Monday, November 24, 2014

How UPS adopts New Cloud-Based Technology Platform to Improve International Supply Chain Management

Introduction

UPS has adopted cloud-based technology platform to improve the quality of international supply chain management. The UPS Order Watch, a cloud-based technology platform has allows UPS customers to more efficiently collaborate with international suppliers and better manage their supply chain and inventory.

Functionality


The Order Watch platform includes various services that adding value to supplain:

  1. Adding capabilities to enable greater accuracy and timeliness of overseas vendor bookings.
  2. Improving processing and management of suppliers.
  3. Automated exception management.
  4. Near real-time shipment status and detailed line-level visibility of in-transit inventory
  5. Improving internal operational process.
  6. Facilitation of purchase order consolidation.
  7. Optimizing shipping plans.

Benefits


The improved UPS order watch vendor booking system will dispatch system-generated exception alerts to ensure vendor meeting customer’s requirements and providing an online system for approvals. It also eases the PO-specific communication between vendor and customers. The improvements to the supplier management service will eliminate time-consuming email communications and enhance monitoring of vendor bookings against purchase order details. 

Once the order is placed, PO-level shipment planning capabilities enable visibility and control from order creation all the way through shipment delivery, providing customers with a virtual on-hand inventory view of incoming orders.

Conclusion



“This can provide opportunities to consolidate ocean freight shipments and improve container usage to realize cost savings, which is increasingly important as COOs are looking for ways to mitigate ocean transportation costs following the ocean carrier rate increases in 2014” said Tom Boike, The vice president of supplier management at UPS. Now UPS Order Watch has enables 50,000 companies to streamline management of vendors and manage all of their inbound shipments in a single ease-to-use platform.


Reference:

1. UPS supply management : http://www.ups.com/content/us/en/bussol/browse/supplier_mgmt.html
2. UPS order watch blog : http://blog.ups.com/tag/ups-order-watch/

Mix & Mingle Online - Social Media Use in Supply Chain Management

Have you ever thought about social media in the context of supply chain management (SCM)? To be honest - I had not. But when we talked about the impact of technology and the web on SCM in class, I started to wonder about the role of Twitter, Facebook, LinkedIn & Co. in modern supply chains. And indeed - social media has become an integral part of SCM across all industries.
A paper by Daniel E. O’Leary on the use of social media in the supply chain explains what the big advantage of social media is from an economist's perspective: the gathering of information in order to reduce asymmetric information (let us remember from economics that asymmetric information is a type of market failure that we love to avoid whenever this is possible!). 
And why is that? Well, in a supply chain, various pieces of information are bound to particular processes and cannot be accessed all at once by any individual. If information is now being drawn from a common basis, i.e. a common information platform, it can be spread more evenly across the different sections of a supply chain. This platform (I named it that way to make the idea more tangible) is then not only fed by experts (which is usually the case) but also by customers (who now become directly involved in the supply chain process).
O'Leary further elaborates on the effects of social media on SCM (I present only four out of five as one of his arguments does not seem to be very compelling):
  1. The integration of information into supply chain transaction processing systems (e.g. RFID)
    • Social media provides a new platform (he calls it "context") via which information about supply chain events can be communicated and shared
  2. The change from unidirectional to multidirectional communication
    • Experts and customers are directly involved in the supply chain process and turn communication between those in the supply chain (company) and themselves into a dialogue
  3.  Insights into [potential] customer's thoughts that could otherwise not be gained
    • [Reputation of company]
    • we remember from statistics - the larger the sample size, the more reliable our findings, i.e. the risk of  asymmetries of information due to a biased source of evaluation can be reduced
  4. The increase in velocity when it comes to the generation and processing of information
    • In particular when incoming knowledge through social media is directly linked to knowledge management systems, i.e. the system is being fed more quickly
To illustrate some of the results of the aspects mentioned, it might be worth looking at this chart, as it clearly and in a very concise way shows the positive affects on the supply chain:




In addition to the advantages of social media in SCM already described, there are even more benefits. Ed Rusch, who is vice president of corporate marketing at Elemica, emphasizes in his article "Using Social Media In The Supply Chain" the potential for innovation and improvement of existing processes implied in the use of social media in SCM. 

But - can all these findings be quantified? The answer is yes! Apparently, the logistics and supply chain industries can generate profits from the use of social media.
In the area of market intelligence, customer engagement, business intelligence, and leads, companies reported a significant impact of social media use (based on a survey: click here):


Also very interesting is the finding that these companies found LinkedIn and Twitter very beneficial (55 - 60%), while only 15% made the same statement about Facebook.

