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May 11, 2018 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Trip Report: WERC 2018 bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet Cartoon Caption Contest Continues bullet Trivia      bullet Feedback
bullet New Expert Column bullet On Demand Videocasts



Discover the Scanners, Mobile Computers, Tablets and Printers with the Features and Form Factors Made for You


first thought


Supply Chain Graphic of the Week
The Big Benefits of Carton Optimization


New US Drone Test Projects Unveiled by DOT

Oil Prices to Head Still Higher
New APICS Study on Salaries for Supply Chain Pros
Apple Keeps Auditing More Suppliers


April 11, 2018 Contest

See The Full Cartoon and Send in Your Entry Today!

Holste's Blog: Productivity is a Crucial Factor in Measuring Production Performance


Weekly On-Target Newsletter:
May 10, 2018 Edition

Cartoon, Who Wins Digital Freight, Planning and Analytics and more


Learn How Blockchain Technology Can be Applied to International Trade


Five Tips for Improving Demand Planner Effectiveness

by Henry Canitz
Product Marketing & Business Development Director

The $100 Billion Returns Question

by Karin Bursa
Executive Vice President

The Impact of Inaccurate Carton Contents

by Kevin Harris
Director of Freight Audit
Compliance Networks


Using Multi-echelon Inventory Optimization to Achieve Measurable Operational Improvements


WERC was founded in what year?

Answer Found at the
Bottom of the Page

Trip Report: WERC 2018

I am just back from two good days this week at the annual conference of the Warehouse Education and Research Council (WERC) at the Charlotte convention center.

If you haven't been to one of these event, WERC's conference is of a decent size - about 900 attendees - but it maintains a relaxed, boutique sort of feel, with many of its members very passionate about organization and its missions.

As the name implies, the event focuses on 4-wall distribution center matters like no other conference really does, but there are other subjects covered as well.


WERC 2019 will be a short drive down I-70 from me in the great logistics town of Columbus, OH.


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There is generally a decent amount of content on managing/improving 3PL selection and relationships, and where else are you going to get a session on "Solve Back and Shoulder Injuries in the Warehouse," as we had this year.

WERC tries to pack an awful lot into a short amount of time and given the number of attendees it attracts, with several keynote presentations, an aggressive number of breakout sessions each day, broad use of discussion-focused "peer to peer" sessions on focused topics (they are hit or miss in my experience), relatively new educational "Ted Talks" on day 1 around a handful of topics, several opportunities as always for distribution center site visits nearby, and more.

If you are disappointed in a WERC conference it won't be from a lack of options.

There was a change this year, with the usual committee of 10 or so members selecting presentations topics and session now supplemented with a member panel that also provided input.

Whether that led to improvement in the sessions I can't say. In general, I have been very satisfied with WERC content, and that was true again here in 2018. That said, most years I attend at least a couple of sessions at WERC that are what I would call truly outstanding presentations that make my list of top presentations of the year.

Did not find any of those this time, though that may have just been bad luck in terms of what I chose to attend.

So let's get to some of the highlights.

I have learned it is almost an iron law that any presentation that purports to discuss the application of Lean to distribution center operations does not really get into any real discussion of what is truly different about Lean DCs.

That was true again here in a decent enough presentation on gaining a competitive edge in distribution through Lean, presented by Aaron Lord

and Lissette Contreras of accessory and apparel maker Michael Kors, and consultant Alan Noss of Lean Quest.

The big takeaway for me here was just how long this process takes. The goal, Lord said, was to create a continuous improvement culture in the DC and foster the development of problems solvers at every level, but especially with floor level supervisors and hourly associates.

In took a little more than two years just to get the program organized and everyone from management on down trained on Lean principles, processes and tools, but Lord noted if you aren't really well prepared a Lean program will lead to failure.

I would say the presentation spent too much time on Lean basics ("House of Lean," etc.) and not therefore as much on the details of the implementation, especially as the majority of attendees worked for companies that have already started Lean programs and likely knew the basics.

