Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
In the world of supply chain management, the bridge connecting strategy and execution can sometimes be a long and rickety span.
For example, take the concept of "collaborative distribution." It has been around for years, has frequently been cited for its potential benefits, but has never really lived up to its billing.
The theory works like this: Convince clusters of small to mid-size manufacturers to shutter their individual warehouse networks and stop shipping via less-than-truckload (LTL) service, and instead centralize their inventories in one vast third-party-controlled warehouse, where orders from retailers can be consolidated into a single full truckload and shipped once a week direct to a warehouse.
Manufacturers that would otherwise lack the volumes to ship full truckloads would commingle their freight with other shippers' cargo, thus combining one week's worth of orders into a single delivery and avoiding the higher costs of having to ship a few stand-alone pallets via LTL. They would also boost their cash flow by sharing the warehouse and DC infrastructure with other manufacturers and eliminating the costs of operating their own facilities.
Retailers would benefit by receiving a truckload of goods once a week rather than accepting shipments on multiple trucks over several days. This streamlines their supply chains and better aligns their delivery schedules with weekly inventory replenishment cycles. They would also realize reductions in fuel consumption and their carbon footprints by taking trucks off the road and cutting vehicle-miles traveled.
But while some companies—and the consultants supporting them—boast of mastering the strategy, the real-world implementation has in the past left many practitioners feeling frustrated. Successful execution, experts say, requires that competing manufacturers pull together for the good of the whole; that retailers shift from fragmented, silo-driven ordering practices to a uniform, synchronized order approach; and that information technology (IT) be sophisticated and functional enough to tie it all together. While there has been significant progress made on the IT front, the first two challenges have defied easy resolution.
"The trust and integrity aspect among manufacturers has been the missing component," says Kevin Smith, who has spent decades in the supply chain as a shipper and retail executive and now runs his own supply chain sustainability consulting company. "If I'm a manufacturer, why would I want to give a competitor a ride on the same truck moving my goods, especially if I'm doing a better job than he is running my supply chain?"
Ironically, Smith says the savings offered through the sharing of transport and distribution services would probably be the key reason for adopting the strategy in the first place.
"If there is one thing that is going to drive action in this space, it's the increase in cash flow through a reduction in inventory-related expense," he says.
Right for the times
Some experts believe "collaborative distribution" is right for the times, and that its day has come. The main reason? Retailers like the idea, and retailers—instead of suppliers—are increasingly calling the supply chain shots.
"This is the direction that the retailers are moving in," says Mike Bargmann, former vice president of distribution for the Wegmans regional supermarket chain and now head of a consultancy called Collaborative Logistics.
Bargmann says many retailers can demonstrate "measurable savings" by using the concept, though the savings are on an event-by-event basis and cannot be measured in the aggregate.
The concept also may get a boost from continuing technology improvements that enable retailers to share information with their suppliers faster and more effectively. "Technology has finally advanced to the point where retailers can be more flexible in their ordering processes," says Dan Sanker, who spent many years working in logistics for Nabisco and Procter & Gamble Co. before forming CaseStack, a Fayetteville, Ark.-based firm that advises manufacturers and retailers on collaborative distribution opportunities.
Sanker adds that implementing the collaborative distribution concept has become less complex and confusing as industry consolidation has winnowed thousands of retailers and left a relatively few large ones standing. "Retailing was much more fragmented years ago," he says. "You're not dealing with 30,000 retailers anymore."
Is Kane able?
One person looking to change perceptions of "collaborative distribution" is Chris Kane. Kane is vice president, sales and marketing for Kane Is Able Inc., a Scranton, Pa.-based third-party logistics service provider that has created a program called CODE Green (with CODE being an acronym for Collaborative Orders Delivered Efficiently).
Under Kane's concept, manufacturers collapse their warehouse networks and centralize their inventories in distribution centers operated by Kane. The company, which charges manufacturers a flat rate of $55 per pallet for its services, gives manufacturers the option of contracting for their own transportation from the plant to the Kane DC, or having Kane arrange the shipping.
A retailer is given incentives to place one order with multiple manufacturers, with goods stored in the 1 million-square-foot Kane "collaborative center" in Scranton, Pa. Once the order is received, Kane pulls together the disparate products in the DC and creates full truckload consignments. The retailer dispatches a truck on a predetermined day to the Kane distribution center to pick up a full, 20-pallet load for final deliveries.
For the Kane concept to work, however, retailers or their representatives would need to synchronize their order patterns—that is, buying groups from within a single retailer that now order goods separately and receive goods on different days must agree to receive goods on specific days. To motivate retailers to change their stripes, Kane is offering a $5-per-pallet rebate for every consolidated order placed through the program.
The CODE Green program today is active only in the Northeast and covers a 500-square-mile radius from the Scranton facility. Kane says he is looking to expand the program to the Southeast, Southwest, Midwest, and West. So far in Scranton, Kane has signed up six consumer packaged goods companies and says he hopes to attract more customers throughout 2010.
If Kane fails, it won't be due to a lack of effort. He has been pressing the issue with virtually everyone he comes in contact with and has written an e-book touting the concept.
"We think it's a win-win for everybody," he says. "It's just a matter of getting the word out."
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 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.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.