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  First Thoughts

    Dan Gilmore

    Editor

    Supply Chain Digest



 
July 27, 2017

Supply Chain Comment: A Materials Handling Roadmap 2.0 Part


I Summarize the New Roadmap Report from MHI, Focus on Workforce and Logistics Infrastructure Issues

 

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.

Gilmore Says....

Maybe hyperloops will solve part of the problem? The report seems optimistic.

What do you say?

Click here to send us your comments
 

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 undwerway.

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


What is your reaction to Gilmore's Part 2 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. 

Kai Furmans

Professor, KIT
Posted on: May, 22 2017
I am referencing to the comment that leasing of warehousing equipment (beyond forklift trucks) is a vision for 2030.
Just recently in Europe, such a business model has started, see here: https://next-intralogistics.de/

I am following with a lot of interest, how the business develops.

Stuart Rosenberg

Supply Chain Consultant, First Choice Supply Chain
Posted on: Jun, 05 2017
If we limit the standard on judging or determining the best supply chain to just three calculations it does not tell the entire picture.  Financial performance metrics are valuable as they capture the economic consequences of business decisions.  But supply chain managers make decsions and use organizational resources that impact a company's financial well being.  Where is a firm's earnings over a period of time determined by sales less product costs and general/adminsitrative costs?  Where is the metric for determining the sources and uses of cash from three perspectives - operational, investment and financial?  Where are these supply chain metrics: on-time delivery, lead time, response time to customers, product returns, procurement costs, network distance, inventory carrying costs, forecasting accuracy, sourcing time, etc,.  Without knowing the results of all these supply chain calculations the there must be a question as to the accuracy of the 25 top supply chains.

Dustin Calitz

Project Commercialization Manager, Mondelez
Posted on: Jun, 06 2017
I feel this ranking misses the mark in SC. It does not seem to consider a key indicator in days inventory on hand, which is key to determining a SC company's ability to forecast, manage inventory costs and reduce aged stock. In additiion I realize it's difficult to understand what goes into the customer survey, but would I assume specific metrics are being asked. For examples customer's opinion on service level differentiation and the ability to deliver the right product on time, which should then be allocated a bigger weighting than 10%. It would also be interesting to take a view of the above list's SKU portfolio complexity, seasonality and launches/promotions. I would again assume some companies on the list above have a far more complex SC to manage and lead, ultimately requiring a lot more innovation within a SC to stay ahead of competitors, and ultimately satisfy their customers demands.  I understand above metrics are difficult to measure, as mentioned in the article, but they somehow need to be considered to give a true reflection. 

Michael Hurd

Lean Consultant, Unemployed
Posted on: Jun, 10 2017

A Very Good Article...

While some feel that lean is a scam that pushes for more out of the personnel and out of the companies through reduction of waste and adding value for the customer, there are several things to remember:

1) Lean methodologies are designed and implemented to reduce time wasting, so this may seem that you are working harder as an employee.

2) Lean methdoligies only work when everyone from the janitor to the owner of the company get involved and back the program.

3) Lean methods are there to make you work smarter not harder, although it may feel you are working harder.

4) YES... Sometimes lean methodologies fail! This is due to project overun or taking on too large a problem and trying to fix it all in one go and not taking the smaller problems that are associated with the large problem and fixing them first. Sometimes fixing the small problems leads to resolution of the larger problem.

 
 
 
 

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