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Coronavirus: On the supply chain frontline with Blue Yonder

Bnamericas Published: Thursday, May 07, 2020
Coronavirus: On the supply chain frontline with Blue Yonder

For companies involved in supply chains, the coronavirus crisis has presented both challenges and opportunities. 

Changing consumption habits and the fallout from social distancing restrictions have sent shockwaves through the industry, forcing players to adapt rapidly.

Among those on the frontline is digital fulfillment platform Blue Yonder, formerly JDA Software, which provides supply chain management solutions and services to more than 3,300 of the world’s leading manufacturers, retailers and logistics firms.

Despite headwinds, the company – whose solutions leverage AI technology – is still closing deals in Latin America, where it operates in the retail, manufacturing and ground and maritime logistics verticals and has offices in Mexico, Brazil and Chile.

To find out more about the impact of the pandemic on supply chains and changes around the corner, BNamericas spoke with the Latin America vice president of US-headquartered Blue Yonder, Jorge Sánchez.

BNamericas: How has Blue Yonder been impacted in Latin America since the beginning of the health crisis in terms of demand, sales, and so on?

Sánchez: It varies by country. In those in South and Central America that implemented quarantine measures early on or have been stricter, we have seen delays in projects or cancellations of some rojects until the end of 2020.

There are also countries where clients have advanced with projects and have even launched new ones. The quarantine restrictions expose the vulnerabilities in supply chains, and what has been done at this time is to start mitigating these vulnerabilities, launching selection processes for different types of solutions such as transport management system [TMS], or control tower, where the main thing is to have visibility over the complete supply chain. 

In fact, we closed two deals last week in Mexico, two are about to close in Brazil, and others in Chile and Ecuador, for solutions that allow visibility of the supply chain and provide certainty, the lack of which can lead to a broken supply chain, something that can put the business at risk.

In December, a supermarket was able to organize its store according to consumption habits, and there was a wide offer of products that has now decreased, because the manufacturing sector – for example, shampoo or toothpaste firms – do not have the capacity to produce as before. Therefore, they decided to produce in certain categories only. This represents a challenge for the retailer and two problems: one, that the design of its stores must change, because the products are different or fewer in quantity, and two, people's consumption habits are changing. For example, they are now looking for large amounts of liquid hand soap, and for this, a change must be made in the spacing of gondola shelves.

This, seen in most countries in the region, is only part of the issue. Retailer distribution centers and manufacturing producers have half the staff to move the same or more goods for certain products; now they have to manage their staff differently to maintain efficiency.

This way of operating will be the one that predominates over the next six to eight months, until the 'new normal' stabilizes, and from there, the catalog of products and availability begins to grow. This will be a phased change.

There is also an important change within the stores. For example, before, there were stores that could have 10 cashiers operating and now, because of social distancing protocols, they can only have two in some cases. Before, 15 people could work in the area of product promotion and assistance, and now there are four to five. 

These are unprecedented changes that you can now streamline at the operations level, but also from above, looking at the entire supply chain, which Blue Yonder control tower can do, incorporating transport, demand traction, customs and port inputs, to which the COVID-19 factor is added. It says how it is progressing, which regions are becoming less affected. Based on this, we can say that, for example, a plant in Asia will close in three months, and can establish, through AI, how to source later, where are the substitute inputs, where are they produced, where are my clients and how I get to them. We have the ability to create scenarios, and with that, the algorithms are learning.

BNamericas: Were Blue Yonder's AI algorithms adequate/suitable for this unprecedented scenario in Latin America, or did they need to be adapted quickly?

Sánchez: They were correct and the customers have appreciated it, recognizing that our software is capable of managing an impressive volume of data that is being generated every day. 

This event was not possible to forecast. There was no history, and there are daily changes with the opening or closing of factories. AI had to adapt quickly to be able to forecast without prior history and then see what you are going to do with that forecast, how you are going to resupply, where, with whom, what substitute product they have, at what price, whether it is a promotion, how that product behaves when other products are purchased, not necessarily substitutes, for example. 

With this can you predict a new COVID? Not directly the COVID, but in the supply chain we can react very quickly when something similar happens again. AI with existing data can create a cycle and react; in addition, advise where you have to pay more attention and how to improve.

BNamericas: Which changes has Blue Yonder implemented in the region to adapt to this new scenario? 

Sánchez: At Blue Yonder we have adapted to ensure excellent client support, with part of the team working from the office and another part from home. The client is more open to communicating and being contacted remotely. The important thing is to continue delivering value, via information that we share with clients. We carry out various actions, such as making available to logistics companies a portal with different types of tools that can help mitigate the effects of the crisis; we have held knowledge-sharing webinars, for example, on what is happening in the pharmacy industry and how it is being affected right now. 

BNamericas: What other trends do you forecast?

Sánchez: Many countries will focus their efforts on nearshore manufacturing, rather than offshore manufacturing; the logic of this approach is to have it within the borders, allowing greater control, and taking advantage of all the power that e-commerce gives you. Much came from overseas sources, and now you do not want to depend only on what comes from these, and you want to further develop local manufacturing. There are clients who are studying these variables; many will be willing to pay a little more to minimize risks, but with the possibility of ensuring supply.

BNamericas: Will the logistics industry in the post-crisis region look different?

Sánchez: It will look different, depending on the maturity of each economy in the region, bearing in mind that some were more accustomed to the virtual economy than others. First World countries are very used to this, as are Chile and Mexico in regards to Latin America, but there are other economies that do not have this level of maturity.  

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