Too many consultants and academics are spending too much time and making too much money as expert witnesses and advisers to lawyers in supply chain management litigation. There may be money in it, but it's not value-adding.
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.
We Americans present a real paradox to the world. On the one hand, we're borderline lunatic optimists—whatever it is, it'll work; nothing can or will go wrong; and the other guy will do the right thing in the end. On the other, we're borderline lunatic litigants. We'll sue anybody—our neighbors, our dry cleaners, our family members—over faults, errors, injuries, and slights, including imaginary ones.
Regrettably, the supply chain management world is no exception. Entirely too many consultants and academics are spending too much time and making too much money as expert witnesses and advisers to lawyers in supply chain management litigation. There may be money in it, but it's not value-adding.
Almost any element of supply chain interaction has the potential to generate enough heat to get a blazing lawsuit going. But three areas are particularly vulnerable: information systems, warehousing, and transportation. These are where billions of transactions with outside parties take place, each presenting an opportunity for things to go wrong. And do things ever go wrong.
Take information systems, for example. The tales from the front regarding systems problems, gremlins, failures, and blow-ups are legion—and legendary. The whole world knows about the consequences of a delayed enterprise resource planning (ERP) system implementation at a world-famous candy maker— and the reported consequent inability to ship during the year's peak season. Likewise the world—least-wise the supply chain world—knows all about another ERP failure at a prominent appliance maker.
It's not hard to see where the trouble lies. Any system is a complex entity, and complexity means lots of opportunity for glitches or worse. Those can and do lead to litigation.
In warehousing, too, a million things can go wrong. Failure to ship on time. The provision of sub-standard service to the most important customers. Shipment errors. And so on, and so on.
Ultimately, these failures constitute a breach of contract and provide the basis for a lawsuit. Whose fault? That's the question the lawyers, abetted by their consulting and academic hired guns, must settle.
The story is much the same in transportation. There, too, plenty of things can go awry, resulting in late delivery, non-delivery, mis-delivery, or shipment damage. As with warehousing, each of these missteps opens up the possibility of litigation.
Why things go wrong
As for what goes wrong, it usually comes down to expectations and communications. When salespeople oversell and a naïve buyer doesn't probe hard enough, the stage has been set for disappointment. When the buyer does- n't disclose everything about products, processes, and customers, the software or service provider is forced to react—under stress and with insufficient resources.
When circumstances change and the parties insist on sticking to the letter of the contract instead of modifying it, they put the entire relationship at risk. If provisions and processes for changing performance targets—and resulting penalties and bonuses—haven't been built in, bitterness over "easy money" or "impossible demands" can poison the working relationship.
When the service provider doesn't provide unspecified best-in-class solutions, both parties become frustrated. When the internal legal staffs take charge of the contracting process, and dense, incomprehensible, and rigorous language replaces flexible statements of intent, a budding relationship can be snuffed out.
When both parties are unrealistic about benefits and mutually over-promise to top management, to customers, and/or to employees, someone in the chain is going to figure out that things aren't going as promised. Any of these constituencies can turn dangerous upon discovering that they've been shortchanged.
We shouldn't have to say it, but entering into a software or service arrangement without a written contract is an open invitation to litigation, which is, like international trade, warfare conducted by other means.
The right way to fix things
The best "fix," of course, is prevention. That means starting off with mutual full disclosure and realistic expectations. It also means acknowledging from the outset that problems may develop and building problem-solving, SWAT-team, resources into the implementation team, to put the wheels back on as soon as they start to wobble.
Inevitably, a problem will arise that proves intractable, and here's where it is vital to have conflict resolution processes and responsibilities defined, in place, and tested— well in advance of implementation. The key to both of these approaches lies in establishing broad working relationships throughout both organizations. If the relationship is important enough to both companies, include the CEOs in the mix.
Take these steps, and the number of issues that linger and fester should be relatively small. And making the problem-solving and conflict resolution customer-centric (to the customer's customer) ought to minimize the external impact of internal problems.
Arbitration or mediation?
But what if the two parties go through the conflict resolution process and are still unable to work out their differences? Is it then time to call in the attorneys? No, indeed. Here's where an unbiased outside consultant can assess the situation and deliver an opinion. The consultant can also facilitate negotiations toward a monetary and/or operational settlement that is fair to all.
Mention conflict resolution processes, and most people immediately think of arbitration or mediation. In our opinion, arbitration is not much of an option. It simply provides an alternative arena in which the same combatants and surrogates battle to the financial death. The same law firms are involved. The same expert witnesses are in play. The arbitrator may not have an interest in a rapid resolution—and the lawyers certainly don't. All the drama simply plays out under a different aegis.
