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  First Thoughts

    Dan Gilmore

    Editor

    Supply Chain Digest



 
May 19, 2017

Supply Chain Comment: A Materials Handling Roadmap 2.0


I Summarize the New Roadmap Report 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 emlematic, 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.

Gilmore Says....

I will note the "tyranny of now" is a good way to describe the pressure that forces retailers to offer profit-crushing free shipping because everyone else does.

What do you say?

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As a side note, MHI's model is to offer membership at a company level - materials handling equipment and systems providers, software firms, some consultants - similar in that regard say to the National Retail Federation (NRF) - versus professional organizations such as CSCMP, WERC, and ISM, that are built on memberships at an individual level (even though most offer a form of corporate membership, but not in the same way).

This has many ramifications, which I may sort out one day.

The first Roadmap's mission was to "to assemble a broad community of thought leaders with a stake in the future of material handling and logistics technologies and practices to create an industry roadmap that will increase productivity, reduce costs, create jobs and improve the global competitiveness of the US," according to then senior vice president for professional development at MHI Gary Forger, who officially retired last year but was still involved in a new Roadmap released in April.

One of the catalysts for the initial MHI Roadmap effort was a similar effort from the Robotics Virtual Organization, which released a conceptually similar roadmap in early 2013 - an effort that led to some attention and suppotr from the US Congress. MHI was hoping for similar success.

Key to the first Roadmap and this latest one were a series of four events in cities such as Atlanta and Chicago, in which roughly 50 supply chain professionals from materials handling vendors, consultants, users/shippers, academics and more were brought together for a couple of days to discuss relevant topics and themes and provide the key fodder for the end Roadmap. I participated in one of these meetings - which was interesting - for the first report, but decided for me personally it wasn't worth the time last year to attend one of these enclaves for the 2017 Roadmap.

The structure of "Material Handling & Logistics US Roadmap 2.0" is very different from the first version, for reasons not completely clear. The 2014 edition was largely oriented around a discussion of key supply chain disruptors (e.g., the growth of ecommerce; urbanization) and then a related set of core competencies that these changes demand companies embrace (e.g., collaboration, supply chain visibility).

The 2.0 Roadmap, by contract, is organized around four key mega-themes: technology, consumers, workforce issues, and infrastructure. Whether this was a smart change or not I will leave to part 2 of this review, but the overall theme running through the document is the incredible pace of change supply chain organizations and practitioners are facing.

"Unbelievable and surreal aptly describe our daily rate of change across the board," the new report notes, citing a long laundry list of developments just in the past few years that supply chains need to grapple with, from last mile delivery to the "gig" economy.

In the report's introduction, it cites some interesting comments that came out of those four discussion group meetings I noted above. For example, mentioned is a discussion on how permanent a material handling system should be in a warehouse, with one participant suggesting that all equipment should be leased for five years and then replaced with an updated system.

"That doesn't happen today, but no one said the idea was a bad one. It could well be standard practice by 2030," the report says.

Another participant said "Warehousing has changed so much in the past 5 years that I have to be careful not to hire experienced people who do not recognize the shifts." That's very interesting indeed.

I am now going to summarize some of the highlight of the technology and consumer report themes in this column, then address the workforce and infrastructure sections in a part 2.

The pace of change in technology that directly or indirectly impacts the supply chain is extraordinary, as the report notes and most of us perceive clearly.

These change bring opportunities - and concerns.

Those concerns "range from ordinary security of data and physical items to causing massive unemployment by eliminating jobs to combinations of technologies that could be wrongly used to significantly damage humanity," the report notes.

There lead to interesting questions. The report, for example, says it is possible that artificial intelligence will make most human work obsolete. Is that good or not so good?

The report adds that "technology is most likely to be the strongest driver of change today and for the foreseeable future in the supply chain," in large part because it will have a profound impact on the other three themes of the Roadmap.

