A LOOK INTO AMAZON’S SUPPLY CHAIN OPTIMIZATION

Amazon’s massive and consistent growth over its short 25-year history is firmly rooted in Supply Chain Optimization. Having morphed from an inventory-heavy bookseller, Amazon has developed a supply chain that brings parity to the consumer, while simultaneously reducing the burden of Supply Chain Management for its suppliers.

You might think of Amazon suppliers (third-party sellers for Amazon) being small businesses (SMBs), and as the Pareto Principle states, that’s true for 80% of them, likely even higher. But a little-known fact of the Amazon Marketplace is that some of the world’s largest manufacturers of goods, from B2C to B2B, are beginning to outsource a great deal of their supply chain directly to Amazon.

Neurored APP conceptualization to automatically monitor and manage your inventory levels, issue reorders automatically, allowing you to maximize your margins and reinvest in your bigger future with Amazon.

Neurored App conceptualization to automatically monitor and manage your inventory levels, issue reorders automatically, allowing you to maximize your margins and reinvest in your bigger future with Amazon.

HOW DOES THIS WORK?

Let’s take an example.  Say Pika-Laptop manufactures their electronics in Asia, and their customer base is largely located in the United States which is a mix of retail consumers and business consumers. Pika-Laptop is shipping hundreds of 20′ containers from Asia to America every year. These containers must be transferred from factories to ports, to vessels, to trucks or trains, to distribution centers. These distribution centers require large buildings, advanced technologies, and of course, staff. But this is only half of the supply chain for Pika-Laptop because orders need to be received, the product needs to be picked, shipments need to be released and delivered. These activities are very costly, and heavily dependent on third-party logistics (3PLs).

Amazon saw this opportunity early, but also appreciated the complexity of logistics. So they tackled the problem from last mile delivery first and gradually worked their way back towards product sourcing. Today, suppliers (third-party sellers for Amazon) have the luxury of Amazon’s Seller Central technologies, which empower suppliers to plug their supply chain operations software directly into the Amazon Eco-system.

Take for example how customers of Neurored, a Global Supply Chain & Transportation Management app built native on the Force.com Cloud Platform by Salesforce.com, leverage Neurored’s Amazon Fulfillment Integration. Suppliers (third-party sellers for Amazon) create shipments to Amazon Fulfillment Centers digitally.  This process enables suppliers to choose their own shipping partner, or leverage Amazon’s transport partners network directly. Suppliers receive automatic notifications of inventory receipts, as well as orders, fulfillment, damaged goods, return claims, you name it, all electronically communicated back into their Neurored Supply Chain & Transportation Management App.

Amazon even released Artificial Intelligence capabilities, which literally applies predictive modeling as it makes next-best-action recommendations for suppliers to take next in order to optimize their inventory levels. Here we are in 2018, and Amazon has already created a seamless supply chain solution for even the largest suppliers, on a global scale. Given a little time, they will continue to reach all the way back to the original manufacturing sources.

Imagine a seamless supply chain where your app will automatically monitor and manage your inventory levels, issue reorders automatically, allowing you to maximize your margins and reinvest in your bigger future…Stop imagining because that future is already here!

Contact us for a personalized live demo of our Amazon Solution for Global Supply Chain and Transportation management here.

I recently enjoyed the privileged experience of a personal tour of the Port of Philadelphia in Pennsylvania, whose Master Plan aims to, “ enhance the port as an economic engine for job growth of family-sustaining jobs that reflect the composition of our community.”

To bring this into focus, the port will double its capacity to 900,000 TEUs, construct 100,000 sq ft of warehousing to support a 21% increase in breakbulk capacity, and double its auto transport capacity.

Much of these goals have risen from the recent widening of the Panama Canal, which can now accommodate ships carrying 13,000 TEU containers.  That’s nearly triple the number of containers on a single voyage… and this is merely one economic region of global trade in the world!

These increases in global trade are however placing the industry’s participants under increasingly greater pressure.  Pressure to deliver, on time, in budget, claim free.

Documentation management which has historically operated in a peer-to-peer manner, has been placed under greater stresses over the years as the number of participants in a typical international shipment transaction has grown.

