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October 28, 2016 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Trip Report - MHI 2016 Part 2 - An Outstanding Panel Discussion bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet Cartoon Caption Contest Extended One Week bullet Trivia      bullet Feedback
bullet Expert Column bullet Three New Videocasts
first thought


Supply Chain Graphic of the Week
2017 to be Tough Year for Materials Handling Sales - and the Economy


Reebok Latest Shoe Maker to Shift Production to the US

Best Buy Goes for Free Shipping Again this Year
Scary Economic Projection on When US Budget Goes Bust
Suez Canal Says Pay Me Now



Week of September 28, 2016 Contest

See The Full-Sized Cartoon and Send In Your Entry Today! 

Discusses Perspectives From Leading Retailers on Strategy and Tactics for Home Delivery Services

Holste's Blog: Managing Security Risks

Weekly On-Target Newsletter:
October 26, 2016 Edition

Last Chance Cartoon, CO2 Breakthrough? 'Nuclear' Truck Verdicts and more

The "-abilities" of Global Trade Management: The Importance of Integration and Configurability

by Claude Correll
VP, Global Engineering
Amber Road

Understanding Demand Signal Repositories in Consumer Goods

All These Years Later, Why is a DSR So Hard to Build? A Path to Rapid Deployment and Lower Costs

Featuring  Dan Gilmore and John Beckett, Founder and President at Retail Velocity and the inventor of the Demand Signal Repository in 1994.


Do you know what these acronyms for the following supply chain-related professional associations do or did stand for? APICS, CSCMP, ISM, MHI, WERC? Bonus: NASSTRAC, NIT League

Answer Found at the
Bottom of the Page

Trip Report - MHI 2016 Part 2 - An Outstanding Panel Discussion

Last week, I attended the annual conference of MHI, at the beautiful Hilton el Conquistador near Tucson, AZ, and provided my overall summary and review, which you can find here.

As noted then, this is a conference that has some big ambitions to become a major supply chain event, attracting a broad mix of supply chain and logistics practitioners beyond its core MHI member attendees. It will be a challenge, for a variety of reasons, but for the last three years, the content has been very good, and for now at least MHI has the financial clout to make investments in this event.

I would have gone regardless, but attended this year as moderator of what turned out to be an excellent panel discussion, loosely connected to MHI's upcoming Materials Handling Roadmap, scheduled to be released in 2017. The first Roadmap was released in 2014, and was a solid piece of work, presenting a broad overview of the issues and technologies that will be central to logistics in coming years.


Ecommerce is "standing the logistics industry on its ear right now," Rader noted, saying that 10 years from now logistics likely will be radically different than what it is today.


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But things change fast, so an updated document is needed and underway. To produce that, MHI once again is holding a series of conclaves across the US (four in total) where 40-50 practitioners of all sort gather for a day and a half talking through a variety of issues, and that feedback then becomes core content to the final Roadmap.

This year, those discussions are oriented around four main themes: workforce issues, technology, the consumer, and infrastructure - all obviously very big and broad topics.

So I worked with MHI to assemble an expert panel to talk through a variety of topics under those four main themes, and in front of a packed room kicking off the conference on Monday morning, the panel hit it out of the park - one of the best panel discussions I have seen, and that's quite a few.

The panelists were: Jonathon Rader, FedEx; Mike Regan, TranzAct Technologies; Bill Ferrell, Clemson University; Fab Brasca, JDA Software; and Mike Kotecki, Dematic.

I could fill up five columns with what we covered over 90 minutes, but will do my best to summarize here. For each topic, I offered some intro thoughts or data points, then mixed it up with the panel in those areas in which they had expertise.

When it comes to workforce, I noted there of course are multiple dimensions of this, starting with sort of the blue/white collar split. The so-called "talent crisis" in supply chain has a mostly white collar slant (not enough qualified supply chain professionals, with a wave of baby boomer retirements looming), but there is also a perceived shortage of blue collar labor in distribution, transportation and more.

Are these real issues? "Absolutely," said Rader, noting FedEx is really feeling it. While a bit more focused on the blue collar side and distribution center labor, Rader said that "a lot of people just don't want to work in the logistics industry anymore," and that there is even some of that on the white collar side. The industry needs to work to bolster its overall reputation and attractiveness, he said.

I asked Regan the same basic question about the truck driver shortage - is it real? His answer: "It is as significant and serious as you could imagine."

He noted there was a mini-crisis in the US trucking sector relative to capacity in Q4 2013 and Q1-2 2014, which then abated as the freight market slowed. However, Regan believes that if economic growth gets anywhere around 2.5%, that capacity issue will quickly arise again, and that if we hit 3%, we will see "the motherlode" of capacities crises.

