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In 2019 “Supply Chain Has a Seat at the Strategic Table”

Over the past of couple years, the number of times that publicly traded companies have sprinkled terms like “supply chain,” “digitization” and “artificial intelligence” into their analyst earnings calls has jumped 70 percent—a sign, says Logility’s EVP of marketing Karin Bursa, that “supply chain has a seat at the strategic table and its benefits are being felt across the organization.”

Speaking at the supply chain optimization and retail planning solutions company’s Velocity joint conference with NGC, Demand Solutions and Halo Business Intelligence, Bursa described how tools built for the value chain are incorporating AI, analytics and machine learning in order to serve businesses tasked with making faster, smarter decisions. For one, the newly released Logility Voyager Pulse Wise is an “autonomous engine” that takes on the burden of optimizing planning constraints in real time. What Logility realized, Bursa explained, is that many customers would tune their parameters when initially deploying their planning software but then never go back to “manage and monitor” that process.

AI-enabled Pulse Wise solves that dilemma by allowing organizations to put their supply chain parameters on autopilot, Bursa says, tweaking those parameters and providing an immediate response based on their data, sell through and performance over time. Logility’s official news release on Pulse Wise says this automated approach improves forecast accuracy by as much as 50 percent.

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Pulse Wise is just one component of the Voyager suite to incorporate innovations like AI or machine learning. Several solutions within Voyager, such as Optimization Orchestration and Integrated Business Planning, leverage digital twin modeling powered by AI-based algorithms that simulates multiple scenarios, enabling companies to move toward continuous planning.

“Having the ability to make those postponement and just-in-time decisions [is] really where this is going,” said Mark Burstein, chief strategy officer for NGC, which offers cloud-based enterprise software for fashion brands and retailers.

Finish Line’s senior director of planning and allocation Katie Morrison described how Logility’s Retail Optimization software helps the athletic footwear and apparel retail manage allocation, planning and replenishment all inside a single system and get the right products to the right places across hundreds of stores, its own e-commerce and a digital partnership with Macys.com. Though the chain automates much of its replenishment, Morrison says human intervention works best for hot-selling products or items moving more slowly than expected.

Like most major retailers, Finish Line, owned by JD Sports, fulfills e-commerce orders from not just distribution centers (DC) but from its store fleet as well. Finish Line’s planning organization can scale how many units any given store can afford to give up for e-commerce fulfillment, Morrison noted, and locations that typically manage a smaller volume won’t be tapped for a lot of online orders. Fulfilling from a network of 660 stores is a great inventory management tool, she explained, adding, “It’s a way for us to clear out distressed inventory and allow our stores to have room for those new products.”

Finish Line’s digital operation clocks in above the industry average for e-commerce, contributing 27 percent to the company’s business. When key footwear launches, the retailer will reserve product at the distribution center specifically to fulfill e-commerce demand, Morrison said, and product lines marked by high-velocity sales will fulfill exclusively from the DC.

When sourcing an order from brick-and-mortar, Finish Line ships customers product from the store closest to them. “I would love for [the software] to consider how many units of supply my stores have so it’s taking from the stores that have too much inventory first,” Morrison said, “but that isn’t currently our priority, which is closest to the customer.”

Finish Line ended up with 26 percent of products out of stock when it cleared out merchandise recently, but was forced to cancel just 1 percent of online orders, Morrison noted. The retailer is able to take risks on committing to orders because if one store is all out, it’s more than likely that the next one can pick up the slack. Plus, Morrison says, Finish Line can tweak the threshold levels for each product category when necessary to ensure stores aren’t stripped of key inventory.

The Finish Line business on Macys.com operates on the department store retailer’s separate routing logic, Morrison explained, providing one example of how Macy’s is “sensitive to canceling customer orders.” “They decide to change the threshold [for Finish Line products] right after Cyber Monday and took all of our inventory off their website,” Morrison said, describing the moment as “sad.”

A recent survey found that 25 percent of new CEOs taking the helm at Fortune 500 companies served as leaders in the supply chain, Demand Solutions president Bill Harrison noted. “That’s what [the supply chain] has been elevated to,” he said. “It has become such a critical point for businesses.”