Those who cannot remember the past are condemned to thinking they have invented the future
A recent Wall Street Journal feature reminded us that there may be little new under the sun, but that there is plenty of history being newly discovered.
Art van Bodegraven was, among other roles, chief design officer for the DES Leadership Academy. He passed away on June 18, 2017. He will be greatly missed.
A recent Wall Street Journal feature reminded us that there may be little new under the sun, but that there is plenty of history being newly discovered. The "aha!" moment for the Journal's intrepid sleuth, a professor from the University of New Hampshire, was the finding that suppliers, Procter & Gamble in this case, are being encouraged by that disruptive force, Amazon, to place operations adjacent to Amazon warehouses. Diapers are the select product. But we will not follow the obvious line of criticism here, including nappy jokes.
Our reaction is actually a collective and protracted "Well, duh!" Others may be wondering, "How long has this been going on?"
LINKS TO THE PAST
The good professor reaches way back into World War II for an early example in a superficially unrelated, but parallel, application. In the case in question, the U.S. Navy was busily engaged in being slightly too successful. Early in the war, after we recovered from the shock of the Japanese attack on Pearl Harbor, we discovered that our hit-and-run tactics were limited by the necessity of returning to Hawaii to refuel.
Some genius conceived a great solution, and this was some 40 years before we could even say "supply chain management." Step One: Capture an island held by the enemy. Step Two: Station oil storage facilities there, replenished by the Navy's capacity-constrained oiler fleet. Step Three: Attack, return a short distance, refuel, and attack again. Step Four: Repeat Steps One through Four, only closer to Japan.
But success led to another outstripping of capability and capacity. Ultimately, a scheme in which oilers met carriers at predetermined forward locations and refueled while in forward motion solved the problem. Thus was born what is just now being called "co-location" of supplier and distributor facilities. Some have called the solution a "just-in-time" supply chain.
JUST-IN-TIME?
WWII logistics eventually influenced private industry's material handling, then physical distribution concepts in the post-war period. What we forget is that the legendary Taiichi Ohno built the Toyota Production System (Lean manufacturing) on a foundation laid in his 1946 visits to Ford.
The Japanese manufacturing approaches, kaizen, kanbans, and the lot, were relatively late in development, were often borrowed from American practices, and owed much to prophets without honor at home (e.g., W. Edwards Deming). They made their way early into the automobile industry and later into other types of manufacturing—and still later into a spectrum of nonmanufacturing practices. And so we more or less adopted relevant components of just-in-time—some 30 or more years ago.
In Japan, a significant enabling feature of just-in-time success was the formation of keiretsu, a collection of trusted key suppliers located near or adjacent to production facilities. The idea was not inventory reduction, but a recognition that short distances meant short times—times to respond, times to change over, times to tweak quantities and schedules.
Sounds, in action, very much like co-location to us; does it to you?
WAS JUST-IN-TIME SLAIN OR MERELY MAIMED?
While the terminology has continued in use until the present day, the reality of offshore manufacturing significantly altered the core premises of just-in-time. Global marine transport wiped out the short distance/short time advantage, and uncertainties in supplier reliability, factors of time and distance, and vagaries of weather (not to mention the beady-eyed tactic of slow steaming) demanded markedly higher inventories in order to maintain service levels to customers. Sell-through of a fixed order quantity became a de facto operating standard given the slow response to tweaks in continuous-flow replenishment.
At least in certain industries. But consider this: The largest of the big box retailers required its vendors to locate forward inventories near access points of entry into its internal distribution network. Does that sound like co-location? How about this? A third-party logistics service provider (3PL) for a tier two automotive supplier assembling wiring harnesses worked inside the customer's facility, integrating the flow of its component into a deliverable component for the ultimate manufacturing and assembly customer. Co-location? You bet!
The first example dates back some 15 years; the second has been in place for over a dozen. So, how new is this co-location concept, anyway? And is it stretching a point to try to tie this "new" development to an event that, while it may be current events for us, is likely ancient history to you?
ON AND ON ...
More likely, we think, is that this vaunted co-location is just part of the continuously evolving way we execute processes and concepts of long standing in our profession. Just-in-time, for example, didn't go away; it merely put on a new dress. And it wasn't new in the early '80s when we thought we imported it, along with some Datsuns and Toyotas, from the land of the Rising Yen.
We keep, like some sort of perverse Groundhog Day, repeating this rediscovery and reinvention process. A few years ago, we—the trade press, the movers and shakers, and the consultants—fell in love with the concept of fulfillment. And that was well before information technology and omnichannel whatever. What we forget is that a little catalog retailer out of Chicago built a fortune that endures to this day by doing fulfillment. Customers sent in orders, with some arrangement for payment, and people fanned out inside an enormous distribution center, selected the ordered item(s), and shipped it/them to the customer.
The differences? Orders arrived via U.S. mail, no information technology assigned shelf locations in the facility, pick waves were not computer-generated, and a shipment might arrive by Railway Express. No computers, no FedEx, no Androids or iPhones, few complex algorithms, no Excel, no control tower. But the company, the brainchild of a fella named Sears, somehow managed to satisfy customers, shipping brassieres, long johns, hammers, automobiles, and even entire houses.
THE MESSAGE
Cool your jets, cowboy. What's new under the sun may not be nearly as important as making what we've got work better. That approach has served us, planetwide, pretty well—to the point at which we can scarcely recognize what we started with.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
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.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!