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New thinking on infrastructure

By Peter Bradley | August 04, 2015 | 9:59 AM | Categories: Transportation

Congress continues to dawdle, postpone, pontificate, obfuscate and otherwise refuse to come to grips with reauthorizing highway and mass transit funding programs. Before heading off for August recess, both houses did agree on a three month extension of the current law, so at least states had funding for current projects during the peak construction season. You can see DC Velocity's latest report on the legislation's progress here.

Just as Congress went away without coming to grips with a long-term bill, along comes a timely new book on just how important fixing our infrastructure is to the health of the nation's economy. And the book, “Move: Putting America’s Infrastructure Back in the Lead,” comes from one of the nation's most respected and thoughtful business thinkers, Rosabeth Moss Kanter. A professor at Harvard Business School and former editor of Harvard Business Review, Kanter offers an analysis of what ails our transportation and other infrastructures and offers some thoughtful ideas on how to tackle them. It's book not just for transportation executives or those involved with managing transportation projects, but for anyone concerned with the long-term health of our economy.

I hope that someone of Kanter's stature addressing an issue that's usually given short shrift in the mainstream business press might help bring greater attention to the topic and help develop the sort of innovative approaches to dealing with some of the massive challenges. The book has already drawn important reviews in major publications, including the New York Times.

Now let's just hope key players in Congress take note as well, particularly of this from Kanter: “Infrastructure has no ideology. Bridges either stay up or fall down.”

TMS is driving forward

By David Maloney | July 27, 2015 | 8:03 PM | Categories: Material Handling, Supply Chain, Transportation

A research survey released earlier this month shows just how important transportation management has become. The survey, conducted by InMotion Global (the folks behind the AscendTMS transportation management system), reveals that the use of TMS has more than tripled in the last 10 years.

The report details that 54 percent of logistics professionals currently use transportation management software in some way. InMotion Global says that is up from only 15 percent in 2005. And to show further how TMS is growing, the research also explains that of the remaining 46 percent not currently using a TMS, more than half say that they expect to use transportation management software within the next 12 to 24 months.

 Among other findings taken from the report: 

  • The two most common reasons for not using a TMS are cost (43%) and complexity (32%).
  • Trucking companies were most likely to use a TMS if they had more than 20 trucks in service (89%). For those with under 10 trucks, the percent using a TMS falls to just 31%. For those with under 5 trucks in service TMS use was only 16%.
  • Shippers and manufacturers used a TMS system primarily for LTL shipments (47%). However, that number rises to 73% if the shipper moved an average of 30 or more truckload shipments per week.
  • Home-grown TMS systems accounted for 6% of TMS systems in use today, and 3% of survey respondents use a freight module as part of another system (such as an ERP or sales management system). 

 Clearly transportation management systems are playing a more crucial role than ever before in managing the flow of goods. Companies have learned through experience and through their competition that decisions need to be done in a smarter way using available data. A good TMS fills that role.

J.B. Hunt study shows ways to boost trucking efficiency

By Ben Ames | July 27, 2015 | 7:28 AM | Categories: Material Handling, Transportation, Warehousing

Logistics partners in every part of the supply chain are in a constant hunt to increase driver utilization and optimization in trucking fleets—whether their own, their partners’, or their 3PL’s.

Now a white paper from J.B. Hunt Transport, Inc. says one solution for wringing maximum efficiency out of the Hours of Service regulations covering the legal driving limits for commercial motor vehicles (CMVs) may be right under our noses—inefficiencies at the loading dock.

Breaking down the math around the DOT-regulated driver’s “on duty” day of 840 minutes (14 hours), the report shows how quickly those minutes can drain away. The rules require a 30-minute break and 150 minutes for everything else a professional driver does, including pickup, delivery, safety inspections, and shutdown.

A quick calculation shows that leaves just 660 minutes of actual driving time per day, but surveys show most drivers fall far short. The J.B. Hunt report cites figures showing that a typical driver loses valuable time on activities such as empty drive time, appointment inflexibility, and time spent at the shipper or receiver location. Multiply that over many loads, and there’s no mystery what happens to missing capacity.

The paper points out ways to avoid those wasted minutes, such as:

  • shave down loading and unloading times
  • utilize a drop-and-hook strategy strategy instead of live unloading
  • push back against rigid pickup and delivery times
  • shrink shut-down time by asking shippers to provide onsite parking and amenities
  • furnish a more predictable schedule to avoid cancellations, short lead times, multi-stop loads and other headaches

To read the full whitepaper, check out http://blog.jbhunt.com/wp-content/themes/files/pdf/660_Minutes.pdf.

