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New for You

By David Maloney | May 18, 2015 | 7:00 PM | Categories: Material Handling, Warehousing

I am writing this blog from the Spring meeting of MHI being held in Charlotte, N.C., where today two new industry groups were created to better serve you.

For those not familiar with MHI, it is the largest trade organization serving the material handling industry. That is its traditional role, but MHI has expanded its borders over the past couple of years to extend to all facets of the supply chain. The two new groups owe their incarnation to the realization that the industry has changed and so have the needs of end users who rely on solutions from system providers.

While MHI is the entity that encompasses many disciplines, within the organization are sub-sets known either as Product Groups or Solutions Groups. The Product Groups are composed of member companies that make similar specific technologies, such as automated storage systems, racking, hoists, lifts, and conveyors. Though competitors, they collaborate together within MHI to conduct research into industry trends and customer needs, as well as they provide education and resources to strengthen their portions of the industry as a whole and to independently develop products that better serve the marketplace.

Similarly, Solutions Groups consist of competing solutions providers who cooperate to share knowledge and information, while addressing trends and challenges facing their customers.

The two new Solutions Groups birthed today came from former product groups that had moved beyond their initial scope. Recognizing a need to better serve and interface with end-users, these groups were established to be the “go to” authorities for customers seeking solutions to their problems.

The former Integrated Systems and Controls (ISC) group has now become the Automated Solutions Group (ASG). More than a name change, the new direction of the group is to identify needs through research, educate the industry and end users about automation, and provide solutions that address industry trends.

Similarly the former Supply Chain Execution Systems and Technologies (SCE) group has been shuttered to make room for the Information Systems Solutions Group (ISSG). These folks will focus on educating the industry on software trends and how information systems connect the varied data streams of the supply chain.

Both new industry groups will be conducting industry research and thought leadership in the coming months and both plan educational presentations as both the MHI Fall meeting held in October in Ponte Vedra, Fla. and at Modex in Atlanta next April.

DC Velocity is a member of both of these Solutions Groups. Look for further updates from us on how these two new groups are designed to better serve you.

Tomorrow is today!

By Mitch Mac Donald | May 12, 2015 | 11:33 AM | Categories: Transportation

Being just on the tail end of a long conference season, with 6 conferences and/or trade shows under belt over the past 8 weeks, it can often be tough to identify just one, two or even three high points. There were so many. 

This year, though, things are different. At the invitation of good friend George Prest at MHI.org, aided by his colleague Daniel Stanton, I was honored to take the main stage at ProMat in Chicago for a "fireside chat" with none other than Apple co-founder, and builder of the first Apple personal computer, Steve Wozniak, or as he prefers to be called, simply "The Woz." 15-214-600_1027

He is simply the finest kind of gentlemen. Passionate about his work. Passionate about the education of our nation's children. And, passionate about technology and its future. Yet, a model of humility. Having dinner the evening before with the man who invented THE machine that changed the daily lives of every human (and business) on the planet, was not unlike dining with a good friend of roughly the same age with interests in music, cars (he drives a Tesla), technology, and education. 

A good part of our discussion in front of the 3500-plus logistics executives who gathered for our "chat" the next day dealt with future technological advances. Among the topics was autonomous (i.e. driverless) vehicles. Certainly and important topic in the motor freight sector of logistics where a driver shortage, it seems, has been going on for over 100 years. (Seriously. Need convincing? Click here)

Everyone has heard about the Google Driverless Car, and we all seem to agree that, as far-fetched as it may seem, many of us will live to see the day when driverless cars (and trucks) will be moving down America's roads.

Well, in fact, we'll only have to what until this summer. Just days before the Woz and I took the stage, Tesla & SpaceX founder Elon Musk made a rather stunning announcement. Autonomous versions of his Tesla Model S will be available for sale, and indeed tooling down the road, as early as this summer.

Wow! Tomorrow really is today. The Tesla will not, admittedly, be fully autonomous, but will include enough driverless features that they can rightfully be called the first of its kind to be available to the motoring public. 

Now, just a month later, Musk made potentially even bigger news. Watch this YouTube clip and let me know what you think: https://youtu.be/NvCIhn7_FXI

 

 

How do you beat on-the-job stress?

