supply Chain Matters® blog. All rights reserved.

 


Untimely Occurrences of Multi-Industry Supply Chain Disruptions

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As businesses enter the all-important final four months of 2016, news of supply chain disruptions are permeating business media channels.

We, along with global media, have already alerted readers to the ongoing and quickly cascading implications of Hanjin Shipping’s financial receivership, which we have characterized as a financial shot heard across the globe. The potential for supply chain disruptions is imminent along with other cascading implications for shipping rates or further ocean container industry consolidation moves.

Samsung Galaxy Note 7 Product Recall

Today brings the stunning and somewhat embarrassing news that Samsung has initiated a global recall of its newly announced Galaxy Note 7® smartphones due to reports of battery fires. All sales have been halted pending an investigation of why certain batteries are exploding during the re-charging process. According to a published report by The Wall Street Journal, Samsung had logged 35 cases of battery explosions which has prompted the electronics giant to issue a global recall. Apparently, Samsung has multiple suppliers for the lithium-ion batteries of the Note 7 and not all of the phones are affected. Samsung teams are now in the process of tracing the faults to a specific supplier. Still unclear at this point is whether suspect batteries effect other new Samsung models. An estimated 2.5 million of this model phone have been shipped since its availability announcement of two weeks ago.

The glitch comes at an obvious awkward time for Samsung, with holiday sales looming and with next week’s planned announcement from rival Apple rumored to be about the announcement of the newest versions of iPhones.

 

Gap Distribution Center Fire

Clothing retail chain Gap is dealing with its own supply chain disruption as a result of a fire that occurred at one of the retailer’s online support distribution center located in Fishkill New York.  According to business media reports, the fire that occurred on Wednesday of this week, completely destroyed about 25 percent of the warehouse while the remainder of the facility suffered extensive smoke and water damage. The center supports Northeast U.S. online and store fulfillment needs for both Gap and Banana Republic branded merchandise and according to one report, represents 10 percent of the retailer’s nationwide warehouse capacity. In reporting of the incident, The Wall Street Journal quotes a Wells Fargo equity analyst advisory as indicating that the disruption of the fire could: “create a meaningful bottleneck given the upcoming critical holiday season.”

According to the WSJ, the retailer’s logistics and distribution teams are now working on plans to rely on other distribution centers located in Ohio and Tennessee, as well direct shipments from retail stores to support Northeast online fulfillment needs. Teams are further working to accelerate the reopening of a nearby New York warehouse that was planned to supply Old Navy branded merchandise.

This fire is obviously untimely since Gap has been in the process of a merchandising turnaround to boost sales and profitability.

Continuous Natural Disasters

It seemed that during the months of July and August, a week did not pass without some occurrence of natural disaster. Whether it was continuous wild fires across the U.S. West, severe flooding southern Louisiana and China, devastating earthquakes in Peru and Italy or this week, the first hurricane in 10 years to impact southern Florida and the U.S. Southeastern coast, supply chains are continually disrupted in various degrees.

 

Indeed, the timing and occurrences of major supply chain disruption cannot be controlled, especially when occurrence is just prior to one of the most important and meaningful revenue and profitability quarters. After and in spite of such occurrences, supply chain teams learn more of the critical importance of active supply chain risk mitigation and business continuity planning.

As our U.S. readers prepare to take advantage of the summer’s last long Labor Day holiday weekend, keep in mind that supply chain teams remain engaged in responding to supply chain disruptions.

Bob Ferrari


There is a New Phase of Online and Omni-Channel Fulfillment

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From time-to-time as developments warrant throughout the year, we publish various succinct research advisories to clients and blog readers focused on specific industry, line-of-business, functional or technology trending that warrant specific attention for both management teams and supply chain management professionals. Normally our advisories are included within regular blog posts, but when significance warrants, and content length dictates that we provide deeper insights, we will now provide these advisories in our Research Center as complimentary downloads.

There have been several phases related to the ongoing explosion of online commerce and its impact on retail and B2C focused industry supply chains. Take note that 2016 marks the beginning of the newest phase, namely impacting the long-term presence of brick and mortar retail.

The watershed events have been recent Q2 financial performance results from various retailers, and more specifically, last week’s public acknowledgement by broad based merchandise retailer Macy’s that declining foot traffic makes the cost or value of real estate and physical store operations a new determinant of long-term strategy. The initial shockwave came in January with Wal-Mart’s announcement that it would close 260 stores globally, including 154 across the United States as part of comprehensive strategic alignment of strategy. By June, there is additional discernable evidence of  this new phase.

