As supermarket chain Giant Eagle Inc. can attest, when it comes to software, more isn’t always better. Sometimes, you can accomplish more with a single multifunctional platform than with a host of specialized systems.
The Pittsburgh-based retailer found that out a couple years back when it consolidated all of its existing transportation systems onto a single platform. Up until that point, Giant Eagle—which operates an extensive trucking network to serve stores throughout Pennsylvania, Ohio, West Virginia, Maryland, and Indiana—had been using four different software products to manage transportation. But as part of a broader business transformation initiative, the company had decided to overhaul its IT (information technology) infrastructure. Among other things, that would mean consolidating systems in order to cut IT maintenance and software licensing costs, as well as create better interfaces for data exchange, according to Ann-Marie Daugherty, vice president of logistics for Giant Eagle.
In 2015, Giant Eagle switched over to a transportation management system (TMS) from supply chain software specialist Manhattan Associates Inc. The new TMS allowed Giant Eagle to eliminate three of its four transportation software applications, including inbound procurement, inbound scheduling, and outbound routing, Daugherty says.
Along with the software upgrade, Giant Eagle changed its organizational structure, moving to a centralized routing model instead of relying on its six distribution centers (DCs) to create their own delivery routes. With a central office now able to “see the whole picture,” the grocery chain has increased its use of cross-docking to consolidate orders to stores, Daugherty reports.
Together, the two initiatives have produced significant improvements in transportation metrics such as trailer cube utilization, the number of stores served by each trailer, empty miles driven, and percentage of backhauls. Stores are replenished more frequently too. “We now send shipments to our stores seven days a week, which is very unique [in the industry],” Daugherty says. “Our health and beauty care (HBC) line doesn’t actually need delivery seven times a week, but it gives our stores the ability to order every day, and it fills out our trucks.”
By deploying centralized routing and cross-docking strategies, Giant Eagle has been able to combine shipments of groceries and HBC items into a single truck, instead of sending them in different vehicles. That has led to efficiency improvements such as a reduction in the total number of trailers “bumping the dock” at each store. “The average store used to get 14 trucks per week across all commodities, and now it gets 11 trucks per week,” Daugherty says. “That’s because of the consolidation we are doing before we ever get on the road to the store.”
Despite all the gains it has realized to date, the company is not yet done with its supply chain IT overhaul. Giant Eagle is now creating an in-house order management system (OMS) to feed orders into its TMS, which it plans to roll out this spring.
More than 40.5 million speakers of Spanish reside in the US, making it the country’s second most common language, according to an infographic by MotionPoint.
In the infographic, the company, provider of a turnkey solution for multilingual websites, explores the opportunities that the presence of Spanish-speakers affords US marketers.
For instance, the combined purchasing power of US Hispanics was $1.4 trillion in 2016, accounting for 10% of the US total.
That’s a big opportunity for companies, and some are already on board, such as Amazon, which offers a Spanish-language version of its site for US customers.
To see more about Hispanic and Spanish-language growth on the Web, check out the infographic. Just tap or click to see a larger version:
Specialty bulk food chain Bulk Nation has made its online retail debut.
The Tampa, Fla.-based grocer on Wednesday went live with an Internet store, accessible through BulkNationUSA.com.
To mark its e-store’s grand opening, Bulk Nation is offering free shipping within the contiguous United States on purchases exceeding $69.
Through the online store, shoppers can access Bulk Nation’s wide assortment of more than 3,000 specialty bulk food items, including dried fruit, nuts, flour and spices, coffee, tea, ancient grains, local raw honey and candy, as well as vegan, non-GMO and organic products.
Bulk Nation
Through the online store, shoppers can access Bulk Nation’s wide assortment of more than 3,000 specialty bulk food items.”This is a momentous era for our company,” president Clay Donato said in a statement. “We are excited to launch this new store and reach customers nationwide who are ready to experience the thrill of shopping hundreds of popular and hard-to-find products.”
Bulk Nation opened its first store in 2014 in Brandon, Fla. The company said its bulk shopping concept stands out from other retail grocers by leaving the quantity purchased in the control of the customer, letting them take as little or as much as they want.
