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Chirag Modi currently serves as the corporate vice president, industry strategy - supply chain execution and 3PL, with Blue Yonder. He has spent more than 20 years doing business consulting and supply chain transformation work. Modi leads the integration of cross-functional groups to design and implement solutions within a supply chain ecosystem. His work frequently integrates both physical infrastructure (inventory, transportation network, warehouse real estate, material handling systems, operations, human capital, etc.) and digital infrastructure (order management, demand and inventory planning, WMS, TMS, etc.).
David Maloney, Editorial Director, DC Velocity 00:01
Government initiatives to strengthen domestic supply chains. The logistics economy edged downward last month. And how soon will we see autonomous trucks? Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast.
Hi, I'm David Maloney. I'm the group editorial director at DC Velocity. Welcome.
Logistics Matters is sponsored by PERC, the Propane Education and Research Council. Propane is the safe, reliable energy for material handling. Propane-powered forklifts can improve air quality inside your facilities for a healthier, more productive workforce. See how propane can give your productivity a boost at propane.com/forklifts.
As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insights into the top stories of this week. But to begin today: Last week, the Biden administration unveiled more plans to strengthen our domestic supply chains, with the goals of making them more resilient. To find out more details on the initiatives, here is Ben with today's guest.
Ben.
Ben Ames, Senior News Editor, DC Velocity 01:19
Thanks, Dave. Anyone who works in logistics knows that the sector has faced some real challenges over the past couple of years, beginning with the pandemic disruptions, of course, then quickly adding turbulence in fuel prices, inflation, interest rates, unemployment and labor issues, weather extremes — seems to go on and on — and last week, we heard that the Biden administration had announced a collection of some 30 actions that it said will help to strengthen domestic supply chain operations. Now, federal actions can always tend to be complex, and this one has dozens of different parts, so to help us understand the implications of this package of policies, we have this week's guest on the show. He's Chirag Modi, who is corporate vice president of industry strategy at Blue Yonder. Welcome, Chirag.
Chirag Modi, Corporate VP of Industry Strategy, Blue Yonder 02:06
Thanks for having me, Ben.
Ben Ames, Senior News Editor, DC Velocity 02:06
To start us off, could you give a quick description of what Blue Yonder does and what is its role in this broad topic of national supply chain issues?
Chirag Modi, Corporate VP of Industry Strategy, Blue Yonder 02:09
Absolutely. So Blue Yonder is the largest end-to-end supply chain software suite company. We are the OEM, so to speak, of software for supply chain planning. We do warehouse management, we do transportation management, order management, returns management, essentially anything related with supply chain. If you're handling supply chain, you are likely using one of our software products. And we've been around for 40-some years, and we'd love to play a role in bigger and making this better.
Ben Ames, Senior News Editor, DC Velocity 03:02
So you guys cover a lot of waterfront there. The new White House policies have to juggle a lot of different interests. For example, can they both provide critical support that we've needed, as we've discussed, to U.S. supply chain systems, but also benefit the workers that make it work?
Chirag Modi, Corporate VP of Industry Strategy, Blue Yonder 03:22
That's correct. So, essentially, anything related with a bigger scale — and we all know United States government has that scale, being the largest economy in the world, largest army in the world. You know, it spends a lot of money to innovate on this front, and make us better as a society, if you will, and in this particular case, last four years, it has taught us in the United States, a lot of things, and one of them being supply chain, how critical the supply chain is. You know, we saw a lot of shortages in different areas, and how those things impacted food costs, those things impacted inflation, those things impacted unemployment rates. So, this is the reason why the government's finally coming to the table and saying, you know, we have let the private sector do a lot of this work, but it's time to kind of look at this in a big picture and have a top-down view of this where we'll get involved and endorse a lot of these policies.
Ben Ames, Senior News Editor, DC Velocity 04:30
Okay, that makes sense. So they're talking about some of the threats and disruptions we all saw and those, are certainly top of mind for any company in this area today. The new policies address some of those, but can investing in new capabilities to monitor supply chain risks, actually help that supply chain operators are able to identify any potential vulnerabilities or threats, and maybe even work around them?
Chirag Modi, Corporate VP of Industry Strategy, Blue Yonder 04:59
Yeah, I think, when you think through, then, the role the technology plays, it is meant to scale the issues and it is meant to bring those issues to the table a lot faster at a higher, higher, and much bigger scale. So I think that's really what the government is trying to do, is maybe have the technology, you know, players, as well as endorse some of the technologies to able to bring up front a lot of those vulnerabilities you talked about, whether they are critical parts, where you only have maybe one or two suppliers in the mix, but you don't have necessarily — you know, three or four, how do you how do you deal with situations like that? You know, we have seen during [the] pandemic, where the nose, nasal swab, the testing swabs, there used to be only one large company in the country which used to make them, and how the government really kind of went after that company and said, Hey, we will give you a lot of investment dollars, because this is [a] critical part of a U.S. national security issue. So, they're looking at doing something similar, Ben, with not just that one area, but, you know, a plethora of areas. I'm talking about, you know, military parts and suppliers. We're talking about food-related topics. I'm talking about drugs, you know, the pharmaceutical drugs. You know, a lot of those supply chains need reinforcements, and that's really what the government's trying to do now with these programs.
