Industry executives weigh in on Big Data, analytics, apps and more.
As published in Food Logistics Magazine: http://www.foodlogistics.com/article/12088071/how-is-software-technology-impacting-the-food-beverage-supply-chain
As part of this month’s special coverage on Software & Technology, we contacted over a dozen industry executives at companies that play a s
ignificant role in the food and beverage supply chain to ask them about the impact of Big Data, the Internet of Things (IoT), analytics, cloud technology, apps and more to get a sense of the changes underway and what they portend for the future. Without a doubt, Software & Technology represents one of the fastest-moving, promising and disruptive segments in the business and consumer worlds today. In the food/bev supply chain it facilitates visibility from farm-to-fork, compliance, improved food safety, productivity, better management of people and processes, and cost reductions and accuracy, among other benefits.
Following are highlights of the comments and quotes these industry executives shared with Food Logistics…
Who: Kevin Lynch, National Account Executive, Q Products & Services
Key Topic: The impact of rejected loads on the supply chain
Takeaway: Applying technology to address this challenge
Lynch explains that, “Our business is unique because we have a diverse customer base that includes food manufacturers, motor carriers and retailers. In terms of the supply chain, all three play an important role that is dependent on one another to ensure a successful shipment is executed.” In addition, “Food safety regulations already impact our industry and will continue to do so moving forward, especially when something goes wrong,” he says.
“Think about the rippling effect a rejected load has on everyone involved. For example, the revenue lost by the shipper followed by a scramble to get another load prepped for the customer. The carrier will likely be hit with a claim to pay and then forced to delay a scheduled backhaul. Meanwhile, on the receiving end the customer is left with a delayed timeline to get the product on the shelf, resulting in potential lost sales. These are just a few of the consequences felt by each business. While it’s difficult to determine which company feels the most pain, the reality is that on some level everyone loses.”
Lynch acknowledges that rejected loads are sometimes unavoidable. However, “The preventable instances are the most frustrating to everyone involved. Tampered seals and missing temperature recorders are two of the more common variables causing shipments to be turned away. As an industry, we need to continue the development of proactive solutions by way of existing technology.”
Who: Chetan Tandon, CIO Allen Lund Company, LLC; ALC Logistics
Key Topic: Evaluating your software/technology spend
Takeaway: Look for a solution, not just a product
According to Tandon, “Technology has changed the way we look at the transportation and logistics industry today. Several factors play a major role in this evolution, products like mobile technology, transportation management systems (TMS), yard management, dock scheduling, warehouse management systems (WMS), and location and trailer tracking devices are just a few. Many companies have already taken advantage of such technologies, and some are playing catch up. With so many products in the market, how do you decide which one is the right match for your market segment, industry and company?”
Tandon says there are several key factors to consider:
Price: Expensive is not always the best. Many times mid-market solutions offer more bang for your buck. It is important to find out how much this solution will cost you over the next five years. Technology will change significantly in five years, and so will price.
Features: Does the solution offer all the features you are looking for? Can it grow with your company’s needs? A company needs to assess their business plan specific to growth and confirm that the software solution fits into the plan.
Platform: As we all know, the tech world is experiencing a mobile war, browser war and operating system war. Is the solution your company is considering platform agnostic? If it is not, then this platform will not be in keeping with your business plans. Additionally, the “solution” will not be able to keep pace with the platform competition in the marketplace.
One size does not fit all: Is the solution customizable? The way you run your supply chain might be completely different from others in your industry. Can the solution be customized to fit your business needs or do you have to change your business process to fit the solution?
When shopping for software, keep in mind the various aspects in which technology interacts with your business. Look for a solution, not just a product.
