 Welcome to the third live event of SC1x, Supply Chain Fundamentals. I'm in Mavorrella, postdoctoral associate at Center of Transportation and Logistics at MIT, and the course lead of SC1x. So I'm sure all of you know me already. And I'm here with the most famous person at CTL for you guys, is Dr. Chris Capples. Thank you, Chris. Hi, everyone. Today we're gonna talk about some problems from practice that were shared by some of your fellow learners in SC1x. And we'll try to talk about these real life problems that they face in their day-to-day life at work. So to do this, we're gonna use a new application that we have not used here before. I think it was in the update that we sent out. If you could all go to slido.com, s-l-i-d-o.com, and then enter in the code Q, as in Quebec, 855, Q855. And what we'll do, we'll have a series of poll questions, and this is a chance for you. If you wanna ask us a question, you can type it in there, and then we'll try to get to those. So again, go to slido.com, s-l-i-d-o.com, and enter in the meeting number Q855. And so if you're there now, you can always see what's showing there. And I asked the first questions for everyone to enter one word that describes your experience in SC1x, and it's just creating a word cloud. And so, yeah, so you can see what everyone said. I asked for one word to describe it, and so some people are entering those things in, and we'll give you guys a chance to do that. But we'll also have some polling questions as well. In fact, let me go to the, we'll actually go to that one now. I have another one that I'm gonna end up, and this is simply asking for anyone here, what was your favorite week of the course? Weeks one through four, and then seven through 10. I didn't put the off weeks or the midterm or final weeks because I thought that they wouldn't get many votes anyway. But this is just a chance for us to talk, and we always look for feedback from you guys of where we can improve the course, where we can make it better. Week seven was pretty much redone for the first lesson. We added the warehousing one about a year ago, so we're constantly adding things in based on your feedback, so we'll constantly do that. All right, so we're getting some responses in. Again, go to slido.com, slido.com, and it's Q855. Yeah, I think you can also click on the link that Arthur just shared in the chat. Oh, great. Oh, you click there, you will go directly to the Slido room we are using for the live event. Yeah, so we'll give it a few more seconds. And again, we're trying out the system. We haven't used it for this. I use it for some of my other courses now because it's pretty good. But it looks like week 10 is leading the pack with week seven right behind it, which was NewsVender. Oops, NewsVender's just lost some. Because what's interesting though, remember the last time you ran this, that was the week people liked the least. Yep, exactly. Yeah, so I re-filmed all that and hopefully beat you guys over the head with statistical distributions. All right, and week 10, transportation, that's great. I actually teach a course here in freight transportation management at MIT. I've not made it on an online course yet, but maybe that's something I should consider. All right, so and then what's the least like, no one likes week one. That's too intellectual. All right, so let's go to some of the questions. And again, as you're in Slido, what you can do is you have a polling and then you have questions. And so if you look at some of the questions, you can type things in and then I will upgrade them so we can all see them. And so I wanna put some initial ones in that we've already been asked. So the first one came from the ideas, Facunda Artisone, and he asked, how can I use inventory review policies for items we have a seasonal demand? Remember, everything that we did assumed stationary demand. And so if you have seasonality, there's two ways you can think about this. If it's generally deterministic, but varies with time, then you can use a technique called fixed horizon planning. And we'll talk about that in SC2X actually. It's where you use an optimization model. If you know that your demand is deterministic, but it's gonna be higher in one month, lower in the other, and you know what that is, such as in the production schedule, then there's a lot of techniques. And we'll spend actually a whole week on that in SC2X. The other, if it's stochastic and you have demand that changes, say you have in the third quarter of the year, you have slightly higher demand than in Q1, all you can do is just adjust your demand that you're expected over that next cycle. And so I would not do, someone had suggested re-seasonalizing the trigger, S and the Q values. I don't know, that seems a little extreme. I think you just constantly wanna look at, remember what you're doing for the safety stock, I'm covering the expected demand over lead time. So if you see the demand over the next lead time is gonna be much higher, let's say it's hit rip for Christmas or something, then you wanna add in more for that, because you wanna cover the demand over that lead time. And if it changes over that lead time, just adjust the value. So you just be adjusting the S. It's gonna constantly be changed anyway, in real life, in an ERP system, you're probably gonna be using a base stock anyway. So what was ordered is going to be reordered and then adding some on for any increase in the demand forecast. Anything you wanna add? No, no, I think that was a great explanation. You're just saying that. Okay, so the next one I wanna do came from, let's see, can I, there we go. Naiman Ansari asked, how should I plan inventory policies for an item that has both high lead time and fulfillment variability? And this one also had, was this perishable as well? Yeah, this was an interesting one, because was it food or was it pharmaceutical food? So he sent us a lot of detail on this, where the multiple companies where things are coming in with different lead times. And the question is, how do I plan my inventory? Because my demand is variable, my lead time is variable, but also the order fulfillment. So if I order 100, I might only get 80. So you have all these sources of variability. We talked about how to do lead time variability and it's simply the equation that we showed, I think in week 10, is that when we do that? Yeah, and so you can add it in and as you should figure out by doing the practice problems, anytime you increase the variability