Ben Ames, Senior News Editor, DC Velocity 06:42
That makes sense. And those spiraling food prices was another one of those variables that we mentioned a little earlier, and food and agriculture, indeed, is another focus of some of these new policies. How can strengthening those agricultural supply chains help to expand economic opportunities for farmers and workers, and then eventually lower those high food prices we've been seeing?
Chirag Modi, Corporate VP of Industry Strategy, Blue Yonder 07:07
Yeah, I think the biggest issue in the food sector, Ben, is around disruptions in weather patterns — disruptions due to hurricanes, or, you know, natural disasters. You also see a lot of issues with respect to food wastage — you know, the yield, if you will, on the food per acre of growing. How can technology help bring that number up so that the economy of scale perspective, the food price could potentially continue to go down? I think that's one area, Ben, where technology could play a big, big role. You know, and we, as a technology, we have come a long, long way from the early Microsoft DOS, and all of that, those Windows and others, to cloud computing, and, you know, data now available at your fingertips. How do you actually leverage that data to bring quote, unquote, food prices down, or other efficiency factors in. I think that's really what the government's trying to do with that scale.
Ben Ames, Senior News Editor, DC Velocity 08:12
Got it. And so Blue Yonder, of course, is a technology company, and that's, anybody would agree, a crucial tool for reaching these goals that we've been talking about. Indeed, some of these new administration policies say that investment in digital and artificial intelligence technologies will enhance productivity and better delivery of goods and services. Do you agree that that's a possible goal, are we going to get there?
Chirag Modi, Corporate VP of Industry Strategy, Blue Yonder 08:40
Absolutely yes. Like anything else, Ben, I mean, I'm talking about the early GPS days, the military, United States military, guard behind it, and how it was able to then endorse it and make it available to the wider public. It is something similar; the biggest difference is there is a lot of work being done in artificial intelligence area already, so it's not like United States government is coming, you know, at a time to really kind of start from scratch, much like it did in GPS times. But now, there is a lot of investment going on in artificial intelligence to move in the same direction — you know, improving efficiencies, reducing costs and reducing waste, and how that all kind of comes together to make it make it better for all of us.
Ben Ames, Senior News Editor, DC Velocity 09:39
Really interesting. Sounds like we're coming into a fascinating time when we could see some quick developments. We really appreciate your joining us here today to talk about them and maybe we can touch base again as this continues to unroll.
Chirag Modi, Corporate VP of Industry Strategy, Blue Yonder 09:52
Absolutely. Thanks for having me, Beth.
Ben Ames, Senior News Editor, DC Velocity 09:54
Thank you Chirag. Our guest today has been Chirag Modi from Blue Yonder. Back to you, Dave.
David Maloney, Editorial Director, DC Velocity 10:00
Thank you, Chirag and Ben. Now let's take a look at some of the other supply chain news from the week — and, Victoria, you wrote this week that the logistics economy took a turn downward last month. Can you share the numbers?
Victoria Kickham, Senior Editor, DC Velocity 10:14
Absolutely, Dave, happy to. Yeah, so economic activity in the logistics industry fell in November following three months of steady increases — and that's according to the latest Logistics Managers' Index report, or LMI, which was released this past Tuesday. LMI researchers attributed the slowdown to a decline in inventory levels as companies prepared for fourth-quarter holiday sales. Subsequent growth in warehousing and transportation capacity were also factors, as were slowdowns in transportation and warehousing utilization. As our listeners may know, the LMI is a monthly survey of logistics managers nationwide. It's aimed at gauging activity across warehousing and transportation markets. The report assigns a score for overall activity, and a reading above 50 indicates growth in demand for logistic services, and a reading below 50 indicates contraction. So, in November, the index dipped seven points to a reading of 49.4, which is just below that 50-point threshold. So we're talking about a mild contraction here.
David Maloney, Editorial Director, DC Velocity 11:19
Right. So, though it is contracting, conditions had been in a growth mode for a while, right?
Victoria Kickham, Senior Editor, DC Velocity 11:24
Yes, that's right, and conditions have remained pretty much above 50 for the life of the LMI, which has been around for about seven years now, and what that means really is the demand for logistics services has remained strong, or pretty solid. The index contracted for the first time in its history this past May and slid to an all-time low reading of 45.4 in July before returning to growth in August, as you noted. It was growing through, up until this past November, this past month. And although this year is the first time we've seen an activity shrink, essentially, the slowdown is sort of in line with a broader trend that began in the spring of 2022, and that's when activity began to slow from record-high demand for logistic services that we saw during the pandemic. Demand has certainly slowed for a variety of reasons, and the researchers have been saying for a while now that conditions would be swinging back to sort of more typical industry growth patterns. I mentioned at the outset declining inventory levels, and that reflects a broader trend as well. If you recall, last year, there was a glut of inventory in the supply chain, and it looks like retailers and others may have spent some time this year working through all that. We still have to get through December, of course, so we'll see what the report shows in early January to see if November's slowdown is just a blip or a more sustained trend.