By Martha Spizziri | May 07, 2015 | 2:36 PM

Job satisfaction is high for logistics professionals, according to the results of this year’s salary survey, That’s despite a 5-percent drop in average salary since the previous year. But there are a few areas of the job that could be improved, according to those who responded to our survey. A big one: work-life balance. 

Asked what company management could do to increase their job satisfaction—barring a salary increase—survey respondents offered comments such as:  

  • “Hire enough people so we all don't work 50-60 hours a week.”
  • “Draw the line for acceptable hours and offer comp time for beyond those hours.” 
  • “Flex time.”
  • “Allow us to get help where it is needed to properly get projects finished on time, or at all,” and, more bluntly:
  • “Reduce stress and allow some work-life balance.”

One respondent said management should “[p]rogress into the real world and stop being so ‘old school’ in their culture and approach.”

More vacation time or time off during holidays were also frequent requests. And there were calls for better processes and technology: “Provide the departments the tools to complete the job efficiently,” said one; another survey-taker wished for a “fully configured SAP to avoid repetitive tasks.” Those types of changes have the potential to make for a more manageable workload. 

One respondent summed up the general sentiment particularly well:

I have found that providing a quality-of-life aspect has been key to myself and my staff. People do not want to work 60-80 hours per week and in most businesses I have worked that is the norm.

On the plus side, the logistics sector is adding jobs much faster than is the general economy; hiring is expected to increase by 22 percent over the next 10 years. We can hope that the need to attract talent will encourage employers to create more employee-friendly work environments. But in the meantime, logistics professionals will have to figure out for themselves how to juggle work and home life and avoid getting burnt out.

Have you found ways to reduce stress on the job, or to keep the job from taking over your life? If so, please share them in the comments section below.

A healthy industry - for sure

By David Maloney | April 06, 2015 | 4:01 PM | Categories: Lift Trucks, Material Handling, Warehousing

It has been just over a week since all of us at DC Velocity have come home from ProMat and we’ve had some time to reflect on this year’s show, which is always one of the top conferences in the supply chain industry.

This year, more than 800 exhibitors were on hand to show off their wares in the huge hall at Chicago’s McCormick Place, and over 30,000 people attended the four-day show. The biggest impression I walked away with this year is that we are in a very healthy industry. Supply chain has shaken off the rust of the Great Recession and has more than made up for six years of barely keeping above water. I believe we are poised for great things ahead.

Plenty of intriguing technologies were on display during ProMat, as well as the latest in software offerings. During the show, DC Velocity editors held over 80 meetings with exhibitors and attendees. We produced more than 60 articles of ProMat coverage. If you could not make it to the show, you can find information on many of the leading technologies on display as well as select conference sessions held at ProMat here:

http://www.dcvelocity.com/conference_reports/promat2015/

We also produced 10 videos highlighting some of the latest solutions found in the exhibits. You can view those videos here:

http://www.dcvelocity.com/dcvtv/profiles/

Additionally, DC Velocity recorded video interviews at our in-booth studio with many industry leaders as part of our continuing Meet the Rainmakers series. These will be released over the next two months. Look for those videos in our This Week on DCV-TV newsletter.

I would like to express my thanks to the many people our editors met with during ProMat for helping us to provide such extensive coverage to DC Velocity readers. See you all at Modex next year in Atlanta.

Will smart robots take your job?

By Mitch Mac Donald | March 30, 2015 | 3:04 AM | Categories: Lift Trucks, Material Handling, Warehousing

Technology in logistics is replacing jobs traditionally done by humans, the trend and will continue at a record pace for the foreseeable future. Many have grown accustomed to seeing this kind of thing in certain industries like manufacturing, healthcare, and logistics. But now, according Professor Edward D. Hess of the University of Virginia's Darden Graduate School of Business, technology will be coming for white collar jobs, too.

"Technology will be replacing more jobs at an ever-increasing pace, particularly with this next round of technology, which includes artificial intelligence. AI is the game changer," says Hess, author of a new book Learn or Die: Using Science to Build a Leading-Edge Learning Organization (Columbia Business School Publishing, 2014, ISBN: 978-0-231-17024-6, www.EDHLTD.com). "It is the biggest discovery since fire! It effectively threatens to wipe out a whole new group of jobs, including white collar positions."

His assertions are supported by a recent University of Oxford study that found over the next 10 to 20 years, of full two-thirds of U.S. employees have a medium-to-high risk of being displaced by smart robots and machines powered by artificial intelligence.

