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June 16, 2017 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Trip Report: LLamasoft User Conference 2017 bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet Cartoon Caption Contest Continues bullet Trivia      bullet Feedback
bullet New Expert Columns bullet On Demand Videocasts

New Report

Supply Chain Executive Brief: How Distributed Order Management (DOM) 
and WMS Work Together to Power Omnichannel Supply Chains



Satish Kumar from Softeon and Kevin Hume from Tompkins International
Answer Key Questions on DOM and WMS



first thought


Supply Chain Graphic of the Week
What Do Procurement Managers and Executives Earn?


Amazon Roils the Grocery Sector

Nike Takes a Whack at SKU Counts
Why is US Productivity Flat?
Is US Manufacturing Glass Half Empty or Half Full?


May 15, 2017 Contest

See The Full-Sized Cartoon and Send In Your Entry Today!

Holste's Blog: Flexible Processes Are Key To Managing Volume Fluctuations

Weekly On-Target Newsletter:
June 14, 2017 Edition

Cartoon, Truck Drivers Going Away, Watson on the People Side, DC Capacity and more


This White Paper Discusses the Big Five Elements for Sourcing: Production Facilities, Raw Material Sources, Labor Pool, Logistics and Export Capabilities and Infrastructure.

Great Expectations: Supply Chain Flexibility

by Gary M. Barraco
Global Product Marketing
Amber Road

Six Keys to Driving Wholesale Distribution Success

by Henry Canitz
Product Marketing & Business Development Director

The first computerized supply chain network optimization tool is generally believed to have created in what year?

Answer Found at the
Bottom of the Page

Trip Report: LLamasoft User Conference 2017

One of the great strategic blunders in technology history was Microsoft's failure to perceive that search would become the on-ramp to the Internet, leading to the ascension of Google and Microsoft's decidedly second tier status in the search arena and resulting challenges from Google on many other fronts.

Why do I make this observation after just returning from a couple of days at the LLamasoft user's conference in Detroit this week (not far from the company's Ann Arbor headquarters)? I will come back to that in a moment.

If you are not familiar with LLamasoft, the company has been around for almost 20 years, and now dominates to an amazing degree the supply chain software category that was once usually categorized as supply chain network planning/optimization.


At the conference, CEO Don Hicks said LLamasoft will be receiving an investment of hundreds of millions of dollars from another big time private equity firm, TPG Growth.


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LLamasoft's ultimate genius - it took the company a while to get here - was to recast that network planning/optimization category as "network design" - and more importantly that "design" was itself a separate discipline that stood alongside supply chain planning and supply chain execution - and provided rich opportunities for operational improvements and savings across virtually every supply chain process.

LLamasoft's tremendous success in this positioning really has to be viewed as one of the greatest marketing/branding strategies of all time in the supply chain software space, second only to what i2 was able to accomplish in creating an environment in which it was perceived by many companies that they were at a competitive disadvantage if they weren't jumping on the i2 bandwagon in the late 1990s and early 2000s - though like Icarus of mythology, i2 flew too close to the sun and fell dramatically into the sea.

I do not expect that fate to happen to LLamasoft. As I have written before, through a combination of the "design as a discipline" message, really focusing on advancing its design software while competitors moved more slowly, and a better-than-most focus on customer success, LLamasoft has simply blown away the competition.

What it couldn't crush nearly completely in the market LLamasoft simply achieved by acquiring weakened competitors, first the LogicTools solutions from IBM in 2015, and then a more Euro-focused provider called Barloworld Software in 2016.

The 2017 user conference again demonstrated LLamasoft's success. Attendance continues to grow, with close to 700 in the Motor City this week, and scanning the badges as you walked the halls of the Marriott Renaissance Center would show a who's who of Fortune 500 and indeed global 2000 companies.

As further evidence of LLamasoft's strength, in 2015 the company received $50 million from an arm of Goldman Sachs that valued the company at some $250 million - huge number for a company that I believe then had less in revenues than the $50 million Goldman Sachs plunked down. That only happens if the growth rate is very rapid.

At the conference, CEO Don Hicks said LLamasoft will be receiving an investment of hundreds of millions of dollars from another big time private equity firm, TPG Growth. To repeat, Hicks said "hundreds of millions" - that is simply staggering. It means LLamasoft will have to someday be worth multiples of that for the investment to pay off for TPG.

Now, back to my Microsoft-Google reference. What is now becoming increasingly clear - and I doubt even LLamasoft itself early on let alone any other software provider or pundit, including me realized this - is that once you have modeled substantial elements of a company's supply chain, you are in a tremendous position of strength.

That modeling - which then leverages a variety of optimization and analytic techniques to solve problems from the traditional "where we do we put our distribution centers?" to what products are made in which factories and on what lines, to complex capacity planning questions and much more - is what LLamasoft does.

With that position with a customer, a couple of things happen. First, LLamasoft becomes highly strategic within the company's supply chain. Second, having modeled all or most of a customer's supply chain - understanding if you will how the company's supply chain works in tremendous detail - LLamasoft has the opportunity to branch into other areas of supply chain from that position of strength.