Mediation, however, is a different story. People are beginning to recognize that mediation can offer a speedier, lower-cost alternative to litigation for resolving disputes. Contrary to some thinking, it is not an informal, feel-good process, but an organized approach to finding mutually satisfactory solutions.
As with almost anything else, mediation has its upsides and downsides. In addition to the time and cost advantages, mediation's upsides include its non-binding nature. That is, unlike arbitration, mediation does not require that the disputing parties accept the mediator's recommended solution.
But that same non-binding nature can also be a downside. Because the mediator has no real authority, closure cannot be reached without mutual agreement. Of course, if agreement cannot be reached, the options of arbitration and legal recourse are still open.
We've made our fair share of money as expert witnesses, but we still maintain that litigation is a costly, soul-searing, and ineffective way to resolve supply chain disputes. Building relationships the right way from the beginning goes a long way toward reducing the potential for supply chain litigation. Finding advisers to help sort out real—not judicial—responsibilities and consequences, and working from the beginning toward a fair negotiated settlement—we think these are infinitely preferable to the current debilitating wave of supply chain litigation.
Generative AI (GenAI) is being deployed by 72% of supply chain organizations, but most are experiencing just middling results for productivity and ROI, according to a survey by Gartner, Inc.
That’s because productivity gains from the use of GenAI for individual, desk-based workers are not translating to greater team-level productivity. Additionally, the deployment of GenAI tools is increasing anxiety among many employees, providing a dampening effect on their productivity, Gartner found.
To solve those problems, chief supply chain officers (CSCOs) deploying GenAI need to shift from a sole focus on efficiency to a strategy that incorporates full organizational productivity. This strategy must better incorporate frontline workers, assuage growing employee anxieties from the use of GenAI tools, and focus on use-cases that promote creativity and innovation, rather than only on saving time.
"Early GenAI deployments within supply chain reveal a productivity paradox," Sam Berndt, Senior Director in Gartner’s Supply Chain practice, said in the report. "While its use has enhanced individual productivity for desk-based roles, these gains are not cascading through the rest of the function and are actually making the overall working environment worse for many employees. CSCOs need to retool their deployment strategies to address these negative outcomes.”
As part of the research, Gartner surveyed 265 global respondents in August 2024 to assess the impact of GenAI in supply chain organizations. In addition to the survey, Gartner conducted 75 qualitative interviews with supply chain leaders to gain deeper insights into the deployment and impact of GenAI on productivity, ROI, and employee experience, focusing on both desk-based and frontline workers.
Gartner’s data showed an increase in productivity from GenAI for desk-based workers, with GenAI tools saving 4.11 hours of time weekly for these employees. The time saved also correlated to increased output and higher quality work. However, these gains decreased when assessing team-level productivity. The amount of time saved declined to 1.5 hours per team member weekly, and there was no correlation to either improved output or higher quality of work.
Additional negative organizational impacts of GenAI deployments include:
Frontline workers have failed to make similar productivity gains as their desk-based counterparts, despite recording a similar amount of time savings from the use of GenAI tools.
Employees report higher levels of anxiety as they are exposed to a growing number of GenAI tools at work, with the average supply chain employee now utilizing 3.6 GenAI tools on average.
Higher anxiety among employees correlates to lower levels of overall productivity.
“In their pursuit of efficiency and time savings, CSCOs may be inadvertently creating a productivity ‘doom loop,’ whereby they continuously pilot new GenAI tools, increasing employee anxiety, which leads to lower levels of productivity,” said Berndt. “Rather than introducing even more GenAI tools into the work environment, CSCOs need to reexamine their overall strategy.”
According to Gartner, three ways to better boost organizational productivity through GenAI are: find creativity-based GenAI use cases to unlock benefits beyond mere time savings; train employees how to make use of the time they are saving from the use GenAI tools; and shift the focus from measuring automation to measuring innovation.
According to Arvato, it made the move in order to better serve the U.S. e-commerce sector, which has experienced high growth rates in recent years and is expected to grow year-on-year by 5% within the next five years.
The two acquisitions follow Arvato’s purchase three months ago of ATC Computer Transport & Logistics, an Irish firm that specializes in high-security transport and technical services in the data center industry. Following the latest deals, Arvato will have a total U.S. network of 16 warehouses with about seven million square feet of space.
Terms of the deal were not disclosed.
Carbel is a Florida-based 3PL with a strong focus on fashion and retail. It offers custom warehousing, distribution, storage, and transportation services, operating out of six facilities in the U.S., with a footprint of 1.6 million square feet of warehouse space in Florida (2), Pennsylvania (2), California, and New York.