Who: John Haggerty, Vice President, Burris Logistics
Key Topic: Cold chain challenges
Takeaway: Creating high performance strategic partnerships
“Today’s cold chain and its stewards are being stretched to new levels of performance by consumer demand, especially for products from all fresh categories,” emphasizes Haggerty. “More products are processed and harvested in more places requiring precision temperatures, critical handling, and faster movement than ever before. As cold chain resources tighten, older assets reach obsolescence, and the driver shortage deepens; food industry leaders should plan for these realities and look to create new, high-performance strategic partnerships.”
Choosing the right cold chain partners is crucial. Haggerty lists a handful of questions to consider when evaluating partners:
- Will your potential partner be a true partner, one willing to go the distance, and share the pain and the gain with you?
- Does your partner invest in people, training, and talent management?
- Does your partner invest in “owned” cold chain assets and their proper maintenance?
- Is your partner experienced and capable at multiple temperatures?
- Do they have a solid track record and reputation of integrity?
- Is your partner committed to constant improvement, process improvement, and process reengineering?
- Does your partner invest in new technologies?
- Is food safety and agency compliance part of your partner’s DNA and culture and do they live this every day?
According to Haggerty, “Cold chain logistics partnerships can create substantial value. They can also be executed with seamlessness, visibility, and transparency. New and emerging technologies allow for real-time visibility, as well as time, place, and temperature validation. Inventory visibility and full functionality through systemic integrations can essentially join two companies at the hip. The challenges of fresh supply chain execution may be effectively addressed through collaboration and true partnerships.”
Who: Michael Bargmann, Principal, Collaborative Logistics LLC
Key Topic: Tapping the potential of mobile apps and Big Data
Takeaway: Cloud stability, back-up systems and cybersecurity are concerns
“The logistics industry continues its journey towards the growing significance of moving information seamlessly along the supply chain,” notes Bargmann. “This critical evolution has been accentuated by the growing prominence of fresh products in the marketplace. The mobility and timeliness of this data is crucial and there is an ever-growing plethora of hardware and software available to drive this critical change.”
Collaboration isn’t a new concept in the supply chain sector, but recently there has been a renewed focused in this area.
“The changes in the food supply chain towards a quickly growing and expanding percentage of fresh foods has rekindled the interest and focus in collaboration,” explains Bargmann. “There are many tools being offered to assist in this journey to a collectively-managed profitable delivery of consumer expectations. The opportunities to enhance supply visibility and share data in real-time with cloud-enabled applications and mobile devices are becoming game changing. Of great concern though are cloud stability, back-up systems, and cybersecurity.”
Bargmann cautions that, “Many transportation technologies, while very effective, can be cost prohibitive. Yet, mobile apps could impact these costs dramatically. It is possible in the near future that every truck will have a central tablet or similar mobile device which will integrate with the entire vehicle and virtually all current stand-alone technologies and data points such as GPS, diagnostics, cab and trailer condition monitoring, temperature controls, electronic logs, cameras, and more will be synchronized and driven by one device and available in real-time. This would likely drive down the overall costs and somewhat commoditize or make generic the devices used at data gathering points and higher proprietary systems obsolete. Smart cargos with shipper specific sensory devices might also transmit through some sort of industry standard shared app.”
In addition, “While all the Big Data has been gathering for a long time, little good has been done to harvest and utilize it with any real meaning,” says Bargmann. “What good is the data if it can’t be shared and made actionable while it’s still relevant? Visualization software products seem to be effective in harvesting and bringing this data to an actionable place while still ripe.”
Who: Dan Filby, EVP and Managing Director, First Advantage
Key Topic: Big Data
Takeaway: Opportunities to improve carrier performance and profitability
In the U.S., the average for-hire truck drives 489 miles each time it hauls freight. With 10.3 million commercial trucks on the road, these vehicles are generating large volumes of information—or Big Data—while in operation. It’s estimated that today’s commercial vehicle generates about 1 terabyte of data annually, according to Filby.
“The existence of these data creates the opportunity for fleet operators to improve their operations with respect to a host of performance measures including pricing, routing, asset tracking and utilization, maintenance, and fuel optimization,” he says. Furthermore, “The existence of these data creates the opportunity for automated government audit and enforcement efforts.”