David Maloney, Editorial Director, DC Velocity 12:43
Right, and hopefully the new year will bring some badly needed improvements for the industry after kind of a rough 2023.
Victoria Kickham, Senior Editor, DC Velocity 12:51
Absolutely.
David Maloney, Editorial Director, DC Velocity 12:52
Thanks, Victoria.
Victoria Kickham, Senior Editor, DC Velocity 12:53
You're welcome.
David Maloney, Editorial Director, DC Velocity 12:55
And Ben, you wrote this week about what it may take to deploy autonomous trucks at a large scale. Can you give us some details?
Ben Ames, Senior News Editor, DC Velocity 13:04
Yeah, I'd be glad to. It's been kind of a rough year also for autonomous vehicles. Some consumers have taken Tesla to court for claiming that its cars have features like full self-driving mode or autonomous mode. The drivers of Teslas, you might know, need to provide active driver supervision, the company says, and be fully attentive and have their hands on the wheel, so, not so much autonomous. We also saw General Motors' Cruise model of cars suspended their driverless taxi service in San Francisco for blocking traffic frequently. And also there's an autonomous trucking company called TuSimple that was delisted by NASDAQ when its stock had financial irregularities. They're actually pulling out of the U.S. now. But there are some ongoing trials by other companies. Gatik is one example. They're typically doing sort of middle-mile routes, just on highways, with driverless trucks. But this week, we also saw some progress in another area, and that's how to build the network of autonomous trucks. That came with news that Daimler Truck North America — they have a autonomous trucking subsidiary called Torc Robotics, and they're going to use data from Uber Freight, which is, of course a digital freight-matching service.
David Maloney, Editorial Director, DC Velocity 14:24
Well, that really sounds interesting, but why does a self-driving truck need freight data?
Ben Ames, Senior News Editor, DC Velocity 14:31
That's what I was curious about as well. It actually points to one of the reasons that it's been so hard to get these things running with the entire system to work. You need a network of three things: You need trucks that run reliably — in this case, those will come from Daimler; technology that can drive the vehicle — and in this case, that comes from Torc Robotics; and then you need a network of highways and warehouses — where you're going to send those self-driving trucks. That last part is where Uber Freight comes in, in this instance. Torc says that it can analyze Uber Freight's logistics data, can study shippers' networks and volume patterns. They can identify the most suitable commercial applications to deploy their autonomous trucks. For example, they hope to figure out which lanes are optimal for deployment; how to prioritize the rollout of those different lanes — they have to balance supply and demand for the autonomous trucks; and where to build transfer hubs to minimize the costs of local hauls. So, Torc says that those kinds of details are the missing links to help them get over the barriers of commercial adoption. So, that fits in with their long-term goal to try to commercialize those autonomous trucks at scale by 2027. So, even if this deal with Uber Freight can provide them with that missing information, it's still several years off.
David Maloney, Editorial Director, DC Velocity 15:53
Yeah, it seems that way. I do hope though, that this autonomous technology advances, as I think it would really help a lot of our problems within the industry.
Ben Ames, Senior News Editor, DC Velocity 16:02
Agreed, yep. They mentioned a lot of problems they're trying to solve with this.
David Maloney, Editorial Director, DC Velocity 16:05
Thanks, Ben.
We encourage listeners to go to DCVelocity.com for more on these and other supply chain stories. Also, check out the podcast Notes section for some direct links to read more about the topics that we discussed today.
And again, we'd like to thank Chirag Modi of Blue Yonder for being our guest. We welcome your comments on this topic and our other stories. You can email us at podcast@dcvelocity.com.
We also encourage you to subscribe to Logistics Matters at your favorite podcast platform. Our new episodes are uploaded each Friday.
Speaking of subscribing, check out our sister podcast series. It's called Supply Chain in the Fast Lane, coproduced by the Council of Supply Chain Management Professionals and Supply Chain Quarterly. Check it out wherever you get your podcasts.
And a reminder that Logistics Matters is sponsored by PERC, the Propane Education and Research Council. Propane is the safe, reliable energy for material handling. Propane-powered forklifts can improve air quality inside your facilities for a healthier, more productive workforce. See how propane can give your productivity a boost at propane.com/forklifts.
We'll be back again next week with another edition of Logistics Matters. Be sure to join us. Until then, have a great week.
Articles and resources mentioned in this episode:
- Logistics economy contracted in November
- Torc to use data from Uber Freight to develop autonomous trucking network
- Visit Supply Chain Quarterly
- Listen to CSCMP and Supply Chain Quarterly's Supply Chain in the Fast Lane podcast
- Listen to Supply Chain Quarterly's Top 10 Supply Chain Threats podcast
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