sc digest
November 15, 2018 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Highlights of the Annual 3PL Study Part 2 bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Distribution Digest/Green Supply Chain
bullet Cartoon Caption Contest Continues bullet Trivia      bullet Feedback
bullet New Expert Column bullet On Demand Videocasts



  Discover How to Prepare for Careers in Today's Data-Driven World  
first thought


Supply Chain Graphic of the Week
The Incredible Growth of Amazon Fulfillment Centers


Chinese Singles Day Sees Online Sales Soar Again

Q2 Cargo Thefts Down a Bit but Still Big
RFID Implant Craze Hits the UK
US Freights Rise but May Be Stabilizing


October 31, 2018 Contest

See The Full Cartoon and Send in Your Entry Today!



Feature Story: Just How should we Measure Distribution Center Size?


Weekly On-Target Newsletter:
November 14, 2018 Edition

Cartoon, Measuring DC Size, Info Shelf Life, TL Rates Stabilizing? More

This is Not Your Father's Inventory Optimization

by Henry Canitz
Product Marketing & Business Development Director

Information Has a Shelf Life, Too

by Richard Wilhjelm
VP, Sales & Marketing
Traverse Systems

Sustainability is (Finally) Making an Entrance

by Gary M. Barraco
Global Product Marketing
Amber Road



The first real-time WMS, meaning use of RF terminals, is generally thought to have been deployed in what year?

Answer Found at the
Bottom of the Page

Highlights of the Annual 3PL Study Part 2

For the 23rd consecutive year, my friend Dr. John Langley of Penn State University has led the annual Third Party Logistics Study.

Last week I summarized the main part of the report that pulls together quite a bit of survey data from shippers and 3PLs, including the famous "IT Gap" that never seems to go away. (See Highlights of the Annual 3PL Study.)

This week, I include a summary of most of the special topic sections, some frankly driven by report sponsor interests but nevertheless generally worth the read.


For all the advancement and growth in omnichannel supply chains, we are not at the beginning of the end, but rather the end of the beginning, as Winston Churchill famously said.


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First, I'll take a look at the discussion of "keeping the supply chain alive and nimble" - that certainly sounds like a better place to be than "dead and rigid."

The report notes the inherent trade-offs between efficiency and agility in supply chain.

"The challenge of crafting a state-of-the-art supply chain is balancing the need to reduce costs while improving agility in an ever-changing marketplace," the report notes.

That's the goal but where to set than balance and how to improve both capabilities at the same time are the daunting questions.

The report hints that more companies are moving the dial a bit more in the agility direction, but notes 39% of survey respondents said they haven't made changes to increase their inherent agility over the past five years and 15% more reported decreasing supply chain nimbleness in favor of reducing costs.

I will note parenthetically that while increasing agility is good, not many companies will pursue more flexibility if it means costs will go up.

This discussion in this section then rather abruptly jumps to some commentary on current transportation challenges in terms of constrained capacity and rising costs.

The report touts the role of 3PLs in reacting to these challenges, and I agree with the comments that logistics service providers may have large shipper bases that can be evaluated for synergies across those companies.

It was noted, for example, that report sponsor Penske Logistics is utilizing data scientists to look at the $4 billion of managed freight it handles to find natural pairings that would optimize the logistics flows.

And while not exactly connected to agility, it's worth including the report reminder to differentiate between rates and costs.

"Large shippers have their procurement departments and they are measured on rate and rate improvement," the report notes.

"Today it is about mitigating rate increases, and that in itself changes the conversation and drives the rate versus cost discussion," a Penske exec is quoted as saying.

Technology clearly can play a key role in increasing agility. The survey says a high percentage of both 3PLs and shippers plan to invest in supply chain visibility/control towers within the next two years. More than half of shippers (59%) and 3PLs (58%) are investing in predictive analytics.

Next, I will take a look at the "last yard" special topic. While "last mile" challenges have been highly discussed over the past decade with the growth of ecommerce and Amazon's relentless focus on reducing lead times, the report introduces the new (to me at least) concept of the last yard. What does that mean?

It involves "what happens to a shipment once it is delivered to a customer or consumer, and then how it is routed to a specific location where it may be needed or used."

And this is not just somehow a more granular aspect of efulfillment. The report cites one example as being the movement of repair parts needed for a manufacturing process from the receiving dock to the manufacturing location. Another last yard scenario is "movement of consumer purchases from the point-of-central delivery to the point-of-use."

Not exactly sure what that means, but I will roll with it for now.

The main point seems to be that even if the rest of the supply chain does its job in terms of right product in the right place at the right time, it can all go for naught if the last yard execution is inefficient. Another way to look at it is the opportunity to add value from last yard innovation.

Some examples of the latter include say tests by Amazon and others to not only deliver to a customer's home, but also to place groceries directly into refrigerators or pantries. Or sophisticated sequencing of parts or assemblies from suppliers to manufacturing lines.

In one of the trends called out relative to last yard, the report notes, is the "increase in value and criticality of many shipments, with examples including medical equipment and supplies, repair/replacement parts, high-priority deliveries for senior executives, and a number of other types of shipments that must be delivered when and where they are needed to avoid organizational problems."

The report notes the increased interest in self-service solutions to last yard challenges, most notably with the locker concept being rolled out by a number of retailers and logistics companies, and thoughts that approach might be extended beyond just ecommerce consumer fulfillment.