However, not all carriers invest in the time or analytic tools necessary to mine their own data.
“Some fleets look to an outside vendor because they do not have the internal capabilities or time to conduct this analysis on their own,” says Filby. “Some look to third-party vendors because they’re private carriers—for example, Pepsi—and while they have the capability to do so, it is more cost-effective to have a specialist do it for them so they can focus on their core businesses. Regardless of the reason, they don’t want data. They want management information.”
Big Data is only going to get bigger, remarks Filby. “The proliferation of data from trucks will continue to expand with the growth of onboard devices and a greater driver adoption of social media. With that comes the opportunity for analyses that deliver actionable information to commercial vehicle operators that drives top-line revenue and helps them control costs and bolster profitability in an industry with thin margins.”
Who: Mike Meehan, CTP, VP of Sales, Fleet Advantage
Key Topic: Mining Big Data for competitive advantage
Takeaway: Rethinking the fleet lifecycle management practice
“In the arena of food distribution, understanding the financial impact of integrating technologies that continually increase fuel efficiency and reduce emissions is imperative,” emphasizes Meehan. “Leveraging data can be the catalyst to elevate a distribution operation from a support function to competitive differentiator with quantifiable revenue enhancement strategies. Using newly-available technology that generates data from a wide variety of sources, then combining and mining that data to discover new ways of cutting costs is the key to gaining competitive advantage.”
Meehan says that, “While data has long been used for route optimization, only recently could it be leveraged to provide new insight into the equipment performance, operating costs and fleet lifecycle management practices. By combining equipment performance data with maintenance and finance data, it is possible to determine each vehicle’s point of economic obsolescence—the exact time that a tractor starts costing more to run than it does to replace it with a new model. The data essentially provides a P&L statement on each truck.”
On the topic of fuel-related regulations, Meehan notes, “Fuel economy mandates on heavy duty trucks focused on emissions reduction and resource conservation and will be in effect through 2027. That means only one thing—continuous improvement in fuel economy for years to come. Since fuel is approximately 70 percent of a fleet’s operating cost, this is good news for the industry as a whole. Effective in model years 2014, Phase I mandates are indeed proving to save transportation operations millions of dollars annually in fuel and maintenance costs. The new data intelligence is prompting fleets to address long held fleet lifecycle management practices. Fleets are increasingly moving from a purchase/bank financing model to a short-term, more flexible leasing solution that allows them to capture the benefits of the fuel economy improvements (and) reduce their maintenance—gaining efficiencies and competitive advantage.”
Who: Lori Harner, Sr. Global Product Marketing Manager, International Business Systems (IBS)
Key Topic: Cost impact of Food Safety Modernization Act (FSMA)
Takeaway: Using technology to be proactive, not reactive
Despite helping to assure consumers have access to healthy, sustainably-produced food, the U.S. Food Safety Modernization Act (FSMA) brings with it additional costs, especially for smaller producers and distributors in the supply chain, notes Harner. Leveraging technology, especially around business intelligence (BI) and reporting, is an important strategy for mitigating these costs.
Technology can also help companies become more proactive as opposed to reactive, she explains.
“IBS offers a powerful suite of applications that can synchronize how a company communicates and responds to challenges associated with the FSMA. For example, if there’s a disruption, the distributor can change suppliers and/or initiate an inventory substitution by using their software to ‘see’ what’s going on. Ultimately, this boosts and retains customer loyalty and satisfaction, which is what everyone is looking for.”
At the same time, “The food/bev industry can learn a lot from the work that’s already been done by the pharmaceutical industry,” says Harner. “Many of the processes and best practices with regards to tracking and tracing in the pharma industry can be leveraged by the food/bev industry.”
