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From Paralysis To Recovery, Optimization Offers Ports New Tech Remedy – a BoldIQ byline

Eight weeks is what the port of Oakland estimated it would take to recover from the paralyzing effects of the west coast port labor disputes. As much as eight weeks of delays for domestic car manufacturers to receive parts, grocery stores to receive food and retailers to get their hands on the new Apple Watches. And eight weeks for the U.S. exporters to get their goods to market overseas – at least those goods that will not have lost precious shelf life in this period of time.

With West Coast ports handling roughly a quarter of U.S. international trade valued at $1 trillion annually, the cargo backlog at its 29 ports is monumental. Associated Press recently noted that if you stacked all the backlogged containers from the ports of Los Angeles and Long Beach alone, they would rise to more than 300 miles, higher than the orbit of the International Space Station.

Did the port backlogs really have to reach this excessive level, or is it just a part of doing business when importing and exporting by sea freight? In today’s world of big data and advanced analytics, why can’t the ports have systems in place to recover more quickly from these types of events? Or better yet, how can they be poised to minimize the backlogs to begin with if we are to assume that disruptive events like the port slowdown can and will happen again?

The recent crisis is not an isolated event — there have been disruptions in the past and there will be again – whether from labor disputes, political strife or catastrophic weather conditions.

The ports cannot expect an improved result by waiting for the next disruption to occur and again try to figure out how to recover in the midst of a crisis. Ports must re-examine the overall philosophy that governs their entire operation, so when they are faced with the next disruption, they can recover far more quickly and the impact will be minimized.

Right now ports operate with various degrees of computer-assisted decision-making. Where it exists, like in staffing, container planning or berth scheduling, it provides more of a planning aid.

Systems such as these certainly offer a degree of efficiency. But they largely still rely on human intuition, offer little to no insight into how decisions impact the port as a whole, and don’t provide a level of planning and solutions that exceed the operators’ own planning capability. The vulnerability of this philosophy is dramatically heightened whenever there is a disruption because the port is trying to react to a disruptive situation in an already non-optimized operating environment.

To overcome and preempt this damaging ripple effect, ports need to deploy an operations philosophy that accounts for and takes advantage of the entire sum of their parts. Within a very complex and unpredictable environment, ports need to know that they are maximizing each and every resource within a port for their own benefit and the benefit of their customers. And they need to be able to adjust rapidly to any change or disruption they face.

Ports should not have to question whether resources are in the most optimal location to minimize wait-times, cost and maximize the efficient transport of goods. Once ports accept a holistic view of operations management, they can then look at the technologies available today to realize their full potential.

So ports may wonder, what does an optimized port system look like? Do the technologies even exist to provide real-time dynamic operations optimization? The ports don’t need to look any further than the aviation industry.

Take private jet company JetSuite. Built by one of the founders of JetBlue, JetSuite’s business model of affordable, on-demand air travel depends on a holistic operations philosophy. The company has figured out how to maximize its resources relative to the needs of the entire airline rather than just its individual parts.

Like the ports, JetSuite must operate within a highly regulated, complex and unpredictable environment, managing factors such as fluctuating customer demand, regulatory and operational constraints, resource maintenance, changing fuel prices, staffing schedules, and of course unpredictable weather.

But unlike the ports, JetSuite deploys a technology to manage all of its resources in a dynamic real-time fashion. Despite daily changes and disruptions and fierce competition among more established airlines, the young airline has risen to fourth in total revenue hours flown and second in aircraft utilization among its peers.

Similar systems have been deployed for transportation, drones and staffing management, which have realized as much as 16 percent reductions in operating costs and 20 percent increases in capacity using only existing resources. These industries have begun to realize the value of operations-focused advanced technologies.

Our ports can realize this value, too. They can increase throughput of their ports without investing in capital or trying to enlarge their geographic footprint. And they can diminish the damage done to global trade by such a labor dispute.

