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  March 31 , 2006 - Supply Chain Digest Newsletter - Logitics Edition
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First Thoughts by Dan Gilmore, Editor

North American Material Handling Show Review and Comment

I spent the first two days of the week at the North American Material Handling show in Cleveland, and I’ll do a bit of a review and comment here, combining both my observations on the show and new products, and summarizing two excellent presentations by The Limited Brands’ Paul Mathews and John Wettstein of Green Mountain Coffee Roasters.

As most know, the Material Handling Show is a sister event of the larger ProMat event in Chicago, both produced under the Material Handling Institute’s umbrella. Each show runs every other year, but the crowds and vendor activity are always somewhat less in non-ProMat years.

Monday was lightly attended, as usual, but the crowd seemed fairly brisk on Tuesday. In a few informal conversations with both vendors and attendees, my sense was that interest in material handling automation is strong, but that decision and approval cycles are longer than ever. As someone from a large industrial company told me, “We have to go through so many layers and approval levels now for any significant project that it takes a real act of perseverance to keep the energy going to get the project approved.” A material handling consultant told me about a consumer direct distributor they were working with that almost literally had DC workers on top of each other in a small DC, leading to tremendous throughput and customer service issues, but the board wanted data and then more data and then more data still before they will approve the project.

It’s no secret corporations are very tight with capital even in these fairly robust times, but when really high ROI projects take that long, I think things have gone too far.

The major MHA vendors, such as HK Systems and FKI Logistex, had scaled down booths compared to last year’s ProMat show, and Siemens was a surprising no show, which was attributed in part to the material handling unit potentially being up for sale by the global industrial giant.

As a result, there were comparatively few new products of note released at the show, though I certainly may have missed a few things.

That said, below are my “Best of Show” picks for NAMH 2006. Not all of these products were specifically released at the show, but all are at least fairly new to market. You’ll find more detail on each and some photos on our web site.


  • The Smart Loader by Jervis B Webb: This is a combination AGV and fork truck, which I believe is the first on the market to actually be able to place loads in a trailer unattended. The floor demo was pretty impressive, and a booth representative told me a major beverage company, which after a few piercing questions wasn’t too hard to deduce as being Anheuser-Busch (I think), is using something like 25 of the units in a DC for trailer loading, and a smaller number to do floor stacking. “Lights out” warehousing?
  • The Smart Dock software application from BGI International. This is a new web-based version of the company’s dock door management system used by many grocers and some companies in other industries. The web-native element of the new release makes it especially appealing for companies to easily provide for management and visibility of door activities, and to enable carriers to schedule appointments over the web. This is representative of the increased emphasis in the dock and yard management areas by both companies and software vendors, as others such as HighJump Software, Manhattan Associates and RedPrairie all had visual yard and/or dock management systems prominently featured at the show.
  • A new ceiling-mounted pallet dimension scanner from Cubiscan/Quantronix. Like many of us, in the past I’ve used traditional gear from Cubiscan to get accurate carton dimensions. This new device provides a 3D profile of pallets to improve load building and other shipment planning.
  • Softeon’s new interactive voice capability in its WMS: This new feature from the WMS/SCE provider adds the ability to easily create voice notifications or instructions to workers as events occur. Interesting potential now, but will perhaps be essential in an RFID-based world where automated reads, rather than operator-initiated bar scans, create transactions or alert the system to errors or opportunities.

More details on all the above at our NAMH 20006 Best of Show article.

I also thoroughly enjoyed Paul Mathews’ presentation at the executive forum on linking supply chain management thinking and efforts with board room concerns and strategies. This really was an update of a presentation Mathews has made in the past, but it keeps getting deeper and better. The essential point – SCM professionals far too often fail to really understand how to align their activities and language with CEO and board room concerns. We provide a detailed summary here (Aligning Supply Chain Strategies with the Boardroom).

Jon Wettstein, VP of Supply Chain Operations for Green Mountain Coffee Roasters, gave an interesting presentation on how the small but fast growing coffee manufacturer took a big bet with heavily automating its DC. Look for our case study early next week (visit the web site or subscribe to the RSS feed to get early) on how the company achieved excellent results but came away from the project with some lessons/learnings worth considering by others. Here’s one: don’t underestimate start-up costs when projecting the timing of planned cost reductions.  

I’m out of room as always. We would welcome your thoughts on the show and/or our review of new products and the forum presentations.

Did you attend NAMH 2006? What were your thoughts? Did we miss any cool new products? Are more “lights out” type technologies distribution’s future? Are approval processes overly extended for your company?

Let us know your thoughts.

Dan Gilmore


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Quote of the Week

"The customer is not a very predictable person. We could spend millions trying to figure out what she is going to buy – and we do. But in the end, we have to have a supply chain that is able to respond quickly and fluidly to consumer demand.”

Paul Mathews, Sr. VP of Supply Chain Transformation, The Limited Brands, at NAMH 2006 in Cleveland.