So, what can you do to keep your job?

"When the AI tech tsunami hits, the only jobs that will be safe are the ones that require a human element,” says Hess. “The things that humans will be able to do better than robots is creative, innovative, and complex critical thinking and engaging emotionally with other humans. You must take up your skills in these areas in order to make yourself more irreplaceable."

His advice on the skills sets that will strengthen employability in the rise of smart machines include:

  • Overcome cognitive blindness. Humans have a problem when competing with smart machines. We are lazy, sub-optimal thinkers, Hess says. We seek to confirm what we already believe, and we tend not to be open-minded or rational. We take what we already know, replicate it, improve it, and repeat. It is easier than thinking critically or innovatively, but it makes us cognitively blind. You can overcome your cognitive blindness by strengthening your critical thinking.
  • Get good at not knowing. We have to change our mindset about what being smart really is. In the technology-enabled world, how much you know will be irrelevant, because smart machines and the Internet will always know more than you. What will be more important is knowing what you don't know and knowing how to use best learning processes—in other words, the smartest people will be focused on continuously learning.
  • "Quiet your ego," recommends Hess. Humilitywill help you really hear what your customers and colleagues are saying, and humility will help you be open-minded and more willing to try new ways. Don't be so consumed with being right—be consumed with constantly “stress testing” what you believe against new data. Treat everything you think you know as conditional, subject to modification by better data.
  • Become an true collaborator. "The ability to collaborate effectively will be an essential skill in years to come," says Hess. "The powerful work connections that will be needed to build successful organizations will result from relationships that are built by authentically relating to another person, recognizing their uniqueness, and doing so in a respectful way that builds trust.

          "Artificial intelligence will in many ways make our lives better," says Hess. "But it will also challenge all of us to take our skills to a higher level in order to compete and stay relevant. We humans need to focus on continually developing the skills that are ours and ours alone."

UPS’ Fork in the B2C Road

By Mark Solomon | March 16, 2015 | 4:59 PM

 

 

How does UPS Inc. manage the seismic shift from steady-Eddie B2B commerce to the volatile and less-margin friendly world of B2C? Bill Greene, lead transport analyst at Morgan Stanley & Co. and one of the scene’s more astute observers, says UPS can try to maintain its margins and risk losing market share, or maintain share –at the expense of margins—by sticking with an aggressive pricing stance. Greene says UPS should pursue market share, even if it means a short to medium-term hit on margins. 

Unlike the B2B segment where UPS and its rival FedEx Corp. enjoy a virtual monopoly, the B2C market is more competitive. Besides FedEx, the U.S. Postal Service is a major player and becoming more formidable. In addition, there are smaller players that, while they could never directly challenge UPS, could affect pricing on the margins. Greene reckons that if UPS pursued market share growth by offering cheaper capacity to the market, it could take share from USPS, FedEx, and the smaller players. Growth at UPS's competitors would become more expensive, Greene said. This could force competitors to pull back on their own capacity investments, and would remove incentives for potential entrants like Amazon.com to build delivery capabilities.

If managed correctly, UPS could ramp up revenue growth from market share gains while discouraging rivals from re-investing in their networks and new entrants from taking the plunge, Greene says. This, in turn, could improve UPS’ B2C delivery density, the lack of which today is the biggest impediment to the company’s profit outlook in B2C.

Such a move is not without risks, Greene acknowledges. UPS’ margins would fall (the only question would be by how much) and investors seeing margin compression could flee the stock. It would not be an easy choice for UPS management, Greene says, but it may be preferable to the alternative, which is to keep rates high in a bid to preserve margins. What should also be recognized is that FedEx, with its independent contractor driver network, is in a better position to attain suitable margins on B2C deliveries than UPS’ unionized system and the higher labor costs that accompany it.

 

A new warehousing model?

By Susan Lacefield | March 06, 2015 | 11:33 AM

My colleague Mark Solomon has done an excellent job of covering “Uber-like” service providers—like 10-4, Cargomatic, and Box Smart—which match loads with unused truck capacity.

 A similar phenomenon is also being seen in the warehousing space with the company Flexe.

Flexe is a service provider that helps companies share underutilized warehousing capacity by matching those that need space to store their products with those that have excess space. In a sense, it provides a spot market for warehousing space.

