Cloud platforms and AI are turning the supply chain from a cost center to a competitive advantage

SaaS is helping manufacturers and trucking companies save money and boost efficiencies by making the supply chain easier to manage and more transparent.

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Until recently, company executives have chalked up the cost and headaches of managing the supply chain as an unavoidable cost of doing business. Walmart started to change this trend several years ago with new demands on manufacturers and shipping companies. The digital transformation of the supply chain across every industry has turned a cost center into a competitive advantage.  

Disruptions due to the coronavirus have highlighted the weak links in the chain and made an even stronger case for technology investments.

Three B2B companies are using Software-as-a-Service (SaaS) platforms, cloud infrastructure, and artificial intelligence to lead this transformation. 

SEE: Coronavirus: Critical IT policies and tools every business needs (TechRepublicPremium)

Using data analytics to optimize inventory levels

LeanDNA is focused on one of the first links in the supply chain at manufacturing plants.

LeanDNA works with manufacturers in the aerospace, defense, automotive, industrial products, and medical device industries that build airplane fuselage or cabinets or metal detectors for  airports.

The company launched in 2014 to help manufacturers make it easier to track and manage complex supply chains. The company's analytics platform helps customers set inventory levels that are sufficient to keep the manufacturing line going and make the smallest demand on  working capital.

Richard Lebovitz, founder and CEO of LeanDNA, said the recent mass customization trend means that manufacturers are relying on thousands of suppliers to assemble and ship orders. One customer needs up to 60,000 parts to complete a single item. This need for more customized parts means manufacturers are much more tightly integrated to suppliers.

"if they don't get that part, the end assembly can't ship," he said.

LeanDNA's SaaS platform ingests past performance and ordering data from a new customer and analyzes prior demand history with artificial intelligence models. Once the system understands prior demand history, the algorithms make predictions about future demand and set new ordering policies.

 Lebovitz said factories can have anywhere from one to three month's worth of inventory.

"Factories that have one month's supply are very lean while factories with three month's worth of parts are not as efficient with their working capital," he said. "Also, it's not just overall inventory but the right level of each part, based on lead time and demand."

Lebovitz said that companies with good analytics can spot the parts that will hold up production and identify alternative sources.  

The platform offers five languages, so that a factory in China will see information in Mandarin while American employees will see it in English.

Digitizing the purchase order

Anvyl works with consumer goods companies to digitize the supply chain and combine multiple data silos into one dashboard.

Rodney Manzo, CEO and founder, saw the need for these improvements during his time as a global supply manager for Apple and a senior director of supply chain at Harry's.  

"There were days when I was managing everything with my hair on fire because I had no visibility into what was where," he said.

Anvyl's SaaS platform digitizes purchase orders and puts data from disparate systems in one place, including SKU and order management, parts libraries, supplier directories, purchase order management, and document management. The platform automates previously manual tracking processes and makes it easier to see how an order is progressing.

When a customer places an order with a supplier, Anvyl's dashboard tracks the order from raw material to finished product. 

"If you have hundreds of suppliers, you can focus on parts that are an issue instead of thinking everything is an issue," he said.
 
This increased visibility means that companies can reposition their supply chain when one manufacturer can't meet demand. Manzo said that because of shutdowns due to the coronavirus, this can be an even bigger problem than usual for smaller companies that are competing against larger companies with bigger orders.

"As manufacturers come back online, they are going to focus on customers that bring in the most revenue first," he said. "If you don't have a lot of spend with a manufacturer, you're going to be low on the priority list."

Manzo estimates that this workflow automation can replace anywhere from three to 10 people doing this tracking work manually. Anvil's customers include Harry's, organifi, Sock Fancy, and S'well. 

Making the shipping industry more efficient

FourKites took advantage of a new regulation for the trucking industry and the data that it generates to make the transportation component of the supply chain more transparent. 
Due to a law passed in 2016, most truck drivers now must have a tracking device in their vehicles to make sure they drive only a certain number of hours per day. An electronic logging device synchronizes with a vehicle's engine to automatically record a driver's off-duty and on-duty time and transfer hours of service data to a safety official. 

FourKites CEO Matt Elenjickal built a hardware agnostic platform to collect data from customers and shippers in one place in real time. The cloud-based system uses Microsoft and Amazon servers.

Now that shippers and customers know where trucks are in real time, FourKites has built an analytics platform to improve transparency and efficiency of the supply chain.
Elenjickal said customers can manage inventory better because they know what is coming to their locations at what time. The real-time tracking makes the process more efficient for truck drivers also because warehouses and stores can be ready when a shipment arrives.
 
Glenn Koepke, the vice president for network enablement, said that several other business forces are powering the increased visibility into the supply chain, namely the desire for customers to see deliveries arrive on time and the need for shippers to avoid fines for late arrivals.

"Companies like Walmart and Target charge a percentage penalty based on the value of the goods in the truck, which is anywhere from 3% to 5%," Koepke said. "That adds up to millions of dollars per year in fines."

Koepke explained the evolution of the tracking platform that went from descriptive—where is my shipment—to predictive—it will be two hours late—to prescriptive—unload this shipment first because it is at high risk of incurring a fine. 
 
The platform also includes a shot clock for warehouse operates that tracks how when a shipment has to leave to meet the delivery time.
 
Koepke also said that historically logistics operations were not connected to the customer and did not consider customer satisfaction. 
 
"In the past, Walmart would send a fine due to a late delivery but the warehouse didn't know why because the fine was not in its P&L statement," he said. "Now we have one version of the truth for everyone."

Koepke also said that the FourKites platform allows shippers to save on labor costs by  consolidating tracking duties to fewer staff members.

Elenjickal also said that the platform has inspired new collaborations among shippers which in turn has removed some of the waste in the supply chain. At any given time, about 40% of all trucks on the road are empty. The company's Lane Connect program uses historical data to help shippers collaborate to reduce those wasted trips. 
 
Koepke said that FourKites did a pilot project with a grocery wholesaler that worked with several trucking companies. One company was shipping goods from Ohio to Tennessee. Another company was hauling goods in the opposite direction. 
 
"We identified lane matches that helped shippers partner with each other to improve fleet utilization and reduce empty miles," he said.

Also see

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Anvyl has digitized the purchase order process so that companies can track the status of a shipment from order to delivery.

Image: Anvyl