Plucked out of the private sector by the Department of Defense, Roger Kallock was brought in to help bring order to supply line chaos. What he discovered was that the business world could learn a thing or two from the military.
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
For Roger Kallock, the call came late on a Friday night. The Department of Defense was on the line, urging him to come work for them in Washington. There would be adjustments, Kallock knew. He had spent the better part of the past 35 years as a private consultant. Joining the notoriously closed ranks of the U.S. military as an outsider guaranteed him what could be politely described as a wary reception.
And adjustments there were. In the next three and a half years, Kallock would find himself visiting more than 60 military installations around the world, overseeing a budget of over $80 billion, testifying before Congress and producing his own Pentagon paper (a DoD-wide report titled "Logistics Transformation: Update, Focus and Accelerate")—not to mention getting used to being called "sir." And as he predicted, his arrival was met with skepticism—particularly when it became known that one of the Defense Department's big contractors was his former employer, Computer Sciences Corp.
But Kallock overcame all that. Though he entered the department as deputy undersecretary of defense (logistics) in May 1998, he was soon nominated by the president to become deputy undersecretary of defense (logistics & materiel readiness), a post he took over in September 2000. In that position, Kallock served as the principal advisor to the undersecretary of defense (acquisition, technology and logistics) for policy and oversight of the military departments' logistics activities. In January 2001, he received the Department of Defense Medal for Distinguished Public Service.
So how did a man who professes no political connections get tapped for this prestigious posting? It's really no surprise, given his vast experience and the industry respect he's earned over the years. During his 35 years in the logistics industry, Kallock's been a consultant with A .T. Kearney, Cleveland Consulting Associates (which he co-founded) and Computer Sciences Corp., working with clients in industries ranging from computers, consumer goods, health care, pulp and paper, and steel to air, rail, truck and water transportation. Before the consulting gigs, Kallock worked at Procter and Gamble in a series of distribution and customer service posts. Whether shipper or consultant, he's always been a leader in the field, earning the Council of Logistics Management's Distinguished Service Award in 1990.
With his stint with the military behind him, Kallock has gone back to private consulting work with both industry and government. He's also become active in the logistics educational community at Pennsylvania State University and its Center for Supply Chain Research, where he's an adjunct professor of business logistics and an industry director in Penn State's Executive Programs focusing on DoD/private-sector relationships.
Q: What brought you to a career in logistics?
A: It was just the way things happen in life. By pure chance when I interviewed at Procter & Gamble for an operations management position, I happened to interview with a group that was hiring people for the warehousing and shipping plant, what they called their inside logistics activity in 1961. I got excited about it. I was intrigued by what it took to tie the production facilities at P&G through to their ultimate consumer. I took the job. Over time I moved on to other roles at P&G, most notably transportation planning and scheduling. I then got involved in planning distribution center and warehouse activi ty. Over the course of all this, we worked with some consulting houses. That exposed me to the consulting business. Clyde Johnson, a professor at the University of Michigan whom I respected a great deal, suggested to the folks at Kearney that I might be a good fit with their practice, so they called me. The next thing I knew, I was a consultant in Chicago.
As a consultant, I had an opportunity to learn how the carrier industry worked—whether it's motor carriers,airlines, railroads or barge lines. Then I got involved with logistics planning. Those were the early days of computer modeling. I ended up staying with Kearney from 1965 to 1969, when I came over to start the company's Cleveland office. Then in 1974, a couple of us hung out our own shingle and co-founded Cleveland Consulting Associates.
Q: What opportunity did you see in striking out on your own?
A: We wanted to move forward more aggressively using computer capabilities to integrate the functional silos within physical distribution into what we would today call the supply chain. We recognized that the computer would allow us to evaluate a lot of options quickly. It gave us a foot in the door.
Q: You mentioned something that we hear often—that what you were doing was supply chain consulting, they just didn't call it that back then. The push for faster throughput and increased velocity has always been there; really all that is new is the name.Wouldn't you agree?
A: Absolutely. It has always been there, but because people tended to look at things more tactically than strategically and more internally than externally, I don't think they fully realized how interrelated the activities really were. The important thing is how you reduce the time that elapses from production to the ultimate consumption by, not the customer, but the consumer.
Q: Do you believe that's the true measure of success?
A: I have always held total cycle time reduction to be the driving force. The philosophy that I later brought to the Defense Department was that I didn't really care how much we had in the pipeline. The important thing was, when that war fighter needed something, we had the ability to get it there, even if the need was not entirely anticipated in the planning stages.And we needed to get it there very quickly. The soldier is the consumer.We need to make sure that the consumer has exactly what is needed for the job, and we want him or her to have a very high level of confidence that it will be there.
Q: How did you come to be involved with the Defense Department?
A: I got this call out of the blue. Bob Lake, who was the founder of ROLS (the former Roadway Logistics), had passed my resume along to the folks in Washington when he heard the position's requirements. They wanted somebody senior and well-respected who understood logistics, had the time, and was willing to take the financial penalty that goes with that kind of job. I had no political contacts, no military experience, no defense contractor experience and had never worked in government. I went down to the Pentagon and had four interviews. At the end of the day, they asked if I knew any high-ranking politicians. I told them I didn't really know any politicians at all. Well, three weeks later, after I had gone to the Wh ite House for an interview with Clinton's personnel staff and then back to the Pentagon three times, they called me on a Friday night and said, "We really would like you to take this job."
Q: So you were brought in to bring some private-sector principles to bear on military operations. What was the reception like?