Instead of taking eight weeks to recover, what if the port only took four? This is attainable with the technologies we have today. This kind of operations optimization could make a difference of millions, if not billions, of dollars. Beyond the pure dollar impact, harnessing this type of technology will help ensure the longevity of importers and exporters and the economy as a whole.

Just as any other dynamic industry, the ports have very little control of when or what disruptions will happen in the future. But they do have the ability to transform the way they run their operations and how to best optimize resources so that every disruption recovery is far faster, less costly and, as a result, less burdensome on our economy.

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BoldIQ Looks To Mitigate Supply Chain Disruptions – An Industrial Distribution story by Mike Hockett

The manufacturing supply chain is still recovering from a nine-month long standoff between longshore workers and employers on the U.S. West Coast ports, and will for months to come. The labor dispute caused major disruptions resulting from port shutdowns, accused slowdowns, and all-in-all created a massive backlog of cargo that prevented goods from reaching warehouses and store shelves.

The port labor mess, which finally came to a resolution Feb. 20, was the most prominent example in the last few years of the major effects such a crisis can have on the supply chain. Other disruptions caused by labor issues, weather, accidents, or human error are unpredictable for those at ports, distribution centers, and factories.

Roei Ganzarski, President and CEO of BoldIQ, envisions a world where disruptions don’t need to be so disruptive. While supply chain crises can’t be predicted, their effects can be minimized through preparation, and that’s the purpose behind Seattle-based BoldIQ, which pilots a resource optimization and disruption management software.

In a nutshell, the software uses real-time data to create the best possible operating plans for an organization, taking all of its data into account including resources, demand, costs, rules, and constraints.

The key word with BoldIQ is optimization – designed for during times of disruption, as well as times of calm. The software takes into account all the moving parts of an operation and finds the solution that maximizes efficiency. So even when things are running smoothly, BoldIQ can find ways to increase profitability and growth.

Any company could grow by adding more resources. It can buy more trucks, hire more people, add warehouse space, etc. But that kind of growth is very costly. The aim of BoldIQ is to spur growth by maximizing resources already in place.

“By optimizing your business in real-time, all the time, you’re able to grow without investment,” says Ganzarski.

BoldIQ’s origins and most prominent applications so far have been in aviation, but the company is looking to branch out into more supply chain operations. Be it in shipping, fleet management, distribution, staffing, inventory, or beyond, there’s a wealth of opportunities.

“The key that we focus on right now is world complex dynamic industries,” says Ganzarski. “So basically it’s any industry in which you have a lot of resources, a lot of demand, where your environment continues to change every day – be it for good reasons or bad. They include transport, staffing, on-demand delivery, healthcare, energy distribution, aviation, etc. In all those industries, there is no such thing as a “plan” – there is just the best thing to do right now. And it changes, it could be a minute from now or an hour. That’s where our software sits, takes all that data, and continues to pump out the best solution for that specific operation and that specific organization for that period of time.”

How it works

So how exactly does BoldIQ work? How does it create an optimal operation solution? The software uses an algorithm that breaks an environment into four key parts: Resources, data around demands, rules and regulations, and business drivers. To illustrate this, let’s apply it to the ports industry.

  1. Resources – This would include ships, cranes, trucks, and employees, as well as the cost for each.
  2. Data around demands – This would include the number of ships/containers/trucks needed, how many of each are going in and out, how many are going on cranes, trucks, and trains.
  3. Rules and regulations – This would include port labor agreements/contracts, safety rules and limits.
  4. Business drivers – This includes operational goals such as easing the trade of goods, and the ports’ financial goals.

The software takes those four factors in real-time and says “with what I see now, what should I do?” and creates a solution that minimizes disruption and maximizes efficiency.

“It’s a chess game. You want to look 3-4 steps ahead, but every move of your opponent makes you adjust,” Ganzarski says. “This software says ‘this is the best plan right now.’ Now all the user has to do is see what options it gives them.”

