Digital Transformation of the Supply Chain – strategic partnerships promise to mark the market

The issue of digital transformation in the supply chain is not new. Whether due to the need to be more efficient and reduce costs, improve the consumer experience, improve decision-making or transform the business model, the agenda has been on the agenda of companies for some years now, and this agenda has only been accelerated with the pandemic in 2020. Check below some major partnerships announced from May to here in the world, with regard to providing solutions for the digital transformation of the supply chain.

FedEx and Microsoft

At the end of May 2020, the FedEx and Microsoft Announce the Beginning of a Partnership which should continue for a long time, with the aim of launching logistical solutions that improve visibility in supply chains. The first product of this collaboration was titled FedEx Surround, and it combines FedEx's logistics network with Microsoft's cloud services and ERP platform.

In more concrete terms, the solution promises real-time analytics in delivery processes, in a very granular way, reaching the CEP level, for example. Data would be captured with FedEx IoT technologies (such as SenseAware), and analyzed with Microsoft AI and machine learning tools. In certain industries, such as the healthcare segment, monitoring factors such as temperature is critical. Having greater visibility and intelligence behind this data can also benefit companies in cargo security issues, anticipating events with proactive action taken, or identifying improvements in the delivery process.

Many in the market see the partnership as a joint effort to increase competition against Amazon. Last year, in August 2019, FedEx did not renew the Ground and Express contracts it had with the e-commerce giant, which with each passing day expands more and more its capabilities as a logistics operator.

Blue Yonder and Panasonic

The partnership between Blue Yonder (formerly JDA) and Panasonic actually started in April 2019, when the two companies formed a JV to jointly launch solutions for the manufacturing, logistics and retail industries in Japan. In June 2020, however, Panasonic made an equity investment that gives it a 20% minority stake and a seat on Blue Yonder's Board of Directors. the intention is accelerate the development of solutions in the search for an autonomous supply chain.

Blue Yonder is one of the most well-established providers of supply chain management solutions in the world, and Panasonic's IoT capabilities are likely to be one of the biggest draws to the partnership. For Panasonic, the investment reflects the business transformation process it is going through. Until recently, the business focused on selling hardware, but it will now include software, consulting and other services. This business transformation in hardware companies is something that has been going on for a long time in the market (“software-empowered hardware renaissance”), largely because of reduced revenues from the commoditization of hardware products, and across the world. opportunities available in the software market.

In Japan, Panasonic has supplied supermarket and McDonald's cash registers for decades. However, two competitors hold 80% of this market, and the company has not grown in the segment, which must be closed at the end of the fiscal year, in March 2021. Meanwhile, in the supply chain, we face challenges in sales forecasting, inventory management, optimization of deliveries and the use of labor, chain visibility, … The opportunities for developing and improving solutions are countless.

LINK – ecosystem of large companies with startups

In early August, the Innovation Endeavors and Sidewalk Infrastructure Partners (SIP) announced LINK: a global effort to unite large companies and startups, with the aim of establishing an ecosystem to accelerate innovations within the supply chain. Innovation Endeavors is an investment fund co-founded by Eric Schmidt, who was CEO of Google from 2001 to 2011. SIP is co-led by two Google veterans, and is spun off from Sidewalk Labs (an Alphabet subsidiary focused on innovation planning and urban infrastructure).

Something that should be emphasized in this initiative is the term “ecosystem”. The idea is to put big industry players in the same room as startups, and focus on solving problems and accelerating the development of solutions, leaving aside the sales pitch aspect. Startups gain direct access to information from within multinationals, apart from contact with top executives from these companies and the opportunity to convert them into customers. For multinationals, the opportunity is to solve their problems, and to do so at a faster pace than traditionally done. In addition, it is a way to keep the flow of innovations and fresh ideas in the business.

Companies and startups started meeting about a year ago, in 2019, but covid-19 and its impacts on global supply chains gave the initiative an emergency character. Supply chains were already struggling to keep up with the changes and demands of a more digital world, and, with the pandemic, problems such as lack of integration and lack of visibility became extremely evident. Thus, the project was announced in a more “official” format, under the name “LINK” on August 6, 2020. Among the major players in the industry, are participating so far: BMW, Carter's, DHL, Estée Lauder, Georgia Pacific, PepsiCo, Shopify, Starbucks and US Postal Service.

Collaboration is one of the great lessons of the crisis

Among the many lessons we can learn from the pandemic, perhaps one of the most valuable is the power of partnerships and collaborative initiatives, and how these can be structured in a sustainable way, to the benefit of all sides, generating results that are much greater than than the sum of separate efforts. More than that, partnerships can be decisive for the future of a business, as we see in the case of Panasonic. Other technology companies, such as Cisco, have been on the “software journey” for many years. Panasonic has only recently embarked on this trajectory, but it does so with an extremely established partner in a market that is overflowing with opportunity.

Digital Transformation of the Supply Chain and Reinventing the Supply Chain will be two aspects addressed in the 26th International Supply Chain Forum, which ILOS will promote between the 13th and 15th of October, for the first time 100% online. The increasingly digital world already brought several challenges for supply chains and their professionals, and the pandemic intensified all these effects. Despite the countless adversities, we have seen fantastic and creative solutions, and we have learned many lessons. We are preparing a very rich content, be sure to check it out! Guarantee your participation now!