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March 31 , 2006

North American Material Handling Show 2006: “Best of Show Review

We liked a new AGV truck loader, web-based dock door software, pallet dimensioner, and new interactive WMS voice capabilities


March 31 , 2006

Time to Align the Supply Chain to the Boardroom, says The Limited Brands' Paul Mathews

Moving from traditional functional thinking to board-level alignment is both necessary and profitable, executive says.


March 29 , 2006

Best Buy Continues to Soar, Citing Supply Chain Efforts, but is Now also in Cost Cutting Mode

Main focus likely to be stores; Will the “Customer Centricity” strategy be hurt?


March 24 , 2006

Another Survey on the CEO’s Perceptions of Supply Chain Management


No surprise, cost cutting is number one focus, but mismatch with the CEO’s primary agenda stands out

March 24 , 2006

Suit over PowerAde Distribution Highlights Changes Dynamics in Beverage Distribution


Wal-Mart wants to have product delivered to its warehouses, not stores; is beverage industry supply chain soon to have major changes in the flow of goods?




Q.  About how much is spent annual in the U.S. on “conveyors and conveying equipment?”

A. Click to find the answer below

The largest trade show of software and systems for the Supply Chain Logistics Industry


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Feedback is coming in at a rate greater than we can publish it - thanks for your response.

Our feedback of the week comes from Rick Ruzzin of Owns Cornin, who offers some nice insight into how companies could think about measuring logistic costs, coming out of our study on logistics costs. We'd like still more feedback - what's the right way to measure logistics costs?

We're also catching up on a variety of letters, incuding someone who says a big miss by Ford on its transportation budget in 2001 should have been on our list of the worst supply chain disasters, another who says outsourcing to India really drives U.S. and European jobs, and comments from John White on sensitivity analysis when doing network design.


Keep the dialog going! Give us your thoughts on this week's Supply Chain topics. As always, we’ll keep your name anonymous if required.

Feedback of the week - on Logistics Costs:

From an enterprise, use logistics costs as a % of sales.  Within a business unit, use cost/unit sold.  


Cost/unit is better, but not able to be rolled up when different businesses have different units. All are converted to common currency.


Within a business unit we have for freight:


  • Line-haul rate, measured as the change year over year.   This is a plant to an area like a 3 digit zip.   We compare to the average we paid prior year, and then role up all 10,000 lanes to see the change.
  • Fuel surcharges.   Measured vs. prior year.   Additionally track any “hedging” or recoveries we get from our customers.
  • Payload: the number of widgets per TL or weight/TL. 

We additionally separate product mix and customer geographical mix to establish a “core productivity.”


Components of our logistics include:

  • Freight
  • outbound freight line-haul,
  • Accessories, inclusive of all balance due items and fuel
  • Customs & forwarding fees (not duties)
  • Distribution warehousing expenses (separate from the plants).  Warehouses out of the plants are on the manufacturing cost center.


Inbound freight resides in the material price to production.   Either we add it to our material price, or it is delivered as one price and paid by supplier.


Rick Ruzzin
Logistics Leader
Owens Corning

On Supply Chain Network Design:

Without detailed cost premises (by year or planning period), the analysis will clearly be deficient.  If general inflation is assumed to move at 2.5% per year, benefit costs (which have averaged 8 – 12% per year) are far higher.  The point is that some costs move at much higher rates.


The premises for transportation in future years are more critical than ever.  For those networks in which transportation (inbound, outbound, inter-facility) is greater than 50%, sensitivity testing (with differing transportation assumptions) shows if the test assumption alters the primary solution.  As transportation, expressed as percent of total Supply Chain costs, moves up, the sensitivity increases.


The one certainty is that both demand and cost premises made for five years in the future – will, upon an annual review, change.


John White


White Supply Chain and Operations

On Outsourcing:

There is an unnecessary scare about everything getting outsourced to India. I just learned that Indian companies are the second largest Investors (in other words, job creators) in UK. Same is happening with USA. US manufacturing and R&D Firms which are on the verge of closure are increasingly being taken over by Indian Firms (looking for a presence in US) and turned around into profitable ventures due to their better management techniques and synergies achieved through their mergers with Indian Firms. All this is helping people in US and Europe retain their jobs. Many Indian Tech firms are sub contracting their High end jobs to US Firms. Hence there is reverse outsourcing as well but not getting enough publicity.


Here I am, at the age of 33 trying to locate US nationals who can sell my Global Logistics Consultancy Services to US Companies who export/ Import. I specialize in cutting cost of International Logistics Operations. This is nothing but job creation for someone in USA. This is how we mutually benefit.


This is similar to the argument wherein Economists say “concentrate on core competency”.


Shankar Jha

Pune, India

On Worst Supply Chain Disasters:


You might have added Ford Motor Company famously missing its freight budget by $800M in 2001 after it starting using a new procurement tool. All Truckloads shipments were switched from a Friday to a Monday with a new carrier in an effort to reduce costs.

Trailers, detention, and the inability for the Plants to perform to the new plan blew the freight budget.

Lory Sheffield



Q. About how much is spent annual in the U.S. on “conveyors and conveying equipment?”

A. A little over $5 billion in 2004, the last full year of government and MHIA data available. That’s down from a record $6.4 billion in 2000.

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