The report says that during the Roadmap 2.0 workshops, three trends dominated the technology discussions. (1) Increasing scope, deployment and sophistication of the integrated system of Cloud computing, connectivity, sensors and the Internet of Things; (2) Broad use of advanced artificial intelligence, particularly when deployed in the Cloud, will scale so resources can be applied to address problems with huge computing requirements; and (3) The rising importance of security and risk in both the physical and cyber domains as the availability and usage of data escalates.

That's a pretty good list, to which I would add the rise cof robotics in the supply chain.

On the consumer theme, the report notes the buying habits of traditional consumers and business consumers are converging, and "It hasn't always been that way."

The report also notes that within its horizon to year 2030, so called Millennials will be already knocking on middle age. What will the coming wave, often called iGen or GenZ bring? No one has any real idea -  they will both influence and by influenced by the environment.

The report notes that traditionally, the busisness purchasing process took lots of time, working through purchasing managers, sales meetings, pricing negotiations, etc.. That process is changing at an increasing pace, to a more ecommerce orientation.

"This trend is in place but not yet universal by any means. It will be." the report notes.

Whether it's true consumer demand or consumer are being pushed there by Amazon and others, "The tyranny of now will only become more domineering, causing a relentless re-engineering of how material handling, logistics and the supply chain will work going forward," the report says.

I will note the "tyranny of now" is a good way to describe the pressure that forces retailers to offer profit-crushing free shipping because everyone else does.

The report says that there are five key questions for sellers that drive current consumer behavior, notably on-line: (1) Do they have what I want/need? (2) How much is it? (3) When can I get it? (4) How do I get it?; and (5) Do I trust you?

I will note that normally there would be an inverse relationship between how fast I can get it and how much it is going to cost, a relationship that Amazon is simply blowing up - for now at least.

There is much more I can and will say, but I am out of room. Look for part 2 soon. Full report can be found here: Material Handling & Logistics US Roadmap 2.0


What is your reaction to Gilmore's Part 1 summary of MHI's 2017 Roadmap? Let us know your thoughts at the Feedback button below.


Your Comments/Feedback

Srihari

Senior Consultant, Infosys
Posted on: May, 22 2016
Great article. I am a little suprised not to see BNSF in the mix while I understand their financial mode/operation is a little different. 

That would only give a complete perspective with all the players in the pool.

Mike O'Brien

Senior editor, Access Intelligence
Posted on: May, 26 2016
Surprised to see Home Depot fall off the list; thought they were winning with Sync?

Julie Leonard

Marketing Director, Inovity
Posted on: Jun, 27 2016
Using the right tool for the right job has always been a best practice and one of the reasons, we feel, that RFID has never taken off in the DC as exponentially as pundits have been forecasting since 2006. While these results may seem surprising to those solely focused on barcode scanning, the adoption of multi-modal technologies in the DC makes perfect sense for greater worker efficiency and productivity.

Carsten Baumann

Strategic Alliance Manager, Schneider Electric
Posted on: Aug, 19 2016

The IoT Platform in this year's (2016) Hype Cycle is on the ascending side, entering the "Peak of Inflated Expectation" area. How does this compare to the IoT positions of the previous years, which have already peaked in 2015? Isn't this contradicting in itself?

Editor's Note: 

You are right, Internet of Things (IoT) was at the top of the Garter new technology hype curve not long ago. As you noted, however, this time the placement was for “IoT Platforms,” a category of software tools from a good number of vendors to manage connectivity, data communications and more with IoT-enabled devices in the field.

So, this is different fro IoT generally, though a company deploying connected things obviously needs some kind of platform – hoe grown or acquired – to manage those functions.

Why IoT generically is not on the curve this year I wondered myself.

 

 

Jo Ann Tudtud-Navalta

Materials Management Manager, Chong Hua Hospital, Cebu City, Philippines
Posted on: Aug, 21 2016

I agree totally with Mr. Schneider.

