Amazon Effect' Sparks Deals for Software-Tracking Firms
August 29 2017 - 8:29AM
Dow Jones News
By Jennifer Smith
A growing number of companies are paying to track in real time
everything from truckloads of pork chops to shipping containers
full of exercise equipment.
Logistics providers, retailers and suppliers are inking deals
with software firms that use location data and weather and traffic
information to monitor shipments and alert customers to events that
could hold up delivery, such as a loaded truck sitting in a yard
for more than an hour.
This month, supply-chain software firm Descartes Systems Group
bought MacroPoint LLC, which provides location-based truck
tracking, for $107 million. Descartes already tracks ocean, air and
parcel delivery for customers such as Home Depot Inc. and CVS
Health Corp., as well as some trucking. Other "visibility" startups
are broadening their scope, adding services like real-time
temperature tracking.
The need for these services is growing as retailers and shoppers
demand faster, more-precise delivery. Many Amazon.com Inc.
customers have become accustomed to reliable two-day shipping,
forcing other retailers to offer similar service. Businesses are
making new demands of their suppliers as they trim inventories and
reduce supply-chain costs. Wal-Mart Stores Inc. in July said it
would penalize companies that made deliveries too late or too
early.
"It's the Amazon effect -- customers are putting more pressure
on their supplier to know where their product is," said Bart De
Muynck, a supply chain analyst with Gartner Inc. Mr. De Muynck said
he expects more tracking startups to get snapped up by larger
software companies.
Pork producer Smithfield Foods Inc. hires more than 230 trucking
companies to ship about 1,000 truckloads of product in the U.S. a
day.
"Managing that is an awful lot of phone calls," said Dennis
Organ, Smithfield's senior vice president of supply chain.
Smithfield's on-time delivery rate improved to 94%, from 87%,
after it began tracking truck freight with software from FourKites
Inc. Smithfield plans to test its use for ocean freight, Mr. Organ
said, and is incorporating a new temperature-tracking feature
introduced in June.
Some businesses are using delivery speed as a way to compete on
service. "We have a customer in Australia selling sand for a
premium price because they can do time-definite, same-day delivery,
with a one- or two-hour window," said Chris Jones, executive vice
president of marketing and services for Descartes.
On Tuesday, logistics software company Convey, which specializes
in last-mile delivery tracking, said it raised $8.25 million in a
Series B funding round led by Techstars Venture Capital Fund. The
firm, whose platforms are largely used by retail clients such as
Wal-Mart's Jet.com, plans to focus on international supply chains
and expand into additional markets, such as medical devices and
construction and building materials.
Ingram Micro Inc.'s e-commerce fulfillment unit has been using
Convey's software since February to monitor clients' shipments of
apparel, electronics and other items from China to consumers'
doorsteps.
The company tracks containers from the moment they leave the
factory, across the Pacific, through U.S. customs and onto the
truck, said Mandy Shellnut, executive director of logistics,
transportation and trade compliance for the division.
The software measures carrier performance and merges that
information with customer order data to predict whether a shipment
will arrive on time.
"If a client has picked next-day delivery, Convey tells us what
hubs it needs to hit," Ms. Shellnut said.
Write to Jennifer Smith at jennifer.smith@wsj.com
(END) Dow Jones Newswires
August 29, 2017 08:14 ET (12:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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