In August, ERP provider Infor announced that he had entered into an agreement to acquire supply chain logistics and commerce network provider GT Nexus for $675 million. This Supply Chain Matters posting provides updated information regarding the acquisition as a result of an analyst briefing held earlier this week.
At the time of the acquisition announcement in August, the deal was expected to close within 45 days, pending regulatory approval. On Monday, Infor informed analysts that the acquisition has now closed, somewhat ahead of schedule. Once more, Charles Phillips, CEO of Infor outlined a rather aggressive schedule of planned technology enhancements related to GT Nexus. This is typical of Infor’s model related to acquisitions.
Three separate development teams have now been dedicated to GT Nexus integration and enhancements, including the additional of 40 new developers.
GT Nexus technology supports the ability of buyers to transmit order information across a connected supply chain business network, linking various suppliers, logistics providers and financial institutions. In the latest briefing, Infor executives reiterated the attractive opportunities among traditional ERP customers to implement broader supply chain business network support. Further communicated was that Infor and GT Nexus customer feedback has been universally positive.
There was a candid admission that GT Nexus software was not the most user-friendly, and to little surprise, there are now plans to convert GT Nexus screens to the newly designed Infor user experience. Further outlined were plans to deploy a robust security model along with a plan to deploy Infor S&OP on the GT Nexus network. Another cross benefit opportunity was noted as the opportunity to augment Infor’s existing warehouse management and transportation management functionality with technology within GT Nexus.
While GT Nexus is now a stand-alone operating unit of Infor, executives did indicate a co-mingling of sales teams over the next 6-9 months. Infor’s fiscal year ends in April which is more than likely the target for a singular sales team.
There is little doubt that Infor views GT Nexus as a significant market opportunity for adding multi-industry support in deploying more robust supply chain business networks for both large and mid-market firms. While Infor’s marketing message declaring the “first global commerce cloud” is somewhat over the top, it should not negate the need for this level of supply chain technology support. Adding more robust planning and analytical decision-making components to the GT Nexus platform provides even more industry attraction. The open question however, is Infor’s pricing strategy and approach.
Customers with technology from either or both of these technology providers should expect accelerated integration and aggressive up-sell strategies in the coming months.
Supply Chain Matters has long advocated that today’s more globally based supply chains require end-to-end business network technology support in supply chain execution, customer fulfillment and more integrated business planning dimensions. From our lens, Infor’s plans related to GT Nexus will motivate other initiatives and/or acquisitions in this area.
Supply Chain Matters continues with our market education series, in particular, citing next generation technology involving smart item-level labeling technology that can open the door to further integration of physical and digital information needs. Evolving next-generation labeling utilizes printed electronics and near-field communications (NFC-enabled) smart labels to track products and their various states.
Today, Xerox announced the availability of two printed electronic labels that can collect and store information about either the authenticity or condition of products flowing across the supply chain. From our lens, the availability of such advanced labeling technology will foster new, more affordable dimensions of item level tracking, security and authenticity specifically related to products. This author would add that this is the dawning of the application of item-level technology that industry supply chain teams have versioned for quite some time.
Xerox Printed Memory is label that is printed on a thin, flexible substrate (see photo) upon which 36 bits of data can be added, stored, or re-written to non-volatile memory. Xerox product teams describe this product as a low cost method for adding intelligence to objects. The label can be manufactured with tamper-evident adhesives and available in a number of physical formats. Data affixed to the label can be pre or post programmed, depending on business process or product need.
The label licenses printed labeling technology developed by Thin Film Electronics ASA, which Supply Chain Matters has previously brought to the attention of readers in various other application areas. Thin Film and Xerox have been collaborating on joint product research for the past few years, and we were alerted earlier this year of a pending product release.
We had the opportunity to speak with Xerox product management and learned that initial application of this labeling technology can apply to needs to authenticate refill of products such as dispensing machines with consumable products. Think of air or water filters, pharmaceutical products or ink jet print cartridges. A further and most interesting application area is product authentication where label based memory can store product identification or distribution codes while supporting needs for controlling product authentication, tracking and monitoring across the entire physical supply chain. The label is thus utilized to verify if the product is genuine and can track handling during distribution.
The Xerox label passes through a two-part verification, one being the reading of physical memory on the label, and one being a hand-held or smartphone based reading device utilized to authenticate the product.