of the lead time with a variability of demand, your need for safety stock gets huge. And so you can technically do it that way, but it gets to the point, if it's saying your safety stock needs to triple, well it might be that your perishability doesn't let you do that, because the food will perish before then. I think they had to keep it at least six months of life for it to be sold. So it raises the other question is, when we're covering for uncertainty, what we show in inventory is just using inventory for that. So I'm only gonna stock, I'm gonna use inventory to control my uncertainty. There are many other ways you can control that. And so one is faster transit time. So it might be, if you find that you don't wanna plan for all of the uncertainty, plan for 95%, cover 95%, and then anything above that, you can handle with faster transit or backup capacity. You can use a contract manufacturer. So there's other things you can do, other tools in your tool belt to handle for that extreme added demand. Now as far as the amount, the order fulfillment, that gets a little tricky. If you only get on average 80% of what you order, you can actually just use that to increase the amount that you order. That's one way to do it. And so you look at what the expected value is. So if you order 100 and usually only get 80 in, the question is, if you order 120, will you get 100 in? And you can try, without knowing more information about the actual situation, it's hard to know that. Because it gets into something else where if you have a scarce item, you get it allocated. That's a whole different ball game, where you might have a supplier who can't provide it and they start rationing things out. And we talk about that a little bit actually in SC3X, we talk about complexity, because it causes all sorts of other things and different behaviors. This is something that happened to a lot of situations, the classic example, Cisco with a C, C-I-S-C-O, around the 2000.com boom and bust, is that they'd have so many customers order multiple times because they were having to allocate, they had scarce resources. And so there'd be all these phantom orders. So if both Inma and I wanted this item, I might place five orders for 100 each. We're not only one at 100, but I want one of those to get set up. So what happens is you have these phantom orders and then they get pulled. So Cisco thought they had a lot of demand, but it was really people just gaming it. So until we find out a little more, that's about as far as I could go with that one. But the big takeaway is having extra inventory is just one way to control for uncertainty and demand early time. There are other tools out there. Yeah, actually what Iman said they were doing right now, they were in order to, because of the variability of order fulfillment, they were shipping by year, when they had like only, I don't know, like 80% of what they were expecting, they were just shipped by year to get the 20% extra that they needed. But that was driving the costs, like high costs. And it was a big problem for the company. So, yeah. Yeah, so it was more of a, how do you include variability? So I was an issue one. Okay, I put a third one out there and this one is from Alessandro Silvestro. And he was asking, how should I calculate the holding costs for WIP, which is work in process, in a production area with limited space and shared capacity. So I think it's an original equipment manufacturer, an OEM, and they have a lot of just in time and just in sequenced delivery of things. And so very limited space. And so the question is, how do I figure out what the holding costs are so I could figure out what the inventory level to have for each of those items. We haven't done anything in SC1X that actually looks at, how do you look at things collectively? We did one thing. We did exchange curves, I think in week nine. Week nine, yeah. So that's one place where you can look at the trade-offs. And that's one way to get at it. But really there's some other things that you can do. And this reminds me of a project that we did for a Starbucks where we're looking at their back of house or their back room. They want to know how they can better utilize it for different items that they order. They sell coffee and food and things like that. And their back rooms are very tiny if you've ever been in a Starbucks, which I think everyone on the earth has been in a Starbucks at one time or another. So the question was, how much space should I allocate to each of these different SKUs? And so what makes it tricky and different from everything else we've done in SC1X is if I use space for SKU1, I can't use it for SKU2. So we haven't done anything with a capacity limit much. We did it with exchange curves. But what we did in Starbucks, we've created essentially a mixed integer linear program, which if you've taken SC0X, you know what I'm talking about. And if you haven't, you should take SC0X. And we'll also do this again in SC2X. And what it is, you can put a constraint on it. And so what happened in our Starbucks example, the products that drove the highest profit margin got more space. And it's a way of allocating a scarce resource. That's what linear programming, integer programming, mixed integer linear program is really good at. How do I allocate a scarce resource? So this is kind of related to that. I know Alessandro did some genetic algorithms trying to minimize the space. Yeah, it's a little tricky. And so there probably isn't an exact formula for this because I really don't think you want to not store some of the items. The question is how much of each do you want to do? And I would start with if things are coming in, we'd need to know a little more detail. But if it's just in time, there are probably multiple deliveries a day if it's coming into an auto manufacturing plant. Usually you'll have almost hourly because they usually set up their suppliers right around the manufacturing plant. So if that's the case, I would understand what the cycle stock requirements are. And cause you're gonna treat the supporting suppliers as the safety stock. And again, you could probably have an expedited delivery to cover anything for any spikes in demand. The beautiful thing about OEMs is that it's a production schedule. So it's fixed, it tends to be known in advance, at least a couple of days. So that makes it a little easier for you to plan. And again, we'll cover that when we talk about production planning, production scheduling