Many carriers have increased driver pay 20% or so over the past two years, but that's not enough, Regan says. Wages need to go higher, and shippers are going to have to pay for it. Drivers also need to be treated better by shippers across multiple dimensions, from not being treated as if they barely exist at many DCs to excessive waiting times and more - issues which some driver studies find are as big as the level of pay.

To me, it's fairly simple: for both DC labor and drivers, the market wage simply needs to rise to bring in enough new participants. That will increase logistic costs, for sure, but it's no different than the market pushing fuel prices higher. Automation will help eventually, but not in the short term.

On technology, I started with some survey data from SCDigest that had respondents rate the attractiveness of a variety of (mostly) new generation supply chain technologies. Supply chain visibility took the top spot, far ahead of things like 3D printing, but Brasca noted the difference between information and insight when it comes to visibility.

"You have lot look at what's the decision support that goes with that information, where's the intelligence of the system behind that, to deliver something that's actionable," he noted, adding that while the start is to improve managers' ability to make decisions, increasingly the software will deliver the recommended solutions to those managers.

This of course is tied to the subject of so-called ‘"advanced analytics," and Kotecki said that even though he works for a company normally associated with hardware systems for materials handling, the majority of Dematic's R&D investment now is going into software and analytics, though he noted the advances in order picking robots is proceeding rapidly and is likely to really impact DC operations very soon.

Ferrell said he thinks the general trend right now towards "distributed information" to improve local decision-making is likely to reverse, with more data being managed centrally where "algorithms can make the decision." Yes, that is where we seem to be heading.

On consumer, I noted the tremendous growth in ecommerce sales, rising 15% or so quarter after quarter - meaning it will double in less than 5 years. This will have a dramatic impact in many areas, including store and supply chain network designs, which I think has not yet been fully understood.

Ecommerce is "standing the logistics industry on its ear right now," Rader noted, saying that 10 years from now logistics likely will be radically different than what it is today.

Kotecki noted the dynamic of most companies chasing just one - Amazon - that is able to somehow just focus on growth versus profits, and how the move beyond ecommerce to omnichannel has now made the sourcing question far more complicated. The decision to source from regular DC, a store, or an efulfillment DC needing to be made in real-time, based on current variables.

Brasca said the real challenge is how do you connect the traditional supply chain - which was largely focused on achieving and leveraging scale - with this new world. This opportunity is not achievable when ecommerce is set off as a separate operation, Brasca said, and if you want to make money in ecommerce, you must find a way to achieve the financial benefits of scale with the new requirements for "eaches picking" and last mile delivery.

But he noted that it is exciting times in transportation, where for years we were generally focused on the same issues of capacity and fuel costs and shipment consolidation - now we have an exciting new set of problems/opportunities for logisticians to grapple with.

Lastly on infrastructure, Regan said attendees should go back after the conference and tell their CEOs that "we are basically living off the investment in infrastructure that was made in the 1950s," and that significant ramifications are looming if new investments are not made soon.

He noted recent ATA projects that freight movements will increase 35% over the next decade - "Where is that freight going to go? Regan asked. He also said that in the face of this situation, still "every common sense approach to increasing US freight productivity" (such as longer and/or heavier trucks) which could have a major impact on reducing infrastructure needs can't make it across the legislative finish line.

There is so, so much more, but I am out of space. I think I will soon issue a more complete transcript of this outstanding discussion in our OnTarget newsletter. Regan said it was among the best panels he has been a part of, and that's quite a few. 

What are your thoughts on workforce, technology, consumer or infrastructure issues?Let us know your thoughts at the Feedback section below.

View Web/Printable Version of this Column

New Videocast:

A Bold New Paradigm for Supply Chain Planning

The Traditional Approach will Give Way to Apps, Advanced Analytics - Keep What You Have, Add in the New

In this outstanding broadcast, we will explore this new exciting paradigm for supply chain planning in detail, how it can be applied in conjunction with existing planning infrastructure, and why after almost three decades of one planning approach, we may at last be on the verge of a whole new model.

Featuring SCDigest editor Dan Gilmore and Toby Brzoznowski, executive vice president at LLamasoft.

Tuesday, November 15, 2016

New Videocast:

New Cloud WMS Solution is Game Changer for Warehouse Management Deployment and Flexibility

New Technology and Deployment Approach Offer a Simply Better Way to WMS Implementations - Learn How

In this outstanding Videocast, we will cover the latest in each-picking robotics, co-bots, artificial intelligence, autonomous vehicles, sensors, drones and droids.