A: I met with a great deal of skepticism. Here is somebody who comes out of the private sector who must be connected, who must have some ax to grind, and who must have some reason to be here. It took a while to convince people that I really didn't have my foot half out the door and well into another organization. One of our big contractors was my former employer. Of course, that gave them cause for skepticism. From my point of view, it was an overwhelming situation in many ways.One was to get acclimated to the environment, the acronyms and the code names—even having folks call me "sir" all the time.
The other big change for me was the realization that unlike private-sector logistics management, in military logistics your decisions can carry life or death consequences.
Q: That's got to be a huge intellectual and emotional leap.
A: It sure is. A good example of that is the shift from concepts we are familiar with in the private sector like just-in- time. With the military, just-in-time simply doesn't cut it. As I started to figure out what they were doing and thinking about it, I realized that "just in case" wasn't what we needed either, because that results in the stockpiling of mountains of material.What we needed was "just enough," so the military leaders determined what was enough, then together we figured out how we were going to get it there efficiently and effectively.
Q: So the fighting forces were your customers?
A: Oh, absolutely. When I went to the Pentagon, I told them,"Look,I have never served our country, so I need to go out and see firsthand what they're doing and what environments they're doing it in." I needed to spend time, as does any good consultant, out with the clients and customers. My client may be the Pentagon guys at a senior level, but our customers are the men and women in the foxholes, on the ships, in the airplanes and so on.
Q: So that took you on what I guess you could call the Grand Tour. What did you learn?
A: Well, first of all I learned that each of these individuals is an American dedicated to preserving our freedom. They don't live extravagantly—they live a very simple, but very focused, life with a great deal of discipline and many expectations. We ought to be able to satisfy those expectations through our military supply chain activity as well or better than their expectations in their private lives are being supplied by, say, Wal-Mart.
Q: Wal-Mart is always a good benchmark!
A: These are folks who shop at Wal-Mart regularly. They have Wal-Mart-like facilities on their bases that provide a very high level of service. I believe when they go to work and put on the uniform, they ought to benefit from equal or better supply chain integration.
Q: To this point, we've been talking about what you brought from the private sector to the military. Tell us a little bit about what you learned and took away from that experience that might have applications in your consulting work back in the private sector.
A: I think the big lesson—and it really speaks to what you're t rying to accomplish with DC VELOCITY magazine—is the need for speed. I really liked the last line in your January issue editorial, in which you said you hoped readers would quickly come to realize that this is the magazine you need to make sure you're up to speed. I thought it was right on. The important point today is not just the speed of movement within the military or the private sector, but also the need to improve our ability to respond quickly to the unexpected.
Q: So it's not necessarily important to move fast all the time, but it is important to be prepared to move fast when you need to?
A: Exactly. That takes actionable information. That takes good training. In the world as we know it, post 9/11, you need to be prepared for the routine, and you also need to have built-in resiliency when the routine has been altered by forces outside your control.
Now, contrast 9/11 with Y2K. When preparing for Y2K, we knew the exact date, we knew the potential problem, we knew what it would cost to address the problem and we knew what tests we had to conduct to confirm that our systems were working. It was a very well understood event. 9/11 was exactly the opposite: unknown date, unknown location, unknown event. Little coordination, little preparedness, and no advance information. If you really think about what we need in order to accelerate change in the private sector, you need a crisis. You need a CEO to say, "Dammit, to be competitive we have got to change." More often than not today, that change focuses on accelerating the speed and upgrading our ability to respond to the unexpected, and that's really become my passion.
Q: How can we apply that to business logistics operations?
A: It's increasingly clear to me, post 9/11, that those of us in the private sector don't spend enough time thinking about the unexpected and testing the system under stress. Sure, nobody can predict where and when something might happen, but if you've gone through some drills as a community (and I'm talking about the supply chain community) and folks understand who's who, who the potential leaders are , and how compatible the commu nications systems are, you're more likely to respond better—even if it turns out to be a different kind of crisis. In other words, once you've gone through an exercise with a group of folks, no matter what type of crisis you ultimately face, chances are that you will do a better job—that you will "fail smartly."
Q: How would you go about that process? Are you suggesting people actually go through an exercise?
A: I think that you might do it at a tabletop level as opposed to, say, actually shutting down a plant. An example could be a case where SARS shuts down a supplier's facility or interrupts the inbound activity. What would that do to production planning and scheduling? What would it do to your ultimate customer and consumer? You would assume that the Port of Singapore was shut down, that you weren't able to get whatever was coming through by air freight for three days or so. Now I believe that folks in corporations have dealt with disruptions—whether financial or weather-related— on a fairly regular basis. They have overcome some difficulties. I think that what we need to do is coalesce around the lessons learned from these events. Then ask the same of folks throughout the extended supply chain. This is beyond your four walls. I think those folks need to come together and say, "OK, here's where we're likely to be weak and here's the likelihood that it will happen." That will differ depending on the individuals involved, the companies involved and the time dimension. Then you run an exercise. You set up a little drill. Some CEO says, "OK, it's Friday at 2 o'clock. Here are the 10 people who are going to be involved. Let's put out an all-points bulletin: Be in my office in 15 minutes. Here is the drill." You go through it just like the military does, in real time.
Q: Then that drill provides you with information you can use to determine how you can respond better and what you need to change?
A: Right. Then you build a culture around expecting to fail smartly. My goal is to help private-sector companies develop a culture that builds on basic corporate values, focuses on availability of actionable information and is prepared for the unexpected. We need resilient supply chains that are designed for flexibility and with redundancy. We need to test those systems with supply chain partners to identify vulnerabilities. Then we must implement the lessons learned promptly and passionately. Only when future supply chain leaders develop, test and improve activities that bond organizations together will we be at our best when the unexpected happens.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
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.