In just three short years, Southern Living at Home had hit it big. Orders for everything from firescreens to crystal stemware were pouring in at a rate of 10,000 a day. There was just one problem: that was about 7,000 more than the company could ship out. Fortunately, help was a phone call away.
John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.
At first the shouts coming out of AOL Time Warner's New York headquarters were cries of joy. Back in the dark days of 2001, executives had taken a big leap of faith, signing off on a plan that carried the distinct smell of risk. To be precise, they had OKed the launch of Southern Living at Home (SLAH), an offshoot of Southern Living home and garden magazine, whose business model depended, improbably enough, on selling home décor items—firescreens, Tuscan olive jars, plant stands, aromatherapy candles—at home parties. Hardly the route to mass-market success, you might think. Except surprisingly enough, it was. In just three years' time, SLAH's sales zoomed to $120 million.
But all too soon those shouts of joy turned into something that sounded more like lamentations. SLAH was fast becoming a victim of its own success. True, orders were rolling into the fulfillment center in torrents—to the tune of over 10,000 a day. But they were rolling out in a trickle. Despite workers' best efforts, the order fulfillment house SLAH had hired simply couldn't keep up with the volume. Leadtimes climbed to three or four weeks, and the call center's capabilities were becoming more strained by the day.
At first, Southern Living At Home and Custom Marketing Services—the third-party fulfillment provider it had hired—simply threw labor at the problem. The workforce eventually swelled to 375 warehouse pickers, who rushed through the aisles pushing more than 275 shopping carts and running 76 packing tables. For a while, that worked. "We got to the point where we could do 3,000 packages a day using our manual pick-pack process," says Butch Bell, vice president of operations at Southern Living At Home. But as SLAH's sales skyrocketed, it became clear that manual fulfillment wouldn't cut it; the time to automate had come.
Making their move
It was at that point that Southern Living At Home and Custom Marketing Services called in outside help—in this case, systems integrator Forte. What was needed, the three parties agreed, was a new automated, open-ended and highly configurable facility. The decision was made to move fulfillment operations to a new 500,000-square-foot distribution center owned by Custom Marketing just outside of Birmingham, Ala. Forte would be in charge of equipment procurement, WMS integration, project management and employee training. In less than six months, the new, highly automated facility was up and running; the first shipment was ushered out the doors in May 2003.
Because SLAH's business is highly seasonal—sales spike around the holidays and in the weeks following the publication of its twice-yearly catalogs—Forte designed a scalable system with an emphasis on flexibility. The center houses four identical two-level pick modules, which Custom Marketing can enable or disable depending on demand. Under normal circumstances, two modules are used. Southern Living uses all four modules during peak season (September through December) to handle the 14,000-plus orders it ships daily at that time of year.
For many of the same reasons, the center was outfitted with pick-to-light, rather than radio frequency (RF), technology. (The three parties agreed that RF wouldn't be cost effective given the seasonal fluctuations in staffing.) As it turned out, the pick-to-light system—made by Lightning Pick—has provided the flexibility SLAH needs. For one thing, very little training is required to get workers up to speed. It also makes it easy to shift staffing within a picking module so that plenty of help is available wherever demand is highest.
Follow that order!
Today, the typical order arrives electronically, placed by one of the more than 25,000 independent sales consultants who serve as liaisons between the company and the party hosts. SLAH's sophisticated ordering program gives consultants the option of placing an order right away or electing to have it held in queue for several days to allow party hosts to collect additional orders. Once the order is released, it drops into the WMS (WM for Windows from Manhattan Associates), which generates a pick list.
Guided by the pick-to-light beacons, workers start picking product to totes with shipping labels attached. The automated conveyor system uses in-line scanners that sort the totes to a quality assurance or packing area as directed by Southern Living's WMS. All the while, a warehouse control system (Forte's DC Automation Director) that links the WMS and the material handling system processes, reports and tracks cartons as they move throughout the facility.
Following the pick-pack process, cartons are conveyed to a station where dunnage is added. Next, conveyors transport the cartons to an in-line scale and shipping sorter. The scan and weighing system sends info on the box's cumulative weight to the WMS, which simultaneously calculates what the weight should be based on data that's been preloaded into the system for each product. The system takes this information and sends it on to the automation director, which determines whether to pass or divert the carton. If the carton's weight falls outside the expected tolerances, it's diverted to a shipping quality control area. If it's within tolerances, it's diverted to one of six parcel zone destinations and updated to a manifested status. From there, FedEx takes over, delivering all of SLAH's products to their destinations. When the delivery's complete, FedEx, whose systems are tied into SLAH's billing system, automatically provides the company with a proof of delivery.
Faster, better, cheaper
A year after the high-tech DC's opening, Bell can reel off a whole list of benefits. "The automated system has brought us some great cost savings," he says. "But the big thing was the added capacity to ship product."
Another benefit has been a noticeable improvement in quality."Under the old system we were experiencing quite a few mispicks—either missing items or wrong quantities," Bell reports. "But now—thanks to quality control checks both after the picking process and after the packing process—we've achieved around 99.5-percent picking accuracy. When it comes to quality now, the difference is night and day."