Manufacturers, wholesale traders, freight forwarders, lenders, insurers, inspectors, customs officers…all parties to each transaction, must have visibility into the history of the documents that show proof of delivery for each respective step in the process.

Our team at Neurored consistently heard ideas like this from our customers, and so we built a fully multi-modal, global track and trace Control Tower, the centerpiece of our cloud-based Global Supply Chain & Transportation Management solution.

What began as single sets of documents, gradually became replicated and shipped to each peer via parcel shipping services, as each participant expended more and more labor costs attempting to organize their very own version of “the truth” for any given shipment.

Transportation Management Systems historically operated within a given mode of transportation.  Supply Chain Management Systems tended to focus on the costs and sourcing of physical goods, challenged by the notion of delivering a fully landed price.

Meanwhile, the logistics industry evolved to attack this problem, developing Third Party Logistics into its very own niche.  These 3PLs became the concierge service of international trade…shipment status was now a single call away, regardless of the mode of transport, because you now had a single contact.

But here we are in 2018, a time when our homes tell us when a visitor arrives before they even land on our doorstep, our cars can tell us exactly what type of service they’re about to need, and parcel package delivery is gradually becoming crowd-sourced.

For all consumer deliveries, we can open up a phone app or web browser, and have a very clear sense of when that delivery will arrive.

With Neurored’s Control Tower, our customers see all of their shipments, everywhere in the world, with status updates occurring in a matter of minutes throughout each day.

Therefore it is absolutely no surprise to anyone, that buyers and sellers of global trade, are ready to demand, the same level of visibility and transparency.

Our team at Neurored consistently heard ideas like this from our customers, and so we built a fully multi-modal, global track and trace Control Tower, the centerpiece of our cloud-based Global Supply Chain & Transportation Management solution.

Just a few months ago, Hurricane Harvey was bearing down on the city of Houston, Tx.  One of our customers operates two terminals there, importing cement.

Leveraging Neurored’s Control Tower, our customer was able to quickly identify assets at sea, engage in digital communications to divert them out of harm’s way, and commence the safe shutdown of these facilities until the storm had passed.

Thanks to Neurored’s Control Tower, our customer was able to proactively protect their assets both at sea and on land, and with a little help from above, the terminals were back up and operational within 24 hours!

With Neurored’s Control Tower, our customers see all of their shipments, everywhere in the world, with status updates occurring in a matter of minutes throughout each day.

Our most innovative global trade clients have engaged in a very powerful new capability, a FinTech tool which exposes the chain of custody we already provided them, now made available to all participants of each shipment through a secure, transparent, private Blockchain solution we’ve developed on IBM’s Hyperledger architecture.

And we built our app completely native on the Force.com platform by Salesforce.com, ensuring our clients gain the benefits of continuous innovation beyond our own.

As our customer base began to encompass more types of global trade participants, we began to see even greater opportunities to create value.  These opportunities form the basis of Digital Collaboration.

Our freight forwarding customers are sourcing quote requests from shippers, while simultaneously managing their customer, asset owner, and lead relationships, completely online in secure communities.

Manufacturing and wholesale trading customers are planning shipments, and comparing quotes to freight marketplaces like Freightos, with which we have seamlessly integrated.

But transaction and relationship management is really just the foundation for the biggest disruption we are now delivering in international trade.

Our most innovative global trade clients have engaged in a very powerful new capability, a FinTech tool which exposes the chain of custody we already provided them, now made available to all participants of each shipment through a secure, transparent, private Blockchain solution we’ve developed on IBM’s Hyperledger architecture.

And we built our app completely native on the Force.com platform by Salesforce.com, ensuring our clients gain the benefits of continuous innovation beyond our own.

Now, shippers are achieving far more competitive financing, because the manual work of peer-to-peer workflows have been eliminated.

Freight forwarders are even empowered to bring the full suite of these features to their customers, recognizing that their role is shifting from merely broker to technology solutions provider.