Currently, the retailer has nine stores, mainly in west central Florida. Due to open soon is a store in St. Cloud and a second Lakeland location.
In fresh foods, quality is critical—but hard to define and measure. Here’s how retailers can make the quality investments that yield the highest returns.
Just a few years ago, European consumers in search of high-quality fresh food would never even have considered going to a discount store. Supermarkets were the only modern format with credible offerings in fresh fruits, vegetables, meat, fish, dairy, baked goods, and delicatessen. That’s no longer true. In recent years, discounters have significantly upgraded their product range and presentation in fresh-food categories.
According to surveys in several European countries, consumers believe that discounters’ fresh products are as good as—and sometimes even superior to—those at supermarkets, and lower priced to boot. This perception is worrisome to supermarkets, and rightly so, because fresh products drive store traffic, basket size, and customer loyalty. Recent research has shown that if customers are satisfied with a retailer’s fresh offerings, they will shop there more frequently, spend more money on each visit, and start to buy from the retailer’s other departments as well. For instance, a leading retailer found that more than 50 percent of its loyal customers would highly recommend its fruits, vegetables, and meat departments (compared with 20 percent for the health and beauty department, or 13 percent for sweet snacks). Another large grocery retailer found that fresh-food quality—not price—was the number-one driver of satisfaction among its customers.
The intensifying competition in fresh food means that retailers must become known for consistently high-quality products. That’s no easy task. Grocers and discounters are all too familiar with the execution challenges of selling fresh food. The products are highly perishable. The assortment is large and diverse—a typical delicatessen counter alone has more than 100 products. Each offering has different handling requirements, and the quality of goods that suppliers provide can vary from week to week.1Which products are worth the investment in higher quality? Out of tens of thousands of them, how can a retailer know which ones have the greatest influence on perceptions? Better-tasting garlic, for example, may please some consumers, but in most Western European countries, that alone won’t substantially increase sales or customer loyalty.
Furthermore, quality can be difficult to define and isolate. When consumers judge the quality of fresh-food products, they take into account much more than just taste and appearance. Depending on the item in question, other intrinsic attributes, such as smell, consistency, and ripeness, can play important roles as well. External factors—for instance, packaging, pricing, and advertising—may also affect consumer perception.
In our experience, retailers can achieve distinctiveness in quality by following a three-pronged approach: conducting structured consumer research using dynamic surveys, systematically identifying and addressing the root causes of quality problems, and instilling a quality-focused organizational culture to ensure continuous improvement. The impact of using such an approach is almost immediate: at one European food retailer, sales of fresh produce rose by as much as 24 percent in certain categories, and customer satisfaction and loyalty increased dramatically.
Conduct dynamic consumer research
As one retail executive lamented, “We have tens of thousands of SKUs; I don’t know where to focus our quality efforts.” The most successful retailers choose their focus areas by figuring out what matters most to consumers—they conduct consumer research to zero in on the exact products and product attributes that shape perceptions of quality.
The idea of quality-focused consumer research can be unappealing and overwhelming to fresh-food retailers. They don’t relish the thought of asking throngs of consumers an endless number of questions about tens of thousands of products, and possibly ending up with nothing but generic insights that don’t provide clear direction on what or how to improve. But we know from experience that consumer research can be rigorous and rich without being unwieldy: the secret is in carefully structured, dynamic surveys—in which questionnaires automatically route respondents to new questions based on their answers to previous questions.
To kick off a major quality-improvement effort, a leading European grocery chain conducted in-depth, dynamic surveys of more than 8,000 households in its markets. Through a series of structured questions, the retailer identified fruits, vegetables, and meat as the categories that most influenced the consumers’ decisions about where to shop.