I am not a Lean expert, but it seems to me at a very high level, there are two aspects to Lean - first the continuous improvement improvement/Kaizen foundation, and then the principles of how Lean processes are supposed to work (continuous flow, no batching, pull-driven, etc.).

This presentation focused almost exclusively on the Kaizen side, and how Michael Kors is seeing real improvements at last from such practices in its main US DC. As to the Lean process adoption, Lord said continuous flow is not really applicable in distribution, but that you can adopt some principles of pull-based operations, but without providing any detail.

So once again on that specific subject I came away with little additional insight. For example, it would seem to me that Lean would push a company away from traditional batch-oriented wave-based order picking to so-called "waveless picking" - but I am not sure, and have NEVER heard anyone address this or in fact anything like it in a Lean DC presentation.

That chippy comment aside, this was a solid enough effort, as success in the end (e.g., a 43% improvement in an unspecified area of order picking) has other Kors DCs asking for the program. One takeaway: if it had it over again, Kors would have trained its 400 core hourly associates later in the process.

Samar Saiy and Chad Claude of DHL also delivered a solid effort on tools that can be applied to help with the high cost of efulfillment. The reality, they said, is that few companies have a current WMS that really supports the new requirements of efulfillment, and even many current WMS's don't either. You can look to so-called Warehouse Execution Systems, they said, but those can be expensive.

An alternative: use some analytics and other tools to cut the gap between what you have and what you need. So, to an extent this was a commercial for what DHL can do for you, though to be very clear it didn't come across that way at all and I believe there is some real value in thinking about what tools you might deploy from whatever source they are bought or built.

Those tools include: heat maps to visualize pick and replenishment activity in forward pick locations and make adjustments accordingly; something DHL calls velocity coding, which takes history and actual demand to forecast SKU and SKU-cubic movements to improve slotting decisions, especially for dynamic slotting; SKU correlation, again to improve slotting by understanding what products are often ordered together; an order grouping tool that can reduce picking travel time by making smarter picking batches; and carton optimization to calculate how many and what size boxes are optimal for an upcoming period to reduce shipping costs (see our Graphic of the Week).

It was good presentation, providing education, for example, on what slotting approaches are best for what environments.

Labor in the DC is an increasingly important issue, almost a crisis in some markets, so a session by Brian Devine of temp worker firm Prologistex was not unsurprisingly very well attended.

Devine had all kinds of data, most shockingly of which was how over more than a decade, until just recently, DC hourly labor rates simply stagnated, while the cost of living rose substantially. Why the law of supply and demand didn't work better for workers in this period when demand for warehouse workers rose steadily I am not quite sure. However, that has started to change rapidly over the last few years, as wage rates have risen much faster than the CPI.

This should really just be viewed as a move back to historical norms, Devine said.

With unemployment at about 4% nationally, that means almost all the good candidate workers already have a job, Devine noted. Today, if you are paying at mid-level or below local rates, your choice is really going to be amongst poor candidates. And it takes at least $1.00 per hour more to get someone to move.

Among a number of pieces of good advice from Devine, have some empathy for your DC workers for goodness sake. One company that ran a first shift that started at 7 AM announced a new start time of 5:30 during peak season - resulting in chaos as workers had issues with transportation, day care, school transport, etc.

And be smart about your attendance policies. One company made DC workers come in for 23 straight days, and dinged workers attendance scores for missing a day or being late during that period the same as during normal schedules.

Devine, interestingly, is also not a big fan of DC incentive programs - in part because many workers just don't have another gear to use to exceed the standard, and the reward is usually too small and delayed for those that do.

There was much more but I am out of space. Solid event as usual for WERC, and I will say from an overall structure and environment this was the best CEO Mike Mikitka and team have put together.

If you are interested in improving distribution performance, it's a good conference to learn what others are doing. WERC 2019 will be a short drive down I-70 from me in the great logistics town of Columbus, OH. Hope to see you there.