And Digital Collaboration is Accelerating the future of global logistics. [/av_textblock]

“Uber Freight users (truckers) download the app, search for a load, and tap to book it, which is followed by a rate confirmation within seconds that eliminates common anxiety in trucking about whether or not a load is really confirmed.” – Eric Berdinis, Uber Freight Product Manager. It is just another disruption threat that traditional brokerage business models face time to time, but on this occasion, it is in our industry so the “ripple effect” is shaking us.

Before Uber Freight many companies tried to implement the same concept with a disparity of results. Yet to date none disrupted the 3PL industry.

Can a crowded and developed marketplace like 3PL brokerage have an entry point towards the path of a total disruption?

In words of the Product Lead of Uber Freight, Eric Berdinis, their key to success is on truckers: “Over the last year, we’ve gotten pretty deep in the crazy pain points that drivers have an are going one by one to knock them off”. Among them Berdinis highlights that basically, the whole payment process in the carriers/shippers ecosystem does not work:

– Payment terms are net 30 or 60 days.
– Factoring skims off between 2% and 5% every load.
– Uber Freight pays turnaround of 7 days.

“We are paying quickly. We are just giving loads in a more efficient way” he said.

Is this enough for causing a disruption in a complex industry, the Achilles heel of the traditional players?

A bit too simplistic. Freight movement is not just a transaction and it is not relying on one actor such as Carriers nor ultimately in the Truckers – despite the fact of their tough and valuable activity. For a freight to become a load, be shipped and reach a destination, many logistics companies, partners and experts are involved, more or less depending on the complexities of the shipping, but all are exposed to potential exceptions resolved ultimately by 3PLs and their customer support network.

3PLs bring value to shippers with a wide array of shipping, technological and financial options, including generally today:

  • Multimodal freight, not only truck freight.
  • Warehouse management.
  • Customs management.

And this plus IT services, compliance, risk management, analytics, and many other added value services.

Building an APP, Uber Freight and other players such as Convoy or Transfix, they believe they will overcome the 3PLs empowering small fleets and indie truckers and provide better and cheaper service to shippers. However, a new species of player is moving forward in the trying to replace the traditional 3PLs, one collateral effect is happening already: if disrupting driver is a technology making happier truckers, what is the impediment for 3PLs to take advantage of it?

Supply Network Technologies and new Supply Trade Finance solutions for 3PLs like the ones provided by Neurored will more likely impact in a real disruption of the industry by those 3PLs adopting them rather than by those called the disruptors of today.

Future 3PLs

Future 3PLs

If you are a 3PL Contact Us for the answer today.

The past week, talking about the future of SCM with some colleagues from the industry, it came to my mind an article published by Supply Chain 24/7 in 2013 with the title: “10 Supply Chain Trends for the next 10 years”:

  1. Service chains will become more important than product chains.
  2. Companies will need to fully report corporate externalities.
  3. Supply chains must be designed to serve the “base of the pyramid”.
  4. Knowledge work and workers will become global in nature.
  5. SCM will have a standard certification process similar to that for CPAs.
  6. Product clock-speeds will determine the number and nature of the supply chains.
  7. Micro-segmentation will be key to success.
  8. Technology to support SCM will primarily be “on tap”.
  9. Leaders will leverage social media in a closed loop feedback process.
  10. Artificial intelligence will be embedded in mainstream supply chain activities.

In the equator of the 10 years horizon we can see with a retrospective that most of the trends are already facts, but by 2013 the Millennial generation was still in the puberty. Nowadays we know that by 2020 Millennials, the future customer that will change the consuming of goods and services dramatically will represent 40% of the world working population. What changes will introduce this in the global demand of goods, and how supply chains and stakeholders will have to evolve are perhaps two unresolved questions in the sector yet.

But by this newly 2018, Millennial is a better-profiled generation:

  1. Millennials grew up in the digital experience.
  2. They are astute consumers.
  3. They will expect companies to know their individual needs.
  4. They will expect companies to personalize all experiences.
  5. Their consuming habit will shrink the product lifecycle a 50% by 2020 (from 2000 to 2010 product lifecycles experienced already a 50% down).

Service chains will be as important, if not more important, than the product chain.