A merger of material handlers

By Ben Ames | July 24, 2015 | 1:53 PM | Categories: Material Handling, Supply Chain

Two companies made news in the material handling sector this month when Inmar, the Winston-Salem, N.C.-based firm that operates supply chain, promotions, and healthcare platforms for retailers and manufacturers, announced it had acquired Scanner Applications. 

Inmar’s core business is supplying technology to help its clients operate intelligent commerce networks, connecting offline and online transactions in real time for retailers, manufacturers, and their trading partners. More specifically, the Inmar Supply Chain Network combines the unique transaction processing of returns with real-time analytics to enable supply chain improvement and facilitate reverse logistics.

Scanner Applications, of Cincinnati, supplies turnkey solutions for trade promotion management and tracking services. Combine that with Inmar’s offerings—such as digital and paper coupon and rebate processing and settlement, digital coupon distribution, promotion analytics, and shopper behavior research—and the new partners think they have something special.

The two companies plan to join forces to create a broad suite of consumer and trade promotion solutions for retailers and consumer packaged goods manufacturers, as shoppers increasingly demand both flexibility and personalization from retailers.

 As part of Inmar, the Scanner Apps team will continue to operate from its Cincinnati location, enabling Inmar to extend its presence in that area of the U.S. For more information, check out www.inmar.com.

Why supply chain managers should care about material handling equipment

By Toby Gooley | July 14, 2015 | 1:23 PM | Categories: Material Handling, Supply Chain

Back in March, I attended the biennial ProMat trade show in Chicago. ProMat, produced by the trade association MHI, boasts more than 800 exhibitors and largely focuses on material handling equipment, technology, and services for warehouses and distribution centers (DCs). I was there in my role as a senior editor for DC Velocity, but could not help thinking about what the show had to offer readers of CSCMP's Supply Chain Quarterly, the Council of Supply Chain Management Professionals' member magazine of which I am editor. Among all the forklifts, conveyors, and other material handling equipment I found much that could—and should—pique the interest of supply chain managers and executives.

Why should someone who lives in the world of inventory management, demand forecasting, and network optimization devote time to learning about material handling equipment? Because that equipment is what makes it possible to implement supply chain strategies. Without efficient warehouses and distribution centers supported by new equipment and technology, all you have is a plan on paper (or a computer screen). And with supply chains undergoing increasingly rapid transformation influenced by disruptive technology, this has become an area supply chain managers can’t afford to ignore.

Here are just a few examples of the intersection of material handling and supply chain strategy from the show:

  • Much of the more sophisticated equipment on display, such as goods-to-person systems and automated storage and retrieval systems, could play a role in helping companies address broader supply chain concerns—for instance, speed to market and bringing consistent performance to global operations. Vendors are providing complex solutions designed from the customer back—that is, starting with a problem or a new market imperative, and developing equipment and technology that not only address that need, but also revise upstream and downstream processes as needed.
  • E-commerce appears to be the single greatest factor influencing material handling equipment development. The design, or redesign, of everything from packaging equipment to conveyors and sortation systems to order picking and storage systems is being heavily influenced by the unique needs of e-commerce fulfillment. Software, too, is under the microscope; warehouse management systems (WMS), for instance, are being retooled to keep up with e-commerce’s faster pace and its focus on individual piece picking and shipping.
  • Robotics has matured from a gee-whiz novelty to an important tool for bringing consistent, reliable, 24 x 7 performance to an array of tasks in high-throughput distribution centers. Robotic equipment—including some that is designed to work alongside human order pickers and packers—could mitigate the effects of labor shortages and allow more workers to shift from ergonomically challenging, repetitive activities to those that truly require human input. With labor availability, training, and management expected to become more problematic in the future, it’s time to look at robotics as a viable solution.

For more examples, as well as commentary on how this important subject fits into the big supply chain picture, be sure to read MHI’s Material Handling & Logistics U.S. Roadmap report at www.mhlroadmap.org. We've also covered the report at DCV.

