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Ocean Container Industry Dynamics Moving Faster


Starting in late 2011 and early 2012, we began alerting our Supply Chain Matters readers to the building signs of potential consolidation and restructuring for the ocean container shipping industry. That was the time when the major container shipping lines began the pooling of capacity under various formed shipping alliances. Since that time, we believed it was important to provide continual updates, both on this platform, our annual predictions and other research. Gantry_Load_2

Our update in April of this year re-iterated business media reports that the industry had, in-essence, three options: either shrink, merge or continue to ride out the worst downturns in decades.

Industry media also began to question whether shipping lines have chosen to ignore the implications of introducing larger mega-ship sized container vessels within an industry wide environment that was demonstrating anywhere from 10 percent, to as much as 30 percent excess capacity. Current freight rates for the industry are barely compensating for the cost of fuel let alone overall operating costs. The financial pressures continue to mount and the smaller carriers continue to operate under enormous financial stress.

Of late, shippers have been benefitting from the fallout of severely depressed freight rates but paying the price in slower transit times and unreliable scheduling of vessels.  Some questioned whether shippers have been lulled into a perspective of sticking one’s head in the sand and assuming that excess capacity and depressed freight rates would eventually work itself out.

The current wake-up call has been the ongoing financial crisis that has been impacting Hanjin Shipping, as thousands of in-transit ocean containers were stranded by the declaration of bankruptcy protection of the south Korean based carrier. The latest development for Hanjin came earlier this week when a South Korean bankruptcy court ordered the shipping line to return its chartered ships back to their respective owners and to sell off as many of its owned vessels as possible. Neither the carrier’s banks, owners, or South Korean government are indicating any intent to bailout this shipping line to its original presence. Business media reports indicate that this is the strongest signal yet that the heavily debt loaded Korean carrier will either be liquidated or transformed into a much smaller, regionally based shipping carrier. We view the Hanjin developments as a definitive sign that the ocean container shipping industry can no longer continue to ride out the current industry dilemma.

The newest significant development will be this week’s announcement by Danish shipping giant A.P. Moller-Maersk indicating that it would split its current business operations into two separate operating businesses. Maersk Line, the world’s most dominant ocean container carrier will be the center point for a new container transport and logistics division that will consist of other owned businesses such as APM Terminals, Damco and Maersk Container Industry businesses. According to a report from The Wall Street Journal (Paid subscription required): “The split is intended to give Maersk Line more flexibility to grow through acquisitions in what is expected to be an acceleration of industry consolidation in coming months.” Further reported is a view by shipping executives that three existing Japan based carriers, along with Hong Kong based OOCL and Taiwan based Yang Ming Marine will likely be the target of bigger industry players.

Thus, the next phase for further merger and consolidations is about to commence, and shippers need to stay informed and be ready with what-if contingency planning.

At best, 2017 could be viewed as a year of continued industry consolidation. Ocean container freight rates are expected to continue at depressed and unsustainable levels with carriers idling additional vessels to protect margins and financial performance.

We advise global shippers and transportation services procurement teams to continue to plan for slower transit times and supplemental needs for adequate safety stocks.  It would be wise to have some contingency plans in place to avoid being disrupted by another Hanjin type of development.

Beyond 2017 is anybody’s guess as the larger industry players absorb certain other existing players. The open question, by our lens, is whether global maritime regulators step-in to protect shipper and industry interests.

Stay vigilant and up-to-date.

Bob Ferrari

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

Supply Chain Matters Highlights of Oracle Open World 2016 Conference- Summary Impressions


This Editor once again attended the Oracle Open World conference in San Francisco this week and Supply Chain Matters has been publishing impressions throughout the week. As a reference, our prior blog commentaries included: oracle_ow16_sized450

Highlights of Oracle’s Q1 FY17 financial performance last week leading-up to OpenWorld

Our initial on-site Commentary One posting highlighting Larry Ellison’s opening keynote.

Our Supply Chain Matters Commentary Two posting addressed reported uptake of Oracle SCM Cloud from last year’s announcement.

Our Supply Chain Matters Commentary Three posting explored the interrelationships among Oracle ERP Cloud and Oracle SCM Cloud, as well as highlighted announced future pipeline releases planned for SCM Cloud.