Featuring  Dan Gilmore, Editor, along with Mark Hawksley and Bruno Dubreuil of TECSYS, a leading provider of WMS solutions.

Thursday, November 17, 2016

New Videocast:

Successful Supply Chain Vendor Compliance - for Retailers and Beyond

Author Norm Katz on Vendor Compliance "By the Book"

In this outstanding Videocast, Katz will summarize key elements of book, to include:
Compliance program guiding principles; What is permissible under the law relative to vendor chargebacks; Common mistakes companies make in rolling out and maintaining vendor compliance programs; The many "E's" of successful vendor compliance, from "Envision" to "Ethics."

Featuring  Dan Gilmore, Editor, Norman Katz, consultant and author of "Successful Supply Chain Vendor Compliance," and Greg Holder, CEO, Compliance Networks

Wednesday, November 30, 2016


We're just featuring this week an interesting email exchange relative to a point made by Thomas Moore of Warehouse Optimization on a recent Supply Chain Newsmakers video, which argued that shippers can have much to gain through a better understanding - load by load - of their carriers' true weight limits.

David Schneider of David K. Schneider & Company took some exception to this notion, as you can see from his email below, and then Moore's interesting response back.

Both are friends of SCDigest - and we would be happy with one more repost from Schneider!

Feedback on Knowing Carriers' True Weight Limits


The video segment brought this phrase to my mind: "Your performance will vary."

I’m not calling bull s--t on what the fellows from Warehouse Optimizers talked about, but there are practical factors that I think could be wrongly defined as "tribal" knowledge.

Fuel weighs something: Over the road diesel weighs about 7.1 pounds per gallon. So every 100 gallons of fuel on board adds 710 pounds to the GVW of the rig. Many drivers know this, and will wait to fuel until after they have scaled their load if they know that they are close to the 80K limit. Is this "tribal knowledge?" No, as it is something that is taught in many of the driver schools. While a local delivery rig may hold only 45 gallons of fuel in each side tank, it is not unusual to see rigs with 130 gallons on each side, sometimes more.

Driver and driver's gear weigh something: The driver's weight is obvious, but people tend to forget that drivers often live in their tractors - and the belongings can weigh in.

Accessories on the truck: Snow Chains, HazMat kit, skirts, Aero-tails, APU units, again, these all add weight.

Trucking companies do not have high consistency across the fleet. They may specify the same basic model, but the accessories will change the weight of the tractor and the trailer from unit to unit. Metal roof trailer or translucent plastic roof? Hardwood trailer floor or a composite material? E track or logistics track (they are different).

What is getting identified as "tribal: is really a reflection of the variability of vehicle weights based - the complexity of the fleet. If you ask a trucking dispatcher, a driver, or an executive what a truck weighs, they are going to give you the "average" because they recognize that the weight of a truck depends on many factors that are out of control.

David K. Schneider
David K Schneider & Company, LLC

Response from Moore:

This is great! It typifies the response that we often see. The Tribe has a set of assumptions that generate "safe" answers. Here is a very concrete example from companies that shall remain nameless - the total weight that refrigerated trucks can carry:

Company 1 45,000
Company 2 44,000
Company 3 43,500
Company 4 42,000

They all use about the same carrier base!

Data is the key. We took Swift's and JB Hunt's fleets and weighed the various combinations of tractors and trailer a few years back. Yes there was variation and yes we could not take the lightest tractor and the lightest trailer as our standard - but we developed a standard that 95% of the fleet could easily meet.

In another example, it turned out that JBH intermodal had a habit of sending sleepers into the client to drive the 25 miles to the ramp -the client asked them to stop doing that so they could get the extra weight on the loads. Will Cotten's example in the video is real. He ran many loads for, what turns out to be, one of our current clients!

To put this all in perspective, 8 years ago we got about 880,000 records of 5 axle trucks weighed by the DOT. Of those that were clearly weighted out (more than 69K gross) a very large number(81%) had >3000 gross weight available.

Thomas Moorecomma



Q: Do you know what these acronyms for the following supply chain-related professional associations do or did stand for? APICS, CSCMP, ISM, MHI, WERC? Bonus: NASSTRAC, NIT League

A: American Production and Inventory Control Society, Council of Supply Chain Management Professionals, Institute for Supply Management, Material Handling Industry (of America), Warehouse Education and Research Council; Bonus: National Shippers Strategic Transportation Council (it was though National Small Shipments Traffic Conference at its inception), National Industrial Transportation League

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