in SC2X. Right, so any anything you want to add to that one? Yeah, maybe relating to that. There were quite a lot of questions in SC1X forums about how to calculate the holding cost ratios. So I know we will cover it more in depth in SC2X too, right? So the holding cost is typically, actually no, I don't think we cover too much because every company does it a little differently to be honest. And it's, remember, these are just levers. I can increase my H or my R depending on what nomenclature I use or my fixed cost per order. Those are things that are hard to get exactly what you're really doing for it. Usually the company will dictate especially for what your holding cost is because remember in the lecture that we did in week four, I guess we do it, we talk about all the different components that go into your holding cost, insurance needs, the space it requires, all of those things. And those are usually moot. The only thing that really matters is what the hurdle rate is for a dollar invested in inventory versus a dollar invested in something else. So they're gonna see two types of strategies for companies. One, they're gonna put a very low cost, they're gonna treat it actually at the cost of inflation or interest. And so it'll be 5%, which you don't really see because if I have a really low interest rate, what does that mean? My inventory level will go way up. On the other extreme, you see tech companies ratchet that up to like 25%. Now, is it really that the interest is 25%? No, but it's the opportunity cost is lost on a dollar invested in inventory that they could otherwise use somewhere else. So usually you're gonna think of it as competition for a dollar of investment by the company or a euro or a peso, whatever. So you have dollars that can be used to have inventory that'll meet demand, right? Or I can use it for something else. And as I ratchet that number up, right? Then that means my inventory levels will be lower, right? Because it'll cost me more to keep inventory there. So I would think of it more as a lever to get you, it's kind of an approach that the company will decide. I don't know too many places where you're gonna actually calculate it very detailed. You can do this and I think we have a problem or two where you have multiple components. And for EOQ, you can just modify the EOQ equation. You can add in a series of things that add to the cost. Like I think we have a problem where the space, you have a certain cost for holding for every square foot of the item. I can just add that in to the EOQ and it'll adjust, it'll just add to the R value. But in practice, almost universally, this is gonna come from your finance department. Your CFO is gonna determine what your holding cost is. Does that make sense? Yes. Yeah. Okay, so let me just see what questions, okay. Let me do one that I had asked before. And this is, this is one that I put on the discussion forum. What effect does the tightening trucking market have on inventory strategy? What it really does is that the trucking market, as it gets tighter in the US and it's very tight right now, and that is caused by a bunch of different things. One is no one wants to be a driver, the economy is doing well, so there's limited capacity and there's higher demand and limited supply. So what happens in those situations, the cost goes up. Whenever the cost of transportation goes up, then you're going to combat that with increasing your inventory. You're gonna push your inventory closer. That's because the last mile delivery is usually the most expensive. So you can always think of inventory and transportation as they change, right? As transportation costs gets higher, then you're gonna push your inventory as close as possible so your last mile delivery is closer. As transportation costs get lower and inventory costs get higher, you're gonna centralize, right? So it's really a centralized, decentralized question. And we'll talk about this a little bit. I think in SC2X when we talk about network design and some facility location, but that's the inventory effect is something along those lines. But some other things that are happening is you're seeing companies get their own private fleets or contracted or dedicated carriers because as you have limited capacity, limited supply out there, you don't wanna just go to the spot market. So we're seeing contract rates where you negotiate them for a year versus spot rates which are on the per load basis, spot rates are through the roof because it's a tight market. And so you're trying to secure longer term contracts. So the shipper wants a long-term low contract. The carrier would rather take spot contracts right now because they can make more on the profit margin. Interesting, with the trucking market in the US as well as most other countries, it constantly shifts from being a tight market to a loose market. Right now, this is the first time in probably seven, eight years where the carriers had a tight market and their rates are going up. For the last, like I said, seven or eight years it's been a very soft market. And that means that shippers could get really good rates from the carriers. So it always goes one way or the other. And an interesting question is from a shippers perspective, is it okay, is it better for me to partner with my carrier or to just be really opportunistic and ready to ride it? And so there's a lot of interesting discussions there and there's no one set rule but it's different strategies for the companies. Yeah, and the other thing that we're seeing for this is there's more flip to intermodal. Remember, for truck load you're doing in the US a 500 to 700 mile length of haul and the problem with that truck is occupied for a day and a half to two days. If you use intermodal, you have maybe a 50 mile drage, drae move to a loading ramp and then the train will take it to long haul and you have local on the other end. By doing intermodal, it's much cheaper, it adds some additional time though. It usually adds about two to three days more than the direct truck load. So what that would do is you could have lower rates for transportation but you're gonna have to keep a little more safety stock, right? Because you have a little longer time and the other thing with railroads is they're not as consistent. So they have some variability in their transit times as well. So it's a trade off there and that's what a lot of companies are doing. Interestingly, what happened last time that carrier rates went up, that's