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Aug. 14, 2020 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Thoughts on MHI Acquiring WERC
bullet SCDigest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet New Stock Index

New Cartoon Caption Contest

bullet Trivia      bullet Feedback
bullet New Expert Column bullet On Demand Videocasts



A new report from ARC Advisory analyst Clint Reiser lays out the
landscape across WMS, WES and Warehouse Control System (WCS)
software, detailing the WES value proposition, and describing
important changes in the WES market.


first thought


Supply Chain Graphic
of the Week
When it Comes to eCommerce, There is Amazon and a Bunch of Number 2's


This Week's Supply Chain

by the Numbers

Nikola Motors with Huge Deal for Electric Trucks
Big New Surcharges Coming for UPS Customers
FedEx Finding Robot Success for Hub Sorting


Retail Chains Pulling Out of Empty Manhattan


July 30, 2020 Contest

Show Us Your Supply Chain Wit

It' Back! SCDigest's Weekly

Supply Chain Stock Index



The State of Retailer-Vendor Supply Chain Relationships 2020

Are Things Getting Better and More Collaborative - or Heading in the Other Direction? Third Biannual Study - Please Participate


Weekly On-Target Newsletter:
Aug. 12, 2020 Edition

Cartoon, Top SCDigest Stories of the Week

Revisiting SCDigest's Framework on RFID Process Change

Dan Gilmore

What to Do about Lack of Gender Diversity in Supply Chain Management

Abel Tamanji

Senior Student at University Of Wisconsin-Whitewater

Regional grocery chain Schnucks in St. Louis has an important place is supply chain history - why?
Answer Found at the
Bottom of the Page

Thoughts on MHI Acquiring WERC

About two weeks ago, MHI (formerly the Material Handling Institute of America) announced it was acquiring the Warehouse Education and Research Council (WERC), a professional organization.

At one level, it is minor and not surprising news. But it could have some larger ramifications, and I thought it would make sense to use this news to offer some thoughts on this deal specifically and the supply chain/logistics sector's trade and professional associations more generally.

From a broad perspective, as with almost everything, the virus pandemic has had an impact on such associations, not only in supply chain and logistics but in every domain, mostly to the negative. However, that may also be in part a continuation of trends already in play.


if I am right, the MHI acquisition could in the end be a big deal for the industry, depending on MHI's moves from here.


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So let's review some basics, which many may know but some may not.

At a high level, trade and professional organizations are of one of two types:

1. Organizations driven primarily by individual memberships

2. Organizations driven primarily by company/corporate memberships

Supply chain organizations driven primarily by individual memberships include: the Council of Supply Chain Management Professionals (CSCMP); WERC; the Association for Supply Chain Management (ASCM), formerly APICS; and the Institute for Supply Management.

Organizations driven by corporate membership include: MHI; NASSTRAC; the National Industrial Transportation League (NIT League); and a slew of sector organizations, such as the International Warehouse Logistics Association (IWLA - for 3PLs); the National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA), which both offer supply chain services/education; and many others.

I will also note the recent rise of some women-focused groups, such as the Women in Manufacturing Association and AWESOME, both generally focused on individual membership.

Yes, these lines are a little blurred. Most organizations that are individual membership-focused offer some form of corporate memberships as well, but generally as a side line, or as a way to give companies incentives to acquire multiple individual memberships at a discount.

Another important note: in general, organizations with the individual membership model naturally enough focus on personal education and knowledge, while those focused on corporate members can be focused not only on education but also activities that benefit member companies, such as '"growing the pie" for their sector, and or "advocacy" of various kinds attempting to influence government policies.

Some of the individual-based organizations also maintain local chapters or roundtables of various sorts. But already in decline, and of course with such local meetings suspended in the pandemic, whether that model survives remains to be seen.

There are other hybrid organizations, such as the Health and Personal Care Logistics Conference, which has individual memberships but also does advocacy work for that sector as well.

Got all that?

The organizations that focus on individuals have seen slow but steady declines in memberships for a number of years. That has a direct impact on organization revenues, and an indirect impact by reducing attendance at their annual conferences, through which they drive most of their cash.

Corporate-focused organizations have in general fared better. MHI, for example, has seen strong membership numbers along with the growth in spending on automation in warehouses and factories, and as a result record breaking numbers of exhibitors at its major trade shows.

MHI held its MODEX show in Atlanta the US the second week in March. I believe if the conference had been scheduled to start two or even one day later than it was, it would have had to be cancelled, as the virus was breaking out across the US. But the show went on, albeit with attendance way down – MHI was able to cash all those exhibitor checks.

Even with the so-called retail apocalypse, the NRF show in New York City in January also enjoyed a new record of filled exhibit space.

Meanwhile, WERC, CSCMP, ISM, ASCM, and everyone else had to cancel or revamp their conferences into virtual events, as CSCMP is doing with its EDGE conference in late September, right around the corner.

As with virtually everyone sector, there has been consolidation in the supply chain organization ranks.

It started in 2014, with the then APICS acquiring the Supply Chain Council, which was focused completely on the well-known - at least then - SCOR process model. It was company membership focused. As a side note, I personally at least hear very little of SCOR since then.

In 2018, CSCMP in effect acquired NASSTRAC, an organization focused on education for its mostly large shipper members – but which also provides advocacy services for the shipper community. That now gave CSCMP an advocacy presence for the first time. In 2019, the annual NASSTRAC conference, which was seeing modest declines in attendance over time, was moved to be an adjunct to the much larger CSCMP conference.

And now comes the MHI-WERC acquisition. With CSCMP-NASSTRAC, it was an individual membership organization acquiring a corporate member model. Conversely, company-focused MHI has acquired individual member-oriented WERC – though membership was down to some 750, well below its best days. I have heard with good authority finances at WERC were not good.