The software can take much of the guess work out of supply chain disruptions. For example, if truck or shipment of valves is going to be late to a distribution center, or machinery breaks down, delaying an outbound shipment, the platform creates a solution that optimizes current inventory. Instead of naturally saying, ‘these valves were supposed to go to these 10 stores, so now those 10 stores will be out,’ inventory can be optimized to say, ‘I could now move this truck of valves to different stores where sales would be higher.’

“The engine, because it’s not very industry specific, can adapt to various problems with industries,” Ganzarski says. “You can apply it all the way up and down the supply chain to improve the overall industry.”

Origins

BoldIQ’s roots are in aviation. The software was built in the early 2000’s by PhD members of global software company Citrix as a means of driving all the moving parts of DayJet, an on-demand airline. DayJet operated with Citrix’ software for three years before going bankrupt in the 2008 economic downturn. But out of that, the software and key members of DayJet were retained, and the operation was moved to Seattle, where it eventually became BoldIQ.

“What we do today is basically – for lack of a better word – generalize that original engine, and continue to enhance it and expand on it,” Ganzarski says. “Today what it does is produce schedule plans in real time – and I’m talking milliseconds and seconds – for the best use of all of your resources to meet your demands – at any given time, given all of your data.”

Success Story

One of the best examples of what BoldIQ can do for an operation is what it’s done with private jet company JetSuite. In 2011, the California-based company had approximately 35 staff members and five planes servicing California, Nevada, Arizona, New Mexico, and Oregon. JetSuite set out to provide its service to a wider audience, but ran into challenges surrounding logistics and inventory. Things like last-minute customer requests, operational constraints, aircraft maintenance, staffing schedules, and changing weather limited growth.

JetSuite selected BoldIQ and implemented its software, managing the airline’s day-to-day operations. Today, the results speak for themselves. Since partnering with BoldIQ, JetSuite has grown from a $7 million company to more than $50 million in 3½ years, doubling its top-line revenue for four years straight. The company now has more than 200 staff members and 20 planes, servicing around 3,000 cities in the U.S., Mexico, Canada and the Caribbean. Recently, JetSuite was ranked fourth in total hours flown and second in aircraft utilization by aviation research group ARGUS International, even as the youngest charter airline of all companies considered.

What’s new?

BoldIQ is certainly staying busy. Following the lead of JetSuite, several other companies that provide airlines with operations management systems have recently partnered with with BoldIQ to utilize its software. Merlot.aero announced their partnership last November, and Jeppesen Solution followed suit in December. Back in June 2014,GlobeAir announced BoldIQ as its software provider in its integration of private jet platform PrivateFly.com. BoldIQ has also been looking into drone management.

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GlobeAir unlocks new API set to become benchmark in mobile booking

In today’s permanently connected world, GlobeAir believes that the future of private jet charter booking is through mobile commerce, according to the way online purchases have recently impacted the buyers’ decision process.

In support of the modern traveller, GlobeAir, the leading European air charter operator, together with BoldIQ, a leading resource optimization software company, is now offering a revolutionary application program interface (API), which incorporates enhanced features for a streamlined online booking experience based on bold new technologies.

With deeper-than-ever access to the GlobeAir enterprise resources and fleet scheduling system, all web-based brokerage companies and travel booking platforms will be able to integrate their systems with this new API and offer additional features and benefits to their customers to create better, easier, and more customized experiences, providing them with extra confidence and satisfaction.

For instance, users can create their own travel itineraries in mere seconds, choosing between more than 1.500 airports across Europe available for the Citation Mustang (including those not accessible to the traditional airliners), check for a jet availability at a specific time, request a quote, presenting a guaranteed price and book the flight instantly, in different languages, and make the payments via mobile devices.

Furthermore, this innovative API will enable customers to filter GlobeAir´s “Daily Deals” and book them directly, given that some aircraft have to position themselves to the next scheduled departure airport, and therefore on such flights there is an opportunity to travel at advantageous pricing.

The GlobeAir booking system can also adapt and liaise with the existing online platforms to reflect individual requirements, giving the flexibility to offer specific options and special offers.

GlobeAir is breaking down barriers in the travel industry using cutting edge technology, revolutionizing private jet charter now and for years to come.

