Trent McDermott

✅ 10 checklist items while purchasing supply chain software Last week, I was invited as a guest speaker on the practical use of AI with a group of supply chain execs, organized by the Haslam College of Business at the University of Tennessee. Given these are leaders with purchasing power, the conversation shifted to recommendations on purchasing AI solutions. Here is what I shared: 1️⃣ Before looking for an “AI solution”, define the problem⁉️ and ensure the legitimacy of it. 2️⃣ Secure a “committed” executive sponsor. The economic buyers of the tech are often not as closely engaged in the rollout. But, their sustained commitment facilitates continuity of the vision that led to the purchase. 3️⃣ Develop a business case 📈. It forces you to think of how the tech will help your company. Most supply chain transformations deliver benefits well beyond productivity. The top and bottom line benefits resulting from improved product availability and reduced costs, expedites, waste/obsolescence, far outweigh productivity gains. 4️⃣ While the vendor’s tech and demos are important, make sure you understand the vendor’s company culture. It is a very important factor that is easy to overlook. Selecting a vendor with a track record of doing the right thing for customers is extremely important. Observe how the vendor teams interact with you and among themselves. Make this a part of your evaluation. 5️⃣ Check the vendors’ credentials 🪪 among your peer groups. References are a great validation✔️. 6️⃣ Take on transformation projects in bite sizes. You want to start small and scale fast. The benefits from one phase can fund the next, creating sustainable value. 7️⃣ Don’t let the initial cost of deployment cloud your judgement. Low upfront costs💵 don't automatically translate into low total cost of ownership over the lifecycle. Probe and understand the lifecycle costs. 8️⃣ While purchasing tech, consider how you blend in unique functionality that gives you a leg up. However, such tailoring should not translate into writing custom code. Once you/your vendor writes a piece of custom code, caring for it and maintaining can be expensive. Besides, you should consider the risk of a non-upgradeable solution. Instead, with the emergence of ‘no code platforms’ your vendor may have a solution that delivers the tailoring through configs that are upgradeable and sustainable for the long run. Custom coding should be the last resort. 9️⃣ Resist the temptation to automate🤖 the current process. That will make you commit the same old mistakes much faster⏩. That is detrimental to your success. Challenge the organization to rethink the process. 🔟 Once a purchase is made, your company needs early adopters. Lean into such initiatives. This will position you as a change agent and be the ‘go to person’ for the tech, helping your career. Thanks Daniel Pellathy for having me over to meet this awesome cohort. Look forward to many more such conversations!

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🚚 J.B. Hunt’s Q2 Profit Decline Highlights Challenges in U.S. Freight Sector 🛣️ J.B. Hunt reported a significant profit drop in Q2 due to reduced freight revenue, volumes, and rising costs. The company posted a profit of $135.9 million ($1.32 per share), down from $189.6 million ($1.81 per share) last year, missing analysts’ expectations. Revenue fell 7% to $2.93 billion. The U.S. freight market has seen declining demand and rates since late 2022. The Cass Freight Index has declined for 17 consecutive months, reaching its lowest level since January. Despite trimming operating expenses, J.B. Hunt faced a 14.6% rise in insurance costs and a 38% increase in net interest expenses due to higher rates. Some Key Points: • Revenue fell 7% to $2.93 billion amid declining demand and rates. • Intermodal unit, nearly half of J.B. Hunt’s business, saw a 31% drop in operating profit. • The soft freight market pressured overall performance. • Truckload revenue fell 7%, with load volume down 9% and freight rates dropping. • Cass Freight Index declined for 17 months, hitting its lowest level since January. • J.B. Hunt trimmed operating expenses, but insurance costs rose 14.6% to $73.2 million, and net interest expense rose 38%. #Logistics #Freight #SupplyChain #Transportation

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With the 4th of July holiday fast approaching, I wanted to take a look at where June’s dry van truckload spot market rates stand to get a sense if the market is showing any signs of turning. Two charts below using data from DAT Freight & Analytics. Thoughts: •Top chart shows dry van spot rates as well as dry van broker buy contract rates. Dry Van spot rates, while up $0.06 per mile from the April low, are down $0.03 per mile from June 2023. Given diesel prices are down just $0.08 per gallon from a year ago (https://lnkd.in/g5sUVM8V), fuel isn’t driving this difference. •June 2024’s $0.03 increase over May is quite weak relative to what we have traditionally seen in dry van TL bull markets. In 2014 the increase was $0.11 per mile; in 2017 it was $0.10 per mile; and in 2018 it was $0.17 per mile. For that matter, the increase was $0.10 in 2019 (a down year)! As such, spot prices so far are a sign of a cruel summer—my daughter is obsessed with Taylor Swift—from a pricing standpoint. •Bottom chart shows the dry van spot market cycle indicator (DVSMCI), calculated as the broker buy rate less the spot rate, with the difference divided by the average of the two measures. That ratio is currently 16.6%. While better than last year’s 19.9% reading, we are well away from the 10% threshold where we have tended to see markets flip. Implication: dry van spot market data suggest that folks who made predictions of the dry van truckload market flipping from bear to bull in late Q2 or early Q3 likely made an overly optimistic forecast. I increasingly believe the earliest the market could meaningfully flip is Q2 2025, and this will require many things to go right from carriers’ vantages for this to occur. #supplychain #supplychainmanagement #freight #trucking #truckload

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Starting with fully accurate information from the shipper would be so nice.

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