Consider for a moment prior commentaries where sophisticated counterfeiters were able to accurately replicate product labels and distribute counterfeit goods.
Xerox Printed Memory with Cryptographic Security adds a unique, encrypted code developed by the Xerox Palo Alto Research Center (PARC). Essentially a manufacturer can pre-print a QR type item level identification that conforms to GS1 standard serialization or product tracking standards at time of printing along with encrypted metadata with a unique cryptographic “seed” value that is authenticated by designated authorized parties with the proprietary algorithm. An inspector with a secure smartphone reader can capture the encrypted authentication code, along with the QR code, compares the two values and generate a further proprietary authentication code. The reader can optionally add additional time/location or intended destination information that can be fed to a track and trace application.
The attractive part of Xerox’s approach is that verification by reader or smartphone device can be accomplished both online of offline. In the case of offline, the authentication occurs and later can be uploaded when connected to the Internet. Another added feature is that new codes can be re-written to the memory label as the product transcends the value-chain.
Xerox is initially targeting this smart labeling technology for brand protection, anti-counterfeiting or tax or duty stamp conformance needs. Products could include expensive pharmaceuticals, liquor, tobacco or high fashion branded products. A potential use can be the use of rewriteable data within each label to identify if the product is authorized, a shipping tax has been paid, or whether the product passed through an authorized supply chain node.
Previous advanced item tracking technology utilizing RFID enabled technologies proved expensive to implement on a wide scale basis. Xerox believes that its new smart labeling technology can provide high security as well more attractive cost affordability.
Xerox plans to produce these new labels in volume at its Webster New York facility.
As noted in our prior market education commentaries, this is the dawning of a new era for item-level tracking. It is one that will harness the potential of the Internet of Things as well as the abilities to bring together the physical and digital aspects of supply chain information integration applied to important product and business challenges and opportunities.
With today’s ever increasing clock-speed of business, there should be little question that the overall planning, execution and synchronization of supply chain operational processes and resources has become far more complex and demanding. Yet, it is becoming more essential.
Industry market change is constant, customers are more-demanding and risk or disruption is a constant threat. These past two months alone, we have called reader attention to the severe typhoon that impacted Taiwan and coastal China, the sudden de-value of China’s currency and the significant warehouse explosions occurred in Tianjin China. Global equity markets continue to react to deep concerns about China’s economic growth and export economy.
Supply chain business and operational intelligence is not solely about business reporting, but increasingly focused on the ongoing performance, uncovering hidden risk factors and synchronizing performance of the entire supply chain.
Supply chain teams thus require intelligence capabilities appropriately configured and tuned for analysis of root causes of bottlenecks or supply and demand shortfalls.
Traditional Business Intelligence (BI) technology has evolved from a termed vertical design principle that allows users the ability to compare plans with actual results. The architectural approach stemmed tapping centralized data warehouses, where business software applications feed their data and information.
However, the success and uptake of these traditional BI approaches has been frustrating since more than often, effective use or specialized intelligence needs require the direct assistance of IT. The ability to leverage hidden intelligence is often constrained because of the resource limitations of IT, or the complexity of the centralized information warehouse.
Newer, horizontal approaches anchored in data discovery and more de-centralized business process or predictive analytics concentration such as supply chain and product management have since made their presence in technology markets. The design principle of this approach is root cause analysis, to tap important data and information existing in specific applications such as supply chain planning, operational execution, fulfillment and product management applications. Their premise is to identify bottlenecks and provide early warning to operational process outliers and exceptions.
As one can imagine the fundamental determinant of termed horizontal BI user uptake and adoption rests with user friendliness and empowerment. It is about empowering business users to support more informed decision-making predicated on operational intelligence and appropriate business process context.
Major ERP vendors are caught in the middle of this changing paradigm. As an example, older version of SAP ERP supported information architecture that fed operational data and information to SAP Business Warehouse (BW), where either SAP or external BI applications tapped that data for general business reporting needs. The flexibility to hone-in on specific root cause and supply chain operational business process needs was limited to the innovation and resources of IT or system integrators. Such requirements often came with a high cost in terms of resources and time-to-value.
Responding to the compelling market changes outlined above where users require more user-friendly, self-service operational BI tools, SAP continues to evolve its overall approach to accommodate such needs. And there lies a growing tide of confusion. The stated migration from Business Objects BI, Crystal Reports, and now SAP Lumira has both IT and business functional teams confused as to which strategy to employ. Least we mention the other elephant in the room, that being SAP HANA, and its foundational relationship to leveraging data and information across the entire SAP landscape.