So, how is this MHI-WERC thing going to work? How can the divergent models be rationalized? What is the strategy?

I have some ideas on this on this, but first I asked my friend David Schneider of David K. Schneider & Company for his perspective, as I often due on such industry matters:

"MHI needs more fresh blood in the membership, the end-users, to complete the virtuous loop of commerce with membership material handling system providers," Schneider said, adding that "WERC has the educational heft that MHI misses."

What does the average WERC member gain from the merger?

"An organization that survives is one answer. Perhaps a more influential organization? I hope so," Schneider also commented.

I have noted a number of times over the years MHI's interest in becoming more of a force with companies and individuals outside its vendor membe base – and with some resources that could be deployed to do so.

A few years ago, MHI started to make a bit of a run at it, revamping its annual conference from one focused around needs of members with a push to get individual supply chain practitioners there, with an agenda and presenters that were pretty compelling.

But to really make that happen would take a lot of spending, and frankly from my view the conference for a couple of years took a step backward, hurting some of the momentum it had gained.

It seems likely to me that two things will happen now:

1. MHI will use its resources to try and rebuild the WERC membership ranks.

2. It will in some way combine the annual WERC conference with its own to connect MHI more directly to companies and individuals beyond its materials handling company base and try to get the numbers up.

I had some questions relative to MHI's strategy into the organization, admittedly at short notice, and they are sending me an email, but too late for the response to make it into this column. I will post MHI's comments in a blog when they are receive.

So, if I am right, the MHI acquisition could in the end be a big deal for the industry, depending on MHI's moves from here. Would love your thoughts.

I wish all our supply chain organizations success. They provide valuable services, and more of us need to participate/get involved in at least one of them.

Any reaction to Gilmore's thoughts MHI acquiring WERC? Let us know your thought at the Feedback section below.


On Demand Videocast:

Understanding Distributed Order Management

Highlights from the New "Little Book of Distributed Order Management"

In this outstanding Videocast, we'll discuss DOM, based on the new Little Book of Distributed Order Management, written by our two Videocast presenters.

Featuring Dan Gilmore, Editor along with Satish Kumar, VP Client Services, Softeon.

Now Available On Demand

On Demand Videocast:

The Grain Drain: Large-Scale Grain Port Terminal Optimization

The Constraints and Challenges of Planning and Implementing Port Operations

This videocast will provide a walkthrough of two ways to formulate a MIP, present an example port, and discuss port operations.

Featuring Dan Gilmore, Editor along with Dr. Evan Shellshear, Head of Analytics, Biarri.

Now Available On Demand

On Demand Videocast:

A Blueprint for WMS Implementation Success

If You Want a Successful WMS Project, You will Find the Blueprint in this Excellent Broadcast

This videocast lays out the keys to ensuring your WMS implementation goes smoothly, involves minimal pain, and accelerates time to value.

Featuring Dan Gilmore, Editor along with Todd Kovi of Radix Consulting and Dinesh Dongre of Softeon.

Now Available On Demand


After our column last week noting we've turned from toilet paper shotages to "where's the beef?", our friend David Schneider of David K. Schneider & Company sent us this nice email explaning how the meat supply chain works. Now you know!

Feedback on the Meat Supply Chain:


For beef (and lamb/sheep), there are two stages of meatpacking - Primal and Final.

Primal Cuts are the large cuts - whole sections of the animal, cut away from the carcass, later packed for processing into final cuts.

Some of the larger packing operations run from kill to final in the same complex - the traditional way that people think of a meatpacking plant. But many of the new massive campus operations, including the JBL and Tyson sites in the news, ship under long term contracts meat packaged for retail or portion control use.

For decades the meat supply chain operated at two levels; packing houses that shipped primal-and sub-primal - packaged into vacuum bags and frozen for shipping to grocery stores - where meat cutters cut and package the final cuts for sale at that location.

Today, a sizable portion of the production from the kill line is still primal to package and shipped to other companies/facilities that do the Final cuts. Most of the consumers of primal and sub-primal are wholesale distributors, local butchers, Costco, and Asian grocery, where there is still local meat cutting.

A large portion of the US grocery market no longer operates local meat rooms in their retail locations. Walmart is one significant example of the retail scene, as is most of the Royal Dalheize group (Stop-n-Shop, Giant), Aldi, Lidl, and other growing chains. Those contracts with retailers are under tight margins, costs supported by the typically much higher foodservice contracts with bigger and steady margins.

The supply chain innovation that Tyson, JBL, and the rest employed was centralization and concentration of labor into these large campuses - close to the production of the animals. Our modern network of refrigerated logistics - temperature controls trucks and warehouses - helps facilitate the consolidation of the final steps of meat cutting from local to the market to local to the source.

Primal cuts flow between companies in the meat industry like cash - and interesting features in the USDA regulations allow for long term freezing of primal cuts that can sell later as fresh meat. There are times where hundreds of millions of pounds of frozen primal cuts sit in 3PL freezer warehouses. I suspect at this moment, hundreds of millions of pounds of frozen primal cuts sit in warehouses, unable to move to the market because there are fewer places that can do the final cut. I suspect the owners of this meat don't want to ship these cuts because to ship now erodes the future profit margin of the packaged and portion-controlled product.

The COVID virus exposes a substantial risk of consolidation and full-integration of production in the supply chain.

David K. Schneider
David K Schneider & Company, LLC    


Q: Regional grocery chain Schnucks in St. Louis has an important place is supply chain history - why?

A: That is who Procter & Gamble first piloted Continuous Replenishment with in the late 1980s.

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