also the same time companies started being more sustainable because it's easy to be green when it just lowers your cost. So as transportation gets higher then they look for ways to be more efficient and how they load things into a truck to have higher utilization. They look for better fuel mileage because that lowers the cost and they try to cut out long haul trucking by going to intermodal and some other strategies. So what we will also see at this same time is a rebirth now of more sustainable operations and transportation because it makes financial sense for them. All right. That's really interesting. High related to our topics. All right. So here let's look at some new questions. This is from Eamon. What's our take on the new demand-driven materials requirements planning that challenges the way inventory policies we were taught in the course work? Demand-driven materials requirements planning. Everything is demand-driven so I don't know what you mean there. Everything uses the demand as the planning. Now for when you talk about material requirements, you're talking about, I don't think you're talking about art. It seems like you're talking more about production planning and we'll talk more about this. We'll talk about MRPs and bills of material and things like that. But I think everything we do is demand-driven so we don't really look at anything that's a pure push so I don't think it would change anything there but maybe I'm missing the point of the question. Let me go to a poll question. Let's see, how do we end up in our polling for the favorite week? Oh, it's a tie. News vendor and transportation. Wow. Week one, no one likes forecasting. That's interesting. Let me give you another question there. This is an interesting one. It's dealing also with transportation as well. The United States has three main last-mile delivery companies, UPS, FedEx, and the United States Postal Service, USPS. About 10 years ago, actually about 15 years ago, a company called DHL, which is dominant in many other parts of the country, in Asia, strong in Europe, obviously, and in Africa, not strong in the U.S. They tried about 15, 14 years ago and they pulled back out. Interestingly, they're coming back in to the United States and they're going to focus instead of, like UPS or FedEx will go from any point to any point on small shipment size, they're going to focus in on mainly urban areas, the last-mile instant deliveries. They're going to come back in to the U.S. market. Interestingly, Amazon acquired a lot of their air cargo stuff that used to be based out of, gosh, Ohio, I forget the name of the town. Amazon is buying its own transportation delivery. So a lot of air freight, a lot of trucks and things. So they're becoming their own kind of transportation provider as well. And so the question I asked, how successful do you think they'd be? And I give you a handful of options. One is note, not at all, they'll fail. The second is they'll be slightly successful and they'll stay in the market, very successful, and that they'll take a substantial market share and then exceptionally successful, they'll displace one of the existing three. So displace UPS, USPS, or FedEx. And so I'll let you vote for that and you can see the results live on Slido for that. And it looks like as you guys come in, you're saying they'll be slightly successful, they'll maintain their place in the market, but they're not going to take a lot of substantial market share. But we'll let those keep coming in. This is something I just actually read recently. What's interesting is, it's just a surprise. Last mile delivery used to be a very unsexy part of the transportation business, but now it's extremely hot and there's a lot of different experimentations going on, whether it's using... People are still talking about drones, delivering pizzas by drones and everything, but there's also like swarm technology where you have a moving truck and then you distribute from that. In dense urban areas we'll start using something like this where you might have scooters and they pick up from a truck that stops and they all load up there, deliver, and then the truck moves on to another spot and they deliver from there. So there's a lot of experimentation going on. Same thing with lockers. This is something that actually DHL has been doing for years in Europe where you have lockers where you can pick up. It's new to the US. Amazon is doing it. Amazon is doing it. They have some in the back of those, mainly in Canada but some in the US and Amazon is putting some of these in parking garages. We order it online and it will be in this locker when you come by to pick it up later that day. All right, so let's see... Everyone's kind of saying it's going to be slightly successful. No one is going to... No one is saying that it's going to displace the big players. All right. Okay. Any questions that we have? Oh, here, this is a follow-on. Someone just put it in. They're anonymous. Try to put your name in for these. It makes it easier for me to address and know who I'm talking to. So anonymous wanted to know what we think the weaknesses of DHL will be on the last mile delivering the US companies to other big companies. So it's asking where they're weak. I don't think they're looking to do a full network solution. I didn't get a sense of that. Did you read this in the Wall Street Journal now? I think I mentioned this earlier. I forget if I mentioned it to you guys, but the Wall Street Journal has a daily logistics newsletter. They send out every day. Just go to Wall Street Journal Logistics Report. It's run by Paul Page. It's free. Just line up and they'll send you in your inbox every day. Update of the latest logistics stories. It's a great way to stay current on the practical side of the business. They're not going to sit there and talk about technical math problems or anything, but they'll talk about trends and new things coming up. So it's a really good place to see. So what are the weaknesses of DHL? I think the challenge they're going to have and maybe they're going to learn from what they did poorly last time is there's such... As the size of the shipment gets smaller, you need more of a network. And so your fixed costs go way up because you need terminals, you need dock facilities, as opposed to truckload where you go point to point. So it sounds like they're not going for a full network. They're going to go to do something where it's just the very last mile. So doing within a city