The retailer then sought to find out which products in those categories made the biggest impression on consumers. Again using the dynamic questionnaire, it identified some 50 products—out of 7,000-plus in the fresh categories—that met three criteria: the product strongly affected the consumers’ opinions of the quality of a store’s fresh offering, consumers gave the retailer lower marks than competitors for the quality of that product, and the product accounts for a substantial part of the department’s revenue. In the meat department, minced meat and chicken fillets met these criteria (Exhibit 1). Other products that met the criteria included strawberries and asparagus. The retailer prioritized these 50 products for quality improvements.
Exhibit 1
Another set of structured survey questions elicited the attributes that most affect consumers’ quality perceptions of each high-priority product. For minced meat, the top quality indicators included taste, roasting properties (especially water content), and smell. For strawberries, what mattered most to consumers were juiciness and smell—not color and size, as the retailer had initially thought.
Analyze and address root causes
Conducting structured consumer research is crucial to unearthing actionable and precise insights, but it’s only one part of a robust data-gathering exercise. The retailer also conducted “blind” tastings of products, performed chemical analysis on the products, and linked the results to the consumer research. In this way, the retailer determined which quality issues were intrinsic to products and which resulted from the consumers’ perceptions of them. For instance, if the chemical analysis showed that the retailer’s strawberries had a high brix level (a measure of sweetness) but consumers complained that the strawberries were bland, the issue was perception related, not intrinsic.
Category managers and product buyers, working with suppliers, then held intensive workshops to hypothesize about the root causes of each quality issue. They analyzed the supply chain “from field to fork,” looking closely at how each stage of the supply chain contributes to or detracts from the quality of products. For instance, if a fruit’s color strongly influences the consumers’ quality perceptions, what factors affect the color? Is the fruit variety a factor? Is the fruit getting discolored during handling or transport? Is the lighting in stores somehow altering the fruit’s appearance?
Such workshops are an effective means of fostering a constructive dialogue, getting the right people to think about and collaborate on quality, and challenging assumptions and hypotheses. And as this retailer discovered, bringing in suppliers to participate in root-cause analysis and problem solving can be a powerful way to generate ideas for improvement.
One end product of the workshops should be a targeted action plan that addresses the root causes of perceptions of poor quality. Initiatives could entail switching to new types or varieties of products, adjusting their specifications, or changing certain aspects of the supply chain, store operations, merchandising, or marketing. The aforementioned retailer, for example, introduced a juicier variety of strawberries. For minced meat, it changed its product specs (lower water content and fewer additives). Within weeks, the retailer came up with precise quality-improvement measures for all 50 items.
An end-to-end quality program—including designing survey questionnaires, conducting market research, analyzing results, identifying the root causes of quality problems, and planning and launching quality-improvement initiatives—typically takes three to four months. The exact duration depends on how much market research is already available, the number of products and departments in scope, and the size of the survey sample.
Instill a quality-focused culture
Executing this disciplined approach shouldn’t just be a one-off undertaking. Rather, it should be part of an ongoing quality-management process, helping to embed a continuous-improvement mentality into the organization’s way of working. A retailer should articulate its quality aspirations—for example, “become number one in both technical and perceived quality in the meat and seafood departments.” It should then define its quality targets and agree on testing tools, guidelines, timing, performance indicators, resources, and roles and responsibilities.
To instill a quality-focused culture, retailers must pull the four levers defined in McKinsey’s influence model. Exhibit 2 shows a number of tactics that have proved effective in orienting mind-sets and behavior toward a focus on product quality.
Exhibit 2
Role modeling by senior leaders, for example, can go a long way toward creating awareness and buy-in. One retailer published photos (on its intranet and in internal newsletters) of the CEO participating in blind tastings.
To foster conviction and understanding, a European retailer has its category managers and sourcing staff regularly test the quality of fresh products. Employees buy items from the retailer’s stores and those of competitors, compare them, conduct informal blind tastings at the office, and brainstorm ideas for quality improvements.
Capability building is an indispensable element of a quality-focused culture. Retailers should train and coach category managers and purchasing staff to analyze consumer-research findings, to detect the sources of quality problems, to look across the entire value chain for hypotheses about root causes, and to develop and implement action plans.