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Drone Management The Next Frontier

A Network World story by Colin Neagle, Once commercial drones start filling the skies, how will they be managed?

About a year ago, Amazon CEO Jeff Bezos made a bold publicity move – he sat down for a 60 Minutes interview and showed off the company’s planned use of drones for same-day delivery to its customers.

Those familiar with the reluctance surrounding drones in the U.S. knew that Bezos was being overly optimistic. Among many other obstacles to commercial drone use in the country, the Federal Aviation Administration (FAA) has been slow to permit widespread commercial use of drones in U.S. airspace. Bezos was getting the public excited for a technology despite the uncertainty over when and how exactly his company will be able to launch it.

If Bezos and every other organization that is eager to launch commercial drones have their way, the U.S. could see an entirely new form of air traffic. How this network of drones is managed carries a lot of implications, from the millions of dollars in costs for the companies that own them to the safety of the people who live on the ground below them.

“Right now when I look at the environment, it seems that the reason we don’t have things in place is exactly that network level,” Roei Ganzarski, CEO of resource optimization software company BoldIQ, says. “So the drone capability exists, including if they get lost or lose control with the operator they fly back home, they identify people around them, they’re very technologically capable. The thing that is missing right now, I believe, from an FAA level, is to say ‘how do I know that there won’t be 10,000 of those flying around, and let alone hitting each other, hitting passenger planes?'”

To solve this problem, many companies are adapting software designed to optimize resources and the supply chain in other industries for unmanned aerial vehicles. BoldIQ’s software was originally created for a now-defunct air taxi service and creates automatic plans based on the resources at hand, the user’s immediate needs, and the regulations to which it needs to adhere. Extending it to drones only seems natural.

Ganzarski points to transportation services like Uber, Lyft, and taxi services as examples of what could happen if drones are mismanaged.

“The only way for me to promise that you’ll have a car within five minutes right now is to load the streets with cars,” Ganzarski says. “That’s very inefficient.”

Just like the taxi industry, flooding the skies with an excess of drones is not only inefficient, but it’s a safety risk. This puts higher value on the tools and techniques that will allow companies to do more with fewer drones.

A potentially game-changing dynamic for the drone network – one which has been nonexistent in the cutthroat competition between Uber and Lyft – is cooperation between the companies using the drones. Steve Banker, service director for supply chain management at analyst and consulting company ARC Advisory Group, wrote in a Forbes  responding to Bezos’s 60 Minutes interview last year that “to achieve higher volumes [of deliveries], multiparty retailer/courier collaboration would be very helpful.” Banker’s article pointed to optimization tools that can forecast delivery routes for drones and process data in real time to create a more efficient route. These tools open all kinds of possibilities, from cheaper delivery to flexible pricing. But they all require an open drone ecosystem that maximizes access for every organization that needs them.

“If the courier company can flex and add new couriers that use their own vehicles, then demand spikes can be easily accommodated,” Banker wrote. “However, if there are transportation capacity issues (the number of delivery vehicles is static), variable delivery fees can be used to shape demand fulfillment. In effect, a buyer is told if we can deliver between 3 and 4 pm, the cost is $5, if you want it between 6 and 7 pm, the fee will be $25.”

Ganzarski also suggested drone sharing to supplement optimization techniques. Different organizations using similar drones could use them more efficiently if they were open to sharing information, if not sharing drones themselves. As an example, Ganzarski mentioned the U.S. Forest Service, which to monitor wildfires before FAA restrictions forced it to shelve the plan, as the kind of organization that could find itself sharing data and even hardware to get better use out of drones.

“Since we know where the Amazon drones or the Google drones [are], as an example, then if there is a fire, we can optimize the use of the Amazon drones to deliver packages differently, and use some of those drones as an emergency need for the forestry service to look at where the fires are,” he says.

This same kind of collaboration could be applied among drones used to deliver packages ordered on Amazon or Google and delivered by couriers, some of which have expressed interest in drone delivery, to ensure the most efficient delivery time. As long as deliveries are made, it doesn’t necessarily matter who owns the vehicles that carried them out.