that instant delivery. So I think they'll be pretty strong at that. They could be. It's just a matter of how they can get the capacity fast enough. Interestingly, it's easier to find drivers for local delivery than it is for the line long haul. For long haul driving, the turnover rate for most trucking companies is about 100%. Now it doesn't mean that every driver quits, but some, you know, they have filled multiple times a year because if someone's driving long haul trucking, they could be gone for a couple of weeks at a time. But if you're just doing local deliveries, you can go home every night. And that's a big advantage because one of the other challenges that's happening in the trucking market in the US and in other countries as well as the economy goes up, people who would normally drive a truck now have other options. And one of the other big options that you see drivers do is they work in construction. And right now construction is booming in the US. So that takes more drivers out of the pool. So there's a lot of interesting dynamics that can go on in this market. But I think DHL, it could do well. They could leverage what they've done very well in urban delivery in Europe. I'd love to see them replicate that here and get a little more competition in the market. Okay. Let me just put some other ones out there. Questions are coming in. Here's another anonymous one. You guys need to put your name on it. Okay. Is the cost of transportation per load considered as CT, the transactional cost or cost per item? It depends. So you can look at the different types of costs. So generally, if it's a cost per truck load, whether I ship one pallet on it or 20 pallets on it, then it's a cost per truck load, CT, cost per transaction. If I turn that into, like if I was shipping it by LTL, I would charge per unit, right? And I would do that as a transactional cost per item. So it really depends. And I think I talk about this, don't I, where it gets fixed. The only thing, if you do it like for a container, and it's a fixed cost per container, you need to make sure that you charge it, that your capacity, you stay within your capacity. So if I can only fit, for example, on trailer, 26 pallets, and it's $1,000 per shipment, then it's $1,000 for whether it's one pallet or 26. But if I ship 27, it's now 2,000. And so you have to think of it in those terms. So usually if it's a fixed cost, right, which truck load trucking usually is, it's cost per transaction or C sub T. If it's cost per unit, then you just convert that to a just a C, right? Cost per item. Yeah, we usually, C sub T in the course is usually the transaction or cost. So pre-order, that's how we define it. Of course it can change. Just one comment from Param in the chat about the DHL discussion. He states that DHL's core competency is international transport, mainly involving customs. And it could be hard to leverage that within the USA. Yeah, I agree. That's why I agree. They're not going to leverage that because that's not what they're coming into the U.S. to do. DHL is still here for international shipments. They just don't do domestic within the U.S. They stopped. They pulled out. They bought Airborne Express. That was it out of, ah, I forget the name of the town in Ohio. Actually, it might be Edna. Edna, Ohio. That doesn't sound right. Cincinnati. No, it wasn't Cincinnati. No. Okay, yes. People are going to say, Yeah, I was there. I was there in like 99 doing stuff with Airborne Express. They bought them and now those are the resources I believe are required by Amazon. I haven't configured out. Yeah. It's not a big thing unless you're from Ohio. Right. All right, someone. Let's go some other ones. Someone forecasting. Okay, we're going all around the boards. Okay. You know what? Another anonymous one after this, I'm not going to answer any more anonymous questions. Okay. I spoke about a REMA forecasting model. When do we use it? Did I talk about a REMA? No, we don't talk about that in the course. No wonder you're anonymous because I didn't talk about this. I teach this in the fall course here at MIT. I'm deciding whether to introduce it to the online. The autoregressive technique, typically in a real production environment, if you're using Oracle, SAP, or any of the other large forecasting systems, you're going to have this as an option. And in fact, a lot of what we do for experimental smoothing is a form of a REMA. You can use a different flavor of a REMA, replicates what you do in experimental smoothing. And what typically happens is companies will try all sorts of different things. It's used interchangeably. I'm a big believer in keeping things as simple as possible. So a REMA can be great, but sometimes people over-specify things. You can always over-specify a model where it really maps to history really well, but it doesn't help you longer-term. I think I talk about this in one of the forecasting problems where we map an SE, might have been an SE1X, when I talk about 0X, when I talk about regression. So a REMA is widely used because actually it's like the larger family of which experimental smoothing is a piece of it. And so it's commonly used in CPG manufacturing, for example, consumer packaged goods. Wilmington, Ohio. Wilmington, that's it. So thanks to Krishna. All right, Wilmington, that's right. There was nothing in Wilmington, except Airborne Express and like a big boy restaurant. If I remember, there was nothing else there. Okay, so Washington R has a question. Do I think that UPS FedEx apply any inventory techniques for their distribution network? You know, they actually, I can't speak to FedEx, but I know UPS also, another piece of their business is managing inventory for like cell phone or smartphone repairs or things like that. And in that case, they do manage some inventory. But typically for their distribution, they look at the demand flow. And so they look at volume flows from point to point because they need to determine the frequency of shipments between their terminals. How many workers do I need to hire or bring on board for a certain area? So they plan this especially for the Christmas season way in advance and they try to predict what the flows are. But they really don't look as much to inventory techniques for this. They do some of this, but it's not the core of their business. Also, all of these companies that do the partial delivery, as you can imagine, spare parts is a pretty big chunk of that. And with 3D printing, you know, there's