David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
For third-party logistics service providers (3PLs) that specialize in order fulfillment, life is never dull—unpredictable, perhaps; but never dull. Unlike their counterparts at, say, an engine manufacturer or a textile mill, the third party's staffers might find themselves picking lipstick one day, electric guitars the next.
A prime example of a 3PL company that has to be ready for whatever its clients might throw at it next is New Jersey-based Capacity. This five-year-old company, which runs two distribution facilities in North Brunswick, N.J., serves more than 60 different clients. Half of Capacity's distribution business is for cosmetics companies, like Bliss and Tarte, so it has to be ready to deal with small products. But the facilities also must be prepared to handle music CDs and larger items, like textiles, garments and electronics. "We actually handle everything from K-Mart uniforms to yoga mats to electric guitars," says Thom Campbell, chief strategic officer and a founding partner of Capacity.
To give it the flexibility it needs to process both pallet loads and single-item orders, Capacity actually uses two warehouses. The smaller 60,000-square-foot facility processes mostly full case orders, while its 130,000-square-foot building handles pick-and-pack needs. Of course, managing two different systems in two separate facilities poses challenges for the software that automates the whole process. For Capacity, the answer was a warehouse management system (WMS) customized by Foxfire Technologies to accommodate Capacity's multi-facility, multi-product design. The WMS controls all picking and packing processes, including paper picking and radio frequency (RF)-directed picking from pallet racks, flow racks and shelving. In addition to order fulfillment, RF is used to direct receiving and shipping functions. The WMS also allows clients to view their inventories in real time.
Take your pick
Most picking tasks take place in the larger pick-and-pack building. In that facility, the majority of products are placed into reserve pallet racks upon receipt, where they remain until needed. Some full pallets and full cases, like cosmetics that ship directly to stores, may be picked from the pallet racks, but most of the items pulled from there are destined to replenish Capacity's pick modules.
"Our picking strategy really depends on the client," reports Campbell. "We currently process everything from a single Internet order with one piece to a full trailer of products."
The facility's pick modules consist of case flow racks and shelving. Takeaway conveyors run through these areas to facilitate efficient picking of orders. The flow racks hold fast-movers, while the shelving contains slower-moving products and irregularly shaped items not suited to the flow racks. Most products for a particular client are grouped together to speed up selection, as processing is typically waved a client at a time.
Items are picked by order into totes or cartons according to the client's specifications. The fast-movers are selected from their flow racks using either pick tickets or RF-directed assignments (Capacity is currently in the process of migrating more of its clients to the RF processes). Items are also gathered from the nearby shelving and placed into the cartons or containers before they're pushed off onto the takeaway conveyors. Since picking is performed by discrete order, some cartons or totes are filled to the brim with products, while others, such as those for Internet orders, may contain only one item.
Slower-moving items, odd-shaped products (such as the electric guitars) and select merchandise for less-active customers are located in shelving away from the conveyors. These items are picked to wheeled carts.
Once all selections have been made, the items are either conveyed or carted to 16 pack stations. Typically, 10 to 15 of these stations are active at any given time, depending on the volume being processed that day. Workers remove the items from their totes and cartons, conduct quality checks to verify proper order selection and then repack the items into shipping cartons.
"Different clients have different pack regimens," says Campbell. Some use custom boxes with identifying markings. Some require value-added services, such as gift wrapping. Dunnage, the protective material placed around the product in the shipping carton, is added according to the clients' preferences. Some prefer air bubble wrap, while others use kraft paper to protect their products. Cartons are also weighed and packing lists are created, again based on customer preferences. Once all items have been repacked, the cartons are sealed and then sent to a staging area to await shipment.
The facility processes 2,000 to 3,000 orders a day, consisting of about 10,000 packed items. And in case you were wondering, Capacity has not yet reached its name.
gearing up to pick ...
There's no shortage of equipment and systems on the market designed for use in picking and packing operations. Here's a look at some of the most common types of equipment:
Pick tickets and labels: Although they represent a decidedly low-tech approach, pick tickets are still the most widely used method of picking orders. Typically, a list of required selections is printed onto a sheet of paper that a worker takes with him into the picking areas. The worker simply pulls the needed items, then crosses them off the list. Similarly, pick labels are used in many facilities. The labels contain printed information on which items are needed, with many also doubling as shipping labels. Workers pick required products, deposit them into a carton, then place the label on the carton's side.