Last week, the event and research company eyefortransport did an interesting webcast with Flexe CEO and Co-founder Karl Siebrecht and one the company’s customers, Dhruv Agarwal, CEO of True Fabrications, which sells wine accessories. Cleverly the webcast title described Flexe as being “AirBnB for Warehousing.”

In his presentation, Agarwal said that using Flexe has allowed his company to grow without having to expand its warehousing space. “It allows us to act as if we have a warehouse twice as big [as what we currently have],” Agarwal said. 

That’s one of the biggest advantages of Flexe, according to Siebrecht. “Warehousing is the most fixed of all assets in the supply chain,” he says. By allowing companies to tap into other organizations’ unused warehousing space, Flexe helps companies create much more flexible and responsive supply chains without having to increase fixed cost.

This type of model does seem to have a lot of potential, in particular for seasonal products. Additionally retailers might find this one way to respond to the need to have more product stored closer to the customer to fulfill omnichannel retailing and e-commerce demands. 

The big question, of course, is security. After all, there have been numerous reported cases of Uber drivers sexually assaulting customers and the unforgettable story of the AirBnB customer that refused to leave. How can you prevent the warehousing equivalent of this from happening to you? Flexe insists that it screens all its partners to meet standards of service and has a rigorous training and onboarding process. 

While there are certainly a lot of unknowns about this new model that may make a cautious person hesitate, it’s definitely an idea worth keeping an eye on, and I would love to hear from anyone who has had experience with Flexe or other similar models.

The expanding supply chain

By David Maloney | February 21, 2015 | 12:33 PM | Categories: Transportation, Warehousing

The recent move by FedEx to acquire Genco Supply Chain Solutions is proof of the growing trend of companies looking to stretch their traditional supply chain borders. The huge transportation company sees embarking into the contract warehouse business as an integral part of its future.

In doing so, it matches UPS, DHL, and other transportation providers who see a link between moving products and processing them in a distribution center.

Up until now, FedEx has not been a big player in this arena. With Genco under its umbrella, it has a proven commodity that has a nationwide footprint in warehousing and distribution – 35 million square feet in 130 locations.

Genco is also recognized as a leader in handling returns, which of course must be transported back to the distribution center. Once processed, FedEx can leverage its transportation network to deliver the returns to other parts of the supply chain. It should be a profitable union – one that recognizes the symbiosis within the supply chain of these important functions.

The move comes as no surprise to those of us at DC Velocity, confirming a core belief here. From its initial edition, DC Velocity has stressed the marriage of both transportation and distribution in an evolving, forward-thinking supply chain.

Manage like a coach, not a dictator

By Mitch Mac Donald | February 17, 2015 | 1:31 PM | Categories: Lift Trucks, Material Handling, Warehousing

Common sense sometimes isn’t as common as it should be. This came to mind in correspondence with the folks at West Monroe Partners.

 

Michael Harris, manager of workforce optimization at WMP makes a very strong case for a shift in mindset and approach for warehouse managers in dealing with team management. The bottom line: managers who coach their team will yield more positive result than those who dictate.

 

Harris notes it is very common in warehouses with standards to discipline based solely on a performance percent – for example, John only achieved 80% of his target for the week.  The problem is deeper than John’s performance, though, because there is typically no detail on what caused the subpar performance. For example, was it because an environmental condition was not present, i.e., a wheel on John’s picking cart is broken? Or was it due to something John is or is not doing? 

 

Managers have two ways to approach this matter with John. They can discipline him for poor performance, or they can coach him to improve his performance.

 

In a disciplinary approach, says Harris, the associate is instructed to react to a course of action dictated to them through the company’s formal discipline process. There is little to no opportunity for the associate to have input into this course of action and it ends up creating low morale and a lack of trust. It can also strain the relationship between the associates and the management team.

 

By instead taking a coaching approach, he suggests, a manager engages John to actively work together to address the issue. This creates a process of supervisors observing the associates and their environment to determine a root cause. It also gives the management team and the associates an opportunity to improve their relationship and create a team environment where both sides are working together towards a common goal.

 

If the root cause is a methods issue with the associate, the supervisor can explain what the associate is adding to the work or doing different from the preferred methods and how that equates to their underperformance.

 

Coaching should be utilized as the initial steps to newly-identified underperformance, Harris states. “Supervisors should give the associate an opportunity to learn from mistakes and fix any issues prior to launching into the formal discipline process, which may still be necessary if the associate continues to show an inability or unwillingness to address the issue.”