questions, will that go away? And that's why all of these companies are investing heavily into 3D printing. Maybe it makes sense for them to use all that capacity with their different facilities to make spare parts local instead of having to ship them through. So there's a lot of churn here, a lot of interesting developments. All right, let's see, where do we go? Let's see how our poles are going. So it looks like there's polling question. Yeah, it won't kind of say where they'll be in the middle of the market. Nothing great. UPS and FedEx don't have to lose sleep over DHL entering the market. It might be that they take the place of some of these startups like what's at Instacart and some of the local couriers because that seems to be the niche they're going at, which in addition to the customs clearance, they actually are very good at urban delivery because Europe is much more dense than the US. All right, let me do another one. It's kind of a little bit different, but it's a fun question. And so I put it up and so I asked the question, how will smart speakers impact inventory levels and demand forecasting? And you can check more than one of these. And these are like Amazon Echo, Alexa, Google Home, which is partnered up with Walmart and then Apple HomePod, which I don't know who they partnered up with. I know you can order things off it, but I don't know who they hooked with one retailer. The question is, what will this do? And so if you've never used one of these, you can ask it the weather, you can carry on these conversations and things, but you can also order things. Like when I order a dog food for my dogs, we have an Amazon Echo, I'll just say order dog food and I give my security code and it shows up in two days. It's an amazing thing, so I don't have to carry a 55-pound bag of dog food up the street. So the question is, what do you think this will do in the long term as these things, the IoT, Internet of Things becomes more common. It's an interface directly to the consumer. Similar to what Amazon has something else called the dash buttons. I don't know if you've seen these. Did you talk about these in anything else? It's by different products like Tide or Palmolive where you hit it, it's a button that automatically reorders something. And again, it's trying to get around easier to place that order. And so all of these things, the smart speakers, the instant order buttons, these are all things to lower the friction of placing an order. So the question is, what do you think this will lead to? And I gave you a bunch of different options. You can pick more than one. I'll let you guys continue to do that and we'll take another question. Any questions that you want that you've seen? Any more coming in? I'll do some easy ones. Okay. Parham asked, can we expect more analytical topics to be covered in the warehousing in the future? No. I just don't have anything else there. I don't do much in warehousing. I think the expert there is John Pertoldi out of Georgia Tech and I think I gave the link to warehousing science. I'd recommend going there. He's done a lot of work there. It's a free PDF and videos and things. I really recommend going to that and I'm pretty sure I referenced it in my KeyCon ZipDoc. Now, we do talk about WMS's warehouse management systems in SC4X and that's where I talk about technology. I talk about ERPs and how WMSs, TMSs and MEPs tie into those. So we'll talk about those on a higher level but most of the detail with warehousing is that we do it in warehousing. So we don't do too much there. The only programs I know that did is like I said Georgia Tech does some stuff there, look up John Pertoldi and then University of Nevada, Las Vegas used to do some of that but it's kind of a niche area that we just don't go too deep into. Okay, here we go. Someone wants to swear to come. So Pranav wanted to know my thoughts on the impact of blockchain will make in the world of logistics and will it truly improve transparency? I don't know, how do you feel about this? You're the blockchain expert. I'm starting to be an expert. So what's your opinion? I think there's a big potential to improve transparency but companies are still struggling on how to implement this new technology to translate real world transactions into digital ones. So there's a lot of hype around it. I definitely think there's a potential but we still need to work on some proof of concepts and some pilot before really figuring out how to what a good implementation could be. So we're working on that right now. We're starting a line of research on blockchain here at CTL. So more to come. In SC4x you can learn a lot about blockchain with some experts here at MIT and some great discussions between Eva and Chris about the topic. So blockchain, I'll let you guys Google it. We didn't talk about it at all in SC1x, right? It's essentially a distributed ledger that allows you to have a little more secure, a little more permanent record keeping in a very distributed fashion. I'm not I think it's going to have a big impact for chief information officers and CTOs. I don't think it's going to have a huge impact for supply chains personally. The big ones where it says it has impact are smart contracts where if something happened it automatically changed the payments. There's a question certainly for transportation whether they're ready for that because there's a lot of gray area when something happens. For example, if a shipment is late do you automatically trigger a penalty? Well, a lot of times it's not the carrier's fault and so there's a lot of negotiating back and forth. So I don't know, I have a student doing a thesis right now on smart contracts and ocean shipping. We're trying to explore that. I know Maerska is doing a pilot with Walmart right now. There's a lot of pilots going on. The other one is Providence and we talk about this in SC3x, tracking and tracing. There could be some things here where you can actually show the proof of where something came from and it's a nice way of keeping an unadulterated version of records. We're actually doing this we're looking to do this for your SCX and MicroMaster credentials and certificates because a lot of you guys when you finish the courses you want to have them sent certificates sent to like an academic program or something and it doesn't really work that well going by emails but if we put it on a blockchain where you're authorized to release your certificates to anyone you want that's a much better