Blue Yonder – Intelligence in Supply Chain Management
Blue Yonder is a leader in end-to-end digital fulfillment, harnessing artificial intelligence and machine learning to optimize supply chains across the globe. But could COVID-19 be the Black Swan event that breaks their value proposition to pieces?
Introduction
This past month, JDA Software, a 35-year-old supply chain management company rebranded itself “Blue Yonder”[1]. It’s a neat name, a play off the phrase, “Into the Wild Blue Yonder”, inducing a feeling of adventure into some mysterious and faraway place[2]. The name itself wasn’t pulled from a hat by some clever branding intern, it was taken from a company that JDA Software acquired two years ago called Blue Yonder. Blue Yonder was a strategic acquisition for JDA Software to move into the space of artificial intelligence. The unusual step of taking the name of an acquired company was made for good reason – it signals just how important Artificial Intelligence will be to the future of supply chain management.
What is Blue Yonder?
Blue Yonder is an end to end, digital fulfillment platform powered by Artificial Intelligence (AI) and Machine Learning (ML)[3]. Any company that deals with a global supply chain that influences how the product gets to the shelves faces a daunting challenge of predicting what consumers want, planning supply in advance, managing and optimizing routes, and fulfilling this demand accurately and on time. Throw into this complex puzzle the global piece; supply chains pass through multiple borders that inherently amass region-specific risk.
Blue Yonder absorbs the sea of data circulating multiple channels to include social, news and events, curates this data through machine learning algorithms, produces trends and probabilistic predictions, and finally creates actionable business insights relating to supply chains[4]. It presents this information to users with a real-time dashboard, allowing them to deliver the right product at the right time using the right channel at the right price.[5]
Where is the value?
The value to customers is real-time information, predictive visibility, and AI-backed recommendations. It dampens the risk of supply chain disruptions. These risks in the past were baked into company margins, so when minimized, companies see healthier bottom lines. Blue Yonder is delivering on this value proposition – serving 73 out of the top 100 retailers, 77 of the top 100 consumer goods companies, and 8 out of the top 10 global third-party logistics providers[6].
It is also “end to end”. It covers not only the supply chain, but also optimizes labor force management, maximizes utilization of assets, and reduces inventory waste[7]. It’s a one-stop-shop for customers.
As an ML service that is winning the market, benefits to customers improve via a flywheel effect. More customers, more data, more learning, less risk, more savings. It also keeps the operation transparent, allowing customers to look under the hood and access the factors feeding these insights[8].
Sounds great, so what could go wrong?
Something very few could have predicted – COVID-19. For decades, companies have focused on the very value proposition that Blue Yonder provides – supply chain optimization to minimize costs, inventory reduction, and increased asset utilization. However, this focus has removed the buffers and flexibility to absorb disruptions caused by COVID-19[9]. In other words, supply chains followed the path of least resistance and solidified over time. With plant closures, limited port access, and highly unpredictable demand, bottlenecks have run rampant.
An even bigger jolt to the status quo is a growing distrust of what was previously a championed, global supply network. Countries most affected by the disease are beginning to realize how vulnerable they are to a global system unable to deliver on essential medical equipment to battle the disease. It’s too early to accurately predict the long term implications, but a pivot toward more domestic supply chains is not beyond the realm of possibility.
The latter could spell trouble for a company whose value proposition is dampening risk with global supply chains. However, it could also be a prime opportunity to showcase the need for a company like Blue Yonder. And that is exactly what they have done.
Blue Yonder quickly seized the moment by taking live CDC data, integrating it with the supply chain landscape to understand effects on port access and site closures, and presented users with a Supply Chain Risk Response Dashboard that provides real-time visibility and predicts short and long term impacts to businesses[10]. Added to this quick turnaround is the pricing scheme – free of charge.
Recommendations
Blue Yonder has responded to the current epidemic wisely by being part of the solution instead of the problem. However, the long term implications of countries pulling back from a globalized system could be detrimental to their value proposition. Blue Yonder has as much a battle with perception as it does in keeping its technology competitive. This perception must not be taken lightly – in the long term, Blue Yonder must showcase the inherent flexibility of a digital supply network, powered by AI and ML, as the ultimate defense against future black swan events.
[1] https://www.businesswire.com/news/home/20200211005664/en/JDA-Software-Announces-Company-Change-Blue-Yonder
[2] https://www.collinsdictionary.com/us/dictionary/english/into-the-wide-blue-yonder
[3] https://www.marketscreener.com/JD-COM-INC-16538052/news/JD-com-Logistics-and-Blue-Yonder-reach-strategic-agreement-30414180/
[4] https://blueyonder.com/
[5] Fill In
[6] https://www.marketscreener.com/JD-COM-INC-16538052/news/JD-com-Logistics-and-Blue-Yonder-reach-strategic-agreement-30414180/
[7]https://www.marketscreener.com/JD-COM-INC-16538052/news/JD-com-Logistics-and-Blue-Yonder-reach-strategic-agreement-30414180/
[8] blueyonder.com
[9] https://www2.deloitte.com/global/en/pages/risk/articles/covid-19-managing-supply-chain-risk-and-disruption.html
[10] https://now.blueyonder.com/by-covid19-response.html
Thanks for sharing Nicolas!. I have spent 10 years working in supply chain management and I enjoyed your post, as Blue Yonder approach tackles many challenges I faced myself. Very interesting their response to COVID and I agree that nobody could have seen that coming. I am optimistic about the company, though, as I strongly believe supply chain management will have to change to accommodate the emergence of global pandemics, but I also believe the level of global sourcing will not change, so AI will be essential to create resilience.
Very interesting Article!
It’s great that this company is engaging in helping to assess the effect of the current situation on supply chain. I completely agree with your conclusion. I am sure they would have great opportunities to help start developping a more digitized gobal supply chain. They could also learn from the current situation to make the global supply chain more black swan proof.
The thought on the trade-off between a ‘lean’ or ‘robust’ supply chain is spot-on. In fact, with companies trying to continuously reduce working capital and investments in capacity (to maximize asset utilization), very lean supply chains are also very prone to disruptions. The absence of ‘buffers’ increases the fragility of supply chains. Software that increase visibility, transparency and ability to predict issues in any of the nodes of a supply chain can be very useful. The challenge will be to help supply chain companies ‘justify’ such investments, as the cost-benefit analysis is not very immediate. Many insights triggered by BlueYonder may result in false positives, at least until the AI will learn on real data (that are specific to the supply chain), so organizations will need to carefully track costs incurred and costs avoided, to define how much value BlueYonder can deliver.