In our Ferrari Consulting and Research Group Research AdvisoryThe Beginning of a New Phase of Online and Omni-Channel Fulfillment for B2C and Retail Supply Chains, we address background, the iteration of phases and including the tenets of this new phase, along with actions to consider.

Our only requirement for this complimentary research advisory report is that readers fill-out an electronic download form that requires some basic information. To download the report, access our Research Center from the top menu, double-click on the words Research Advisory- August 2016 on the right-hand side and complete the form.


The U.S. Postal Service Has Reached a Critical Crossroads

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This week, the United States Postal Service (USPS) reported its financial performance for the latest quarter, and from our lens, there are distinct indications that the agency has reached a critical juncture in its ability to be a sustaining competitor and service provider to the world of online fulfillment. As the agency handles more and more package volumes, its transportation and operating costs have risen significantly. Readers, those residing in small and medium as well as large businesses, need to continue to be aware of the implications of this trend.  USPS Delivery_sized

In September of 2014, Supply Chain Matters declared that the USPS had suddenly changed the industry dynamics of parcel shipping, online commerce and customer fulfillment.  The agency established a whole different dynamic for B2C/B2B online commerce by aggressively reducing parcel shipping rates and by declaring to online retailers and businesses that the USPS intended to be a parcel transportation and last-mile delivery partner in the ongoing explosion of online. Suddenly, e-retailers who wanted to maintain attractive free shipping options discovered a potential new alternative to control costs of such programs, and entities such as Amazon were quick to make leverage.  Both FedEx and UPS were not all that pleased with the pricing move and began logging protests claiming foul, even though both relied on the agency for completing more costly last-mile delivery needs.  However, both were forced to deal with a different competitive landscape in terms of rates and customer alternatives.

Then we viewed the evidence of the results from the all-important 2015 holiday fulfillment quarter, as the agency actually surpassed UPS in total delivered packages. USPS letter carriers delivered about 660 million packages, up from an initial anticipated volume of 600 million packages. UPS reportedly delivered 612 million packages as compared to its initial forecast of 630 million. The postal agency offered the equivalent of as many as 25,000 Sunday delivery routes, up from a normal 4000 pattern.  In essence, the USPS became the de-facto go-to carrier for Amazon’s needs for Sunday deliveries. Financially, the agency recorded its first quarterly profit since 2011, earning $307 million, a significant milestone.

In the latest June ending quarter, while total revenues increased 7 percent, the agency reported a controllable loss of $552 million compared with a year-earlier controllable loss of $197 million. Overall volumes were down slightly while package volumes increased 14 percent, an indication of offsetting declining volume in standard mail. The agency reports that it is now delivering to one million additional addresses across the U.S..

In the latest quarter, operating expenses increased 12 percent. The agency’s CFO indicated that transportation and compensation costs continue to rise despite strict cost controls, and according to The Wall Street Journal, the majority of compensation cost increases were related to the growth in package volumes.  Further noted was that transportation costs rose in part due to added air freight expenses to meet customer expectations.  According to a statement from the Postmaster General, while a recent package rate increase helped to boost revenues in that segment, it was not enough to offset rising costs. By the way, the principle air freight services provider to the agency is FedEx, who obviously benefitted from increased USPS package volumes.

From our lens, the USPS cannot continue to sustain its growth in package deliveries related to current and more expanded online commerce package volumes without investments in newer equipment, systems, and more flexible people resources. Most current delivery vans are over 20 years old and added package volumes are obviously taking a toll on these trucks. The agency is close to awarding contracts in evaluating new delivery van prototypes with larger cargo capacities while consuming less fuel, but the timetable obviously needs to accelerate.  Most of the agencies inter-city and cross-country surface delivery needs are established with external transportation firms or independent trucking contractors. As noted, air freight resources are contracted as well.

Scalability of this model does not equate to added efficiencies and cost control. As a government agency, beholden to the U.S. Congress, there are obvious political constraints.  Some in Congress want to be rid of direct government ownership yet many current and retired postal workers as well as associated contractors are voters who expect their interests to be considered. Add to this a heightened and highly partisan Presidential campaign environment and readers can get the picture.

The agency and its associated postal workforce have proven viability as an option in package delivery and last-mile fulfillment. The latest TV commercials depicting USPS vans branded with virtual retail branding has purposeful meaning for online consumers. But, the crossroads has been reached in terms of added scalability without losing additional monies.