Although I tried to base this blog article (at least this time) less on personal experience but more on academic papers and professional articles, there are still some questions that could not be answered:
  1. Apart from the increased velocity of generating and processing information due to its easy accessibility - is social media really the unique tool described in O'Leary's paper? When a company Facebook or Twitter, it still needs followers in order to be able to spread its message. So where is the big difference to, let us say, frequent updates on the company's website or e-newsletters? 
  2. A company, as already mentioned in question 1, needs followers. And the followers should and will be in particular customers and potential customers. But - I need a very good reputation already BEFORE I can use social media tools efficiently due to the fact that only if the company and its products were popular, people would like to or at least consider to follow it.
  3. Also, especially when the company IS popular, there might be some people who just try to use the company's profile for their own purposes. The more people (and this holds true for a virtual room, too!) are gathered in one place, the higher the risk of uncontrollable events.
  4. And finally, although the impact-study mentioned in the last paragraph of my blog gives some basic information on the benefit of social media use in SCM, it does not provide us with "real" facts and figures. It would be very interesting to know what an impact of 80% means in financial terms.
Have a great day and please contact me if you know the answers to any of these questions! :-)

Best,
Kyra

________________________________________________________________________
Sources:
  • http://www.mbtmag.com/articles/2014/08/using-social-media-supply-chain
  • http://csuitepen.files.wordpress.com/2013/03/social-2.png
  • file:///C:/Users/reisefreak/Downloads/SSRN-id1963980.pdf
  • http://blogs.dcvelocity.com/productivity/2014/10/the-logistics-and-supply-chain-industries-are-realizing-benefits-from-social-media.html





Kiva Systems - Adding Robotic Technology to Warehouse Operations


Kiva Systems - Adding Robotic Technology to Warehouse Operations
 Ian McIntyre, 11/24/2014

In the past warehouse operations have typically hinged on two roles, pickers and packers.  Pickers would travel throughout the warehouse, selecting goods that had been ordered by a customer.  Those goods would be given to a packer, who would then prepare the order for shipping.  These two components would work together, with the picker insuring the packer had a steady stream of the right goods to be packed for shipment.  Kiva Systems, based in Massachusetts, has developed a robotic-based system that entirely transfers the role of the pickers to robots leaving the packers as the sole human element.

The Kiva system is simultaneously incredibly simple and dauntingly complex. Hundreds of orange robots the size of suitcases are built to transport carefully designed modular shelving units.  These shelving units are organized into groups 2 wide and 5 deep, creating what is effectively a street system of "blocks" with open "streets" running in between them.  The robots can drive under a shelving unit, lift it up over them (so the footprint remains the same), then carry the shelving unit over to where the packers are packing.  A number of algorithms coordinate the movement of robots so there are no crashes, and designates what goods are on what shelving units so the robots can bring the right shelving units to the packers.  At that point the packer just grabs what they need off the shelf right in front of them, after which the robot brings the shelving unit back to the "human exclusion zone" where are the shelves are organized.



 



The robots cover an average of 12 miles a day and only need to spend 5 minutes out of every hour charging.  Amazon was so impressed by this technology and the possible impact it could have that they bought out Kiva Systems in March 2012 for over 700 million dollars.  Since then most of Kiva's work has been exclusively with Amazon, as they work to refine their systems in a proprietary manner. 

While Amazon has found a use for it in their fulfillment networks, the question is what is the next step for this sort of technology?  While this system may work in a massive warehouse with hundreds of thousands of SKUs, does it scale down to smaller operation?  A break-even point definitely exists where it becomes less costly to use employee pickers than robotic pickers, but the exact location of that point is difficult to locate.  Lacking sufficient background or data, I imagine its on the larger end of the spectrum, as the fixed up-front costs of retooling an entire warehouse and purchasing the robot units needed is definitely costly and not to be taken lightly. 

Another question to ask is if the picker-half of the picker-packer duo can be automated, is there a way to move in a direction where the entire warehouse is automated?  In some industries this is easier to do, especially when the product is uniform.  My father used work at a plant that made bricks, and while as a company they were technological dinosaurs, he took me to look at their process and it was easy to see how much of the work in their warehousing operations could be executed by robots since the dimensions of the objects being shipped were so similar.  For Amazon, where they need to pack everything from jackets to computers to chairs, it may simply be too difficult to develop robotic packers that can handle all those different sorts of objects.  One solution may be to develop specialized robots for different types of goods (one robot only packs clothes, another only packs small electronics, etc.) but programming them to handle every single possible SKU is likely beyond the realm of feasibility.  With specialized robots it also would be difficult to adapt to changing orders, as bottlenecks may form (new fashion line comes out so everyone orders clothes, but one clothing packing robot would be quickly overwhelmed) but in this case human packers who can adapt are able to handle every type of good that comes their way.