Finally, formal mechanisms should reinforce the quality culture. As an executive at a leading European retailer said, “Our category managers are trained to focus on sales and margins, so it can be difficult to convince them to give quality the attention it deserves.” Retailers should therefore incorporate quality-focused metrics into the performance-management system and link them to compensation schemes for category and sourcing managers.
We’ve found that a quality-focused culture makes employees much more engaged: it generates energy and excitement, and they begin to take more pride in their products—in part because the quality improvements are immediately obvious, both in the stores and in the retailer’s financial results. Indeed, the payoff for disciplined quality programs includes not only motivated employees but also significantly higher sales, greater customer loyalty, and a true competitive advantage.
As technological innovation and creativity continues at pace, the potential ramifications for businesses and their supply chain are huge. Therefore, building a roadmap for effective performance as well as developing the ability to diversify, adapt and react will all become cornerstones of success within the immediate future.
There can be little doubt that achieving excellence within the supply chain is fundamental – but it can also be overwhelming. This is especially the case when we consider a shift in focus towards an agility and responsiveness that is required to achieve genuine end-to-end supply chain visibility.
As VP of Industry Strategy for Manufacturing, EMEA at JDA software, Hans-Georg Kaltenbrunner is charged with benchmarking intelligence, strategy setting and definition for JDA’s digital supply chain. As such, there are few people better placed to comment on what the framework for success should look like.
Understanding the digital supply chain
“The digital supply chain, for most people, tends to begin with enhancing their scope of what traditional supply chains cover,” Kaltenbrunner tells us. “It typically involves the industrial Internet of Things, devices, track and trace of goods and so on. It’s about the incorporation of data sources and big data, such as social media and weather news, to then take a judgement on what all of this information really means for me, my goods and the execution within my supply chain,” he continues.
This vast amount of information brings with it a separate issue and a new challenge that Kaltenbrunner has identified: “We have so many big data sources available to us these days that the problem now is there’s almost too much information out there. The challenge these days is making a call on what is important and what is just noise.”
This naturally leads on to another topic of discussion that Kaltenbrunner feels is crucial: supply chain visibility. “Everything has become more dynamic and more real time. We’re more active than we were in the past. When things did or didn’t show up it was almost a surprise, because there was little visibility around potential disruption. That is something we can now anticipate and then, where necessary, take counter measures.”
Industry 4.0
As a business strategy, Industry 4.0 will enable flexibility and agility with the digital supply chain and Kaltenbrunner has some very concrete thoughts on what this will mean in the future and how it will work. “For example, imagine a piece of metal that will eventually turn into a car body or a part of a car body. That piece of metal has the capability, via a small identifying device, to negotiate its way through the factory and find the operation centre that can do the job required. The piece of metal will tell a robot, ‘I’m becoming a Vauxhall model XYZ, for example, therefore you have to do this or that operation to me,’” he tells us.
“Similarly, on the transportation side, you then end up eventually with metal sheets that have been formed into the right shape for that particular car model and then the metal negotiates with the truck or lorry or vessel or air freighter and tells them, ‘okay, I need to go to this destination on the other side of the country so when do we leave? Can you take me? Is there a better option?’ This is a negotiation process and the whole supply chain then eventually becomes self-steering and self-optimising. In the past we’ve looked at management philosophies like ‘swarm thinking’, which is similar, but Industry 4.0 shifts this process from mass production to a position of ultimate flexibility where everything can be different,” he continues.
Dealing with disasters
Real-time visibility will increasingly become an expected element of an effective supply chain, particularly when it comes to dealing with natural disasters. Arguably, there are three main areas to consider here: preparing for a natural disaster, predicting it and then managing risk within the supply chain.
JDA work with its partner TransVoyant and uses its technology which employs advanced analytics on real-time big data curated from sensors, radar, smartphones, satellites, GPS, video cameras, and other devices to produce live and predictive insights to transform their supply chain performance. “TransVoyant provide data streams including track and trace information on where stuff is in the world, be it vessels, containers, trucks etc. Then we know, from a supply chain planning perspective, where things ought to be so we can steer the operator or logistics planner towards those things. Through predictive mechanisms and algorithms we can also predict that there will be an interruption affecting any particular shipment.