Radio frequency-directed systems: At sites that use RF systems, workers use radio-frequency data terminals/scanners to direct their picking. Instructions for which items are needed are relayed to the display on the workers' terminals. Typically, items are scanned with the units to confirm their picks.
Voice-directed systems: Workers wearing headsets are given audible computer-generated instructions on which items to choose. The software that drives the system has voice-recognition capabilities so that the workers are able to speak responses back into their headsets to confirm their selections.
Light-directed systems: Beacons installed on racks next to storage locations light up to guide workers in selecting items contained in the racks. Number displays adjacent to the lights show how many of each SKU are required. The worker selects the proper items, then hits a button on the pick-to-light system to confirm that picking has been completed.
Storage systems: While not true picking technologies, many storage systems are designed to facilitate order selection. These include flow racks that rely on gravity to move products to the front of the rack faces where they are easily accessible. Carousels and mini-load automatic storage and retrieval systems (AS/RS) are similarly designed to collect stored items and then present them directly to workers located at picking stations.
... and to pack
Corrugated cartons: Corrugated is still the material of choice for packing products, especially for one-way shipments. Corrugated is relatively inexpensive, recyclable and easy to store and assemble.
Returnable containers: Companies that have a closed-loop distribution system find economic advantages to using returnable containers. These shipping boxes—typically constructed of plastic, although they may also be made of wood, steel, aluminum and other materials—provide greater protection than most corrugated cartons and are reusable, making them economical and environmentally friendly. Even companies that do not have their own backhaul transportation mechanism for returning containers to their distribution center can benefit by joining a pooling organization that shares returnable containers among a large number of clients.
Dunnage systems: Dunnage is the protective material placed inside a carton or container to cushion products in transit. There are a variety of different types.
Air-filled bubble material can be purchased either already inflated or in flat form so that the user can inflate it as needed and cut it to length at the packing stations using specialized machines.
Kraft paper can also be distributed by machines at pack stations. In many systems, the paper can be folded into a protective "mattress" that is placed around items within the cartons to provide cushioning and to fill voids. Foam peanuts are also widely used to protect items.
They are small enough to fill empty carton space easily, and are lightweight and reusable.
Chemical foam offers a high level of protection and is often used to cushion electronics and other products that could be easily damaged by shifting during transit. Typically, two chemicals are injected into plastic bags to form this type of dunnage. As the chemicals mix, they interact to create a foam that quickly begins to expand. The bags are then placed around the product within the carton. As the foam continues to expand, it wraps around the product and fills any voids.
Machine-aided packing: A number of machines can help to automate packing processes. Automatic carton erectors make building multiple-sized cartons a snap. Once the cartons are packed, sealing machines automatically tape them closed. Labeling machines place packing slips, shipping labels and RFID-embedded labels directly onto cartons. Other labeling machines known as coders can print bar codes and other information directly onto carton surfaces without the need for adhesive labels.
Jeremy Van Puffelen grew up in a family-owned contract warehousing business and is now president of that firm, Prism Logistics. As a third-party logistics service provider (3PL), Prism operates a network of more than 2 million square feet of warehouse space in Northern California, serving clients in the consumer packaged goods (CPG), food and beverage, retail, and manufacturing sectors.
During his 21 years working at the family firm, Van Puffelen has taken on many of the jobs that are part of running a warehousing business, including custodial functions, operations, facilities management, business development, customer service, executive leadership, and team building. Since 2021, he has also served on the board of directors of the International Warehouse Logistics Association (IWLA), a trade organization for contract warehousing and logistics service providers.
Q: How would you describe the current state of the contract warehouse industry?
A: I think the current state of the industry is strong. For those that have been focused on building good client relationships over the years, I think it’s a really exciting time. Coming out of all the challenges of the past few years, I think there’s a lot of opportunity for growth and deeper partnerships. It’s fun to see the automation and AI (artificial intelligence) integration starting to evolve [in a way that’s] similar to what we saw with WMS (warehouse management systems) in the early 2000s.