The impending drone ecosystem presents a big opportunity for a lot of organizations. Those that use the data to manage the drone network more effectively just might be the ones to capitalize on it.

“It’s really not all about saying ‘what’s the empty drone?’ It’s not about which is the closest drone,” Ganzarski  says. “It’s all about which is the right drone with the right operator for the right mission given everything that’s going on right now.”

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BoldIQ Technology to Enhance Jeppesen Solution

BoldIQ, Inc. a global provider of dynamic real-time optimization software, today announced that Jeppesen, a part of Boeing Commercial Aviation Services, has selected BoldIQ’s scheduling technology to enhance development of its products and solutions for its business aviation customers.

“Enabling customers to make intelligent and integrated decisions in real time is what we are all about,” said Roei Ganzarski, president and CEO of BoldIQ. “This relationship is in line with the quality and customer focus that Jeppesen is renowned for in aviation and is a great affirmation of the value we provide aviation and other industries worldwide.”

In addition to aviation, BoldIQ’s technology is used within the transportation, energy, healthcare, and defense industries to significantly increase operational efficiencies.

“BoldIQ offers remarkable scheduling technology that will further Jeppesen’s ability to provide industry leading information and planning solutions for our customers in business aviation,” said Dr. Stefan Karisch, director, Jeppesen Optimization and Value Strategy. “As we continue the development of products and services that provide our customers with a distinctive competitive advantage, BoldIQ technology will serve an important role in this process.”

BoldIQ has helped its customers in complex business environments drive significant increases in productivity, decreases in operating costs, and increases in their revenue-generating capacity.

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Avoiding Christmas Past: Use Technology to Ensure Timely Holiday Deliveries – a BoldIQ byline

The holiday season is quickly approaching, and that means it’s only a matter of time before Santa’s sleigh is filled up with presents from online orders and cross-country relatives. FedEx is anticipating an increase in holiday shipments of 8.8 percent, and UPS is anticipating an 11 percent increase over 2013. Will UPS and FedEx be prepared to meet their delivery dates in 2014, or will we see the industry crumble once again under the load?

Last year, Cyber Monday saw a 20.6 percent jump in online retail sales – a new record, according to the IBM 2013 Holiday Benchmark Reports. And in the final weekend before Christmas, online sales were up 37 percent over the previous year. The massive amount of orders and data snowballed until networks couldn’t manage the resources. As a result, the shipping industry was hit with a snowstorm of a problem.

The number of orders, coupled with weeks of bad weather hindering delivery services, made it so packages were not delivered by their promised dates. Companies like FedEx, Amazon, and UPS tried to remedy the problem. UPS brought in additional workers on Christmas night to sort through packages for Thursday and Friday deliveries, and FedEx rushed some packages so customers could pick up items at local FedEx Express centers on Christmas Day. Despite this, many people were left disappointed when packages didn’t show. While bad weather was a factor in the delivery delay, UPS acknowledged in a statement the real problem was that the network was overloaded. The system couldn’t manage the resources necessary to ensure timely delivery, and as a result, real people felt the burden in real-time.

So how can the delivery industry better manage their resources vis-à-vis growing demand, while readjusting to real-time disruptions like bad weather and icy roads?

Real-time operations optimization technology helps many industries manage their resources in an ever-changing environment. On-demand aviation industry is an example where the technology is already helping companies increase efficiency and reduce costs. Aviation companies like charter airline JetSuite use this technology to manage airplane fleets and staff in an industry with constant real-time change requirements and unpredictable disruptions (like bad weather and mechanical failures). The solution enabled the airline to manage their potential revenue and maximize resources, while at the same time lowering fuel costs and waste, and providing superior customer service, all in real-time.

If the shipping industry had introduced real-time operations optimization technology, the delays of last year’s shipping debacle could have been minimized. Delivery companies would have been able to optimize the massive number of orders received and utilized their resources more efficiently. FedEx, for instance, handled more than 275 million shipments between Thanksgiving and Christmas, but how many of those shipments were truly optimized, taking into account all elements of their operation to include resources, demand, cost structure, labor rules and more?