In the light of this product strategy confusion, innovative best-of-breed players have gained additional attention and deployments.
In a prior posting, we called Supply Chain Matters reader attention to Every Angle Software, which provides a self-service and operationally focused business intelligence tool designed to leverage information within SAP R3, SAP ECC, and SAP Business Suite environments. What impressed this author about Every Angle was not only its ability to add in-process logic and sophisticated calculations that adapt to an SAP operations management configuration, but customer testimonials testifying to the end-user friendliness of the software itself. The software comes with built-in adapters for SAP, includes hundreds of pre-configured templates and built-in, configurable business rules, and accommodates access by end-user device of choice including mobile devices. The software can be deployed for either on premise, cloud, or outsourced hosted needs.
Functional supply chain teams have a lot on their plate right now with little patience nor tolerance for having their IT teams figure out the long-term BI product strategy, architecture and functionality of a large ERP provider such as SAP. That is why many continue to opt towards filling-in such technology needs with experienced best-of-breed specialists.
Disclosure: Every Angle Software is one of other sponsors of the Supply Chain Matters blog.
In April, Supply Chain Matters highlighted a PwC Omni-channel fulfillment survey that highlighted among other findings that 67 percent of CEO’s believe that the cost to fulfill orders across channels is increasing, and that a near total consensus cited transportation and logistics as a fulfillment capability that needs the most attention.
Even Amazon, an icon in online B2C fulfillment is not immune to such transportation cost realities. Transportation costs in its latest fiscal quarter increased 29 percent to a reported $2.34 billion.
Financial and business media have recently reported that Amazon is testing a new program currently termed Ship by Region. The program would allow certain site sellers to designate where they are willing to ship goods in two days or less for Amazon Prime members. If a Prime customer’s ship-to address is outside the specified region, shipping my take longer since it will be likely routed via a less costly segment. Previously all online merchants distributing via Amazon had to ship their goods to Amazon customer fulfillment centers in order to participate in the Prime program.
According to a published report from The Wall Street Journal, Amazon is currently limiting the Ship by Region option to a select group of sellers, including when goods are stored in non-Amazon customer fulfillment centers. The report indicates that the program aims to expand the number of items showing up in search results for Prime. However, some items may not be subject to two-day free shipping since Amazon will not guarantee such fulfillment based on distance traveled. As an example, a small appliance or power tool warehoused on the U.S. West Coast, many not qualify for two-day shipping for a Prime customer located in the Northeastern U.S… However, if the same item is stocked on the U.S. east coast, if may be eligible.
Separately, the WSJ reports that Amazon may introduce a further program, Amazon Day that combines particular customers’ orders in fewer boxes and ships on fewer days of the week. For customers, the program aims to for predictability, receiving all Amazon shipments on a specific day. For Amazon, it could turn out to be a means to save on overall transportation costs.
A Bernstein Research analyst recently indicated to Bloomberg BusinessWeek that the United States Postal Service may have accounted for 40 percent of Amazon’s hipping volume in 2014, more than either FedEx or UPS. In turn Amazon, performs much of the pre-processing sortation prior to handover to the USPS, and secures an attractive last-mile package delivery rate in doing so.
The rising costs of online and Omni-channel related transportation and logistics has indeed become a high-level concern, and industry icon Amazon is developing more innovative programs to buffer such costs. Others will do so, as well, and the need to fully understand and contrast all aspects of transportation costs by fulfillment channel are going to be critical table stakes.
The Renaissance of Available-to-Promise Capability to Support Retail and Online Omni-Channel Fulfillment
Supply Chin Matters has featured prior commentaries exploring the supply chain impacts of Omni-channel and online customer fulfillment for retail supply chains. Such impacts are many, but one of the more important relates to the needs for efficient overall inventory management while exceeding more demanding customer fulfillment and satisfaction needs.
In B2C retail, and in online B2B, inventory investment has a major impact on margin and profitability, and Omni-channel strategies that allow customers different fulfillment options can cause havoc with the proper balance of inventory.
