C.H. Robinson (NASDAQ: CHRW) has teamed up with data analytics provider SAS in a joint initiative to marry the 3PL’s transportation knowledge with SAS’s retail industry capabilities and provide an entire suite of new analytics tools to companies in and serving the retail sector.
In the announcement and in interviews with FreightWaves, as well as a video released to a major annual industry retail meeting meeting virtually this week, CHRW and SAS officials spoke in sweeping terms about the initiative, calling it “first-of-a-kind” and unprecedented.
Richard Widdowson, vice president of Global Retail & Consumer Packaged Goods Solutions at SAS, said his company had not undertaken anything similar in the many other industries that SAS provides data services for.
Widdowson and Chris O’Brien, CHRW chief commercial officer, said in their interviews with FreightWaves and in the video presented to the National Retail Federation’s virtual annual meeting that bringing the two companies’ capabilities together will solve numerous problems in the retail supply chain. It is not yet targeted to any other sectors.
The pairing does not have a name and in its formal statements, the two companies did not designate it as a joint venture or a description more specific. But broadly, the idea is to take CHRW’s customer base and streams of data that come from its business and combine it with the data analytics at the heart of the SAS software offerings.
O’Brien said the information that will flow from that combination will combat multiple inefficiencies that cost time and money in the retail supply chain. He identified four areas in particular:
— Carrying costs of inventory, with the expectation that the SAS/CHRW data product will provide far better inventory management knowledge.
— Improving levels of service, which will save shippers money when retailers hit them up for charges on inaccurate and incorrect shipments.
— Keeping shippers out of the spot market with better data analytics to help match up supply and demand for trucking capacity.
— And in what O’Brien described as the “fourth bucket,” but which he came back to several times in his interview, changing the “long annual process” that now exists when a company puts together its annual shipping procurement program. As O’Brien said, the one-time procurement tender often takes six months to prepare, buffeted by constant shifts in markets. But he said he believes users of the SAS/CHRW offering can overhaul it so that while it might remain annual, it can be adjusted regularly and in real time as new data flows in.
“Two things that change your plans are changes in demand and changes in supply,” O’Brien said. “Until now, those two sources of data haven’t been talking to each other and that is what we are changing today.”
Widdowson said something similar in the video released to the NRF virtual meeting. Under the program, a shipper will have better knowledge of the market for transportation, and a customer of CHRW will have insights into the demand for retail products that it will be called upon to move.
O’Brien stressed that the changes are “more than just technology.” “This is two companies with great tech and with great solutions that had different things and not a lot of overlap that immediately zeroes in on what they were good at,” he said. What SAS is good at, he said, is demand planning for merchandise, and what CHRW is good at is the transportation of that merchandise.
Brian Kilcourse, a managing partner at Retail Systems Research, which advises SAS, and which the two companies turned to for a supportive quote in the press release announcing the pairing, said the initiative was coming at a badly needed time in the retail industry. What Kilcourse said was “the old model” was for a retailer to “buy once and buy big and then allocate out merchandise to stores from central distribution.”
But that doesn’t work anymore, Kilcourse said, saying that retailers now “need to be able to see all the way back to the manufacturer and the interim steps,” and also “need to see all the way to the consumer.” Retailers also are competing with companies — he didn’t mention Amazon or Walmart, but it was clear that is whom he was referring to — that are building their own significant logistics chain while the others continue to rely on others to get their product to market. “They have no visibility into the supply chain,” he said. “It’s a big black hole.”
O’Brien and Widdowson said both their customer bases would market the SAS/CHRW data and analytics offering. The connectivity in the product offering, according to the company’s prepared statement, is that there would be “an integrated data loop” that starts with SAS providing a “demand plan” that uses its retail data in its formulations. That would then ultimately feed into CHRW’s Navisphere platform. The loop is then complete with transportation data coming off Navisphere being circled back into SAS’s Intelligent Planning suite.
Widdowson, who joined SAS 18 months ago after a long career in the retail industry that included stints at Walmart and CVS, said discussions between the two companies began in the first half of last year. But COVID-19 and all the retail logistics changes and upheavals that came with that gave urgency to the process.
He said when he was in the retail business, he had envisioned such a pairing for “the last five to 10 years.” He had been a customer of CHRW in his retail days, Widdowson said, and also had been a customer of SAS before he joined them.
“I knew they were both leaders so last year is kind of when I had the opportunity to say, wouldn’t this be great if we could get these two together and finally solve this problem that nobody has been able to do?” Widdowson said.
According to Widdowson, the two companies are not setting up a separate division in their companies to manage the relationship. He added that for now, SAS is focused on “just this partnership” and has no plans to put together similar arrangements with other 3PLs or transportation companies.