This whole section can be adequately summarized in this statement from the report: "The central idea is that supply chains do not end at the receiving dock or the central point where shipments are delivered but at the point of use where the intended value is actually created."

Will the term "last yard" catch on? In some sectors I suspect, but probably not broadly, even if very relevant in some scenarios and a potential focus for innovation.

The report next takes a fresh look at omnichannel commerce. It was last a focus topic in the 2015 report, and thus ripe for some fresh perspective and survey data in this rapidly changing domain.

Perhaps surprisingly, most shippers and 3PLs rate themselves as not very mature in omnichannel capabilities. As shown in the chart below, only percentages in the low single digits rate themselves as "high performing" in this area.


See Full Image

The highest percentage - 38% - said they are inconsistent and 36% said they had no capability. Just 18% of shippers rated themselves as competent.

I will note, however, this could be because, as an example, chemical company responses were included in the data pool that naturally pulled down the overall average. But will also observe that I have recently spoken several 3PLs that are significant firms in the market but as yet really don't offer much in the way of efulfillment services.

The report asked shippers and 3PLs to rate top omnichannel challenges, and the results seem about right. The top issue was flexibility/last-minute changes to orders, which was cited by 42% of shippers and 40% of 3PLs, followed by inventory visibility (35% of shippers, 20% of 3PLs), inventory control (35% of shippers and 30% of 3PLs), and order management (35% of shippers, 24% of 3PLs).

My take: for all the advancement and growth in omnichannel supply chains, we are not at the beginning of the end, but rather the end of the beginning, as Winston Churchill famously said.

Lastly, there was a section on data sharing between shippers and 3PLs - an interesting topic indeed.

The report notes the many steps and functions involved from a shipper first putting together an RFI type document for a new 3PL selection process through that selection and operational start-up, and how information flow is the lifeblood of a successful end-to-end process.

An analogy was made to a relay race, with information as the baton - if it is dropped, even partially, anywhere along the way it will lead to an unsatisfactory result.

Among respondents, 36% of shippers and 35% of 3PLs agreed that there were opportunities to improve the sharing of insight and data collected by 3PL sales teams with their account management functions. Also, 37% of shippers and 35% of 3PLs agreed there was a need for improving the hand-off of bid, RFP and tender data with solution design/delivery teams.

"There are real and lasting consequences to 3PLs that don't make data sharing a priority across their commercial operations," says Chuck McDaniel, a 28-year veteran of Procter and Gamble's supply chain group. "It would seem irresponsible not to explore the innovation that we're seeing from Silicon Valley, that's transforming the efficiency of the RFP process."

I am not sure what that new technology is - but I will find out.

I am out of space. Again, the full report available for free download with registration here. Would welcome your thoughts.

Any reaction to this data from the 3PL report? Let us know your thoughts at the Feedback section below.



On Demand Videocast:

Digital Transformation's Value to the Supply Chain

The Future of Order Management

This videocast breaks down what digital transformation is and how automated order management solutions equate to supply chain benefits.

Featuring Dan Gilmore, Editor along with Esker's Dan Reeve.

Now Available On Demand

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


We received a number of emails on our various coverage of the CSCMP Edge conference. A selection is below. More next week.

Feedback on CSCMP Edge 2018:


Since the company upgraded its security, SC Digest was getting trapped in "junk" mail folder.

I recently released them from the folder. SC Digest, and your columns, are anything but junk. Indeed, SC Digest is one of the few bulk emails that I enjoy reading.

Though not able to attend the CSCMP conference, your column, as always, was informative and refreshing. You deserve much credit and courage for suggesting realistic and practical ways the conference can be improved. I have been to other conferences where it seems the vendors have hijacked the format either through monopolizing the agendas, duration of sessions or spouting product attributes as 'thought leadership.'

I understand there needs to be balance in these conferences and recognizing the companies willing to share their stories is the a good message to the conference organizers.

Thank you.

Jerry Saltzman
Director, Global Supply Chain Processes




On Monday's Panel with Amazon, IBM, and Nike, I had a few more observations to add to yours.

First, in your video you pointed out that Amazon (Bozeman) had a great saying that you should "strive for a boring factory." And, at the end of session, his first take-away for the audience was to study "lean manufacturing" techniques. Even with advances in technology, the "lean" movement teaches us a lot of about operations. It is interesting that GE announced its first outside CEO and he comes with a very strong lean manufacturing background.

Second, Nike (Brewer) had a quote that supply chain and operations folks should treasure: "It is just an art project until you get it onto someone's feet." Just a great quote to stress the importance of the supply chain. But, I think the quote is deeper. It reminds us that the whole business is connected. The "art project" has to be good for the operations to even exist.

Third, both Nike (Brewer) and IBM (Wright) pointed out that with the pace of change, if you aren't leading it is easier to fall further behind.

Michael Watson
Opex Analytics






First, thank you for you coverage of CSCMP. It was outstanding as usual.


I was unable to make this years' event. Your videos and trip reports made me almost feel like I was there.


I completely agree with you that the conference format is stale and needs a refresh. Your suggestions are good ones. Maybe there are other suggestions out there.


But events like species must evolve and react to the environment, and that is not happening.


Still a good conference, but needs "new blood," for lack of a better word.


Name withheld by request

Consumer package goods industry



Q: The first real-time WMS, meaning use of RF terminals, is generally thought to have been deployed in what year?

A: 1975, according to WMS guru John Hill, now of St Onge. Though there are a couple of contenders for who was actually first.

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