Our Supply Chain Matters Commentary Four posting highlighted the key messages from Larry Ellison’s second keynote, specifically implication of the release of Oracle Database Cloud.

In this our final on-site commentary, we share summary impressions, insights and takeaways for our readers and clients.

This Editor and analyst has been attending Oracle’s annual OpenWorld customer conferences on an off and on basis for well over a decade.  During that time span, I have observed lots of changes concerning Oracle from organizational, technical and customer applications perspectives.  Some to the good, some not so. That has been the context of our coverage of this and past annual OpenWorld events.

During this year’s as well as last year’s conferences, Oracle senior executives reminded attendees that it has taken this company ten years to reach its vision of Cloud based IT technologies and software-as-a-service (SaaS) applications. The results of that ten-year effort are now manifesting themselves in the blizzard of new Cloud based product and platform announcements that continue to unfold every year.  It is now difficult for customer’s to be able to keep-up.

I can well remember when the Oracle Fusion initiative was first introduced, and there were no initial indications of the length of the journey, only the breadth of the vision and the scope of the endeavor.  Indeed, the vision was bold, and to Oracle’s credit, it was not watered down when the challenges grew deeper. The effort took on a holistic approach to include infrastructure, database as well as applications dimensions.  Few enterprise technology companies have been able to execute such a breadth of technology.

More importantly, Oracle’s adopted a business and industry focused lens, one that could specifically respond to the overriding businesses challenges that enterprise, business and functional organizational focused technology needed to address and solve. This was an area where Co-CEO Mark Hurd plays a valuable role in his role-based articulating of the C-Suite challenges of business in so many industry settings and how IT must be able to respond to such challenges.

Such challenges include various multi-vendor based legacy ERP backbone customers who felt hobbled in their ability to ever be able to take advantage of the next generation of technologies because of the realities that upgrading was far too disruptive to existing business processes, would take far too much time and be far too expensive. Legacy ERP includes tendencies to have added too much business unique customization that provided more obstacles to overcome in adoption of newer technology.

As many technology authors and visionaries have pointed, in the prior era of ERP implementations, systems integrators were making the bulk of the initial money while ERP providers themselves gained sustaining revenue streams related to annual maintenance of systems that in essence, get the basic job done but add little to needs for more business agility, adaptability and revenue growth.

Oracle’s journey has been directed at developing a holistic Cloud based technology approach that can address IT as well as business cost control and margin challenges. It very much includes engineering based systems approach, as was often articulated by Larry Ellison himself. For our readers, that implies that Oracle’s target is to sell technology to senior leadership levels of businesses, as well as to IT or functional teams.

At the same time, the journey has led Oracle to bring along a host of other different traditional licensed application suites such as JD Edwards, E-Business Suite, Advanced APS, Siebel, Demantra, Agile, G-Log and many others. To its credit, Oracle did not stop ongoing development nor customer support programs in its own traditional suites, new acquisitions or long-time applications.  That afforded customers the peace of mind to determine which technology paths they wanted to pursue, at their own timeframes, as opposed to ‘it is my path to the Cloud or on your own’ approaches that some technology vendors tend to influence.

In its most recent financial performance briefing for analysts and investors, Oracle executives indicated that while the bulk of its installed based software applications customers have yet to make their decisions to move to Cloud based adoption models, many have begun an overall assessment strategy. At this year’s event, some executives’ views indicate a ten-year window, some view it as far less. Oracle has rightfully provided multiple paths, while assuring that legacy behind-the-firewall applications will be supported.

Many of the new early adopter customers of Cloud based platforms and applications have done so for specific business motivations, many with common themes of shedding legacy IT infrastructure costs with the ability to make more manageable technology leaps. Some view the Cloud as another form of leasing technology, or a computing utility platform that flexes with the needs of business or supply chain. That has been the declared surprise to the current momentum.  The upside has built-in momentum if Oracle continues to execute as it has done up to now, both in internal development and external acquisition.

Today there are some key new Oracle faces in senior leadership roles of development, sales and other areas while the company manages to continually balance new and seasoned experience and vision. While the bravado of the prior Oracle sometimes shows, it is now accompanied by a discernable shift toward being more customer and services focused. That includes adoption of practices directed at providing customers with what is described as zero-hassle buying, allowing more customers to try before they buy, and yes, less expensive pricing. Customer engagements are now assigned an executive sponsor for monitoring and customer feedback.

