Blue Yonder ICON 2023 Key Takeaways: Advancing the Luminate Platform with Cloud-Native Focus and Returns Management Acquisition

At its ICON London event last week, Blue Yonder doubled down on its strategy to deliver interoperable supply chain solutions built with a microservices architecture and apply Artificial Intelligence (AI) in ways that both support organizations’ adoption and evolve management systems toward cognitive orchestration.

The company’s partnership with Snowflake announced back in 2022 continues to drive solution capabilities, and Blue Yonder is becoming the first company to write applications natively on the Snowflake data cloud. The partnership has been integral to the success of Blue Yonder’s Luminate Platform and is enhancing the transition to more advanced AI applications with the company currently running more than 165 billion AI workloads each month.

Blue Yonder also announced its acquisition of Doddle, a returns management solutions provider helping companies develop Pick Up-Drop & Drop-Off (PUDO) networks and optimize digital returns. Doddle work with Third-Party Logistics (3PL) players, parcel carriers, postal operators such as Australia Post, and leading retailers such as Adidas, Amazon, and GAP. The acquisition expands Blue Yonder’s offering to customers by incorporating solutions and expertise for optimized reverse logistics, a pain point for retailers that has increased exponentially with the e-commerce boom.

The sharp focus on interoperability, not just by Blue Yonder, but across the supply chain ecosystem paints a clear picture of the issues facing organizations today. The era of point solutions has fostered fragmented supply chains, with myriad data silos created through which organizations lose visibility, control, and the ability to run network analytics.

Many organizations have struggled with migrating from their point solutions to broader supply chain platforms given the general aversion to ripping and replacing existing systems and their aversion to data sharing. Cloud-native solutions and composable microservices can assist with this transition by allowing companies to adopt individual applications that integrate with their existing platforms and gradually scale to the broader offering via a pay-as-you-use cost structure. Augmenting this process with AI can greatly accelerate any data cleansing process requirements and allow users to start leveraging advanced functionalities much faster. Currently, Blue Yonder has 17 beta customers using their cognitive planning solutions and are continuing to develop their generative-AI-based tool, Blue Yonder Orchestrator, which allows for natural language queries and decision execution.

The Doddle acquisition comes at an interesting time for the retail space. Over 40% of retailers have now introduced some form of returns fees, with big names such as H&M, Zara, and SHEIN now charging customers due to the growing impact on bottom lines. According to the National Retail Federation (NRF), roughly 17% of online orders were returned in 2022 and, on average, retailers spend US$33 per returned item on postage, packaging, item value depreciation, labor, and missed sales windows.

From a logistics standpoint, platforms like Doddle mean that carriers can better manage the flow of returns coming from their various retail partners by consolidating returns through strategic drop-off locations and routing the reverse network more efficiently, helping to reduce costs. GAP Japan has also seen benefits beyond logistics through its use of the platform, with improved customer experience, reduced restock time, improved staffing efficiency, and increased conversion rate in the online store. In this new phase for retail, better digital platforms for returns and more efficient reverse networks will be crucial to coming out on top of the e-commerce boom, and this is becoming an ever more critical piece of retailers’ digital transformation considerations.

While it’s clear that cloud-native solutions are addressing the technical requirements needed to deliver supply chain cohesion, end users are not totally sold on the idea. For many, on-premises solutions allow for full control of Service-Level Agreements (SLAs), operational costs, and data risks, and avoids cloud provider fees. If an organization has developed an extensive on-premises solution that works for it, the transition to the cloud can be both costly and expose organizations to cyber risk. This is a difficult belief to shift when supply chain cyberattacks increased 633% from 2021 to 2022.

Many also still find that the promise of “out-of-the-box” integrations does not hold up, and solutions still require a high degree of time-consuming and costly customization before they bring value. Growth in composable microservices could be the catalyst for change in this area, but vendors will need to ensure that end users can unlock value at every stage of their scaled deployment, not just when the full platform is deployed.

Then emerges the next challenge as to what extent organizations’ data are shared to allow for network-wide optimization and greater visibility, while still maintaining ownership over their data for competitive advantage. Snowflake has addressed this concern with a method of querying external stakeholders’ data, without any data transfer occurring. Kraft Heinz is using Snowflake’s Data Cloud for its Joint Value Planning process, collaborating with retail partners such as Albertsons for full joint visibility and data analytics that then provide better planning recommendations.

It is becoming increasingly difficult for organizations to unlock value through traditional setups when vendors continue to unlock new capabilities with cloud-native solutions. Its clear innovation is top of mind in the current wave of AI, but solutions that can be easily implemented, offer individual scalability, and ensure data control is maintained will become market leaders. Blue Yonder is assembling the right team through its Snowflake partnership and Doddle acquisition, and is well positioned in the retail sector where ABI Research expects to see considerable investment in digitalization over the coming years.