Genco's operation on behalf of a major customer already ran well. But linking labor management and lift truck management systems yielded further improvements.
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
In the mindset of a company focused on continuous improvement, hitting all the marks is just the beginning. The persistent question always remains: How can we get better?
Genco, a major third-party logistics service provider, operates a 410,000-square-foot distribution center for document management giant Xerox in Groveport, Ohio. Even before launching an effort to improve operations, Genco was meeting its client's expectations. "The facility was performing very well," says Marek Jezior, who works in Genco's Lean Solutions Group. "But we wanted to see what else we could do to impact performance." Specifically, he says, Genco was looking for ways to improve efficiency and take out cost—"anything that would bring value to the company and the customer."
The company decided early on to focus its efforts on its lift truck fleet. What ultimately brought substantial savings and improvements in productivity (not to mention safety) was linking lift truck management and labor management software. Historically, labor management systems (LMS) have not covered lift truck movements; they monitor workers using time-stamps, which are created whenever a worker scans a bar code. Genco and its software partners extended the concept of labor management from order selectors to the forklift drivers. Because it has more visibility into lift truck operations, Genco now can better manage its lift truck driver workforce.
The effort began with a close look at lift truck fleet management—an area where Genco felt its management systems were falling short. "One thing missing in our management was detailed information for the optimization of our material handling equipment," Jezior says. "We are in the business of moving materials for our customers. That's how we get compensated. And we had absolutely no way of measuring the activity and efficiency of our forklift drivers or the utilization of the equipment. We were interested in moving more material and reducing the cost of ownership." After consulting with Bob Simon, director of process solutions for Genco, Jezior set the twin goals of improving operating efficiency and operational safety.
The most obvious choice for a partner in developing better information on the fleet was The Raymond Corp.: All 26 pieces of lift truck equipment in the facility were Raymond trucks. And Raymond also brought to the table its iWarehouse fleet management system, a fleet optimization solution designed to manage driver access to vehicles, ensure compliance with record-keeping rules, record and alert managers when impacts occur, and track operational performance.
But the decision to go with iWarehouse wasn't a slam dunk. Jezior says Genco selected the system only after conducting an evaluation of Raymond's offering along with competitive products. The result was a decision to go with the iWarehouse system to improve safety and utilization of the facility's lift truck fleet.
SUM GREATER THAN THE PARTS
That proved a success. The iWarehouse system provided managers with better insight into the way the fleet was being used, opening the door to changes that would boost productivity.
"The biggest thing was visibility—what was happening on the floor," says Melinda Laake, manager of enterprise solutions for The Raymond Corp. "The management team knew they had opportunities for improvement, but they did not have the measurements or the visibility to make informed decisions."
She cites equipment use as an example. Managers had suspected that pickers weren't always using the right vehicles for specific jobs, Laake says. "After turning on iWarehouse, they found that to be the case." For instance, workers were using high reach trucks—one of the more expensive pieces of equipment in the fleet—for case picking on lower levels, an inefficient use of the equipment.
Once the lift truck management system was installed, managers were able to run the fleet more efficiently. But that was just the start. What made the project stand out was the successful effort to link the iWarehouse system with a labor management system. That is, by combining management of the lift truck fleet with management of the lift truck drivers—and other employees in the DC—Genco achieved even greater efficiencies.
For its labor management software, Genco selected a cloud-based LMS provided by Easy Metrics Inc., a division of Integrated Management Systems. (Integrated Management Systems originally developed Easy Metrics for its own use as a third-party provider of DC labor management services, but later commercialized the product and spun it off as a separate division.)
The integration of Easy Metrics and iWarehouse proved challenging at first, says Easy Metrics CEO Dean Dorcas, requiring the partners to solve problems that might seem simple on the surface, such as aligning clocks in the two systems and ensuring accuracy even if an employee forgot to sign off from one scanning device before picking up another. "We had a lot of different issues we had to work through," he says. But the basic components were pretty straightforward.
Jezior concurs. "Like anything new, the two systems did have some issues," he says. But he applauds the efforts of the two providers to make it work. "We had exceptional project management," he says. "After the initial start-up problems, the systems showed they had great potential to provide us with a 360-degree view of everything going on in the facility, not just the material handling equipment, but everybody.
STRONG RESULTS
As for how the initiative is working out, Jezior reports that the Groveport site has seen marked performance improvements since the introduction of iWarehouse and Easy Metrics. "We have seen a significant increase in productivity," he says.
For example, one key measure of lift truck productivity tracked by Genco—travel with load (the percentage of time lift trucks are carrying a load)—has risen by 8 percent since the implementation of the software systems. In addition, in the first three months after iWarehouse was installed, labor hours dropped by 18 percent. After the two systems were linked, the results got even better, with labor hours falling by 27 percent from the original level. Another important metric for Genco—labor cost per case handled—dropped by about 10 cents.
In addition, as a result of closer monitoring of driver activity, accidents have fallen sharply. Medium- and low-impact accidents fell by 80 percent, and severe impacts dropped to zero. The last is important financially: Jezior says a single severe impact incident could cost as much as $16,000. (Damage largely resulted from truck impacts with racks, damaging both.) The iWarehouse system reports any impacts, which are then confirmed by supervisors. As drivers have become aware of those reports, their safety record has improved. And the system flags underperforming drivers for retraining and operating restrictions until the retraining is completed.
Overall, the changes have led to more efficient and productive operations within the DC. Jezior reports that compared with 2011, the facility processed a higher monthly volume in 2012 with 15 fewer teammates on average.
Laake adds that the project was the first time that Raymond had merged iWarehouse data with an LMS, but it proved an excellent test. "We have quite an opportunity to expand this offering to other customers," she says.
Jezior is already taking the idea to other Genco sites. "We looked at the Xerox facility as a proving ground," he says. "The facility was performing well. If we can show significant improvement in a facility that is working to requirement, what impact will it have on a facility that is underperforming? We have several facilities that we are targeting for implementation."
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.
However, that trend is counterbalanced by economic uncertainty driven by geopolitics, which is prompting many companies to diversity their supply chains, Dun & Bradstreet said in its “Q4 2024 Global Business Optimism Insights” report, which was based on research conducted during the third quarter.
“While overall global business optimism has increased and inflation has abated, it’s important to recognize that geopolitics contribute to economic uncertainty,” Neeraj Sahai, president of Dun & Bradstreet International, said in a release. “Industry-specific regulatory risks and more stringent data requirements have emerged as the top concerns among a third of respondents. To mitigate these risks, businesses are considering diversifying their supply chains and markets to manage regulatory risk.”
According to the report, nearly four in five businesses are expressing increased optimism in domestic and export orders, capital expenditures, and financial risk due to a combination of easing financial pressures, shifts in monetary policies, robust regulatory frameworks, and higher participation in sustainability initiatives.
U.S. businesses recorded a nearly 9% rise in optimism, aided by falling inflation and expectations of further rate cuts. Similarly, business optimism in the U.K. and Spain showed notable recoveries as their respective central banks initiated monetary easing, rising by 13% and 9%, respectively. Emerging economies, such as Argentina and India, saw jumps in optimism levels due to declining inflation and increased domestic demand respectively.
"Businesses are increasingly confident as borrowing costs decline, boosting optimism for higher sales, stronger exports, and reduced financial risks," Arun Singh, Global Chief Economist at Dun & Bradstreet, said. "This confidence is driving capital investments, with easing supply chain pressures supporting growth in the year's final quarter."