Over these past ten years, a lot has changed, most toward the better.  Today’s Oracle is one of momentum, continuous innovation and perhaps a dose of fast follower.  We continually observe this with every subsequent OpenWorld.

With the pending acquisition of NetSuite, and that of other acquisitions such as LogFire, Oracle is indeed increasing its momentum in offering a more business compelling and flexible path toward Cloud based ERP, data management, analytics and supply chain focused applications.  Indeed, acquiring 2800 Oracle ERP Cloud customers might well be just the beginning of this momentum. Oracle SCM Cloud will continue to be the recipient of that momentum as will Oracle Procurement. This Editor previously cited Oracle’s SCM development team for its slow pace toward the Cloud, but as noted in our prior commentary, we now observe that the pace of innovation is now accelerating.

Last year and again this year, Mark Hurd’s classic prediction was that by 2025, there will be but two enterprise technology vendors controlling 80 percent of the SaaS technology market.  Last year, we viewed that prediction as stick to the wall wishful.  This year it is beginning to look more likely that Oracle will indeed one of the few enterprise technology vendors that got it right.

Bob Ferrari

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

Supply Chain Matters Highlights of Oracle OpenWorld 2016- Commentary Three


This Editor is once again attending the Oracle Open World conference here in San Francisco and Supply Chain Matters is publishing impressions throughout the week. As a reference, our prior blog commentaries included:

Highlights of Oracle’s Q1 FY17 financial performance last week

Our initial on-site Commentary One posting

Our Commentary Two posting.

In previous commentaries we observed that Oracle has been sharing the customer uptake counts for Oracle HCM Cloud and Oracle CX Cloud. While there was again specific mention of Oracle SCM Cloud (Oracle’s complete suite of Cloud based supply chain management and manufacturing applications) there was no customer data shared from the podium in Larry Ellison’s opening keynote. Our Commentary Two echoed customer uptake statistics shared by senior Oracle SCM executives.

We advise our readers to take context to the stated current total of 1090 Oracle SCM Cloud customers since there is the possibility of some double-counting of customers among ERP Cloud and SCM Cloud. Our on-site discussions yesterday indicated that SCM Cloud may be benefitting from the ongoing momentum of 2800 customers embarking on various applications within Oracle ERP Cloud. Development executives for Cloud ERP indicated to independent analysts that one of the current primary motivations for movement toward ERP Cloud is to undo many years of backbone systems customizations that have occurred, leading to increased maintenance and IT support costs. While the majority of on premise deployed Oracle E-Business customers remain with current deployments, Oracle executives indicated building customer inquiries and discussion reflecting on how they can take advantage of Cloud based deployments and the reduction of expensive and complex customizations. As those efforts continue towards Cloud deployment, it obviously opens up on-ramps to SCM Cloud to fill-in potential business process gaps. Oracle SCM executive Jon Chorley indicated that current active on-ramps to SCM Cloud have been early customer’s election to adopt indirect procurement, product innovation management, transportation and global trade management. Oracle SCM executives articulate such motivations towards Cloud as either:

  • Operational excellence
  • Innovate at the edge
  • Divisional level modernization (termed two-tier ERP)
  • Complete transformation to Cloud deployment model

The above stated, we did observe that the release pipeline for SCM Cloud is accelerating from previous levels.  First, SCM senior vice president Rick Jewell flatly indicated that the majority of Oracle’s development resources will be dedicated towards a continuous Cloud based applications development environment. Releases in the pipeline for 2017 include:

Supply Chain Collaboration Cloud, an application focused on supporting primarily outsourced supply chain collaboration and decision support needs.

Supply Chain Planning Cloud will introduce enhanced demand management capability via Oracle Demantra, a full sales and operations planning (S&OP) support utility for supporting multiple ERP and best-of-breed systems, and the beginning of enabling Oracle APS Release 11 Planning Central functionality to be enabled by the Cloud.

Oracle Quality Cloud was described as supporting something that Oracle SCM has not done previously, introducing end-to-end quality management support and quality management best practices.