While the future of Kiva's robotic picking fleet remains to be seen, it will certainly be interesting.  A huge number of companies stand to possibly benefit by implementing the same or similar technology.  My question to you is what direction should Amazon take with Kiva technology?  Should they spin it out and make it available to the market as a business solution (similar to how their cloud services evolved?) or should they keep it proprietary to maximize their business advantage? Should they look to explore if humans in the packing process can be replaced like they in the picking process, or is that a futile effort and a waste of money?

Or should they look to form the worlds first robotic ballet company?  Who knows what direction Amazon will choose to go with Kiva.



Additional links, sources, and resources:
http://en.wikipedia.org/wiki/Kiva_Systems
http://www.wimp.com/kivarobots/
https://www.yahoo.com/tech/amazons-warehouse-robots-at-work-and-play-103129789109.html
http://guardianlv.com/2014/11/robots-serve-amazon/

Re-inventing the warehouse by inverting the roles of humans and robots: Kiva Systems

Today, eCommerce requires that global product companies have the ability to deliver their product to the customer at the very least, on an expected delivery date. Reducing the time of that expected delivery date while still maintaining accurate predictions is the key to winning market share in many industries. One new technology helping businesses reduce their expected delivery time is the Keva System. 

As shown in the video below Kiva Systems is deviating from the traditional warehouse model by inverting the usual roles humans and products take on. In a traditional warehouse, products are stocked on shelves in aisles of large buildings and when orders are received humans walk the aisles and retrieve the particular product for shipping. In the Kiva Systems model, human employees stay stationary packaging products for shipment while robots continuously bring them inventory. The process is more efficient and allows for warehouses to actively organize themselves bringing more popular items to the front and keeping less popular items toward the back or even in mezzanine floors for more storage. 


The Kiva System represents a futuristic technological solution existing in the present to tackle the immense challenge of constantly cutting costs and improving the speed at which companies deliver products to customers. In the future, technology will likely be used in other increasingly innovative ways to work towards that goal of instantaneous delivery of goods to customers.

The Dark Side of Information Sharing: Protect yoself!


As the use of cloud computing is consistently on the rise so is the occurrence of “hacktivists.” These individuals are labeled as “sophisticated cybercriminals” who have the ability to cause operational disruption and intellectual property loss.[1] McKinsey authors David Chinn, James Kaplan, and Allen Weinberg explain that there is up to $3 trillion dollars lost due to the slowing down of technological and business innovation caused by cyber attacks. In the words of sweet brown, “Aint nobody got time for that!” [2] nor the available funds. In fact, enterprise-technology executives understand that there are necessary changes that must occur but these executives may not be heeding the warnings.

More organizations are investing in preventative methods for security protection. The department of Homeland Security explains that reactionary technology is not sufficient on its own and that security must be utilized as a “constant constraint on all cyber activities.” To further assist organizations the department of Homeland Security created the Defense-In-Depth Strategic Framework. There are six basic tenets in the framework[3]:
  1. Know the security risks that an organization faces
  2. Quantify and qualify risks
  3. Use key resources to mitigate security tasks
  4. Define each resource’s core competency and identify any overlapping areas
  5. Abide by existing or emerging security standards for specific controls
  6. Create and customize specific controls that are unique to an organization


More organizations are investing in sourcing software from public cloud environments. These methods come at a great cost. McKinsey reports that corporate spending on third-party-managed and public-cloud environments will grow from $28 billion (2011) to more than $70 billion in 2015.[4] This does not include the cost of building and accessing private cloud environments. For most companies the investment in accessing public cloud environments is worth the price tag as some executives claim to achieve up to 60-70 percent savings through “software-as-a-service” alternatives.

Understandably, these savings provide very attractive incentive to host public and private cloud sourcing. However, it must be simultaneously understood that preventative methods for security protection are crucial. The greatest issue of cyber hacking is that it greatly reduces an organization’s competitive advantage, as they must slow down operations to address the attack. Obviously the risk of an attack is worth it to achieve much more efficient supply chain networks, however executives much remain vigilant against cyber attacks and should equally invest in a variety of cyber security methods.

Aside from this it is my thought that some cyber hacktivists may be motivated by the privatization of cloud access. They may be driven to reduce cost of access, leveling the competitive advantage experienced by companies with the highest monetary capacity. With the knowledge that overall cyber security for every organization is the most socially efficient outcome for operational costs and business innovation, is it ethical for protection to come at such a great cost?