"Go down the list,” says Steve Simmerman, senior director of sales at JDA, a supply chain software company. “Sears, JCPenney, Target in Canada. They weren’t able to adapt fast enough.” Target, awash in technology and inventory troubles from the start, fled Canada after only two years in business. Simmerman suggests other major retailers could also be on the brink for failing to adapt to changes ripping through the digital supply chain.
JDA is a software company that makes programs that manage every facet of a supply chain. “Ten years ago, a retailer never had to worry about shipping the same day,” says Simmerman, after hosting a panel in Vancouver on tech trends in the supply chain at the Cargo Logistics Canada conference in February. “Now, it’s ‘Give it to me in two hours and I’ll pick it up in the store.’”
Not long ago, product makers chose how many units to make and how to distribute them, and retailers controlled when and how to sell it, Simmerman says.
“I can do all that on my phone right now. If I don’t like your price, I’ll go to the next guy. If I don’t like his delivery, I’ll go to the next guy.”
Now, online shopping and social media have made consumers more aware than ever about their options, industry insiders say. The supply chain went from being a one-way street to a feedback loop that relies on new technologies as well as consumer-based demand planning, forecasting and promotion.
Based in Scottsdale, Arizona, JDA launched in 1985 and is now used by 4,000 customers around the world, including 20 companies in the Gartner Supply Chain Top 25.
JDA’s programs add intelligence to every aspect of the chain, such as scheduling trucks with an automated assessment of warehouse scheduling. “I’m not going to send five trucks to the warehouse when I know the workload of the warehouse, and I won’t have back doors available,” Simmerman says. “I have to get better at planning the pickup or delivery of those goods. If I don’t, I’m losing money.”
He says JDA’s programs also help to optimize labour.
“We plan the labour; we predict how much we need. We monitor it in real time throughout the day,” he says. “I need four people here, two people here, and I can let these people go home. The savings are absolutely tremendous.”
Simmerman says that a typical fulfilment distribution centre is running at about 60% productivity. “You’re taking 40% of that cost and just throwing it out the window. It’s amazing.”
Brian Best, who runs London Drugs’ warehouse and distribution network, agrees.
“You have to make sure that you’re always looking out for what the customers’ needs are,” Best says. “I think that’s what we do well as a retailer – we always have – but now we have to do it even faster. That’s the bigger challenge.”
Meanwhile, a made-in-Canada development is primed to further shake up the global supply chain: robots.
Dematic Canada, based in Mississauga, Ontario, is now producing and testing several automated inventory-picking systems to add to its stable of intelligent conveyor systems, automated guide vehicles and automated storage and retrieval systems.
The company invests more than $70 million per year in research and development, says Nick Klein Schiphorst, Dematic Canada’s director of business development.
“An order that leaves the building with an error is very costly for any company to have to correct that error.”
Klein Schiphorst adds that the robots are now more accurate and efficient than humans.
The company has created a robot arm that sifts through and identifies items as small as aspirin in inventory totes.
“We’ve been working on it for many years,” Klein Schiphorst says during the tech panel in Vancouver. “There are two key components that we’re not ready for us to commercialize as of yet, but they have come far enough that we can now pick orders more accurately than a human can. There could be six or seven SKUs [stock-keeping units] in a tote, and the system can actually recognize which one it needs to pick and it can shuffle around.”
Dematic is looking for a third-party company to start beta testing of the technology.
We live in a golden age of technology and information, but that information must be converted into usable intelligence, says Rick Cleveland, director of education with the Supply Chain Management Association advocacy group.
“There are now more items connected to the Internet than there are people on the planet,” Cleveland says. “How do we take this unstructured, unfiltered data and turn it into actual information?”
He says Canada has always provided a good testing ground for new tech in the supply chain due to the modest size of most companies here.
“It just becomes the natural thing for Canadians to be better communicators internally. We are early adopters in a lot of ways, but we still don’t have the funding and we are not a big enough market to justify the cost.”
Simmerman says the argument is easy to make for stakeholders throughout the supply chain: change or die.
“These are major paradigm shifts, because organizations weren’t built this way,” he says, adding that most supply chain companies still have closed-off silos of methods and technology. “The whole game is changed.”