The pragmatic futurist: interview with Shekar Natarajan
Shekar Natarajan not only foresees the future of supply chain management, he is helping to shape it by finding new and revolutionary ways to apply technology to solve business challenges.
Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.
If, in the future, a drone is taking inventory in your warehouse, autonomous robots are delivering groceries to your customers' kitchens, or you're delivering products to consumers before they even realize they need them, you might be taking advantage of innovations conceived and developed by Chandrashekar (Shekar) Natarajan and the teams of forward-thinking supply chain and engineering professionals he has led over the past 15 years.
From redesigning material handling systems and adapting autonomous vehicles for logistics applications to improving urban logistics and rethinking supply chain planning methodology (to name just a few examples), Natarajan can cite many achievements in his multifaceted career—and he's not even 40 years old yet.
A protegé of the late Richard Muther, a pioneering industrial engineer known as "the Father of Systematic Planning," Natarajan has been a supply chain executive at some of the best-known companies on the planet, including Coca-Cola Bottling Co., Alliance Rubber Co., PepsiCo, and Anheuser Busch. In addition, he has served in executive leadership roles at The Walt Disney Co., Walmart Inc., and Target Corp. His name is on hundreds of patents, and he's authored or co-authored four books on systematic planning and network design. Perhaps not surprisingly, Natarajan, who was honored as a DC Velocity Rainmaker in 2009, has earned a host of industry accolades, including the Council of Supply Chain Management Professionals (CSCMP) Supply Chain Innovation Award.
Currently, Natarajan is focusing on finding new ways to apply technology to solve business challenges and revolutionize how supply chains serve consumers. He recently spoke with DC Velocity Contributing Editor Toby Gooley about the future of supply chain technology and how supply chain professionals can prepare themselves and their companies to succeed in a constantly changing world.
Q: You advocate encouraging "productivity of the mind" in supply chain organizations. What do you mean by that, and why is it important?
A: Productivity of thinking is something you can actually measure as the ability to have situational awareness and react very quickly. People often address problems with mundane solutions if they don't have a structured way of thinking about them. If you have a framework for thinking about problems, it drives you to consider both the obvious and the non-obvious. This should increase situational awareness—anticipating what will happen before it happens and pre-positioning responses ahead of time.
Businesses today are evolving rapidly. The primary axes of change include time, networks, networks of networks, relationships with our customers, and the use of data in real time. And all of these are changing asynchronously. To take advantage of these changes, navigate them, and deal with threats, the productivity of our thinking must increase dramatically. We need to incorporate and implement our peoples' ideas and realign ourselves very quickly.
One way to do that is to think through more than one solution to a problem. What was contextually right at one point in time may be completely wrong two years later. If you have "A to B" and "B to A" scenarios, you will be better prepared for change. You will know how to respond because you have already thought through two opposite solutions for that scenario. When you have determined the right approach, you will have strategic options ready to execute. In this way, you can accelerate organizational change.
Another is to have all employees see themselves as a potential provider of personalized service; when that happens, hyperlocal opportunities quickly emerge. For example, an employee might deliver a package for a customer on the way home; another might offer a painting service for a customer who is apprehensive about doing the painting.
Q: When you were in the beverage industry, you were instrumental in improving product handling equipment and processes. Tell us about one solution that continues to have a significant impact.
A: At Coca-Cola Bottling Co., we developed the CooLift beverage-delivery system, which is now a standard throughout the industry. The specially designed carts and pallets make the job of moving beverages from truck to store much quicker, safer, and more efficient. We developed the solution by looking for a merchandising delivery system that reduced the risk of injury and could be used easily by anyone. We analyzed the whole supply chain as a system, deconstructed it, and identified where and how we could improve it.
When I was with PepsiCo, the same "system" approach led to a host of other innovations, including geo-based delivery, automation of the manufacturing-to-merchandising processes, building orders like Lego bricks so they could be merchandised in minutes versus hours, centralizing and automating routing and dispatching, implementing reputational integrity systems to manage bad actors, and virtual control towers to handle the order flow on an exception basis. In this way, every one of our cumbersome processes got a facelift. As a result, we were able to launch several billion-dollar brands and simplify the work of thousands of field associates. I am grateful to the teams that enabled this and the executives who inspired us to think this way.