Florida-based United Customs Services offers import and export solutions, specializing in remote location filing across the U.S., customs clearance, and trade compliance. CTPAT-certified since 2007, United Customs Services says it is known for simplifying global trade processes that help streamline operations for clients in international markets.
“With deep expertise in retail and apparel logistics services, Carbel and United Customs Services are the perfect partners to strengthen our ability to provide even more tailored solutions to our clients. Our combined knowledge and our joint commitment to excellence will drive our growth within the US and open new opportunities,” Arvato CEO Frank Schirrmeister said in a release.
And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.
One of the biggest targets for innovation spending will artificial intelligence, as supply chain leaders look to use AI to automate time-consuming tasks. The survey showed that 41% are making AI a key part of their innovation strategy, with a third already leveraging it for data visibility, 29% for quality control, and 26% for labor optimization.
Still, lingering concerns around how to effectively and securely implement AI are leading some companies to sidestep the technology altogether. More than a third – 35% – said they’re largely prevented from using AI because of company policy, leaving an opportunity to streamline operations on the table.
“Avoiding AI entirely is no longer an option. Implementing it strategically can give supply chain-focused companies a serious competitive advantage,” Kristi Montgomery, Vice President, Innovation, Research & Development at Kenco, said in a release. “Now’s the time for organizations to explore and experiment with the tech, especially for automating data-heavy operations such as demand planning, shipping, and receiving to optimize your operations and unlock true efficiency.”
Among the survey’s other top findings:
there was essentially three-way tie for which physical automation tools professionals are looking to adopt in the coming year: robotics (43%), sensors and automatic identification (40%), and 3D printing (40%).
professionals tend to select a proven developer for providing supply chain innovation, but many also pick start-ups. Forty-five percent said they work with a mix of new and established developers, compared to 39% who work with established technologies only.
there’s room to grow in partnering with 3PLs for innovation: only 13% said their 3PL identified a need for innovation, and just 8% partnered with a 3PL to bring a technology to life.
Volvo Autonomous Solutions will form a strategic partnership with autonomous driving technology and generative AI provider Waabi to jointly develop and deploy autonomous trucks, with testing scheduled to begin later this year.
The announcement came two weeks after autonomous truck developer Kodiak Robotics said it had become the first company in the industry to launch commercial driverless trucking operations. That milestone came as oil company Atlas Energy Solutions Inc. used two RoboTrucks—which are semi-trucks equipped with the Kodiak Driver self-driving system—to deliver 100 loads of fracking material on routes in the Permian Basin in West Texas and Eastern New Mexico.
Atlas now intends to scale up its RoboTruck deployment “considerably” over the course of 2025, with multiple RoboTruck deployments expected throughout the year. In support of that, Kodiak has established a 12-person office in Odessa, Texas, that is projected to grow to approximately 20 people by the end of Q1 2025.
Women are significantly underrepresented in the global transport sector workforce, comprising only 12% of transportation and storage workers worldwide as they face hurdles such as unfavorable workplace policies and significant gender gaps in operational, technical and leadership roles, a study from the World Bank Group shows.
This underrepresentation limits diverse perspectives in service design and decision-making, negatively affects businesses and undermines economic growth, according to the report, “Addressing Barriers to Women’s Participation in Transport.” The paper—which covers global trends and provides in-depth analysis of the women’s role in the transport sector in Europe and Central Asia (ECA) and Middle East and North Africa (MENA)—was prepared jointly by the World Bank Group, the Asian Development Bank (ADB), the German Agency for International Cooperation (GIZ), the European Investment Bank (EIB), and the International Transport Forum (ITF).
The slim proportion of women in the sector comes at a cost, since increasing female participation and leadership can drive innovation, enhance team performance, and improve service delivery for diverse users, while boosting GDP and addressing critical labor shortages, researchers said.
To drive solutions, the researchers today unveiled the Women in Transport (WiT) Network, which is designed to bring together transport stakeholders dedicated to empowering women across all facets and levels of the transport sector, and to serve as a forum for networking, recruitment, information exchange, training, and mentorship opportunities for women.
Initially, the WiT network will cover only the Europe and Central Asia and the Middle East and North Africa regions, but it is expected to gradually expand into a global initiative.
“When transport services are inclusive, economies thrive. Yet, as this joint report and our work at the EIB reveal, few transport companies fully leverage policies to better attract, retain and promote women,” Laura Piovesan, the European Investment Bank (EIB)’s Director General of the Projects Directorate, said in a release. “The Women in Transport Network enables us to unite efforts and scale impactful solutions - benefiting women, employers, communities and the climate.”