On track in Texas

By David Maloney | June 25, 2015 | 8:17 PM | Categories: Lift Trucks, Material Handling, Supply Chain, Transportation, Warehousing

Yesterday I was in Pharr, Texas working on a print story and a video at a company called McCoy’s Building Supply (look for this story in an upcoming issue of DC Velocity). As the name implies, McCoy’s provides lumber, hardware, shingles, blocks, and a full range of other building products to construction firms from over 80 locations throughout five southern states. I was there to look at their use of Toyota lift trucks, particularly in moving the heavy loads within their yard.

 

The Pharr facility does a little of everything. It serves as a distribution point for other McCoy stores in south Texas and there is also a retail store attached to the lumberyard that provides hardware and other home improvement products to do-it-yourselfers.

 

What struck me as uncommon about this facility was that it had a rail spur in its yard. While rail is often used to supply manufacturing facilities, few distribution operations in the U.S. have rail connections. Two flatbed rail cars had been dropped off onto the spur the night before I visited. Heavy-duty pneumatic-tire lift trucks were used to quickly unload the cars the following morning, taking advantage of their ability to access the rail cars from both sides.

 

Of course, a lot of freight moves by rail in North America. It is the most cost-effective ground transport available to shippers. Most rail loads, though, have to transfer to trucks to reach a D.C. Having a rail spur in their yard allowed McCoys to purchase full train car loads, which gave them better pricing and saved on freight. The product is then distributed to other local McCoy’s stores.

 

Possibly in the future we will see more distribution networks designed to better take advantage of direct connections to rail, gaining the efficiencies and cost savings found with being on-track.

Fast track off track on trade disputes

By Peter Bradley | June 23, 2015 | 10:25 AM | Categories: Supply Chain, Trade

With its vote to end a Democratic-led filibuster, the US Senate will pass fast track authority this week for the Trans-Pacific Partnership(TPP), the most wide ranging trade deal since the North American Free Trade Agreement. The House will be under enormous pressure to go along.

Most of the details of the pact remain secret as negotiations continue, and that secrecy is one of the reasons that authorizing fast track authority has run into opposition. 

But a more contentious part of the deal is the Investor-State Dispute Resolution (ISDS) mechanism. That creates a binding arbitration process by which foreign investors can challenge a nation's laws or regulations that they contend unfairly cause those investors economic harm. 

ISDS has been a part of trade agreements for a long time. but as large international firms have used the process more and more often to go after laws and regulations they don't like, ISDS has become a central issue to opponents of TPP and similar agreements (notably the now stalled Transatlantic Trade and Investment Partnership.) 

When you look at some of the ISDS challenges, it's no wonder. As the Economist reports, "Among the cautionary examples often cited are the suit brought by Vattenfall, a Swedish energy firm, against the German government for phasing out nuclear power after the Fukushima disaster and that of Veolia, a French utility, against the Egyptian government for raising the minimum wage." And there others like that that create similar concerns. Philip Morris Asia, for example, has challenged Australia's rules aimed at reducing smoking by requiring health care warnings on tobacco packaging under the ISDS procedures. The results of that case are pending. Furthermore, ISDS cases have proliferated, jumping sharply over the past decade or so, 

It surprises me that the Obama administration has not seemed amenable to reforms in the ISDS process to allay at least some of the concerns of the TPP opponents. The Economist, in the same report, says European trade authorities, in an effort to restart the transatlantic talks,  have suggested changes that would make the process more like that found in courts of law, with public access, permanent arbitrators, and an appeals process.

The original idea behind ISDS processes was to protect investors from arbitrary and confiscatory rules in nations where they invested in order to encourage that very investment. But it seems to being used more often to challenge laws and regulations that are merely inconvenient--health and environmental rules, minimum wage laws and the like. Furthermore, with business investment flourishing around the world, even the need for ISDS might be questionable.

I'm no foreign trade expert, but a process that could let outside arbitrators rather than our own courts determine whether our rules and regulations are legitimate--a process, by the way not open to all-- makes me as a citizen pretty uncomfortable.

 

 

Parcel carriers behaving badly

By Mark Solomon | June 08, 2015 | 9:20 AM | Categories: Transportation

Duopolies should be able to make bundles of money the above-board way without resorting to tactics that could be described as underhanded or just downright dumb.