My point is that just maybe supply chain modeling, as is now practiced by LLamasoft as has never been approached before, is an here-to-now unperceived on-ramp to lots of additional supply chain planning and execution solutions, the way most didn't see search as the on-ramp to the internet.

This is far from guaranteed at this stage, but it is an intriguing question - and LLamasoft is now certainly heading down this path. The trend for several years has been for LLamasoft customers to use its tool sets for making decisions in shorter and shorter time frames - not just long term network decisions made every few years or even annually, but tactical and even operational planning for decisions made monthly, weekly and even daily. For example one customer, USU Silica, gave a case study at the show of how it built a daily available-to-promise and order allocation tool using LLamasoft.

It is a complicated story I don't have room to fully detail it here, but combined with the customer trend towards using Supply Chain Guru (LLamasoft's flag ship design tool) the company also inherited a suite of traditional supply chain planning applications (demand planning, supply planning, etc.) in the Barloworld deal.

While ultimately moving away from simply building out those planning solutions, that deal forced LLamasoft to think more specifically about if and how to pursue the all more general market.

In what was a bit of a circuitous though not overly long path, we got the answer this week at the conference with the introduction of LLamasoft's "planning by design" solution, which will be delivered in Cloud form under the portal (private Clouds also supported).

LLamasoft repeatedly emphasized that "planning by design" was not meant to replace existing supply chain planning solutions - a partially dubious if understandable claim, as I will explain below.

So what is it then? In great simplicity, it is a tool for creating logic and workflows that leverage LLamsoft's great library of supply chain models and analytics to solve problems not being addressed by existing planning systems - the white spaces that are leading a growing number of companies to invest in data scientists and other smart people - in a reversal of a decade-long trend - to create advanced analytics for decision-support in areas that existing systems do not well address.

On top of that ability to call and sequence analytics in highly flexible ways LLamasoft has created a neat tool for easily developing simple, clean user interfaces, with the goal being to expand the use of modeling and analytics from normally a small group of really smart people to more of the supply chain masses and even beyond to more general business users - which of course will also expand LLamasoft's revenue stream.

It is understandable that LLamasoft would position the solution as it has, because if it was marketed as a potential replacement of existing planning systems that would create all kinds of resistance from users and caretakers of the existing software. But smart tools to fill in the blanks, from a company that runs the critical model of your supply chain? That will generate far less objections. But as LLamasoft gains a foothold with really smart analytics and optimizations - versus the heuristics that underlie most traditional planning systems - with an innovative new age tool for building the "apps" - well, it may indeed be seen as offering replacement possibilities - though of course traditional planning vendors are hardly sitting still and are all on their own analytics journeys.

I wish I had more space. In addition to planning by design, LLamasoft featured a new tool that I believe for the first time is truly designed to provide complete visibility across the end-to-end supply chain - as I rather presciently predicted in 2012. That tool, named "ESP," leverages Llamasoft's successful Data Guru Integration tool, and if I have it right can interact with models built in the core product to automatically create the visibility structure, then pump in the data. More soon, but very impressive.

It also announced a product called Demand Guru that tackles another white space - understanding and decomposing demand over time, with a focus on advanced analytics for forecasting and to incorporate so-called causal factors (e,g., the weather, competitive reactions) in a more sophisticated fashion, as well as considering macro data such such as GDP forecasts and much more. The goal of course is to provide better and more nuanced forecasts for making strategic supply chain solutions. Very good.

I may do a part 2 on this to summarize interesting keynote and breakout presentations. It was something of a "Heat Wave" in Motown this week. 

What is your reaction to Gilmore's LLamasoft conference trip report? Is modeling a key path in to other areas of the supply chain? Let us know your thoughts at the Feedback button below.

View Web/Printable Version of this Column

On Demand Videocast:

How DOM and WMS Work Together to Power Omnichannel Supply Chains

Experts from Tompkins International and Softeon Set the Record Straight in Fast Paced, Q&A Format

This discussion will be based on an outstanding new "Executive Brief" on this same topic, developed jointly by Kevin Hume of Tompkins International and Satish Kumar, a vice president at Softeon.

Featuring SCDigest editor Dan Gilmore, Kevin Hume of well-known consulting firm Tompkins International and Satish Kumar, a vice president at Softeon.

Available On Demand

On Demand Videocast:

New Cloud WMS Solution is Game Changer for Warehouse Management Deployment and Flexibility

New Technology and Deployment Approach Offer a Simply Better Way to WMS Implementations - Learn How

In this outstanding Videocast, we will cover the latest in each-picking robotics, co-bots, artificial intelligence, autonomous vehicles, sensors, drones and droids.

Featuring  Dan Gilmore, Editor, along with Mark Hawksley and Bruno Dubreuil of TECSYS, a leading provider of WMS solutions.

Available On Demand

On Demand Videocast:

Innovation in Shipper-3PL Relationships Benchmark Study Results

New Research will be Unveiled from SCDigest and JDA On This Increasingly Important Topic

In this outstanding broadcast, SCDigest and JDA recently completed new research study on innovation in shipper-3PL relationships, with the goal of obtaining the perspectives of both shippers and service providers on this increasingly important topic. All registrants will be sent a copy of the report will all the data shortly after the Videocast.

