Blue Yonder Can Deliver a 394% Return on Investment — Even in Challenging Times
Faced with port closures, supply roadblocks, labor shortages and shifting consumer behaviors, many companies have had to drastically change how they manage their supply chains and serve customers in the past two years. More organizations are discovering the power of advanced technologies, powered by artificial intelligence (AI) and machine learning (ML), to mitigate these challenges by making real-time, autonomous decisions that optimize cost, service, sustainability, and other critical outcomes.
How much of an impact can intelligent supply chain solutions make? Blue Yonder commissioned Forrester Consulting to study the real-world, financial benefits generated by Blue Yonder’s Luminate™ solutions in supply chain execution, omni-channel commerce and supply chain planning.
“The Total Economic Impact™ of Blue Yonder Luminate™” study concludes that a $10 billion company can expect to realize a 394% return on its investment in Blue Yonder solutions over a three-year period, $59.79 million in net present value over that same period, and a full return on its software implementation expense in less than six months.
Forrester’s study is based on interviews with nine customers who relied on Blue Yonder solutions to successfully master the challenges of 2020 and 2021. Forrester spoke with seven decision-makers with experience using Luminate supply chain execution and omni-channel commerce solutions, along with two decision-makers from organizations that recently transitioned their supply chain planning solutions to a software-as-a-service (SaaS) model. Forrester combined the results into a single $10 billion composite organization that reflects the typical benefits achieved by Blue Yonder customers.
Luminate: Purpose-Built for Today’s Supply Chain Challenges
The results demonstrate clearly that Blue Yonder’s Luminate solutions are helping businesses successfully navigate supply chain disruptions and generate a dramatic return on investment, even in today’s challenging environment. The benefits of these solutions for Blue Yonder customers include:
- Reduced markdowns, for improved margins. 2020 and 2021 saw retailers scrambling to meet increasing omni-channel demand via a range of new order-fulfillment and product-sourcing strategies such as curbside pickup and ship-to-store. However, their on-the-fly decisions based on manual analysis didn’t always consider complex issues such as the likelihood of future markdowns. By combining Luminate Commerce’s intelligent sourcing capabilities with its stock-out forecasting capability, Forrester estimates that retailers can realize a $15.3 margin improvement by making data-driven, profit-minded decisions that maximize outcomes across all channels and stores. For example, retailers can shift their store-sourcing strategies to fulfill orders from locations that are less likely to sell those products in-store.
- Increased labor productivity, driving millions in cost savings. The world’s logistics teams have struggled for two years to address shortages of both warehouse associates and drivers. Blue Yonder’s capabilities in warehouse management and transportation management, along with Luminate Control Tower, enable increased productivity via automation, process improvement and organizational restructuring. The projected results for the average business include a risk-adjusted $31.2 million in labor cost savings — and, just as important, the ability to continue to meet delivery commitments and retain customers in the face of unprecedented labor shortfalls.
- Reduced transportation costs, without compromising service. Despite facing enormous challenges like driver shortages and port closures, logistics teams are still pressured to minimize costs and maximize service. Blue Yonder’s transportation management and Luminate Control Tower capabilities enable companies to optimize carrier selection, avoid expediting fees and late-delivery penalties, optimize routes and delivery cadence, and increase capacities and roundtrip loads. Adjusted for risk, Forrester’s model estimates that companies can reduce transportation costs by $14.1 million by leveraging these two solutions.
Other benefits projected by Forrester for the $10 billion composite organization are an additional $3.8 million in e-commerce revenue via an improved online shopping experience, a $6.5 million margin improvement from more effective inventory management, and a $1.4 million cost savings due to better resource management across the e-commerce sales and fulfillment process.
The Power of Real-Time, Data-Driven Decision-Making
In its customer interviews, Forrester uncovered a key theme: Luminate solutions help Blue Yonder customers gain increased real-time visibility and execution-based insights across the end-to-end supply chain, so they can make fact-based decisions that have a higher probability of delivering a favorable outcome.
Lacking real-time awareness of inventory availability, current labor resources, transportation asset status and other key supply chain data, interviewees previously made incorrect assumptions that led to less-than-optimal decisions. “We wanted to see inventory positions around the world compared to our forecast, compared to our actual demand. We wanted to see what things are in transit, as well as identifying where there are delays and whether [or not] they would cause stock outages,” said one customer, the director of supply chain for a medical technology business.
After implementing Blue Yonder Luminate solutions, the interviewees are seeing the results they expected in various functional areas, as well as an overall improved ability to respond to the extreme supply chain volatility that characterized 2020 and 2021. Not only can companies recognize any exceptions in real time, but they can also immediately re-plan as conditions change across the extended supply network. Blue Yonder supports both short-term responsiveness and long-term resilience.
For example, the e-commerce fulfillment director for a fashion retailer stated, “As things opened up and closed down, that used to take significant multi-day projects to make changes in our system. With intelligent sourcing we have been able to make extremely large changes in less than an hour related to sourcing and fulfilling orders. We are able to avoid some markdowns while keeping inventory positions where we need them. And, to be honest, I don’t think that it’s hyperbole to say there would have been days where we might have had to bring our website down without Blue Yonder.”
The director of omni solutions for a specialty retailer emphasized that Blue Yonder’s solutions drive more certain results and supports more reliable customer promises. “Previously, we could only provide the customer with a date range versus a promise delivery date, because the solution couldn’t see store inventory in real-time. Customers [would] abandon orders due to the lack of specificity. Blue Yonder solves this because it obtains DC and store inventories in real-time. Furthermore, we have improved a key metric [by] promising [delivery in] 5 days or less well over 40% of the time when, historically, it was around 30%.”
Blue Yonder’s solutions also support broader changes that deliver long-term profitability and service improvements, such as new network models. A director of global sourcing for a health consumer goods company noted, “[Blue Yonder transportation management] enabled us to completely redesign and reconstruct our distribution structure, shifting from decentralized planning and execution to two transportation centers in the US and in Europe. We moved from manual, gutfeel, and relationship[-based] carrier selection to automated selection based on service levels and cost. We won by significantly reducing our carrier costs while also reducing labor costs and improving service levels.”
Start Earning Your Own ROI Today
What results can Blue Yonder’s Luminate solutions help your organization achieve? That answer depends on your specific business challenges, core competencies and strategic goals. But the recent Forrester study demonstrates that Blue Yonder solutions are delivering significant financial benefits and a rapid return on investment for a wide range of companies, with diverse challenges, as they successfully navigate the current business landscape.
Whether your company is seeking increased real-time visibility, a greater level of agility and resilience, more fact-based decision making, improved efficiency and automation, greater sustainability or some combination of these objectives, Blue Yonder can help. Read the Forrester study here and start imagining what your own results could look like.