Cloud SCM Release 13 in 2017 is expected to include some form of a supply chain analytics cloud application that would include analytics-driven navigation as well as newly developed Oracle analytics technologies pre-configured to support key supply chain decision support needs.

Other areas mentioned, not specifically in timeline include abilities to support Internet-of-Things data sensing of capital equipment and the sharing of analytics directly into manufacturing and shop-floor scheduling systems,  A sophisticated on-stage demo of potential functionality was demonstrated.

Before closing out this commentary, we share some additional thoughts. If your organization remains concerned about potential shift of applications hosting to the Cloud, you are obviously not alone.  Concerns for data and information security are natural and even acknowledged by enterprise technology providers such as Oracle.  Yet, do not be close minded as to not consider the operational, decision-making and/or financial benefits that Cloud based deployments can and will ultimately provide.  The reality remains that if your organization remains conservative, industry competitors or disrupters will move to gain important competitive advantages in cost, productivity and business agility.  Therefore, keep an eye toward developments and demand that Cloud technology providers provide required information and customer deployment references. Talk to early adopters and talk to independent analysts who have knowledge of this quickly changing landscape.

Yesterday, Oracle icon Larry Ellison delivered his second keynote and he did not disappoint. His two key themes were advances in Cloud based database technologies as well as Cloud infrastructure.  It was pointed and direct, and from this author’s view, provided many longer-term implications for supply chain planning, sales and operations planning, analytics and more demand-driven analytics needs.  We will address these functional implications in our next commentary.

Stay tuned to our continuing coverage of Oracle OpenWorld 2016.

Bob Ferrari

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

Supply Chain Matters Highlights of Oracle OpenWorld- Commentary Two


This Editor is once again attending the Oracle Open World conference here in San Francisco and Supply Chain Matters is publishing impressions throughout the week. We began our coverage with highlights of Oracle’s Q1 FY17 financial performance last week, along with our initial Commentary One posting.

In our previous commentary we observed that Oracle has been sharing the customer uptake counts for Oracle HCM Cloud and Oracle CX Cloud. While there was again specific mention of Oracle SCM Cloud (Oracle’s complete suite of Cloud based supply chain management and manufacturing applications) there was no customer data shared from the podium in Larry Ellison’s opening keynote. We stated our goal for the remaining sessions of this year’s OpenWorld is to probe deeper on current market uptake.

Yesterday, Supply Chain Matters specifically attended the 90 minute session: Oracle Supply Chain Management and the Intelligent Supply Chain. This session featured seven people on the podium including two of Oracle’s most senior supply chain development executives. Executive vice-president Rick Jewell specifically addressed what he termed as the “state of the union of Oracle SCM Cloud.” Here are the highlights:

A current total of 1090 SCM Cloud customers was indicated. (Note: This author later confirmed with a senior Oracle executive that there is the possibility of some double-counting of customers among ERP Cloud and SCM Cloud.)

A detailed listing of current SCM Cloud applications customer uptake and entry points indicated:

  • 290 adopting inventory management
  • 200 adopting product innovation management and PLM
  • 160 adopting transportation and global trade management
  • 90 adopting order management
  • 40 adopting manufacturing and planning control

Jewel further shared current highlights of operating statistics concerning the Oracle SCM Cloud platform which included:

  • Managing 28 million product lines
  • $40 billion freight spending under management
  • 600,000 plus named users
  • 3000 plus trained partners

Also during the session, the profile of four early-adopter customers were shared and included:

  • Canadian based medical device manufacturer Profound Medical Corp
  • UK based life sciences company Abcam
  • S. based energy fuel cell provider Ballard Power Systems
  • High tech consumer electronics manufacturer Western Digital which is currently embarking on a three year deployment window of all-in for Oracle SCM Cloud

There was lots of other information shared in this session including future applications releases planned for 2017

We will cover more of this detail in other subsequent other OpenWorld dedicated commentaries.

Suffice to note at this point that Oracle is achieving some initial momentum with its Oracle SCM Cloud suite and the ongoing development cycle is accelerating.

Stay tuned to our continuing coverage of Oracle OpenWorld 2016.

Bob Ferrari

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

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


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.


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