 

According to Harris, this approach helps the associate understand exactly what activities hurt their productivity and gives them hands on understanding of how to fix the issue as well as how it benefits them to do so. It also gives the supervisor and manager insight into any issues outside of the associate’s control that are affecting overall productivity.

 

Managers, Harris maintains, can foster this environment by utilizing the same coaching approach between themselves and their supervisors. In addition, having regular discussions on the process and helping supervisors to understand how a coaching approach will benefit the operation in the long run will go a long way. Some key benefits include:

  • Increased morale
  • Stronger relationship between management team and associates, manager and supervisors
  • Reduced turnover
  • Consistent performance and increased productivity

Supervisors applying the coaching approach have an intimate knowledge of the functions under their responsibility (the methods for each job) and incorporate the following steps into their typical day:

  • Identify consistently underperforming associates.
  • Schedule time to observe identified associates as soon as possible.
  • Address any root cause issues immediately during observations.
  • Practices good listening skills when working with associates.
  • Utilize proper training techniques to ensure understanding and buy in.
  • Document each associate interaction related to coaching or discipline.
  • Spends as much time as possible in the operation even when not performing formal observations.
  • Have an “open door” policy and a process for associates to report operational concerns or other issues.

Managers applying the coaching approach also have an intimate knowledge of the operation and incorporate the following steps into their typical day routines:

  • Have an “open door” policy and a process for associates to report operational concerns or other issues.
  • Works with supervisors on a regular basis (including occasional role plays) to help them develop their communication and conflict resolution skills which are essential to the coaching approach.
  • Develops and trains supervisors on how to identify coaching opportunities versus when discipline is necessary.
  • Performs regular walk through of their operation over the course of each shift to ensure visibility and to give the opportunity for associates to approach with questions and concerns.

The Fuel Surcharge Head-Scratcher

By Mark Solomon | February 11, 2015 | 8:05 AM

I’ve been doing this stuff for awhile, and I must confess that I don't really get the mechanism of fuel surcharges.

 

In its fourth-quarter conference call last week, UPS Inc. executives talked about the headwinds its three units—in particular less-than-truckload operator UPS Freight—would face as a result of lower fuel surcharges that would negatively impact revenues. But all the comments did was reinforce a basic question: Wouldn’t UPS offset those revenue headwinds from the lowered costs that would come from the cheaper cost of fuel purchases?

 

I have asked this general question of many analysts, especially in the wake of a dramatic fall in oil prices and recent moves by FedEx Corp. and UPS to raise their surcharges despite the dramatic decline in the price of the commodity. I get what appear to be cogent responses, but they are just not sinking in.

 

I am guilty of looking at this in a symmetrical way. That is, fuel costs and expenses should even out, albeit with a time lag that should be appropriately priced in by the shipping and investment community. Yet I am reminded that such thinking is off base. I’m told through analysts’ comments that the decline in oil prices is a negative for some of the largest consumers of fuel in the country. I read that some LTL carriers historically over-recover fuel expenses, and that when prices decline they have to give back some of that recovered revenue.

 

Fuel surcharges were created in the early 1970s after the first Arab oil embargo. They were designed to help carriers recoup the volatile—and in those days unprecedented—moves in oil prices without resorting to the difficult practice of hedging. Surcharges disappeared for about 20 years before returning as a permanent fixture in 1996. At that time, diesel prices had risen to about $1.19 a gallon, a high price in those days. A group of retail outlets was formed to report diesel prices to the Department of Energy. DOE compiled the data into a weekly index of chart of average prices on a national and regional scale. The DOE index would allow carriers to keep fuel charges separate from the line-haul rate, thus ensuring transparency on the impact of fluctuating fuel prices.

 

Over the years, surcharges have taken on different forms. For example, one approach has been to calculate daily fuel prices along a specific route and to set surcharges based on the prevailing daily changes. Whatever the case, a mechanism originally meant to be a pass-through to help carriers cope with fuel price volatility has turned into its own revenue stream. Today, somewhat perversely, it is better for carriers when fuel prices are higher so they can impose higher fuel surcharges in the hope that the surcharges run ahead of their costs. And conversely, in an environment like today’s, where in theory lower oil and fuel prices should benefit those who consume lots of the product, it’s actually a bad thing.

 

 I think I’m getting it…

The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

Thoughts from our editors.



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