Featuring SCDigest editor Dan Gilmore and Danny Halim and Lori Harner of JDA.


Available On Demand


Some of the many emails we received on SCDigest Editor Dan Gilmore's column on Irrational Shipping Prices and the Demise of Brick and Mortar Retail and Reader Respond - Irrational Shipping Prices and the Demise of Brick and Mortar Retail.

More soon.

Feedback on Irrational Shipping Prices and the Demise of Brick and Mortar Retail Parts 1 and 2


Great article by Dan Gilmore, I think he's spot on with his commentary. The state of brick & mortar retailers is hard to watch from a consumer's standpoint versus and investor standpoint. When it comes to apparel, for the most part I personally I have to feel it, touch it, and try it on. Certain on-line purchases make sense and are extremely convenient. I guess it comes down to comfort level and how tech savvy the consumer tends to be with technology.

It will interesting to see how things play out with Amazon and their quest to dominate the world's global supply chain. When does it stop or does it ever stop? Will the success/failure continue to be investor driven, consumer driven or both?

I look forward to reading Dan's future columns and appreciate the opportunity to provide feedback. Wishing SC Digest much continued success in 2017 and beyond.

John L. Antonucci
VP Corporate Accounts
721 Logistics LLC


While I see the truth in what you are saying generally, I think you are being a bit too broad. Retail is surely suffering in some places, and some malls are having tough times. But I think it is tied more to the geo and the forward thinking of retailers. Most should have joined the on-line bandwagon sooner rather than worrying about B&M operations losing out. Most should have figured out how to incorporate the stores (kiosks, store pickup, etc.). I love that I can order from Walmart (and others) online and pick my order up at the store 1 mile away in 2 hours or less. Most should have figured out the Gen X and Millennials a long time ago.

On the subject of malls and geo. Consumers like the trick, new thing. Upgrade your mall (and your thinking) and you may find a real winner.

I live in the Salt Lake City area - a pretty tech savvy place (Ogden, Salt Lake, Provo). Recently the LDS church opened a new downtown (City Creek) mall to rave reviews and lots of business. There is a suburban mall (Fashion Place) which is almost too busy to visit with a soon to open, very large Macy's plus Nordstrom, Dillard's (replaced Sears), Crate & Barrel and many other high end stores. Fashion Place has been around for 50 years and has recently been revitalized to focus on a more selective (high income, young) market.

Another recent success is the Valley Fair Mall - which has been revitalized. Another downtown mall that was extremely popular until City Creek opened was the Gateway. Gateway (an open outdoor type mall) is going through modernization (although it is less than 20 years old) to better compete with City Creek.

A common feature of the successful locations seems to be the Apple Store. Hip, young (or young at heart) shoppers seem to enjoy good shopping, good food and features that appeal to them. Apple was at Gateway until City Creek opened.

Older malls and retail need to take notice.

Steven R. Murray
Supply Chain Visions

Editor's Note:

I think you are missing a few critical few points:

What would happen to ecommerce sales if appropriate pick pack and ship costs were charged?

Items in store should actually be priced lower than online products, because the costs are way lower - but they are not.

Because these things, brick and mortar woes, and the unbelievable change ecommerce is bringing, is happening much faster than it should.

Someday, these costs will have o be charged. They simply must be.

Dan Gilmore





Great article, really interesting perspective on how Amazon may be accelerating the penetration of ecommerce.

I would contest one statement you make about the price of typical goods, and that in most cases they should be priced cheaper than ecommerce. I understand the point you are making, that shipping costs are built into the in-store price but are not being built into the ecommerce prices yet; however, there are other brick and mortar costs (facilities, rent, equipment, labour, etc) that need to be built into an in-store price - many of these represent costs that ecommerce avoid completely. To me, these costs are material, and comprise the basic essence of why ecommerce is winning.

Mark Johnston



I do agree with Gilmore!

On this track, I read not so long ago that about 90% of new business strategies fail. Further, that it is typical to find that there's something that will work arising out of the failure, thus it is wise to maintain resources in reserve to apply in support of that successful element going forward. There are many stories of massive all-in, bet-the-farm commercial disasters. The other salient observation offered was that long term success was more often achieved by strategies that started small and achieved profitability early and then leveraged to gain share vs. those that stressed rapidly building market share at a loss from the start while striving to cross some far off break-even tipping point.

By appearances, Amazon's journey seems like it falls prey to the considerations above. Maybe they made some money early on when they only sold books. Since then, my sense is that it's been 2% or less profit or losses, and should revenue growth sputter- look out?

Meanwhile Mass Merchants and other retail leaders are dealing with the disruption, and from what I can tell, are mighty worried and not just a little grumpy about dealing with all the challenges associated with Omni channel.

Meanwhile, the ‘music continues to play'.

Tom Miralia
Distribution Technology



Q: The first computerized supply chain network optimization tool is generally believed to have created in what year?

A: 1972, by Dr. Arthur Geoffrion and Dr. Glenn Graves of UCLA, we believe for Del Monte’s supply chain.

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