As consumers continue to see the ease of online shopping, the demand for shipping only continues to grow. Ongoing disruptions, such as bad weather or mechanical breakdowns, are unavoidable, especially during busy seasons. To ensure a successful and happy holiday delivery season, companies should focus on technology that allows the system to react in real-time to whatever comes its way. A more efficient allocation of resources allows shipping companies to better manage their delivery service, keep their customers happy, and avoid being deemed the “Grinch” of the holiday season.

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Merlot.aero and BoldIQ to Provide Airlines with Industry’s First Integrated Real-Time Dynamic Optimization solutions

Merlot.aero and BoldIQ are to work together to address and solve an airline industry critical and ongoing issue – optimized planning and irregular operations.

Merlot.aero provides airlines with an integrated operations management system that allows management of everything from crew planning and payroll to aircraft tracking and following. BoldIQ provides real-time operational optimization software in dynamic industries such as transportation, energy, and healthcare. The two companies have agreed to work together to bring the global airline industry a new level of real-time operational planning and disruption recovery.

Efficiently and effectively solving irregular operations – a $7bn problem in the US alone – has been an industry challenge, and doing so in real-time has been a dream. The challenge is a complex one, solving a multi-variable, multi-objective problem taking into account a multitude of data, regulations, constraints, and business goals to include aircraft, crew, passengers, and the operating environment. And doing so over and over again in real time. By providing this capability in an integrated way, airlines are able to actually take intelligent action when changes and disruptions occur.

“Providing our customers with an ever growing suite of value added tools and solutions has always been our goal, right from the start,” said Mark McCaughan, CEO of Merlot.aero. “Enabling them to plan and recover from ongoing changes and irregular operations without having to leave their regular operations management system is the next evolution. In our view, preparing for irregular operations, and the ability to manage them, can reduce costs for ground and flight operators, as well as improving safety, efficiency and customer satisfaction”.

Unlike conventional planning optimization systems, the Merlot.aero solution will have the BoldIQ operational optimization engine built into the regular operations platform. This means that when a change or disruption occurs, the optimization will take into account all elements currently in the system and provide an integrated actionable solution to the airline within seconds that meets the needs of the passengers, crew, and airline as a whole.

“There are a lot of continuously moving parts in this problem and moreover, a significant ripple effect that happens any and every time a change or disruption occurs,” said Roei Ganzarski, President & CEO of BoldIQ. “Our dynamic real-time optimization engine has been used for exactly such environments and we look forward to working with Merlot.aero as they trail blaze this effort for commercial airlines”.

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How the Transportation Industry Can Do More with Less A BoldIQ byline in Mass Transit

As if our roads aren’t cluttered enough, a report from the International Energy Agency projects there will be 1.7 billion vehicles on the road by 2035 – double the current number. Not only does this mean highly congested streets, but it also means an unhealthy increase in emissions and pollution. (Even if we move to electric vehicles, there is still maintenance, oils, paint, manufacturing, and more). Transportation accounts for 20 percent of the world’s energy consumption, leaving the transportation industry under increased pressure to operate more efficiently with fewer resources, while still having to meet the growing demand.

It seems that demand for transport continues to grow hand in hand with the outcry to reduce the number of cars owned by people. Thus the advent of so-called “on demand app based” series such as Uber and Lyft. However, these are simply less than efficient additions to our streets, creating yet another layer of congestion and inefficiency. While they may be very flexible for the passengers, they are adding multiple vehicles to the streets that significantly surpass demand – but I will not be discussing these services in this post.

On the other hand, public transportation departments seem to be facing ongoing budget cuts and their immediate and understandable response is to cut services. In the Seattle area for example, bus services will be reduced by 16 percent due to so-called budget cuts. While it would seem that service cuts are the only remedy for budget cuts, this is an antiquated thought process and these days, simply wrong. Transportation agencies should be continuously finding ways to provide more service with less budget as opposed to wait for a budget cut and simply cut service as a reaction. And with sophisticated optimization technology readily available, this is doable.