“You always have to consider probabilities,” he continues. “Say a vessel is on its way from the US coast towards a UK port and there’s a storm on the way. This could potentially disrupt the harbour operation. This may also affect the supply to a certain factory. With this information you can then make a decision that influences the vessel itself. For example, you could redirect it to a different port.”
Kaltenbrunner believes the value of this information is something that cannot be underplayed and will lead to a more intelligent supply chain. Early visibility of potential disruptions will allow businesses and organisations to plan production and distribution more effectively. Indeed, as our conversation draws to a close, he predicts a future spearheaded by innovation that will lead us to a point where previous cost issues and disruptions will be dealt with on a scale unlike anything we’ve previously experienced.
“We have more information and data points available to us than ever before. New technology, like machine learning and AI, has come into play. When a certain type of event occurs, these systems will be able to pick up, over time, what the best reaction towards any situation should be. We can then take precaution in preparing the most likely course of action and the operation needed to approve the action will be just one simple click.”
A completely automated warehouse inventory solution, developed by French companies Geodis and Delta Drone, will be fully operational by the end of 2018 after a successful trial period, according to a Geodis press release.
Industrialized production of the solution is under way. Drones will be able to capture inventory outside of normal working hours without disrupting operations or human intervention.
Employees will no longer have to do the difficult, time-consuming and sometimes risky job of picking inventory, leading to safer and more reliable inventory management practices.
For example, Argon, a Paris-based supply chain consulting firm, says inventorying a warehouse with 2,500 references would require 100 people over two days. If only done once a year, that can result in as much as a 10% margin of error.
Two more Paris-based companies, global 3PL Geodis and drone manufacturer Delta Drone, think they have the answer. Following two years of development and extensive testing in real operating conditions, they have developed a completely automated warehouse inventory system using drones.
“The tests conducted during this initial development phase show that the solution enables inventory to be managed reliably with rates close to 100%,” according to the press release.
Initially, the system will be used exclusively in Geodis’s warehouses, but once industrialized, it will likely be offered more widely and could revolutionize warehouse operations by accelerating processes and improving efficiency and safety.
Much has changed, and continues to change, in the transportation world. But one immutable rule remains: Service providers want to be paid as soon as possible. There’s another somewhat immutable rule, however: Getting paid quickly is easier said than done. Shippers have little incentive to pony up fast, even though it is good relationship practice to do so, especially in a period of tight capacity when it would seem short-sighted for a shipper to keep its carriers hanging waiting for payment.
It’s Richard G. Piontek’s job to smooth out the rough spots in the payment chain. As chairman of Carlsbad, Calif.-based factoring, or financial services, firm eCapital LLC, Piontek helps smaller truckers and last-mile service providers—a burgeoning segment given the growth of B2C (business-to-consumer) commerce—maintain their cash flows by getting reimbursed fast. Piontek joined eCapital in December 2016 after a multidecade stint that included the presidency of Redwood Supply Chain Solutions, a division of Redwood Logistics Inc., and leadership roles at Crowley Maritime Corp., freight forwarder and customs broker Livingston International, transport and logistics giant Schneider, and DHL’s Express and Global Forwarding units.
Piontek spoke recently to Mark B. Solomon, DC Velocity’s executive editor-news, about eCapital’s role in the ecosystem, how it developed a niche focusing on smaller players, and the role that blockchain technology could play in facilitating the payment process.
Q: Can you describe how eCapital got started and what services you perform?
A: In 1993, our two founders met for the first time in Los Angeles. Both were originally from South Africa. Shortly after meeting, the two launched a factoring business from a spare room with not much more than a desk and a thermal-paper fax machine. They began building a partnership that has allowed us to develop an enduring business helping small companies grow and thrive by gaining access to capital. Over time, the transportation segment became the primary industry they served, and that has evolved to what is now eCapital. Over the last 25 years, we have purchased billions of dollars of invoices and helped several thousand owner/operators and small fleets succeed by providing access to capital and predictable cash flow.
