sc digest
March 21, 2014 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet MODEX 2014 Full Review and Comment bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic of the Week bullet Holste's Blog/Distribution Digest
bullet Cartoon Caption Contest Winners Announced bullet Trivia      bullet Feedback
bullet New Supply Chain By Design & Expert Insight bullet Videocast/On Demand Videocasts

Is it Finally Time for WMS in the Cloud?

This New White Paper Explores in Detail the Barriers to WMS in the Cloud – and How They Have Now Been Overcome

  first thought


Supply Chain Graphic of the Week:

Impact of Lead Time Average versus Variability

US Manufacturing Finally Getting Close to 2007 Levels
IPCC Predicts Economic Hit from Global Warming
Sony Culling its Supplier Field
American Hotel Register Automates Replen Orders


Is it Finally Time for WMS in the Cloud?


March 19, 2014 Contest

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

Holste's Blog: Labor Savings - No Longer Primary Justification Factor


Weekly On-Target Newsletter:
March 20, 2014 Edition

New Cartoon Contest, VW Union Vote May not be Over; Bolton on China Risk, more

A New Trend in Network Design: Flow Path Modeling

By Dr. Michael Watson

New Supply Chain Research

The Present and Future of Voice Technology in Distribution

Will Voice Continue to Take Market
Share in the DC?

Please take this brief survey now, receive results when survey closes.

Are You Ready For the Trans-Pacific Partnership?

By J. Anthony Hardenburgh
Vice President, Global Trade Content
Amber Road


The MODEX show in 2012 as the off year show from MHI replaced the North American Material Handling show, held from many years in what city?

Answer Found at the Bottom of the Page

MODEX 2014 Full Review and Comment

I am just back from a week in Atlanta, two days at the MODEX trade show in Atlanta, followed by another two days at the Logility software Connections user conference . Both were very interesting. Here I will report on MODEX. More on the Logility event next week.

MODEX is a new show from MHI (Material Handling Institute) first launched in 2012. It will run every other year, rotating with the long established ProMat event that runs in odd numbered years in Chicago.

Our materials handling editor Cliff Holste and our Supply Chain Television Channel's Jim Stephens joined me at the World Congress Center in Atlanta, and as usual thousands of you have viewed our day 1 and 2 video reviews of key themes and interesting new solutions, including actual clips of most of these solutions. Thank you. You can view those videos here: MODEX Day 1 and Day 2. Next week, we will break out each new solution into individual videos so you can more easily review just what may be of most interest.



"With regards to "goods to person," for example, there are quite a few "shuttle" based deployments versus a relative few to date in North America."


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The show was much larger this year than in 2012, covering about 200,000 square feet of floor space, versus 145,000 or so in 2012. That's about a 33% rise - quite impressive. I did not get officials attendance numbers, but the crowds were clearly strong, so this was a real winner for MHI.

When launched in 2012, MHI also had the goal of making this more of a full supply chain show than just materials handling and logistics/WMS software. That in my view was really not much achieved in 2012, but progress in that direction was clearly made this year. While materials handling (equipment and consultants) and core logistics software still of course dominated the floor, there was in fact a broader spectrum of exhibitors this year covering various aspects of the supply chain. Two that I had nice conversations with, for example, included a new ocean container rate benchmark service and the blimp guys - more on that one in just a bit.

Cliff and I, however, believed that the two key themes in terms of solutions out at the event were both materials handling related and continuations of trends we have seen in the last few years: (1) a variety of "goods to picker" technologies, especially with a view to powering efulfillment; and (2) automated case pick and related mixed-SKU palletization technologies. There is a lot out there in both areas to look at and choose from in terms of the numbers vendors and technology approaches.

At present, Europe as a whole is much further ahead in deployment of such advanced automation than is the US. With regards to "goods to person," for example, there are quite a few "shuttle" based deployments in Europe from vendors like Dematic, TGW and others, versus a relative few to date in North America. With regards to automated case picking, the focus area remains overwhelmingly the beverage sector, with more general food and consumer packaged goods companies waiting to see how things develop there.