Q: You are now president of your family firm. Is it an advantage having grown up in the business as opposed to working elsewhere?
A: I definitely believe it was an advantage growing up in the business. Whether it’s working with family or someone else in the industry, there’s always an advantage when you have mentors[to guide] you. I’ve been blessed to have several mentors, some in the industry, others just in life, and I’m thankful that they were willing to mentor me and that I was willing to listen to them.
Q: What are the biggest challenges currently facing 3PLs, and how are you addressing them?
A: Labor and legislation are both tough right now. The two seem to have a lot to do with each other, and it can make it tough to find and retain people. So I think we’ll see more and more automation of processes industrywide.
Q: Third-party service providers often must handle a wide variety of products for a lot of different clients. Does this variety make it difficult to invest in automation and other new technologies?
A: It can make things more difficult when looking at certain automation, but it’s in the “difficult” that a lot of opportunities lie. It would be tough to find a single solution that fits every client’s needs, but there are always opportunities to improve in certain areas. It just takes a bit of vision and commitment, and a willingness to invest in your own long-term success.
Q: As a 3PL, what do you look for when selecting the clients you work with?
A: Quality relationships that will last a long time. When both parties are happy and working together in the same direction, everyone wins.
Q: You’ve been a board member of the International Warehouse Logistics Association since 2021. Why is your involvement with this organization important to you?
A: I think it’s important to understand what’s happening in the industry. IWLA is a great resource for staying up to date and getting a solid education when it comes to the latest logistics trends. I also think it’s important to give back and pass along what we’ve learned to those just getting started in the business. As important as it is to have a mentor, it’s just as important to mentor and help others.
“While there have been some signs of tightening in consumer spending, September’s numbers show consumers are willing to spend where they see value,” NRF Chief Economist Jack Kleinhenz said in a release. “September sales come amid the recent trend of payroll gains and other positive economic signs. Clearly, consumers continue to carry the economy, and conditions for the retail sector remain favorable as we move into the holiday season.”
The Census Bureau said overall retail sales in September were up 0.4% seasonally adjusted month over month and up 1.7% unadjusted year over year. That compared with increases of 0.1% month over month and 2.2% year over year in August.
Likewise, September’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.7% seasonally adjusted month over month and up 2.4% unadjusted year over year. NRF is now forecasting that 2024 holiday sales will increase between 2.5% and 3.5% over the same time last year.
Despite those upward trends, consumer resilience isn’t a free pass for retailers to underinvest in their stores by overlooking labor, customer experience tech, or digital transformation, several analysts warned.
"The 2024 holiday season offers more ‘normalcy’ for retailers with inflation cooling. Still, there is no doubt that consumers continue to seek value. Promotions in general will play a larger role in the 2024 holiday season. Retailers are dealing with shrinking shopper loyalties, a larger number of competitors across more channels – and, of course, a more dynamic landscape where prices are shifting more frequently to win over consumers who are looking for great deals,” Matt Pavich, senior director of strategy & innovation at pricing optimization solutions provider Revionics, said in an email.
Nikki Baird, VP of strategy & product at retail technology company Aptos, likewise said that retailers need to keep their focus on improving their value proposition and customer experience. “Retailers aren’t just competing with other retailers when it comes to consumers’ discretionary spending. If consumers feel like the shopping experience isn’t worth their time and effort, they are going to spend their money elsewhere. A trip to Italy, a dinner out, catching the latest Blake Lively and Ryan Reynolds films — there is no shortage of ways that consumers can spend their discretionary dollars,” she said.
Editor's note:This article was revised on October 18 to correct the attribution for a quote to Matt Pavich instead of Nikki Baird.
The market for environmentally friendly logistics services is expected to grow by nearly 8% between now and 2033, reaching a value of $2.8 billion, according to research from Custom Market Insights (CMI), released earlier this year.