Operations optimization technologies are already transforming the way other industries are managing their resources. Take the aviation industry as an example. Airlines are using optimization technology to manage large fleets of planes and staff amidst constant complex planning requirements, unpredictable disruptions due to weather, mechanical failures and staff illness. In an optimized system, resources are more efficiently managed to maximize potential revenue, maximize productivity of pilots and crew, minimize fuel costs and waste, all while providing superior service to their customers. And they do this in real-time, all the time.

Imagine the possibilities for fleets of taxis, buses and other ride-sharing services. With real-time optimization, these transportation services would be able to work efficiently to not only meet demand, but to also improve congestion on the streets and reduce fuel consumption and emissions. Think of how much fuel taxis and ride-sharing services burn driving around looking for their next customer. Through an optimized “central nervous system,” these drivers could receive the best fitting on-the-spot assignments in real time. This provides value not only to the driver and passenger, but to the network as a whole.

According to Robert Burn, “The best laid plans of mice and men often go awry.” No matter how well-planned long-term and short-term scenarios are, disruptions and changes will always occur – be it machines breaking down, a change in weather or even a changed requirement or deadline from a customer.

The U.S. has the largest transportation system in the world. It serves over 300 million people and 7.5 million businesses. It shouldn’t be managed by antiquated technology (if using technology at all) as it largely is today. The transportation industry must rethink its approach to operations and resource management.

The future of transportation will be centered on efficiency. Let’s stop waiting for the future to arrive. We have the technology at our fingertips to make the best possible transportation decisions when it counts most – right now.

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BoldIQ Customer in the News: JetSuite ranked fourth busiest US charter operator – A Corporate Jet Investor story by Terry Spruce

JetSuite has been ranked as the fourth largest US charter operator by total hours flown and second in aircraft utlilisation by ARGUS International.

JetSuite has been ranked as the fourth largest charter operator in the US in terms of the total hours flown and the second largest for aircraft utlilisation.

JetSuite was the youngest charter operator to feature in a comparison of 20 companies by ARGUS International. This report, ranking all FAR Part 135 operators nationwide, was created by ARGUS using flight market intelligence data and analysis programme TRAQPak.

Alex Wilcox, CEO of JetSuite, says: “It is gratifying to learn that JetSuite already flies more than almost every other jet charter company.”

“This ranking and these top safety awards are truly a tribute to the women and men of JetSuite. These professionals, and our partners at Embraer, Cessna and the hundreds of FBOs and support businesses earn the trust of JetSuite’s thousands of clients each and every day,” adds Wilcox.

JetSuite has recently been awarded its IS-BAO certification, ARGUS Platinum rating renewal and FAA Diamond Awards.

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Boards Steal a March With Risk Management – An Agenda story by Tony Chapelle

Handling specific risks smarter than the other guys can gin up a company’s edge on the competition. While overseeing all the risks in the enterprise is already board members’ fiduciary duty, experts say that directors can help managers gain strategic advantage and even steal market share by mitigating certain upside risks.

Athletic apparel company Under Armour is trying such a move. The company is betting the farm that the upside reputational risk that superstar Kevin Durant of the National Basketball Association brings can take a bite out of rival Nike’s dominance. But the advantage can also apply to managing utilization risks to get more airline capacity or even start new lines of business.

Under Armour has offered Durant the equivalent of 10% of its annual marketing budget to agree to a face-of-the-brand sponsorship deal for the next decade. The company is taking the huge risk of spending that much on a single player because it’s vying for a chunk of Nike’s commanding 96% of market share for basketball shoes. Under Armour currently holds just 0.25% share, according to SportsOneSource, a sporting goods research firm.

To make the deal accretive, Under Armour would have to move $400 million worth of Durant’s signature shoes a year. This after Durant’s shoes generated only $175 million last year for Nike, with whom he’s been signed since he graduated from college.