Both these technology areas are advancing nicely in terms of sophistication and proof points.

In more general news, in what we believe to be an exclusive, a senior manager at Kiva Systems confirmed to SCDigest that despite having a large booth at the show featuring its iconic orange robots that might be said to have started the "goods to picker" era, it was not going to be selling the system to anyone other than now parent company Amazon any time soon.

Some, including me, wondered what was up when it became clear Amazon/Kiva would have a booth space at the MODEX show, but it turns out the Kiva robots were really just there as attention grabbers for Amazon's goal of recruiting managers and supervisors for the massive build out of fulfillment centers that continues on for the on-line giant.

And that build it is why, after a review not long ago, Amazon will not still sell the Kiva technology to others. Kiva is simply consumed in terms of manufacturing and deployment resources to keep up with Amazon's FC roll out - there is just no capacity for anyone else. And this work is only for new FCs in North America - it doesn't even include international DCs or potentially retrofitting existing FCs.


This then leads to the conclusion that rather than acquiring Kiva for some $775 million in a surprising move in 2012 to keep the robotic piece picking system out of the hands of competitors, it was instead largely to lock up Kiva's capacity for X number of years, capacity that would have had to share with others over that period. While our source said this position will be reviewed again in a couple of years, I believe it will be 4-5 years before Kiva returns to the open market - at which point Amazon is likely to spin the firm back out as an independent company or sell it to an existing large materials handling system provider.

We covered some 14 different solutions in our two daily video reviews, which I clearly don't have room to detail here, so rather I will offer our top five most interesting new products, in random order:

An upgraded automated label print and apply system from Bell + Howell: The key feature here is the ability to use so-called "linerless" labels, which have no backing paper but rather are just constructed like a roll of tape. This has a number of advantages, including being able to fit 70% or more labels on a roll, a "green" angle from getting rid of the need to dispose of the liner material after the label is removed, and the ability to print variable length labels. Bell + Howell does not produce the labels, but has perfected the advanced "cutters" needed to make this work, a technology developed with big money from a major US Postal Service contract. Definitely worth a look.

Integrated Systems Design (ISD) has released a new "mid-load" AS/RS system that fits between a mini-load system and a full blown AS/RS. That approach, which works at a height of up to 35 feet, allows the company to deliver a system at a much lower cost per storage position. The design also allows the center crane to be easily removed and replaced with a standard very narrow aisle truck, allowing the system to keep working in manual mode in case of a failure. Cliff believes this can open up an AS/RS solution to many more companies.

A company called QTek Design released a simple but witty system to allow pallet riders, fork trucks, etc., to extract an empty pallet from something like an upside down Pez candy dispenser, if that makes any sense, in just 10 seconds, without getting off the vehicle - or the operator slamming the pallet to the floor from wherever the stack is. At $30,000, it seems almost a no brainer for many companies.

Changing gears dramatically, a company called Folded Pack has an innovative new product to replace foam, peanuts, etc., to fill cartons after picking/packing. It is a thin cardboard-like material that is delivered in a flat stack, which is then run through a machine that creates three-dimensional structures about 1-inch across (see Day 1 video) that are surprisingly strong. All fully recyclable of course, with high product protection values, and Cliff and I both agreed we would much rather get a ecommerce box with this stuff in it rather than peanuts. We think you will like it.

And my favorite, a blimp-like aircraft developed under funding from the US DoD by a company called Aeroscraft that is now going after the commercial market to move heavy freight and/or to get to hard to reach areas. Think, for example, about delivering huge pipes to oil or natural gas pipeline projects in sequence. Or picking up many containers of produce right in the field. There are more applications than you might think. The company plans to build a fleet over the next few years that will be available for lease for some period of time. The largest craft will be capable of carrying an amazing 250 tons of cargo.

