<$MTBlogName$

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."

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.

 

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.



Recent Comments

Subscribe to DC Velocity

Subscribe to DC Velocity Start your FREE subscription to DC Velocity!

Subscribe to DC Velocity
Renew
Go digital
International