It is time for the U.S. Congress to act.  Either allow the agency to manage, invest and compete as an alternative e-commerce delivery provider or take action on other options.

The analogy is perhaps a teenager that proves to his or her parents that they have finally grown-up and matured, and desire to launch on a chosen career, and seek the support to do so. So is the situation with the USPS and the Congress. The crossroads is at-hand.

In the meantime, businesses need to stay aware to the implications of these trends especially in the light of continual evidence indicating that supporting online customer fulfillment has become more expensive with every passing campaign.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group LLC and the Supply Chain Matters® blog. All rights reserved

 


Amazon Unveils First Branded Prime Air Cargo Aircraft with Lots of Significance

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August marks the traditional start of the peak transportation period leading up the October thru December peak holiday fulfillment period involving both traditional and online retail channels. The following two Supply Chain Matters commentaries address two important trends that will make the forthcoming period far different and perhaps far more challenging for industry supply chain teams.

Since last December, Supply Chain Matters has been alerting our readers to the changing dynamics related to parcel logistics and transportation, specifically Amazon’s ongoing efforts to build out and directly manage its own logistics, transportation and last-mile fulfillment capabilities during high peak periods such as the holiday fulfillment period.  We have urged teams to stay informed.

During this period, Amazon had been rather coy in not commenting on each of the developments that had come to light across business, industry and supply chain social media such as this blog. Ongoing developments included two separate direct agreements involving the leasing of former used air cargo aircraft. Subsequently two leasing deals were established that including the leasing of 20 Boeing 767 air freighters from Air Transport Services Group (ATSG), and an additional 20 cargo jets from Atlas Air. ATSG is reportedly further contracted to provide loading and unloading support for Amazon’s entire air freighter fleet. Further disclosed was the leasing of 4000 semi-trailers to move parcels among various Amazon distribution and logistics sortation centers.

In a media event held late last week, Amazon unveiled one of the cargo planes now painted in the Prime Air logo design shown here. Keep in mind that because Amazon has leased these aircraft from a third-party charter carrier and does not directly own the aircraft, there are limitations to directly affixing a corporate logo to the aircraft.  Amazon One Cargo Jet_Sized450

The accompanying Amazon press release portrays a more direct admission of the ongoing supplementary capabilities including a direct quote from Dave Clark, Amazon’s senior vice-president of worldwide operations. This newly painted aircraft, similar to the painted leased semi-trailers, establishes the branding of dedicated logistics and transportation services to the Amazon Prime program which customers pay a premium for in order to obtain free and more responsive shipping. Readers may have already noticed Amazon Prime logo delivery vans navigating urban and suburban streets across select areas of the U.S.

Noted in the press release is that in approaching the upcoming 2016 holiday fulfillment period, the global online retailer has a network of 125 fulfillment centers and over 29 logistics sortation centers to increase delivery speeds for customers.  Directly confirmed is the leasing of the 40 air freighters through leasing partners ATSG and Atlas Air and that there are currently 11 dedicated aircraft now flying with all 40 expected to be operationally deployed within the next two years.

A separate published report from the Seattle Times notes the significance of the unveiling of the newly painted plane being held with a Boeing hanger in Seattle. The newspaper cites two informed sources with knowledge indicating that Amazon is further talking with Boeing about the possibility of buying brand-new 767’s for its dedicated Amazon Prime air cargo fleet. However, Mr. Clark insisted in a direct interview that this option is not one that the online retailer is pursuing at this time, but added: “I’d never say never… Who knows what the future holds?” Another hint is an indication by an Atlas Air executive indicating that the leasing firm has plans to hire 400 to 500 pilots just to support its Amazon dedicated aircraft needs.

Once again, Amazon has all strategic options covered while being careful to not disrupt current service agreements with existing parcel transportation partners FedEx and UPS. In essence, Amazon is indeed taking more direct control of both its transportation and logistics capabilities as well as its cost structures along with the potential opportunity to share such capabilities with other manufacturers and online fulfillment partners.

In the coming months, we will all get to observe Amazon’s dedicated logistics, transportation and last-mile fulfillment capabilities and the implications to other carriers and to retail and consumer goods industry supply chains will continue to reverberate.

In the meantime, you can watch the dedicated You Tube video depicting the branding of the first Amazon Prime Air cargo aircraft, a milestone with lots of ongoing multi-industry significance including the upcoming holiday fulfillment period.

Bob Ferrari


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