solution. So I think there will be opportunities I don't think it's going to be like sliced bread that changes everything that we do. I think it's going to find its niches just like RFID if you're in the supply chain space around 2003 to 2005 RFID is going to change the world. Everything would have RFID tags and they're being used in certain things and they're not used everywhere. So I think we're still pretty high on the hype for blockchain. It'll find its purpose but there's still a lot of work there as Ima said. All right. Okay let's go back to the poll see what we ended up with. So the effect of smart speakers and everything. Yeah I agree. So most of you guys said more at the consumer it's taking things away increase the accuracy of demand forecasting. That's a good question because maybe you get better signals and you get true demand because if you request it and it's not there it's not the same thing as truncated demand like if I go to a store and you look at sales because I'm getting the request so it might improve the demand forecasting but the other side of that though is the demand signal whenever you order something online I expect it and I don't know how you are that day or tomorrow. So I'm giving you my information as a consumer but my expectation of delivery now is immediate and so I don't know what the tradeoff is there. I agree it's going to change the way we do demand forecasting because now you can start looking at individual shipping and so on but now we are seeing a point where the commercial source is delivering the market and that's a big no con not just what they bought in the store so whether that improves the accuracy see then we lead to a decrease of consolidation in a number of retailers. I think absolutely we are seeing this in the U.S. Toys R Us was a new recent announcement which they are closing Games and things and they're gone. And so it's really happening a lot. There's been a lot of consolidation of brick-and-mortar Retailers there's been a lot of consolidation like Walmart has been acquiring a lot of niche online Retailers so there is a lot of churn in the retail industry. I was joking. It's a great time to buy things from a retailer It's not a great time to be a retailer because it's a tough market right now And it looked like there was a mix knowing that a toss-up for inventory Equal numbers said there'd be an increase in the required level of inventory and a decrease. So that's kind of a that's interesting There's a lot of debate there Again, it's a trade-off. I improved my demand you figure that would mean I could lower my inventory But then my lead time goes way down because I have to push it out There's a reason why all the online retailers are building more fulfillment centers Because they want the inventory closer to the end consumer because the expectation for lead time Has really shrunk and so I expect it within a day or two So we'll see how it goes, but it's an interesting development. That's happening here with those smart speakerphones You have one in you use this do you use an Amazon? Everything Too lazy Okay, so some more questions If you enter a question as anonymous, I'm not gonna ask your question So Here's one from Valerie Valerie wants to know have we thought about including a module That deals with supply chain and logistics outside of the standard private sector such as humanitarian health and supply Interesting question Valerie. I have not that's not my area But dr. Jared Gensel and Timothy Russell and others in the space and Alex as well, right? You're gonna this are developing a course. They've developed some for a project. They ran with USA ID USAID and they're in the works of developing a potential course in humanitarian logistics I actually have a meeting later this week with Jared. Are you in on Thursday, right Alex? I think it is so One will be coming down the pike. I can't say when The nice thing is it really doesn't matter because all the fundamentals that we teach here apply They all the parameters all the models everything in fact a lot of the stuff that Jared and his research team the humanitarian response lab have done They just modify these models a little bit But the core models still apply inventory still cost something and you have a lead time So a lot of the fundamentals apply, but there are some peculiarities. So we'll see a course coming out I can't tell you exactly when though All right is I'm going to mispronounce your name Salomone Is there any course out of the five that covers SNOP process? If no, please share any links or course that covers that topic. Yes, SC 2x We cover it there as part of demand planning of Yeah, so what we do in SC 2x We cover the three flows the design of the physical flow the financial flow and the information flow The physical flow is a facility location network design When we talk about financial flow Dr. Jared Gensel and Jim Rice talk about supply chain finance and introduce some CFO kind of topics And then in the information flow what we do is we look at how information goes from a supplier to a company to its customers And so we spend a lot of time on procurement Professor Sheffi gives a talk about that we talk about production planning Which is how you coordinate things with your suppliers within your manufacturing and then we talk about aggregate demand planning And that's where we talk about SNOP to be honest We talk a little bit about it because it's more of a qualitative Process so I'll talk about it give you a lot of references and I think we give a lot of Articles written by a dr. Larry Lapiti Yeah, we provided some references from dr. Larry Lapiti who is an expert on this field And the second life event of SC 1x that you can watch it in YouTube in our CTL YouTube channel It's about SNOP processes and forecasting So I totally recommend you to watch our life events with dr. Larry Lapiti and all his work on this field So now getting into where SC 2x picks up from SC 1x You'll use all the same tools, but it takes it another step further and again It's looking at the three main flows physical financial and information Alright One more that's it. Okay Ubert Teller asks what are our thoughts about instant food or grocery deliveries? Not instant food rate instant food delivery, right? One or two hour time windows. Is it not too expensive to handle this in terms of transportation? It depends Yeah, a lot of companies are doing this you pay a premium And so the question our consumers worth is it worth paying