Who: Bob Camozzo, President, Logistix Solutions
Key Topic: Maximizing logistics cost cutting strategies
Takeaway: Designing more user-friendly software solutions
“We work with many companies, both start-ups as well as established enterprises, in diverse industries,” explains Camozzo. “A common theme we are seeing from all our customers in the area of logistics, and specifically transportation management systems (TMS) software, is that companies today are really pushing the boundaries and using aggressive cost cutting strategies like cross-docking, backhauls, direct supplier shipments bypassing distribution center networks, managing their own inbound freight and moving from less than truckload (LTL) to multi-stop truckload and other consolidated freight methods.”
He adds that, “While these types of strategies used to be managed as one-off, manual processes, each of these strategies pose a big challenge for supply chain optimization software with even bigger opportunities to generate significant savings, often beyond the frequently-touted 10 to 15 percent goals companies set as a minimum ROI. The reason these strategies are so challenging to solve is that they are often unique to each company, therefore it’s a challenge to design software algorithms that provide flexible solutions for a broad spectrum of users.”
This requires even greater customization or rapid-response and continuous improvement, which the new generation of on-demand software or Software-as-a-Service is capable of providing, says Camozzo.
“Yet, for all the complexity required to generate solutions that increase levels of profitability and enhance customer service, software solutions still need to hide this complexity and still be easy to use. Much more user-friendly interfaces, better graphics and faster computers all contribute to making these software solutions easier to use for problems that are increasingly more complex, more challenging and, ultimately, much more profitable.”
Who: Peter Yost, VP of Marketing, MercuryGate International
Key Topic: Fleet management and food safety
Takeaway: An optimal plan requires careful analysis
“The food and beverage supply chain has challenges unique to its industry for transportation management,” says Yost. “End-to-end, or tower-to-tower, visibility of the location, and in some cases, the current temperature of the products on board is critical to ensuring food safety and integrity. Knowing where the inventory is and the condition of the inventory when in route allows the food company’s logistics team to react quickly to emergencies, keep the customer updated and reduce their own safety stock inventory levels.”
In addition, “Food companies that operate a fleet for deliveries are challenged to optimize the use of their vehicles and the use of contract carriers. Determining the optimum plan for meeting local and long-distance deliveries with the company’s fleet and contract carriers requires careful analysis of delivery windows, equipment types, pooling locations, and fleet/driver availability. Minimizing the miles driven and driver hours behind the wheel required to deliver products to customers saves money and reduces the company’s carbon footprint.”
Who: Amy Childress, VP, Marketing & Business Development, PakSense
Key Topic: Automating the transfer of cold chain data
Takeaway: Cellular connectivity removes human intervention
“At PakSense we are seeing a new trend regarding monitoring and maintaining the cold chain,” notes Childress. “Historically, customers were happy with placing a temperature logging device on a perishable load and downloading it at the receiving end. However, we are experiencing a shift in this thinking and perhaps this is in response to impending FSMA legislation. Today, there is increased interest in automating the transfer of this cold chain data and making it available to users via cloud computing for anytime, anywhere analysis and on-demand report generation.”
The company has responded to this market shift by creating bolt-on and extensible systems that utilize cellular connectivity to transmit cold chain data, she says. “For example, our AutoSense inbound system utilizes PakSense wireless labels and our cellular M2M readers. Labels are placed on loads by suppliers and when they arrive at a distribution center, the truck door opens and the temperature data from the wireless label is automatically downloaded to the reader without any human intervention. Emails with temperature data are automatically sent to QA staff smartphones and the data also resides in a database on the cloud. We have similar cellular-based facility monitoring systems and real-time loggers that provide temperature and location data in real-time, and they can be bolted on to our AutoSense Inbound monitoring system. All of these systems are automated and use cellular connectivity to transmit data to a central repository where users can analyze data further.”
Who: Ron Gillies, VP Sales & Marketing Americas, Printronix
Key Topic: Food traceability and compliance
Takeaway: Meeting GS1 standards
From his perspective, Gillies says that, “Creating compliant labels and tracking that data through the supply chain can be a challenge for many food producers/growers and manufactures. Today’s label software providers are making that easier through simple-to-use, GS1-compliant templates, but many challenges remain.”