Any reaction to this WERC conference summary? Were you there? What did you think? Let us know your thought at the Feedback section below.


On Demand Videocast:

Digitizing the Order Management Process

Orders Still come in Many Different Forms and Systems - Here's How to Get them Under Digital Control

This videocast discusses breaks down all the ways in which orders can arrive, the downstream challenges associated with each, and the benefits of digitization.

Featuring Dan Gilmore, Editor along with Esker's Sarah Joiner.

Now Available On Demand

On Demand Videocast:

Reducing Costs through Automated Inventory Replenishment & Analytics

How Motor City Industrial Taps into Data Visualization to Help Customers Identify Waste, Reduce Inventory

This videocast discusses how to connect people, processes and technology across commerce and supply chain operations to achieve unified commerce.

Featuring Dan Gilmore, Editor along with Joseph Stephens, CEO, Motor City Industrial, Jay Fielder, Supply Chain Technology Manager, Motor City Industrial and Mike Wills, Chief Revenue Officer, Apex Supply Chain Technologies.

Now Available On Demand

On Demand Videocast:

Yes, Retailers and Distributors Can Survive and Thrive by Unifying Commerce and Supply Chain

Integrated Approach will Improve Customer Experience as Smart Retailers Move Beyond Omnichannel

This videocast discusses how to connect people, processes and technology across commerce and supply chain operations to achieve unified commerce.

Featuring Dan Gilmore, Editor and enVista CEO Jim Barnes, a highly recognized industry expert on retail and distribution.

Now Available On Demand


We received a number of emails on our column on our recent study of retail-vendor supply chain relationships, especially around the always controversial subject of chargesbacks. Below are a few of those emails, some from our partner RetailWire.

Feedback on Use of Retail Chargebacks and Collaboration


Chargebacks are the symptom, not the problem. The problem is compliance, and it has to be fixed at the root. Chargebacks should be used exclusively to drive home the need for vendors to comply with agreed-upon requirements. The financial hit has impact on compliance. Conversely, collaboration can be achieved only between highly ethical, disciplined businesses. If either side of the transaction lacks those qualities, there will be chargebacks.


Bob Amster
Retail Technology Group


There are two types of chargebacks. One type is very legitimate and the other is simply robbery that retailers institute for themselves doing a poor job.

Three examples: My company sold to Walmart, Target and Walgreens among others. We never had a chargeback from Walmart. They gave us specific instructions of how to service them as a customer and we met their needs. Target was another story. They, of course, priced our product higher than Walmart. Every so often they would claim we were selling our products to Walmart for something less than Target so they would deduct what they thought we were charging Walmart. We were not a huge CPG company. We would fight and often lose.

Then there was Walgreens. They ran a huge nationwide promotion on our product. Bought more than we recommended. When it didn't meet their expectations, they didn't pay us.

Chargebacks to a vendor are OK and deserved when a vendor doesn't comply. But chargebacks to a vendor when the retailer makes the mistake is as bad as robbery.

Gene Detroyer
European School of Economics






This study shows that both parties feel the other party doesn't have the skill needed to collaborate, both parties feel there is a need for better tools and data visibility and they also both feel there's little interest in collaboration in general. Hmmm. So, we don't think our trading partners have the skills required, we need better data & tools, but aww, heck, we're not really all that interested in this collaboration thing, anyway.

LOL. Seriously?! These barriers are not all that new. I can remember at least back to the '90s when we also had little overall interest in collaboration. Everyone has talked about it for years. But talk is cheap. Investing in the right tools available today to capture that "dark data" and reap real-time supply chain insights must require significant skills and budget on both parties' parts, right? Not necessarily. I think this is more of an awareness issue, than a level of interest issue.

Chargebacks are probably necessary as long as we continue to operate in the way we have been for years. There will take some key disruptors in the industry to step up and take on this challenge.

Ralph Jacobson
Global Retail and CPG Sales Strategist



Q: WERC was founded in what year?

A: 1977.

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