Art van Bodegraven was, among other roles, chief design officer for the DES Leadership Academy. He passed away on June 18, 2017. He will be greatly missed.
If you move the couch at home and change your mind, that's one thing.
But change your mind about the site you chose for your newly built distribution center, and well, you'll probably have plenty of time to spend on the couch after that.
There are a couple of levels of detail—and criticality—to the subject of locating a new DC. It's one thing to be concerned about which side of the tracks to build a new facility. That's as close to a slam-dunk as things get these days. If you've been charged with deploying facilities in a complex supply chain—or even a global operation—that's a different story. And even when the network appears settled, in today's dynamic business environment, it may not be settled for long.
A number of situations can plunge you into a distribution network design/redesign—an acquisition (or being acquired), a line of business added or dropped, expansion into new geographical markets, a shortage of space, a change in strategy toward centralization (or decentralization), or radical sourcing changes, to name but a few.
If none of those sounds like a reasonable prospect, read no further—you're not in the game. If any of them seems likely, press on.
There are really two components to the question. One is obvious, "where." The other, and first, question is "why." Distribution network structure is fundamental to the ultimate strategic commitment to customer service levels. The strategic view of the network provides the basis for distribution locations, facility missions and inventory deployment.
The devil enters the room
Of course, once the magic word "network" has been invoked, there's a tendency to get overheated about the subject of network modeling. Truth is, once you get beyond a couple of locations, modeling can be enormously helpful for number crunching and quick assessments of alternatives. But be warned: There's an unfortunate tendency at this point for geeks and executives alike to get all caught up in the esoterica of modeling. This is unfortunate, because there's so much more to the question that modeling packages aren't equipped to address. In fact, the modeling tool only begins to answer the critical questions in the overall assessment; other tools and analyses are needed to get at things like strategic approaches to markets or channels, facility size and cost issues, the potential to outsource at least some operations, and questions of whether to automate and to what degree. Modeling does not necessarily provide solid, realistic total cost analysis, implementation planning, or business case development.
In addition, while a number of modeling tools are available for network and facility design, the choice of which to use is far less important than how it's used. The model is merely a tool, ultimately sensitive to the quality of questions posed to it, the reliability of data employed in the solution, and the business context of the exercise. The real keys to successful network modeling lie in asking the right questions, using the right data and aggregating them to the right level, and having enough data and auxiliary tools to evaluate the complete solution.
It's also important to keep in mind that there is often a big difference between an optimal solution and a practical one—and models can't make that distinction. They'll change a solution for a one-dollar cost advantage. Further, it's often true that a majority of savings or benefits come from a sub-set of the modeled solution—and models don't know how to fragment their solutions to find the "bang for the buck" payback. In short, they can't edit or interpret their work, which places a powerful burden on the user.
In addition, models are often tough to build, difficult to verify, and consume data as if an information famine were imminent. Some newer products are somewhat more user- and data-friendly, but modeling is not an exercise for the faint of heart or the resource-constrained. That said, modeling tools are indispensable in solving complex network/facility location questions. Just remember they're only tools, not oracles. They can't answer questions that you can't ask; they can't solve problems that you can't define, and they can't think outside the box.
Selecting the right site for a facility adds another major set of considerations to DC network design. Those include such things as tradeoffs between inventory and transportation. The Von Thunen theory suggests that high-value items, such as gemstones, can be shipped relatively economically from almost anywhere in the world. The inverse is that low-value commodities, such as salt, need to be shipped from quite near the point of consumption. Another element is the potential for postponement, in which it might turn out that the best location for finished-product shipment is not the best location for postponement execution.
House hunting
Once the strategic elements are in place, the process of specific site selection begins. But be sure to have requirements defined before launching the search. Making them up based on what you're seeing is self-delusion of a dangerous kind. As Lewis Carroll reminds us, "If you don't know where you're going, any road will get you there."
The site selection process begins with a Requirements Definition, which prioritizes the factors that are important in a new facility or construction site. Examples include access to specific transportation modes (such as rail sidings or water transport), the labor environment, tax issues, and the ability to expand. Don't forget some other important factors, such as community attitudes—little in business life is more fearsome than the NIMBY lobby. And financing alternatives can radically affect build-or-buy decisions.
Site/facility selection is one activity in which taking all the outside advice you can get is probably a good thing. You can save time and leverage the experience of many advisors—and you can preserve anonymity, a very good thing in a run-up to negotiations. Some sources of help include real estate brokers or developers' consulting divisions, warehouse sales representatives, carrier representatives (especially rail), chambers of commerce, state and local development agencies, and consultants.
When you're ready to make the final pick, be sure to check multiple sources for information and opinions. Aggressively look for indicators of potential trouble, such as floods, seismic activity, soil problems, and access difficulties.
In short, be organized, be creative, and document, document, document.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.