Under Armour is largely counting on the fact that last season Durant was named the NBA’s most valuable player. He’s also younger than the league’s biggest star, LeBron James, so Durant could outlast him as a player and marketer. On the downside, however, another former MVP, Derrick Rose, has been a drain on the Adidas brand that signed him to a $183 million deal two years ago. Since then, Rose has played in only 10 games due to knee injuries.

Under Armour’s CEO is game, however. Kevin Plank in 2011 promised to take market share from Nike eventually. Every percentage point of share in the basketball shoe market is worth $45 million.

“Your willingness to take on risk comes with the knowledge that it may not pay off,” says Roei Ganzarski, a former chief customer officer for Boeing. Ganzarski is now CEO of a Seattle-based software company, BoldIQ, which helps corporations improve efficiency by getting higher utilization rates in their operations. “The smarter way to mitigate risk is in fact to make your business operations more efficient so that risk doesn’t come to bear in the first place.”

In fact, Ganzarski’s BoldIQ makes software that minimizes risk for corporate customers. His clients in the aerospace and trucking industries need to use their physical, financial and human resources better to grow. Instead of buying more planes and trucks and hiring more people, which increases expenses and therefore the risk of not getting acceptable return on capital or suffering more accidents and paying more for insurance, Ganzarski’s software can help airlines and haulage companies get more out of their current fleets.

For instance, since the industry average revenue utilization of business aircraft is 65%, a fleet of 20 aircraft actually is equivalent to 13 revenue-generating planes. Buying two more planes would increase the utilization rate to the equivalent of only 14 revenue-producing planes. This kind of economics requires high fares to produce profits.

With optimization software, however, companies stand to boost utilization rates by 10% to 25%, Ganzarski says. The programs can show an airline how to fly the same number of planes with fewer disruptions to flights or how to manage as efficiently with fewer pilots and cabin crews. If that lowers operating costs and risk, the company could lower its fares or start a second fleet offering more seats and longer range, which could take market share from competitors.

As a CEO, Ganzarski says a board should ask three questions before letting its managers use risk as a strategic advantage. “I expect my board to ask me: What’s the purpose of the CEO to take on new risks from investing new capital? Is there another way to achieve the goal without taking on a new risk? And finally, if not, what are you doing to mitigate that risk?”

Glenn Davis, a CPA and corporate advisor at accounting firm CohnReznick, is particularly fond of internal controls as a tool of good governance and risk management. He says this seemingly bland duty — confirming that proper procedures are being followed — can have direct benefits to the bottom line.

For instance, with good internal or metric controls in the accounting department, Davis says, a company can bill clients more accurately and faster. That can result in being paid faster. Since the typical company collects its money from customers in 28 days, Davis says, just one day’s improvement per month can be worth a significant amount. In addition, if the accounts receivable don’t linger as long, lenders may lower interest rates on a company’s cost of capital.

Davis cites similar benefits on the payables side. If the internal controls let managers process invoices faster with fewer disputes, they can pay vendors faster. Some vendors might agree to sell products at a slight discount if offered the chance to be paid a few days earlier each month.

John Bugalla, principal at training and consulting firm ERMInsights, tells the story of howSnap-On, a national franchisor whose franchisees sell work tools, built a new subsidiary based on managing risk. Under their contracts, franchisees had to buy hazard insurance. Dan Kugler, an assistant treasurer of risk management at Snap-On, identified an opportunity when he realized that, since the partners had to buy from rated insurance companies, he would recommend discounts if they used four specific companies. As he found out more about the risk of losses, cost of supplies and adjustments, Kugler then convinced Snap-On senior managers to let him set up a captive insurance company.

The result was SecureCorp, which is not only a multimillion-dollar profit center, it also has benefit programs that help in recruiting new franchisees.

Ganzarski adds that the board has a role in monitoring upside risk to gain an advantage on competitors. “At some point, I would like the board to ask the CEO if he’s taking on enough risk to grow the business. Is he trying new things, innovating and opening new markets?”

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