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.
When consumer products giant Amway decided to move its Midwest fulfillment operations to a building on its main campus in Ada, Mich., managers saw their chance for a clean sweep. From the outset, they rejected the idea of replicating the setup of the retailer's former regional facility, located just a few miles away. Instead, they would use the opportunity to redesign the fulfillment process and introduce more automation.
What prompted the move was a change in the retailer's operations. The old building had been a dual-purpose facility, used for shipping both catalog orders and orders from Amway's "Independent Business Owners," or IBOs—the local folks nationwide who market Amway products to their friends and neighbors. But the retailer had recently shut down the catalog business, making the old process obsolete. At that point, the company decided it would be better served by shifting fulfillment to a 600,000-square-foot facility that had formerly supported manufacturing.
Although the move offered an opportunity to start with a clean slate, the design team also faced some challenges. One of the big questions involved the conveyors that would be used to whisk items through the facility (95 percent of Amway's products are conveyable). The company was hoping to improve on the system at the old facility, which had featured eight miles of conveyor belt. In particular, it was looking for units that would be quieter and more energy-efficient than their predecessors. It also wanted models that would provide better accumulation and gapping.
There were other requirements as well. The system would have to be capable of accommodating wide fluctuations in volume. Amway's orders rise sharply during the last week of each month, as its IBOs push to meet their goals. During peak periods, as many as 24,000 cartons move through the facility each day. That number is expected to jump to well over 30,000 when the full ramp-up is completed.
Then there was the matter of wide variations in product weights and sizes. Since its founding in 1959 as a seller of household cleaners, Amway has expanded and diversified into such product lines as nutritional supplements, jewelry and accessories, and health and beauty aids. That meant the conveyors selected would have to be capable of transporting anything from an empty carton weighing a few ounces up to an order weighing 50 pounds.
ON A ROLL
With the help of Bastian Solutions, a systems design and integration firm that also acts as a distributor for Hytrol Conveyor Co., Amway found the solution it was seeking. The system the two partners came up with features not just one type of conveyor, but a combination of roller, belt, spiral, curved, incline, gravity, accumulating, and trash conveyors that serve just about every area of the DC. The conveyors in the new system, most of which were supplied by Hytrol, are equally capable of gently handling a big box of dog food as a carton containing a single tube of lipstick.
"We have a wide range of conveyors. There is a purpose behind every type," explains Paul Slack, senior engineer. "Within a line, we go smoothly from one type to another—whatever is best to do the job."
Rollers are employed for basic transport in this extensive network (there are over 400,000 total rollers found within the system's conveyors). Belt conveyors are used in areas for accumulating, weighing, and scanning, among others. The system has 36 scanners arrayed along its various paths.
Among the workhorses of the system are Hytrol's E24 modular conveyors, which provide zero pressure accumulation and gapping with the added benefit of plug-and-play connectivity. That makes them easy to install and later reconfigure. Their 24-volt design also provides efficient, quiet operation. Rollers shut down when there is no product present to convey.
JUST SKIP IT
Another benefit of Amway's new conveyor design is that it can accommodate zone skipping. In the old building, orders had to pass through all pick zones whether the zones contained items needed for the order or not. In the new facility, that's no longer necessary. Under the current setup, the facility's RedPrairie warehouse management system is able to route cartons so they bypass zones that do not contain any picks.
The conveyors serve a pick-to-belt area, where full cases are selected; a split case area; and a pick-to-combine area, where small-carton items and split-case items are consolidated into a single outbound carton to save on shipping. Picking in these areas is directed by a combination of pick-to-light and pick-by-voice technologies, with both systems supplied by Bastian.
DIVERSIONARY TACTICS
Bastian also provided several ZIPline zero pressure accumulation conveyors that feature a "tacky," or rough-surfaced, belt that allows for quick acceleration and deceleration without product slippage. These are deployed in areas where product is to be inserted or diverted. In all, the system at Amway features 51 total conveyor diverts.
Among those diverts is a section that feeds three French-made packaging systems from B+ Equipment and its American partner, Sealed Air Corp. These machines "right size" cartons by folding down the top edges to meet the height of the tallest item in the carton. The system then glues a lid onto the box.
In addition to routing items to the various picking areas, the conveyors also serve document insertion areas, the print-and-apply applicators, and the packaging area. In-line scales built into the conveyors also perform weight verification at several stages along the conveyor journey to assure that true weight matches expected weight.
Once all products have been packaged, the cartons enter a 4-to-1 sawtooth merge that lines them up for sorting via a narrow-belt sorter. Wheels at the 16 diverts pop up at a 30-degree angle between the conveying bands of the sorter to nudge products down spurs to awaiting docks. This unit is able to sort 90 cartons a minute, serving four pallet build areas and 12 shipping lanes. Cartons are floor loaded onto trailers aided by a telescoping extendible conveyor supplied by Adjustoveyor.
Editor's note: The facility described in this story is featured in "Move it!," a new Web-based TV series that takes viewers inside the operations of leading companies and introduces them to the people, cutting-edge technologies, and strategies that make it all work. To view the episode and see Amway's conveyors in action, visit www.moveitshow.com.
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.”