In 2016, one of the biggest warehouse developers in the world, Prologis, opened a venture capital arm with the goal of investing in cutting-edge supply chain solutions. This has given the company a window into the future of not just warehousing, but emerging industry practices around logistics and distribution. That includes retailers, and Will O’Donnell, managing partner of Prologis Ventures, offered his view on the challenges facing the sector and how they are helping solve them.
This interview has been lightly edited for length and clarity.
What are some of the challenges and pain points that retailers are experiencing in their supply chains right now?
Where we see a lot of our customers focused on is inventory management. So how do they get the right goods at the right time in the right place within their facilities? That’s where we’re excited about the utilization of data and also AI and ML to provide more predictive insights. We’re spending a lot of time understanding how [to] digitize our assets to partner with our customers so they can get better visibility into what’s happening within the warehouse. Computer vision is an area where we’re spending a lot of time to understand how it can be used to help our customers optimize their operations.
Talk more about this problem of visibility. Where does it come from and what are some of the other technological solutions you’re looking into?
Part of it is the siloed nature of supply chain logistics. There’s so many different parties who have to come together in a cohesive fashion for the supply chain to work. So we own a warehouse. Someone else may operate the warehouse. There’s some other companies that are driving the vehicles…So you have each of these different organizations who have components of visibility. Part of it is, how do you get more collaboration to be able to see across these components and give people visibility on how things are flowing through the system in real time?…We have invested in a company called Freight Waves that allows both transportation companies and shippers to get real time visibility into transportation costs, rates, potential challenges, etc. We have another company we’ve invested in, Crisp, that provides integration between major retailers, such as Walmart, Target, Lowe’s, Albertsons, etc., and CPG companies, where they can start getting visibility in a consistent manner to point of sale data, and then tie that back into inventory levels and product placement.
Retail news that keeps industry pros in the know
Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.
Are there any specific steps that retailers you’re working with could take that would make it easier for a partner such as yourself to work with them?
I think the feedback for retailers is the more that one can understand the root cause of or where there is friction, partners like us can help sit down and come up with creative solutions and help digitize our physical assets to give them insights that can drive decision-making or enhance decision-making.
Jumping off of that, what would you say to retailers about how transportation and logistics are evolving as a cost? Is this something they should expect to be paying more for in the future?
I’m not sure if it ends up being more or less, but there’s just going to be fixed costs that do increase over time...In some cases, components of the supply chain will become more expensive, but at the same time, technology is going to allow people to identify more efficiencies to drive increased throughput…and eliminate some of the unnecessary cost. I think where I get excited and see where the biggest jumps are going to be coming is through the use of data analytics and AI because it’s going to be able to allow people to get enhanced information that makes for better decisions that a year ago or five years ago, we didn’t even know was possible.