Less lifecycle means a more regular product/service replacement. Consequently, companies will be forced to streamline reverse logistics, and supply chain processes will depend more than ever on track inventory and shipments through the use of Trade Management Systems and constant monitoring of their KPIs. But a second important consideration is about Globalization. As businesses landscapes become more and more global, suppliers and competitors keep continuing expanding operations across the world.

In only 2 years, thanks to the modern transportation management, logistics capabilities, and savvy IT systems, 60% of companies expect to source from more countries than they did in 2017 and in the same period 80% of manufacturers expect to have multi-country operations.

A recent intelligence published by ITV Corporation concludes that new scenario will require a new change of approach in many aspects, as a brooch to this post, here you have their very valuable conclusions:

  1. Be aware of any opportunity for new optimizations as it may pop up because optimization will bring reliable decision support for supply chain challenges such as network design, route mapping, and load building.
  2. When in doubt, simulate! Simulations will provide value by showing how solutions will play out in the real world.
  3. Go for carrier quality.
  4. Invest in 20/20 visibility.
  5. Inspect product for exceptions before they reach the logistics phase from the production phase.
  6. Use damage claims as a source of insight to learn and lead to better performance.
  7. Invest in modern IT systems to help your company to collect and analyze data -including mode, carrier, and location- of exceptions.

Inspired in the article published by ITL Corporation: https://www.itlvn.com/news/333-hieu-suat-chuoi-cung-ung-vao-nam-2020.html

About ITL Corporation: Indo Trans Logistics Corporation™ is positioned as the premier regional solutions provider for Integrated Logistics, Aviation Services, Warehousing, Freight Management and Distribution in South East Asia, being listed for more than 10 consecutive years (2007-2017) as one VNR 500 enterprise – Top 500 Vietnam’s largest enterprises following the same selection criteria as FORBES FORTUNE 500.

https://www.itlvn.com

The complexity of Supply Chain has been resulting in continuous upstream and downstream problems historically.

In a research published by Emerald Group, and recently quoted by Mr. Tim Charlton – Senior Management Consultant at XAct Solutions – we find an interesting approach to the smartification key aspects of Supply Chain:

  1. Instrumented – Information is overwhelmingly being machine-generated, such as by sensors, RFID tags, etc.
  2. Interconnected – The entire supply chain, including business entities, assets, IT systems, products, and other smart objects are all connected.
  3. Intelligent – They make large-scale optimal decisions to optimize performance.
  4. Automated – Much of the process flows are automated by using machines to replace other low-efficiency resources, such as labor.
  5. Integrated – Process integration involving collaboration across supply chain stages, joint decision making, common systems, and information sharing.
  6. Innovative – Development of new value through solutions that meet new requirements, inarticulate needs, or even existing needs in better ways.

“The development of Smart Supply Chains has never been more paramount than now.”

“Academic literature has long advocated the notion that information is a critical component of successful supply chain practices. Given we execute our supply chain activities within a dynamic operating environment of continued uncertainty and disruptions, the development of Smart Supply Chains has never been more paramount than now”, remarks Tim Charlton in his article.

But the questions that you may be making yourself are whether the supply chains are ready to be smartified? will be a standalone process for my company or most likely involve a similar process from vendors and clients? is my organization prepared for such transformation from systems to employees?

Although obviously, you may not have instant answers to all these questions, formulating openly throughout your ecosystem may be a good first step to help the right strategy to emerge. Meanwhile what is unstoppable is the emerging of new pressures for finding the way to the sector’s mantra: cheaper, faster and better, and the way is no other than smartification.

Contact Us to discover how Neurored can help your organization towards Supply Chain Smartification

Sources:

“Are Supply Chains Ready to be Smart?”
Tim Charlton
XAct Solutions

“Smart supply chain management: a review and implications for future research.”
Emeral Group Publishing Limited

Check out our latest PR feature with our friends at New Jersey ROI to learn more about the story of our expansion into the U.S. market and out outlook for 2018!

“We want to establish ourselves within a few different verticals beyond building, construction and manufacturing, by building our presence within the logistics industry here in the U.S. much like the way we have done so in Europe, Africa and Asia,”

Full article here