Consumers increasingly prefer to buy online, and at the same time, seek flexibility to either have their orders ship direct, or pick-up or return in a local retail store or outlet. This new paradigm is why so many Omni-channel retailers are seriously re-visiting inventory management strategies. Some are building dedicated online customer fulfillment centers to directly support online order volumes while allocating separate inventory to support brick and mortar retail needs. Other Omni-channel retailers have rightfully determined that the same inventory has to be efficiently managed to support fulfillment needs across all channels. This changes the role of the brick and mortar store to be an added node within the fulfillment network with the ability to support in-store pick and pack.
Within this increased retail business challenge, available-to-promise capability (ATP) has taken on a new significance as a key capability to assist in more efficient and responsive inventory management. As Supply Chain Matters sponsor JDA Software describes it, ATP is experiencing a new renaissance.
Last week, The Wall Street Journal provided further evidence of the business importance of efficient inventory management. In the article, Retailers See Gains in Serving E-Commerce Supply Chains (Paid subscription or free metered view), the WSJ reports that while retailers view online shopping as a boon to sales, it can provide a drag on profits especially in the light of parallel delivery networks. Some retailers, however, may be on the way toward figuring out the logistics and profitability potential of Omni-channel. Examples cited was that Home Depot which grew online sales 25 percent in the second quarter while improving overall logistics, including higher efficiencies in its distribution network. Target, grew online sales 30 percent and reported a small increase in margins.
Last week, Supply Chain Matters contrasted the financial results and supply chain strategies of Wal-Mart and Target. Wal-Mart’s financial results were perceived by Wall Street as disappointing. To address Omni-channel, the global retailer is currently implementing a new inventory management system. That strategy includes shifting inventory to regional and dedicated customer fulfillment centers, rather than from the retail store backrooms. That would allow the flexibility to meet both online and in-store demand from a distribution center centric inventory strategy. The downside is a de-emphasis of the retail store as a fulfillment node and a greater potential for stock-outs at retail store locations as online orders consume available inventory.
Target on the other hand, has recently demonstrated improving financial results, but at the same time has been candid to Wall Street that balancing inventory across its network and leveraging resources at store level are an integral part of strategy. Senior management candidly admitted that in-stocks within physical stores have been unacceptable so far this year, but a newly appointed role of Chief Operations Officer will have as an initial priority, beefing up the capabilities and responsiveness of the supply chain. Target’s strategy includes the retail store as a direct fulfillment node. Thus far the retailer’s is shipping online orders direct from 140 stores with plans to enable 450 ship-from locations by the end of this year. Target senior management further noted that an important enablement of ship-from-store will be will be testing and deployment of a new ATP system that provides specific online customer delivery commitments.
On JDA Software’s Supply Chain Nation blog, Kelly Thomas writes on the renaissance of: Order Promising and Demand Shaping in a Segmented, Omni-Channel World. Thomas observes that ATP married with demand shaping provides an increasing number of fulfillment options as well a means to determine profitability profiles for fulfillment channels. It provides a basis in making the most informed decision on the source of inventory for a given customer order line and the pick-up or delivery location of the online customer.
Rightfully noted is that nearly 20 years ago, elements of what is today JDA Software (i2 Technologies) pioneered and patented allocated-driven ATP functionality for discrete manufacturing and other industry supply chain environments. Today’s JDA Order Promiser application is now being applied to the evolving needs of Omni-channel retailers for facilitating more responsive online fulfillment as well as improved inventory investment and bottom-line profitability.
The technology has come a long way and has found new meaning in more efficiently managing inventory in a B2C and B2B Omni-channel world.
Disclosure: JDA Software is one of other current sponsors of the Supply Chain Matters blog.
Reflecting on the Application of Social Enabled Supply Chain Processes- Bob Ferrari Guest Commentary
In March of 2011, I had the opportunity to join two fellow supply chain management bloggers in a thought-leadership webcast focusing on the potential of the social supply chain. Four years ago, the concept of the social supply chain was relatively new, not well understood, and lacking many specific examples to cite.
Indeed after much market education and early adopter successes, leveraging social supply chain applications to enhance business processes has far more meaning and applied uses. That is especially pertinent to today’s reality of increasingly complex and fast moving globally based supply chain networks.
On the 21st Century Supply Chain blog I provide a guest posting reflecting on what has occurred in this area and how the power and potential of many is being increasingly leveraged within supply chain business processes.
Have a read and share your perspectives and views regarding what has transpired regarding this area of technology.
Bob Ferrari, Founder and Executive Editor