I have always lived by "put it in writing" all my work life.  I am a firm believer of the many benefits of putting everything in writing and I try to teach it to as many people as I can.

This "putting in writing" can also be used for almost anything else.  Here are some general benefits (only some) of "putting in writing":

1. Everything is better understood between parties involved.  There are lots of people types who need something visual to improve their understanding.
2. Everyone can read to review and correct anything misunderstood.  This will ensure that all parties concerned confirm the details of the agreements as correct.  This is further enhanced by having all parties involved sign off on a hard copy or confirm via reply email.
3. Everything has a proof.  Not to belittle the element of trust among parties involved, it is always safest to have tangible proof of what was agreed on.
4. There will be a document to refer to at any time by any one who needs clarification.
5. The documentation can be useful historical data for any future endeavor.  It provides inputs for better decisions on related situations in the future.
6. This can also be compiled and used to teach future new team members.  "Learn from the past" it is said.

There are many more benefits.  Mr. Schneider is very correct about his call to "put it in writing".





Sandy Montalbano

Consultant, Reshoring Initiative
Posted on: Aug, 24 2016
U.S. companies are reshoring and foreign companies are investing in U.S. locations to be in close proximity to the U.S. market for customer responsiveness, flexibility, quality control, and for the positive branding of "Made in USA".

Reshoring including FDI balanced offshoring in 2015 as it did in 2014. In comparison, in 2000-2007 the U.S. lost net about 200,000 manufacturing jobs per year to offshoring. That is huge progress to celebrate!

The Reshoring Initiative Can Help. In order to help companies decide objectively to reshore manufacturing back to the U.S. or offshore, the nonprofit Reshoring Initiative's free Total Cost of Ownership Estimator can help corporations calculate the real P&L impact of reshoring or offshoring. http://www.reshorenow.org/TCO_Estimator.cfm

Robert

Transportation Manager, N/A
Posted on: Aug, 30 2016
 Good article!  I am sending this to my colleagues who work with me.  We have to keep this in mind.  Thanks!

Ian Jansen

Mr, NHLS
Posted on: Sep, 14 2016
SCM is all about getting the order delivered to the Customer on date/ time requested because happy Customers = Revenue. Using the right tools to do the right job is important and SCM is heavily dependent on sophisticated ERP systems to get right real data info ASP.

I've worked in a DC with more than 400,000 line items and measured the Productivity of Pickers by how many "picks" per day.

I've learned that one doesn't have to remind Germany about your EDI orders.

Don Benson

Partner, Warehouse Coach
Posted on: Sep, 15 2016
Challenge - to build and sustain effective relationships at the level of the organizations that are responsible for effectively coordinating and colaborating in an otherwise highly competitive environment 

Jade

Admin, Fulfillment Logistics UK Ltd
Posted on: Oct, 02 2016
Of course we all need to up our game. We need to move with the times, and always be one step ahead of what the future will bring.

Mike Dargis

President of asset-based carrier based in the Midwest, Zip Xpress Inc. (at ZipXpress.net)
Posted on: Oct, 03 2016
Thanks for the article, but I know there's a lot more to this issue than just the pay rates. Please check out my blogs on the subject at www.zipxpress.net.

Blaine

Inventory Specialist, Syncron
Posted on: Nov, 16 2016
Lora, great article! I agree that companies choose the 'safe' solution more often than not. My solution is a bolt-on for legacy ERP's and we even face challeneges of customer adoption. Most like to play it safe and choose an ERP upgrade, which is more costly, time consuming, and has lower ROI across the board. Would love to learn more about your company, we are always looking for partnerships.

Blaine
blaine.schultz@syncron.com

Bob McIntyre

National Account Executive, DBK Concepts LLC
Posted on: Nov, 21 2016
This is a game changer in GE's production and prototyping.  It also has huge implications across the GE global supply chain with regard to the management of their support and spare parts network. 
 
 
 
 

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