For example, “How do you confirm the label has printed correctly? How do you print in a wide range of temperatures and still produce readable barcodes? Additionally, how do you capture the barcode and associated product data throughout the supply chain?” These are the types of challenges that are resolved by selecting the right barcode printer that can operate at a variety of temperatures, asserts Gillies.
“Real-time label validation is also essential to assure GS1 and industry compliance regulations, which will ultimately save businesses time, money (fines) and simultaneously help collect valuable data from their operations. Solutions that can provide these time and money savings are available from Printronix, such as the T8000, which can operate as low as 23 degrees F (5 degrees Celsius); along with our Online Data Validation and PrintNet Enterprise solutions, which can validate barcodes for compliance and manage print production through an entire organization, respectively. All crucial elements to the success of an efficient supply chain process.”
Who: Valentina Cecchi, Marketing Coordinator, System Logistics
Key Topic: Food safety compliance
Takeaway: Using AS/RS to support tracking and tracing
“Factory-to-fork traceability has many challenges. Key among them is seamlessly tracking and tracing all ingredients input through the final product output while optimizing speed of response at most efficient operating costs. Companies and organizations looking to modernize their processes and facilities should focus on systems and solutions that can support compliance regulations associated with the Food Safety Modernization Act (FSMA), which will be strongly enforced in the near future,” says Cecchi. In addition, “The application of best practices is necessary to decrease response time to customer/regulatory body inquiry or recall, limiting potential product loss and financial liability. With the understanding that data tracking and traceability is critical for food manufacturers, System Logistics software suite Systore provides all of the necessary interface points between the end users’ ERP system and the distribution center’s automation system, helping to keep the system running at peak performance.”
She adds that, “Moreover, by storing finished goods and raw materials in automatic storage and retrieval systems (AS/RS), inventory control and traceability can be guaranteed due to System Logistics` Systore software, which controls the material flow and reports back to the host WMS or ERP. The Systore software can provide a real-time snapshot at any given time and has many more functions to support the material management within the warehouse (i.e., quarantine, cycle counting, expired product or materials, etc). Additionally, utilizing AS/RS warehousing significantly minimizes product damage while increasing accuracy.”
Who: Kerry Byrne, President, TQL
Key Topic: Mobile apps
Takeaway: Speak-and-search features finds loads fast
In May, freight brokerage firm Total Quality Logistics (TQL) released Carrier Dashboard 4.1, the first mobile application in the trucking industry with speak-and-search technology designed to save time for drivers on the road and help them find freight more easily.
“We are the first to market with a mobile application that allows drivers to search for loads with voice commands,” says Byrne. “Technology is a serious competitive advantage. The faster carriers can find our loads, the easier it is for us to satisfy our customers’ delivery requirements.”
The app uses a form of artificial intelligence that continuously improves performance, along with recognizing regional accents and filtering out most ambient noise. The more drivers use the app, the better it gets. And when it’s time for the driver to head home, he/she simply asks the app to “take me home” and it finds them a load heading back to their home town.
Who: John Clark,
Key Topic: Apps for consumers and B2B; AS/RS
Takeaway: New tools improve cold storage facility management
“With the advent of ‘There’s an app for that,’ controlling your cold storage AS/RS via a tablet device makes sense,” says Clark. “One of our customers, Americold, uses this at their Indianapolis facility. With it, users can monitor the system—and more accurately, monitor by exception. They don’t need to see what’s working, but more so see where issues might occur. This saves on travel time throughout the facility as adjustments can be made within the facility and also from a control area outside the cold storage area.” For example:
- Software solutions (TMS, WMS etc.)
- Warehouse (AS/RS, forklift technology etc.)
