A Materials Handling Roadmap 2.0, Part 2

I am finally back this week with part 2 of my review of the Materials Handling Roadmap 2017 from MHI.

In 2014, MHI (formerly the Material Handling Industry of American, an industry trade association), released what it called a "Roadmap for Materials Handling 2025."

That future-looking report was noteworthy for a couple of reasons, starting with it was really the first major initiative from MHI to expand beyond its traditional and primarily "four-wall" oriented roots to associate itself with broader supply chain themes and topics.

This transition, of which the change in the organization's name to just MHI emblematic, has been accelerated greatly since George Prest took over as CEO in 2011, and has manifest itself in many ways, including: (1) partially successful efforts to make its biannual MODEX tradeshow in Atlanta more of a supply chain, not just materials handling, event; (2) dramatically revamped "annual report," which was transformed from a mostly inside baseball review of the materials handling marketplace to a supply chain thought leadership piece, co-authored for the last few years with Deloitte; (3) attempts to transition its annual conference from a members-only event to a broader supply chain forum that would attract non-member practitioners - a effort that is still a work in progress.

If you want more of the history of the Roadmap, how it is created, etc., go to my part 1 review here: A Materials Handling Roadmap 2.0

The 2.0 Roadmap is organized around four key mega-themes: technology, consumers, workforce issues, and infrastructure. I covered the first two in part 1, now the second two here.

The third theme of the 2017 Roadmap around "Workforce" is certainly a very important topic. There are clearly concerns in many circles relative to a "talent" shortage in supply chain, though I have noted for years this is really a bifurcated issue along white collar and blue collar (distribution center workers, truck drivers) lines.

Relative to each of those two vectors, just this week, a DHL study found that demand for supply chain talent exceeds supply by an amazing 6 to 1 ratio (good news if you are a supply chain manager), while Amazon announced plans to hire some 50,000 fulfillment center workers in the next few months in a period of low unemployment and major challenges recruiting and retaining DC workers in most markets.

Then again, of course, there are predictions that robotics on the blue collar side and artificial intelligence on the white collar side will eliminate supply chain jobs by the millions, making any current talent shortage that exists a moot point before too many years.

The Roadmap, for example, notes that "Many current material handling and logistics jobs likely won't exist by 2030. Consider the threat to freight forwarders of today," from digital technologies that can do the job without a human needed.

All that said, the report lays down a number of markers relative to workforce issues:

The supply of new workers will be unable to keep up with the mass exodus of aging workers, resulting in a growing vacuum of qualified workers in all functional material handling, logistics and supply chain roles.

In 2015, the Millennials surpassed Generation X as the largest portion of the human workforce.

Job growth in supply chain-related professions has remained strong, even as overall job growth has slowed in the United States.

Despite declining unemployment and underemployment, it has become harder for available workers to be hired for supply chain jobs because employers demand more qualified people with different and better skills.

Collaborative labor sharing and crowdsourcing of freelance/contract workers through social media platforms and peer-to-peer networks of people will continue to increase.

Use of automation continues to expand as it becomes more reliable and readily available.

I am not sure how to put all that in a coherent framework, but it's safe to say major change is underway.

The key question across the entire supply chain workforce is this, the report says: "What will be the rate of adoption of labor-saving and people-replacing technologies and practices? The short answer is: No one knows."

The report says that workshop participants generally agreed that demand for grey-collar workers - people who install, configure and maintain the equipment and automation - could well exceed the demand for blue- and white-collar workers as 2030 approaches.

Expansion of workforce diversity is a given, the report notes, citing a distribution facility in New England today that employs more than 1,000 workers who speak 15 different primary languages, the most common of which is Mandarin Chinese.

In the end, the report recommends that to find enough people for supply chain operations, the profession should adopt four key capabilities:

1. A thorough understanding of the changing labor market
2. Alignment of work with workers (rather than vice versa)
3. A commitment to the flexible workforce
4. An improved image and greater visibility for material handling and logistics.

I will just end this section by noting that of course, to the extent there is a true shortage of white and blue collar employees, this is will only propel various forms of automation forward at an even faster trajectory than would occur if the only driver was cutting costs. Did you see this week yet another robot announcement, a new one one that can stock grocery shelves? 

While there are clearly major workforce issues right now across the spectrum, alas I believe that in not too many years automation of all sorts will take care of all of that and then some.

On the "Logistics Infrastructure" topic, the report says that "Fundamental change is afoot from the physical movement of goods to the digitization of information about them. By 2030, these changes will transform large segments of air, sea, rail and highway logistics."

There are many factors to consider here, the report adds, noting customer demands for visibility about what's in a product, it's path to the shelf or receiving dock, and where it is all along that journey.

The physical world of material movement will have be married at the hip to its digital side, creating new forms of logistics infrastructure.

Supply chain networks are also changing, the report says.

"To be competitive on the future logistics landscape, large-scale distribution and fulfillment centers will require data-driven networks of smaller centers strategically located closer to the consumer, especially in urban areas," the report notes.

Relative to more traditional infrastructure, the report makes the interesting observation that "We are at an interesting nexus of needing to upgrade what we have just as new technologies change how logistics operates."

To take an obvious example, do you need more roads if someday drones make a majority of package deliveries? How would autonomous cars and trucks impact how you might spend dollars on infrastructure? I don't know the answer to those questions, but they sure ought to be part of the planning process before the concrete starts getting poured.

The report notes the generally accepted view that US logistics infrastructure is a mess, though as I have said in the past I believe that view is overstated (more on that soon), and the report notes that numerous trillions are supposedly needed to get US infrastructure up to some modern level.

I will say starkly that that kind of money is simply not coming. Maybe hyperloops will solve part of the problem? The report seems optimistic.

I think the report is right on in including cyber security as a component of logistics infrastructure. Did you see in recent weeks debilitating attacks on Maersk Lines, FedEx (TNT), and several factories in Europe? The hackers were clearly targeting the supply chain, in what many viewed as a test run. 

I wish the report had been more specific about where scarce dollars could best be spent on infrastructure – a complaint I have noted for other infrastructure hand wringing – but MHI is hopeful that technology and collaboration across shippers will improve logistics efficiency, reducing to an extent the need for infrastructure.

OK, that's it. The report is interesting if in my opinion a bit rambling, and not prescriptive enough, but a good read nevertheless.

Full report can be found here: Material Handling & Logistics US Roadmap 2.0

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