Vocollect/Honeywell wins our best marketing award from an innovative "sound booth" display that effectively demonstrated how its innovative new headset can filter out even heavy background noise from conveyors, horns and such to deliver clear Voice commands and responses. When we were there, a very , very large transport company was showing great interest.

That's it. You will find more in the videos.

Any comments on our MODEX 2014 review? Did we miss any cool new products? Let us know your thoughts at the Feedback section below.


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New Videocast Series:

Big Ideas 2014 Videocast Series from SCDigest and CSCMP

Monthly Broadcasts will Cover the Top Issues in Supply Chain. Register for the Entire Series.

Supply Chain Digest Chief Editor, Dan Gilmore and will feature leading-edge thinking on how to navigate current supply chain waters - and where the supply chain is headed in each area over the next few years.

Monthly Broadcasts Throughout 2014

On Demand Videocast:

Schneider Electric's Inventory Optimization Journey

New Approach and Technology Needed to Take Supply Chain Performance to the Next Level.

Featuring W. James Watt, Partner at OPS Rules, Kyle Hamm, Vice President, Supply Chain Performance & Development North America, Schneider Electric. and Supply Chain Digest Chief Editor, Dan Gilmore 

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On Demand Videocast:

HP's Plans for Global Supply Chain Visibility

Explore how the import and export operations enabled the business strategy of Crate and Barrel while focusing on cost savings.

Featuring Virginia Thompson, Senior Director of Import/Export at Crate and Barrel and Stephanie Miles, Senior Vice President of Commercial Services at Amber Road

Now Available On Demand


Related the above,  few weeks ago we published a column presenting some of the operating and financial numbers of the two biggest forces in retail, Walmart and Amazon.

We received a few emails in response, including our Feedback of the week from Francois Charvet, with some smart questions as he interacts with SCDigest editor Dan Gilmore on Amazon fulfillment costs.

Feedback of the Week: On Amazon Fulfillment Costs:


As usual, very interesting piece, Dan.

Two thoughts crossed my mind regarding the 17.5% fulfillment as percentage of sales:

- Is there any way to estimate the book sales and add that back in? Kindle aside, Amazon must still be shipping a lot of books around ,which could artificially bump the % up.

- How much of the fulfillment expenses are also used to support FBA? This could be another factor why the % looks higher than one would expect (something to keep in mind if/as "Fulfilled by Amazon" grows).

Francois Charvet, Ph.D., CSCP, CAP
Logistics Network Strategist

Dan Gilmore's response:

Media sales were about $10 billion in 2013.  General merchandise was about $47 billion. Amazon does not split out electronic vs physical.  Let's say it was 70% physical books, 30% ebooks, music, etc.

Adding that in would certainly know the percentage of fulfillment down but, not significantly. Would still be in double digits.  Big driver is depreciation costs on new DCs. Trying to separate that out would be interesting.

Also confusing is how Amazon accounts for sales of products fulfilled by the sellers, which is a large amount, based on my own personal experience.

I know some of the Wall Street analysts who follow AMZN – let me dig on all these areas. The AMZN numbers give you a lot of info, but always leave a piece out that is needed to get the complete story.

(Still working on it).

  More on Amazon and Walmart  Numbers  

Good look at where we have been.

Amazon is laying the foundation for the "Grocery" explosion. Walmart is focusing on growing both online grocery and general merchandise.

The Titans of Amazon and Walmart are doing what Titans do: Growing, Innovating, Transforming and Disrupting.

James A. Tompkins, Ph.D.
Tompkins International


Outstanding data summary on Walmart and Amazon.


Thank you for putting this together. Very insightful. Keep up the great work.

Roger Jones

St. Louis



Q: The MODEX show in 2012 as the off year show from MHI replaced the North American Material Handling show, held from many years in what city?

A: Cleveland.

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