“In the meantime, AS/RS technology continues to make inroads into the cold storage arena,” says Clark. “AS/RS falls into Level 3 of the four-level automation scale. Level 1 includes WMS and RF or voice-directed picking. This offers an ROI of as fast as 6 to 12 months. Level 2 automation includes conveyor or pick modules and can have an ROI of one to two years. Level 3 includes AS/RS solutions, which also encompasses conveyor and sortation as well as warehouse control and WMS, and can offer an ROI of three to four years. This was unheard of five years ago. Finally, these levels of automation solutions are incremental, so users can ‘dip their toes’ in the waters of automation and build out as they need to.”
“Demand Sensing Gets Its Day In The Sun”
By Lara L. Sowinski
One of the biggest buzzwords in the software and technology segment today is “disruptive,” as in disruptive innovations that create new—and unexpected—markets and value networks. The advent of digital photography and the resulting “disruption” of the chemical photography market is one example. In the supply chain space, Terra Technology’s invention of demand sensing 13 years ago fundamentally disrupted traditional planning systems with “advanced pattern recognition algorithms to sort through masses of real-time data, understand what is predictive and create the best picture of demand for every item at every location,” explains Byrne. “It is the way you would imagine demand planning to work if it were invented today instead of 50 years ago.”
He explains it this way. “When you decide how much milk to buy for your family, do you check historical shopping lists to see how much milk you bought this week last year, or do you open the fridge to see how much is there?”
The powerful algorithms in demand sensing are just like peeking inside the fridge and simultaneously examining hundreds of other signals to find predictive patterns in and between data sets. According to Terra Technology’s 2014 Forecasting Benchmark Study, on average, food companies that use demand sensing cut their forecast error by 41 percent across all items and years (2009 through 2013). Other food-specific findings from the study include:
- Overall, the proliferation of food items remains pretty stable over time, but started to rise in the last two years with 13 percent more items in 2013 compared to 2009. In the same period, shipments were up 1 percent. As a result, sales per item dropped 10 percent.
- The number of cumulative items almost doubled during this 5-year period, but was masked by a high churn rate of 92 percent. On average, each food company has been introducing three new items and discontinuing two items every day, 365 days a year for the past five years.
- Finally, the ‘long tail’ continues to be a challenge. The slowest moving 50 percent of items contributed 2 percent of sales, while the fastest-moving 10 percent of items generated 70 percent of sales. In other words, companies could cut their complexity in half while losing at most 2 percent of their volume, probably less.
Meanwhile, demand sensing is still working to acquire widespread acceptance in the market place. Byrne says the five years following the initial launch were slow, with only one major deal each year. That changed, however, when Procter & Gamble (P&G) chose to implement demand sensing.
“It was a real endorsement and put us on the map,” says Byrne. P&G deployed Terra Technology’s demand sensing to approximately 75 percent of its global business and has also selected multi-enterprise demand sensing, inventory optimization and transportation forecasting.
Nils Mueller, P&G’s intelligent daily forecasting initiative manager, explains that, “In the current economic climate—with ever increasing volatility in demand—it is crucial to extend the supply chain visibility as close to our customers as possible. Speed today is of the essence. Only those companies that can respond quickly to customer and consumer needs will stay ahead. Terra’s software provides P&G the ability to stay ahead of shifts in consumer demand.”
Kellogg, Kimberly-Clark, Unilever, Mondelez, Kraft and General Mills are others that have implemented Terra Technology’s solutions. And while Byrne admits that some still don’t view demand sensing as a “must have” solution, like WMS, for instance, there are some positive signs on the horizon.
“Ten years ago, I really thought that retailer data was going to transform the supply chain,” he says. “It’s still getting there. You had a bunch of people that rushed in to do things like on-shelf availability management, but then there was a lull. However, it’s started picking up a bit. The recession forced everyone to shift their focus and a lot of projects got canned. But in the last few months I’ve suddenly seen a lot of customers and prospects doing a 3- to 5-year play around supply chain systems. It’s very exciting.”