Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
Watching one of UPS Inc.'s big brown vans (or "package cars" in company parlance) on its daily rounds, a casual observer is struck by the driver's relaxed demeanor. The cab doors are wide open, and the driver greets customers with a wave of the hand after navigating narrow driveways with the confidence that comes with doing this thousands of times before.
Behind the seemingly casual habits, however, is a long list of rules that dictate nearly every movement a driver makes, from morning calisthenics (stretch those legs) to the proper height for carrying a box (well above the belt) and the correct way to exit the truck (always put down that package before stepping down).
Newcomers may chafe at these restrictions, but leaders at the company's Atlanta headquarters hold every employee to the strict standard, from the youngest conveyor belt operator to the 30-year veteran driver.
In June, the delivery and logistics giant invited a DC Velocity editor to ride along with a UPS driver on his morning route in one of Boston's Southwest suburbs. We witnessed the nitty-gritty of a driver's day, the challenges he faces, and how technology has influenced every step of the process.
MORNING HAS BROKEN
Enter UPS's Norwood, Mass., distribution center at 8 a.m. and you quickly realize that you missed a lot of activity while you were downing that first cup of coffee.
The day's first tractor-trailers arrived around 2 a.m. and disgorged their stacks of packages onto webs of high-speed conveyors that crisscross the cavernous facility. The boxes fly past labeling stations, where adhesive stickers are applied to each one with a puff of pressurized air.
The pre-load function begins at 4 a.m., as workers prepare to begin loading the trucks. The company's proprietary load-planning software generates a three-dimensional floor plan for every truck, showing workers where to stack each parcel. Done correctly, the boxes will be positioned in the exact sequence they'll be delivered in, so the proper item is waiting at arm's length as the driver pulls up to the next stop.
About 42,000 parcels move through the Norwood center during this overnight shift on a slow Wednesday in June. But volume can easily reach double that during peak periods, such as the winter holiday season. This particular DC also sees spikes in the summer when suburban homeowners order barbeque grills and patio furniture, and in the fall when students take up residence at the Boston area's many colleges and universities.
UNLEASH THE ALGORITHMS
Even in the off-peak seasons, each driver delivers between 125 and 175 packages on his daily route, so experienced drivers will tell you that pre-load is critical. That's where logistics technology makes its biggest impact on the process.
An overnight supervisor uses proprietary software to calculate how many truck routes will be needed to accommodate the day's package count, to balance driver workloads, and to arrange for enough drivers. Big Brown keeps such a close eye on the bottom line that managers see a column on their computer screens that calculates the dollar impact every time they change a route or reassign a package to a different truck.
Once the loads are assigned, managers apply the routing software known as ORION. The acronym stands for "On-Road Integrated Optimization and Navigation," but Mark Wallace, UPS's senior vice president for global engineering and sustainability, calls it "MapQuest on steroids." This proprietary application shaves precious minutes off every driver's trip by calculating the shortest possible delivery route, even allowing for changes on the fly. The software is also what enables the carrier to offer enhanced services like flexible delivery times and, for those customers enrolled in its MyChoice program, the option to reroute their packages to a different delivery address or a "smart locker" location.
UPS' ORION software calculates the shortest route for each drive and can make changes on the fly.
UPS launched ORION in 2013 and plans to deploy it to all 55,000 of its North American routes by the end of 2016. Ideally, the result will be a reduction in driving time, mileage, gas, and emissions. As UPS brass is fond of saying, "The greenest mile is the one you never drive." In practice, some drivers complain that ORION fails to reflect real-time traffic and road conditions, with the result that they sometimes get stuck behind a school bus or funeral procession. UPS technology executives say the next release will address this by allowing real-time updates.
MAKE THE 10: 30 DEADLINE
Competing parcel carriers may designate different trucks for express service versus two-day delivery, but each UPS truck must accommodate parcels with an array of overlapping delivery deadlines. A single UPS truck might leave its DC at 8: 30 a.m., deliver all of its Next Day Air packages by 10: 30 a.m., make a second loop of its neighborhood to deliver UPS Ground parcels to businesses by 3 p.m., then make a third loop to deliver residential packages and make pickups.
To help sort out those overlapping deadlines, the driver's constant companion is the handheld computer he uses to display a list of addresses, scan every parcel to record the time it's delivered, exchange text messages with a manager, or make arrangements to meet another UPS driver to exchange a mislabeled box.
The next iteration of UPS' DIAD handheld will add smartphone-style features such as a color navigation screen and dynamic optimization, UPS says.
UPS calls the handheld computer DIAD, for "Delivery Information Acquisition Device." The mobile unit, which is now in its fifth version, was launched in 1990 to help drivers cope with the accelerated pace and complexity of modern-day parcel delivery. The sixth iteration DIAD will add familiar smartphone features like a color navigation screen and dynamic optimization, UPS CIO Juan Perez said at a recent company media day event.
REMEMBER THE HUMAN FACTOR
Equipped with the latest ORION and DIAD technology and trained in UPS techniques for everything from exiting the truck to deploying the two-wheeled dolly, a driver might seem like just a small cog in a big brown machine. But many UPS drivers stick with the same delivery route for decades, memorizing every street on their route and getting to know their clients by name.
In the space of a few hours along Norwood's bustling Route 1, we visited multiple car dealerships, a sporting goods store, a gym, a plumbing supply store, an electronics supplier, a law office, a computer programming school, a pharmaceutical firm, an automotive body shop, and a garage occupied by an elderly man running a mail-order business. A 15-year veteran of the route, the driver greeted most of his customers by their first names and a corny joke, or with some good-natured ribbing about their golf handicap.
Our day trip affirmed what many, especially those at UPS, already know: Its drivers are the face of the company. They do more than pick up and deliver packages. They interact, answer questions, and field complaints. They project the brand's image to the outside world. That is why for all of the company's whiz-bang technology and all the talk about autonomous vehicles, UPS will continue to rely on human drivers to manage its routes, and its customers, for years to come.
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.”