James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP?s Supply Chain Quarterly and a staff writer for DC Velocity.
Planning to automate your warehouse? Then you'll need more than just the right blend of software and material handling equipment. You'll also need to have the right team of systems integrators on board. Since it's the integrators' job to make sure the facility's equipment and software can "talk" to each other, choosing the right contractor for the job is key to ensuring the smooth flow of product in and out of the distribution center.
1. Be wary of "alliance bias." Many times, systems integrators have ties to specific developers of supply chain software—in particular, warehouse management systems (WMS). While that may be a good thing—for instance, it's a good indication that the integrator knows the software inside and out—the arrangement could also create a potential conflict of interest. Either way, it's something you as a customer will want to be aware of.
"Most of the systems integrators have 'pay to play' relationships with the software community," says Marc Wulfraat, president of the firm MWPVL International Inc. "For example, in the WMS industry, you might pay $25,000 to 35,000 per year to a Manhattan or RedPrairie to be a certified systems integrator. Because it is expensive to develop the resources and to pay this fee, most services firms can only afford to do this with one or two software firms. As such, it is important for the company to realize that the system selection process will most likely be heavily skewed toward the WMS firm that the integrator is paying to be a partner with."
And it's not just software. Many times, integrators also have alliances with equipment vendors, which might even include financial arrangements that could tilt the balance in a given supplier's favor. Wulfraat notes that this is particularly important to keep in mind if your company is asking the integrator for a fixed-bid turnkey quotation that includes both the services and equipment. That's because unless the client instructs otherwise, an integrator will likely obtain the equipment from vendors that provide financial incentives, Wulfraat warns.
2. Find out what past clients have to say. Background checks are a key part of the due diligence process. But don't just ask the integrator for references, says Steve Martyn, chief strategic officer of Invata Intralogistics, a systems design and integration firm. Instead, ask for the names of the integrator's last seven clients. Then contact each of those companies and ask whether the integrator completed their projects on schedule and whether the project ran into any obstacles.
Before contacting past clients, though, Martyn advises managers to get some background information on their projects from the integrator. As for what to ask for, he suggests obtaining the written functional specification documents for any project similar to the one being planned. Those documents should outline goals and objectives of the project with specifics regarding equipment, engineering, controls, interfaces and software requirements. The document should also list the precise areas of responsibility for the integrator and the software vendors.
At the same time, the logistics manager should be looking to make sure the integrator has relevant industry experience. "Once your expectations are defined, SIs [systems integrators] being considered should include demonstrable experience in your industry or like industries," says Robert Nilsson, vice president and general manager of software and supply chain intelligence at systems integrator Dematic. "For example, if you make frozen pies, a company with experience in handling frozen pizza will probably do the trick."
Donald Derewecki, senior business consultant at the transportation engineering and design firm TranSystems, has one other tip for managers conducting background checks. When reviewing the cadndidate's past projects, he says, look for evidence of creativity in deployment. An integrator's past work should show a range of design solutions tailored to the individual customers' requirements, he says. "You don't want to only see scaled-up or -down versions of the same operations design."
In the course of their investigation, companies may find that many of the staffers assigned to them aren't actually employees of the systems integration firm but instead are independent contractors. Wulfraat doesn't see that as cause for concern. "Independent contractors usually are transparent to the end customer because they carry a card and appear the same as employees," he says. "Sometimes companies ask to have this spelled out, but I don't think that it's overly important since many of the best and most experienced people will be independents that work consistently for the same firm. Sometimes this is for tax purposes; other times it is because these people just want to be independent."
4. Look for a partner who will be in it for the long haul. Finally, when selecting a systems integrator, Nilsson urges logistics managers to evaluate the prospective supplier the same way you'd evaluate a personal investment. He recommends that managers ask such questions as: Is the integrator consistently profitable? Has the firm grown or shrunk relative to peers in the market?
As much as a logistics manager should strive for the best possible deal, he says, a company should pick an integrator who will be a partner who can "grow, invest, develop, and maintain" the infrastructure put in place in the distribution center.
Says Nilsson: "Look for partners that are willing to take you from strategy to design to implementation to long-term care."
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.