a premium and you're only gonna I mean we've been doing this forever. It's called pizza delivery, right? We're always willing to do pizza delivery It's instant delivery. Hopefully it's not even an hour, right? If it takes an hour two hours to get your your food That's that's not a good thing Actually, there've been some projects I know Walmart hooked up with the uber where they do the delivery So they use uber to do the physical delivery and they pick the the basket themselves The real cost driver is the picking alright And because if you think of in a warehouse versus a grocery store, let's say in a warehouse Things are set up to increase the picking efficiency. That's not the same in a grocery store It's there to increase demand and sell so there's marketing. There's end caps and things are very different on plus You you don't know if everything's really in stock, right? Because you have all these people coming through shoppers and they move things around So the real challenge is to efficiently build a basket If it's like grocery because that takes a lot of time you have an individual picker the actual transportation out That's it's not so bad. You'll only see this in urban areas though You're not going to see this in the suburban area. I don't think Then it transportation will be high. I think I did I talk about economies of density in transportation I don't know if I did or not. Yeah, so as you get dense as I have more deliveries going in this Closer area the cost of transportation goes down the per stop transportation goes down So if I'm in the middle of you know farm land Then you're not going to have two-hour delivery for a pint of ice cream here in Boston downtown You will because the economies that the time it makes it takes to make that trip is very small So you can it can make sense, but it'd be a consumer will pay a premium for that All right, so Do you want to do more? What do you want to do? I would love to do more because it's very fun, but I think we should Wrap up Maybe if you could just tell us a little bit more of what we are going to find in a C2X and why our learners should Enroll in that course. Yeah, I think it's an extension of what you've done so far and everything we did before these are like the fundamental models that apply to every company and so Any software system you use will have these models embedded within them So we talked about forecasting and we did the basic time series modeling We also talked about new product development and I think that's pertinent to any company go to I used to run new product Development in a software company and we use the exact same planning tools the stage gate process So we taught you those basic tools that will be applied to any company and then inventory models at the end of it You're making it a trade-off trade off for like a EOQ you're trading off fixed versus variable cost If I look at a news vendor problem, it's cost of overage and underage. I'm too much and too little So you have all these trade-offs for inventory that you're using and again those are applied in every system that's out there and then transportation and Hopefully you picked up from all three of these things that they're all related to each other and the big thing is the transportation costs That total cost equation we gave you hopefully you're seeing how Transportation affects it and how the forecasting affects it and they have different levers So that was the big takeaway from SC1X and SC2X We take that and look at it how it affects the three major flows and looks at a network level So if you haven't taken SC0X I recommend you take that before 2x because we we jump right in to using mixed-injured linear programs And so we assume that you kind of know those things But then we use that that same tool into many other other areas And so SC2X I think is my favorite course because it's the middle course in the five and it also is kind of like The transition everything we do in SC0X, 1x and the first half of 2x are model driven And so if you're a quantitative math person, you love those The second half of the MicroMasters gets more qualitative and so it gets a little fuzzier and grayer We talk about complexity we talk about supply chain finance and so it gets a little Qualitative so it's not as model driven and so the first half of SC2X is very model-based Second second half is less so but that relates to how it ties to SC3X and 4x Which looks at adding complexity and then adding in scale the large-scale companies. What does that do to your supply chain? So I hope we can see you in SC2X. Who's you're not teaching SC2X? No Sergio Sergio. All right This will be his third run. So it's an expert one. Yeah, like I said, it's my favorite course I like a network design. I think it's a lot of fun. Yeah, and so he's a great course lead So you'll have fun there. Yeah Yes, I'm sure you're all very excited to enroll and start with SC2X now after listening to Chris but before you have to finish SC1X and We're releasing the final this Wednesday Just a little reminder the final covers all the topics in SC1X from week one to week ten So please review all the concepts even the forecasting that is really like bugging your head Just go back to that Review everything and be ready to take an exam. That is a timed exam It will you will have four hours maximum to complete it for problems in there and The exam will be open for one week this Wednesday at 1500 UTC until next Wednesday at 1500 UTC But remember that once you start you only have four hours to complete it just like the midterm And we know and respect you're gonna do great there and we'll see you in SC2X very soon And so I got many more questions answered or asked that I had time to answer I'll try to answer all of them. I don't know what the best way is but we have close to 20 So that's why some of you asked a question. Why is my question being under review? Well, I can only answer one at a time. So I'm keeping them to the side. I'll try to Answer the general forum. Yeah, maybe in the form. So I'll look for that and I'll let Inma send a note out But I'll try to get to these other questions, but we're running out of time. Yeah, I think it was a great life event very interactive Yeah, we had a lot of questions. Yeah, so thank you so much for participating and thank you Chris for your great answers And yeah on your proposals for the polls and this has to be a fan Um, all right great. Thanks guys. Bye. Take care. Good luck on the final. Yeah. Good luck