Q: Your name is on some 300 patents. What are some of the areas you've focused on?
A: My purpose in filing patents has been to support and protect my employer's business with respect to the future of logistics and commerce. Some of the subject areas that emerged in the past few years include autonomous vehicles—air, ground, on the road, and in the home; the last 100 feet into a consumer's home and in the kitchen; cognitive commerce, where data collection and analysis allows me to know you so well that even before you need something I will get it to you, which leapfrogs search altogether; just-in-time replenishment to the home according to values, affinities, and preferences held in the cloud, which obviates the need for ordering or in-home inventory; and hyperspectral imaging, which gauges a food product's internal qualities, and blockchains to ensure food safety and freshness.
Some others include temperature control and Internet of Things (IoT) systems that enable virtual control towers; engaging customers with virtual reality and augmented reality; virtual malls and the monetization of virtual space; moving "digital duplex" conversations with inanimate objects that are coded with information from the point of purchase to engage the consumer at the point of consumption; personalized business-to-person products, services, and communications; emotive and psychological measurement systems that can adapt the selling process to each customer in real time; algorithms that power gamified virtual planning towers; and continuous dynamic reconfiguration of the supply chain so that it is always optimized.
All of these have an underlying systemic implication for the supply chain's architecture and for the dynamic response networks that need to be created to enable them.
Q: How do you go about determining which technologies are important and where to apply them?
A: The jobs that must be done in commerce and logistics don't fundamentally change. Customers will always want to buy clothes, and we will always have to complete a financial transaction and provide the goods, for instance. But evolving technologies can overcome resource constraints, provide step-change cost advantages, and give us new opportunities to delight the customer. So, I look at the jobs we need to do and map to them the relevant technologies to create a framework of opportunities. As an example, if a package of pretzels can "talk" digitally to the customer and engage in the process of cooking, suddenly the concept of food logistics and brand packaging looks very different. New value gets unlocked for customers and brand companies.
Here's another example: When they are choosing clothes, customers are regularly at the mercy of the sizes and colors that are already available. The technology exists that would allow a customer to choose the style, fabric, size, color, and other options for the garment to be made to order and shipped out overnight. Then, the customer could have exactly what he or she wanted each time without the risk of the size or preferred color being out of stock.
Q: Any predictions about what will be the hot areas for supply chain in the next five to 10 years?
A: Yes, I think the following areas will be most important:
The Internet of Things will enable full visibility of the supply chain from factory to customer.
Blockchains will enable track and trace and will limit the influence of bad actors.
Logistics services will become available as Logistics as a Service (LaaS), where a third party provides platform-based turnkey solutions for end-to-end processes.
"Frenemy networks" will include competitors in a service offering.
Every supply chain job will change due to digitization, through such means as apps, advanced analytics, and cloud computing power.
"Networks of networks" will develop through the constant realignment of networks with new partners to enable value delivery.
We will see highly personalized business-to-individual (B2i) communications and commerce.
Robots and autonomous vehicles will play an increasingly significant role.
Q: Why is know-how about emerging sciences critical to businesses in general and supply chain organizations in particular? How will the roles of supply chain professionals evolve?
A: I firmly believe that a company must grow as fast as its market to survive in the long term. Since the rate of change in the markets is going up continuously, innovation and growth must be everyone's job, not just that of a select few.
Let me address this using an example. Today, a transportation leader is rewarded for securing the right contractual rates, managing drivers for safety and compliance, and executing on time and within budget. In a world of autonomous vehicles, there is no driver to manage, and the job of the transport leader is to ensure and build the right algorithms, manage the integrity of assets, and ensure good customer interactions. Because so much must change, being ahead of it is critical.
My experience has made me a firm believer in the ability of logistics to drive revenue and create new business models. Logistics can drive customer intimacy, operational excellence, and product leadership. Autonomous vehicles, for instance, will improve efficiency, but there are numerous ways they can be a source of revenue. Those that carry passengers can be mobile kiosks, making sales to passengers. And while they are carrying passengers, the trunks can be carrying packages for delivery.
Supply chain leaders need to be alert to these opportunities and be able to capitalize upon them. To do that, they must think as businesspeople—more like a general manager and less like a transaction-focused logistics manager.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”