J. Scott Nelson, founder and chairman of Trax Technologies
\nThis year will be the scene of a major showdown over the issue of \u201cbig data,\u201d as companies such as Amazon make their moves into the logistics sector. To keep up, integrators, shippers and carriers are seeking a deeper understanding of the enormous amounts of information they collect \u2013 UPS currently stores about 16 petabytes of data on its shipments \u2013 so that they can make their operations more efficient. But how do they know how accurate these data are? If parts of the data are bad, what can be done about it?
\nEnter Trax Technologies, a U.S.-based logistics analysis firm, based in Scottsdale, Ariz., that is focused on not only identifying but fixing bad data in a typical supply chain. Working with some of the world\u2019s largest life-science and technology companies, Trax uses complex algorithms to seek out missing or inconsistent data in a company\u2019s supply chain and converts it into a coherent database. To prepare for expected demand for their services, Trax recently hired a new CEO, John Baptiste, formerly with the digital workspace for government workers, called Bloomberg Government, and with consulting firm McKinsey & Co.
\nAir Cargo World spoke with J. Scott Nelson, founder, chief architect and vice chairman of Trax Technologies, to glean some insight from him about how big data will transform all modes within the freight industry. As a freight automation pioneer, Nelson also provided a frank assessment about Amazon\u2019s entry into the aircraft leasing business and how it compares with its diametrically opposed counterpart, Alibaba, in China.
\nPlease tell us a little about what Trax does and how it works.
\nWe\u2019ve been in the space for about 20 years and have developed an algorithm that will analyze large amounts of data and can identify places where crucial data is missing, is inconsistent with the rest of the data, is incomplete or is simply inaccurate. Then we analyze these bad spots and use the algorithm to fix the gaps and correct the data. After that process, we can help decide what businesses our clients actually want to be in and how their assets can best be utilized.
\nHow big a problem is bad data in today\u2019s supply chains?
\nIn my nearly 30 years in the 3PL business, I can say I\u2019ve never seen accuracy of data reach anything higher than 80 percent; sometimes it\u2019s as low as 40 percent. That means even for the best companies, about a fifth of the data is incompatible. There\u2019s so much data coming from other sources that it\u2019s easy to let in a lot of errors. That\u2019s a really big problem for people. When only 40 to 80 percent of your data is accurate, and you don\u2019t know whether it\u2019s accurate, then your results can come up way off. It distorts your averages and statistics. People haven\u2019t directly connected it in their minds, but they have to come to the realization that if they don\u2019t have good information, they won\u2019t make good decisions.
\nHow does Amazon\u2019s strategy compare against Alibaba\u2019s model?
\nSince Amazon made its big announcement earlier this year, there\u2019s been a big increase in demand for what we do. They\u2019ve really become a supply chain company now, with a new business model of integration, and they provide a storefront on the web. It\u2019s fascinating to see two entirely different visions of logistics play out like this.\u00a0 Amazon wants to do it all itself, while Alibaba doesn\u2019t want to control anything. Amazon\u2019s model will work with some things, but Alibaba is much more community oriented, so you participate more in the process.
\nHow wise was the decision to lease a fleet of planes?
\nI have a feeling this Amazon plan may not be sustainable. The primary reason is to have centralized service levels and greater control of your delivery, which is a problem they had before with FedEx and UPS over the holidays. So, if you\u2019re flying a full load each way, it\u2019s great to have your own planes. But if you have any unutilized capacity, it can be a real danger. Costs are driven by asset utilization. But I think they want to be an integrator and offer their capacity to others. To do this, people will have to have better and better information. Amazon seems cutting-edge but think how fast technology is changing these days. They have some huge assets they\u2019re stuck with, such as owning their own brick-and-mortar warehouses and leasing planes \u2013 those are some huge costs hanging over you. That could be a death knell for them. If it wasn\u2019t for controlling the customer experience, they wouldn\u2019t have done it.
\nWhat can companies do to prevent entering more bad data into their supply chains?
\nEveryone wants good data, but they\u2019re not willing to pay for it. We enable information to be shared in a collaborative environment. What we do enables companies to get the same Amazon services without giving up control. Through our predictive analysis, we can show you what your prices would be should you make a change in your supply chain, track what will happen and assure that you get service levels you want. This can lead to higher profit margins and can move people away from a crisis mentality. In this business, a two to three percent change is a big deal. That\u2019s pretty much most people\u2019s profit margins right there, so it\u2019s a very significant cost to avoid.
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\nSource: aircargoworld<\/p>\n","protected":false},"excerpt":{"rendered":"