The latest incident came to light last month when the Justice Department said UPS Inc., one half of the B2B parcel duopoly in the U.S., agreed to pay $25 million to settle claims that, for 10 years, the company knowingly recorded inaccurate delivery times on packages shipped to hundreds of federal agencies to make it appear the packages were delivered on time. UPS also applied inapplicable exception codes designed to excuse late deliveries, and provided incorrect on-time performance data. UPS’ objective, according to DOJ, was to conceal its failure to meet its “Next Day Air” delivery commitments, which would have allowed the government to claim refunds through the money-back guarantees called for under contracts with the General Services Administration and the U.S. Transportation Command.

UPS did not acknowledge liability, and paid the fine to avoid the prospects for lengthy litigation. Susan L. Rosenberg, a company spokeswoman, said the company has worked to improve systems, training, and technology since it became aware of the issue.

The issue is a practice known as “stopping the clock,” where a carrier will, at times, game the system to appear a particular route has few or any service failures. The clock starts when a shipper selects a service level. The clock stops when a package is delivered and a proof of delivery is furnished, when a carrier encounters bad weather, a wrong address is entered, the recipient is not available, or if Customs holds a package. These are all legitimate causes. The problem arises when carriers, under pressure to hit tough deadlines, play fast and loose with events. There are as many as 60 codes at a carrier’s disposal that stop the clock; many can be and are used inappropriately, and the result is that the customer has no recourse to file a claim. Even if they do, most lose because the carrier’s can prove that there was a code invoked that stopped the clock.

Jerry Hempstead, who worked for decades at top positions at Airborne Express and DHL Express in the U.S., called it a widespread problem that demonstrates no respect for the shipper or the consignee. Hempstead said it’s caused by a culture of fear that flows from line supervisors to drivers to “make service no matter what it takes” in order to make their service numbers and get the bonuses and promotions that accompany good results often arise from that. “When employees are under pressure, and performance reviews, and compensation are involved, sometimes poor judgment enters the equation,” he said.

This isn’t the first time of allegedly bad behavior by either company. Nearly two years ago, FedEx Corp. reached a tentative $21.5 million settlement with thousands to shippers to resolve allegations the company overcharged commercial customers by misclassifying their shipments as residential deliveries to extract higher surcharges. Last year, DOJ accused FedEx of being part of a criminal conspiracy by knowingly transporting illegal drugs on behalf of two rogue pharmacies. The year before, UPS settled similar claims out of court; FedEx plans to fight the charges.

UPS and FedEx dominate the US B2B parcel market, and no one is in sight to challenge them. Yet they’ve been accused of acting in ways that would make them out to be scrappy newcomers willing to push the boundaries of the law just to get their names known. The two companies combined cover virtually all corners of the earth and employ hundreds of thousands of people. It’s true that there’s opportunity for sleazy stuff to go on well below the eyes of upper management. Still, the culture if formed at the top, and if messages aren’t permeating all the way down the line, then, like it or not, the buck stops in the C-suite.

Internet of Things: A real-world example

By Susan Lacefield | May 28, 2015 | 8:19 AM

It seems that you can’t step outside without tripping over yet another study proclaiming that the Internet of Things is upon us and everything will change.

And while it's fun to think about smart washing machines and pantry shelves that reorder garbage bags for before we run out, the pundits assure us that the biggest transformations will be seen in the business realm. According to Deloitte Consulting’s The Internet of Things really is things, not people, 60 percent of all wireless IoT devices will be bought for and used by enterprises and industries.

But data on how companies are actually using the Internet of Things is harder to suss out.

So it was refreshing when John Kern, senior vice president of supply chain operations for Cisco, offered up a couple of examples of how his company was experimenting with the Internet of Things at the recent Gartner Supply Chain Executive Summit 2015.

One area where Kern believes it can create breakthroughs is in energy management.

“We don't manage the cost of energy. There’s no way to drive down those costs,” says Kern. “But we do have access to a massive amount of data.”

At one of its plants, Cisco is experimenting with capturing data on energy consumption. Every machine at the plant has technology attached to it that records energy consumption. The company then runs analytics to determine how they can run those machines so they consume less energy. Kern estimates that this analysis could help Cisco reduce its energy consumption by 20 to 30 percent at every one of its factories around the world.

But this is not where the biggest breakthrough lies, says Kern. He imagines a day when Cisco will take that information and use it to inform when the company manufactures. Will it be during peak hours or at night? This will help the company optimize its manufacturing schedule around cost.

It’s easy to think about how this model could also be used in a distribution operation or a transportation operation to figure out when to make deliveries so that it takes less time and less fuel. 

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."

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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

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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