We provide invoice financing, or “factoring,” services to new entrants and small fleet capacity providers that are vital to the health of the U.S. truckload transportation capacity base. We manage carrier payables for brokerage-based 3PLs (third-party logistics service providers), accelerate payments to a growing list of last-mile delivery providers, and increasingly, act as a technology and services platform that powers the transportation settlement process for TMS (transportation management software) providers, visibility applications, and the new generation of digital freight matching innovators.
Q: There are a number of factoring firms that serve the transportation industry. What is different about eCapital?
A: We have a clear vision and are highly focused on the business that we’re in. For us, this means we are reinventing transportation financial services by accelerating access to capital and streamlining the flow of information and funds to enable shippers, carriers, and logistics service providers to adapt, grow, and thrive in the digital age. Second, we are a business with deep knowledge and experience within the markets we serve.
Q: To what degree have last-mile providers, which have gained prominence with the expansion of B2C commerce, been underserved in the development of factoring solutions?
A: To say the segment is “underserved” might be a bit of a stretch. I think I’d qualify that by saying that it’s somewhat underserved. I also think it’s fair to say that on the surface, when compared with other traditional long-haul segments, last mile may not appear to have embraced invoice financing (factoring) to the same degree—but the demand is there. Some providers strictly operate intra-state and are part of larger regional carriers that hold the service contracts with shippers—they have the capacity to settle quickly. But many do not, so we help those carriers grow.
Q: Do those providers have unique factoring needs relative to the truckload carriers that have been factoring companies’ traditional customers?
A: Yes. There are unique operational processes, technologies, and business rules that come into play and dictate how we efficiently process and manage last-mile transactions. Aside from that, the goal is the same: We enable owner/operators and small fleets to grow and thrive by providing predictable cash flow.
Q: What role do you see blockchain playing in the area of the industry that your company specializes in?
A: Finance and carrier settlements will be among the first, if not the first, widespread deployments for blockchain in transportation. I think blockchain will play a major role in reducing fraud, establishing security and visibility, and streamlining the entire settlement process. We are members of the Blockchain in Transport Alliance (BiTA) and look forward to working collaboratively with our peers to clear the way for progress.
Q: Are folks vesting too much in blockchain than the reality of its evolution calls for?
A: That depends on one’s perspective. If you like all the information in one complete and neat package before deciding where to invest, I suppose that’s one way to operate. I believe that advancements like blockchain tend to get deployed by industry leaders in about half the time that you expect. Said another way, if you think that blockchain has potential but that it won’t be realized in three years, just know that the winners will usually act, implement, and change the game in half that time or probably less.
Q: Have we seen a lengthening in shippers’ “days payment outstanding” (DPO) in recent years? Can you quantify it?
A: We have seen a trend of extended payment terms among commercial shippers, especially large companies. Given today’s capacity crunch, it’s counterintuitive as to why anyone would consider lengthening payment cycles as an effective strategy because it has obvious operational consequences. Asking carriers to finance a shipper with extended payment terms just doesn’t work well today—shippers will pay for it in rates and capacity.
I have seen survey results from the National Association of Credit Management indicating that some shippers are pushing carriers to accept payment in 90 days and beyond, as compared with the average of about 37 days. Reconcile that with our brokers telling us that paying carriers quickly helps build more durable capacity relationships. On the truckload side, taking 30-day carrier payment cycles down to 24 hours makes a difference to brokers who must compete for capacity.
In any case, DPO trends should be understood by mode, as ocean freight, truckload, and parcel have different payment patterns.
Q: Have digital tools streamlined the process?
A: Yes, and they will continue to evolve and proliferate for the benefit of all supply chain participants. From automated freight payment systems and carrier payment acceleration platforms that inject capital into the transaction to broader supply chain and trade finance applications, digital tools are helping to streamline the cash-to-cash (C2C) cycle throughout the financial supply chain.
More than 40.5 million speakers of Spanish reside in the US, making it the country’s second most common language, according to an infographic by 