Then there are the labor savings. Productivity has increased by more than 30 percent. Southern Living at Home has seen a reduction in order cycle time of 15 percent or more, and automation increased throughput by over 100 percent without the need to add staff at the distribution center. Today, products generally ship in five days—not three or four weeks—although they often go out the door in the first 36 hours after the order is received.
So far so good, but what happens if growth continues to barrel ahead? SLAH expects throughput to increase 500 percent over the next three years. And that may be a conservative estimate. As Jerry Vink, vice president of engineering for Forte, dryly points out: "They continue to set records when it comes to their ability to break their own sales forecasts."
Actually, the company's already mulling over its options. Southern Living's Bell says the company is currently evaluating the need for another distribution center, possibly in the Northeast or West. A decision is expected this fall.
But that may not be necessary, at least for a while. Vink explains that when Forte's engineers designed the new DC, they deliberately built in capacity for future growth. "We've allowed for additional pick modules to be constructed, and we can double the size of pick modules and packaging areas," he reports. "We have a number of dock doors available with extra sortation equipment so we can increase shipping capacity at any time. The current system's useful life is dependent on their ultimate growth rate. But we've built in modifications and changes that can handle their growth down the road."
The German forklift vendor Kion Group plans to lay off an unspecified number of workers as part of an “efficiency program” it is launching to strengthen the company’s resilience and maintain headroom for future investments, the company said today.
The new structural measures are intended to optimize Kion’s efficiency, executives said in their fourth quarter earnings report.
“While internal programs to continuously improve product, production, and services costs were already up and running throughout 2024 and will continue, further structural measures will address a more efficient setup for Kion in Europe. This is expected to have an impact on personnel requirements subject to consultations with the respective employee representative bodies as required by local laws,” the report said.
“The efficiency program is addressing developments in the macroeconomic environment. European economies are struggling to gain momentum – this affects key customer industries in the Industrial Trucks & Services segment, where Chinese competitors have been improving their market position in the aftermaths of the recent pandemics,” Kion said.
The move comes as Kion reported that it finished its 2024 financial year with slightly improved revenue of $11.9 billion (over $11.8 billion in 2023), and profitability (measured as earnings before interest and taxes (EBIT)) that significantly increased to $951 million (over $820 million in 2023).
The company now plans to pay $249 to $269 million in financial year 2025 to implement the cost saving measures. Following that one-time charge, it expects to achieve sustainable cost savings of $145 million to $166 million per year, beginning in 2026.
“In order to maintain headroom for investments ensuring our future, to further strengthen our competitiveness and our resilience, we must manage our cost base. This requires structural and sustainable measures,” Christian Harm, CFO of Kion, said in a release.
By the numbers, fourth quarter shipment volume was down 4.7% compared to the prior quarter, while spending dropped 2.2%.
Geographically, fourth-quarter shipment volume was low across all regions. The Northeast had the smallest decline at 1.2% with the West just behind with a contraction of 2.1%. And the Southeast saw shipments drop 6.7%, the most of all regions, as hurricanes impacted freight activity.
“While this quarter’s Index revealed spending overall on truck freight continues to decline, we did see some signs that spending per truck is increasing,” said Bobby Holland, U.S. Bank director of freight business analytics. “Shipments falling more than spending – even with lower fuel surcharges – suggests tighter capacity.”
The U.S. Bank Freight Payment Index measures quantitative changes in freight shipments and spend activity based on data from transactions processed through U.S. Bank Freight Payment, which processes more than $43 billion in freight payments annually for shippers and carriers across the U.S.
“It’s clear there are both cyclical and structural challenges remaining as we look for a truck freight market reboot,” Bob Costello, senior vice president and chief economist at the American Trucking Associations (ATA) said in a release on the results. “For instance, factory output softness – which has a disproportionate impact on truck freight volumes – is currently weighing heavily on our industry.”
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.
Businesses dependent on ocean freight are facing shipping delays due to volatile conditions, as the global average trip for ocean shipments climbed to 68 days in the fourth quarter compared to 60 days for that same quarter a year ago, counting time elapsed from initial booking to clearing the gate at the final port, according to E2open.
Those extended transit times and booking delays are the ripple effects of ongoing turmoil at key ports that is being caused by geopolitical tensions, labor shortages, and port congestion, Dallas-based E2open said in its quarterly “Ocean Shipping Index” report.
The most significant contributor to the year-over-year (YoY) increase is actual transit time, alongside extraordinary volatility that has created a complex landscape for businesses dependent on ocean freight, the report found.
"Economic headwinds, geopolitical turbulence and uncertain trade routes are creating unprecedented disruptions within the ocean shipping industry. From continued Red Sea diversions to port congestion and labor unrest, businesses face a complex landscape of obstacles, all while grappling with possibility of new U.S. tariffs," Pawan Joshi, chief strategy officer (CSO) at e2open, said in a release. "We can expect these ongoing issues will be exacerbated by the Lunar New Year holiday, as businesses relying on Asian suppliers often rush to place orders, adding strain to their supply chains.”
Lunar New Year this year runs from January 29 to February 8, and often leads to supply chain disruptions as massive worker travel patterns across Asia leads to closed factories and reduced port capacity.
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.”