The “green logistics services market” encompasses environmentally sustainable logistics practices aimed at reducing carbon emissions, minimizing waste, and improving energy efficiency throughout the supply chain, according to CMI. The market involves the use of eco-friendly transportation methods—such as electric and hybrid vehicles—as well as renewable energy-powered warehouses, and advanced technologies such as the Internet of Things (IoT) and artificial intelligence (AI) for optimizing logistics operations.
“Key components include transportation, warehousing, freight management, and supply chain solutions designed to meet regulatory standards and consumer demand for sustainability,” according to the report. “The market is driven by corporate social responsibility, technological advancements, and the increasing emphasis on achieving carbon neutrality in logistics operations.”
Major industry players include DHL Supply Chain, UPS, FedEx Corp., CEVA Logistics, XPO Logistics, Inc., and others focused on developing more sustainable logistics operations, according to the report.
The research measures the current market value of green logistics services at $1.4 billion, which is projected to rise at a compound annual growth rate (CAGR) of 7.8% through 2033.
The report highlights six underlying factors driving growth:
Regulatory Compliance: Governments worldwide are enforcing stricter environmental regulations, compelling companies to adopt green logistics practices to reduce carbon emissions and meet legal requirements.
Technological Advancements: Innovations in technology, such as IoT, AI, and blockchain, enhance the efficiency and sustainability of logistics operations. These technologies enable better tracking, optimization, and reduced energy consumption.
Consumer Demand for Sustainability: Increasing consumer awareness and preference for eco-friendly products drive companies to implement green logistics to align with market expectations and enhance their brand image.
Corporate Social Responsibility (CSR): Companies are prioritizing sustainability in their CSR strategies, leading to investments in green logistics solutions to reduce environmental impact and fulfill stakeholder expectations.
Expansion into Emerging Markets: There is significant potential for growth in emerging markets where the adoption of green logistics practices is still developing. Companies can capitalize on this by introducing sustainable solutions and technologies.
Development of Renewable Energy Solutions: Investing in renewable energy sources, such as solar-powered warehouses and electric vehicle fleets, presents an opportunity for companies to reduce operational costs and enhance sustainability, driving further market growth.
A real-time business is one that uses trusted, real-time data to enable people and systems to make real-time decisions, Peter Weill, the chairman of MIT’s Center for Information Systems Research (CISR), said at the “IFS Unleashed” show in Orlando.
By adopting that strategy, they gain three major capabilities, he said in a session titled “Becoming a Real-Time Business: Unlocking the Transformative Power of Digital, Data, and AI.” They are:
business model agility without needing a change management program to implement it
seamless digital customer journeys via self-service, automated, or assisted multi-product, multichannel experiences
thoughtful employee experiences enabled by technology empowered teams
And according to Weill, MIT’s studies show that adopting that real-time data stance is not restricted just to digital or tech-native businesses. Rather, it can produce successful results for companies in any sector that are able to apply the approach better than their immediate competitors.
“ExxonMobil is uniquely placed to understand the biggest opportunities in improving energy supply chains, from more accurate sales and operations planning, increased agility in field operations, effective management of enormous transportation networks and adapting quickly to complex regulatory environments,” John Sicard, Kinaxis CEO, said in a release.
Specifically, Kinaxis and ExxonMobil said they will focus on a supply and demand planning solution for the complicated fuel commodities market which has no industry-wide standard and which relies heavily on spreadsheets and other manual methods. The solution will enable integrated refinery-to-customer planning with timely data for the most accurate supply/demand planning, balancing and signaling.
The benefits of that approach could include automated data visibility, improved inventory management and terminal replenishment, and enhanced supply scenario planning that are expected to enable arbitrage opportunities and decrease supply costs.
And in the chemicals and lubricants space, the companies are developing an advanced planning solution that provides manufacturing and logistics constraints management coupled with scenario modelling and evaluation.
“Last year, we brought together all ExxonMobil supply chain activities and expertise into one centralized organization, creating one of the largest supply chain operations in the world, and through this identified critical solution gaps to enable our businesses to capture additional value,” said Staale Gjervik, supply chain president, ExxonMobil Global Services Company. “Collaborating with Kinaxis, a leading supply chain technology provider, is instrumental in providing solutions for a large and complex business like ours.”