In our continuing series of discussions with top supply-chain company executives, Rob McKeel talks about how the economy has affected supply chain industry players and the impact of parts delays on automation projects.
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.
Rob McKeel is CEO of Fortna, a company that designs, develops, and delivers automation and intelligent software solutions. McKeel, who has been with Fortna for three years, recently oversaw the company’s merger with MHS. Before joining Fortna, he spent 27 years at GE, where he most recently served as president and CEO of GE Automation and Controls.
McKeel holds an MBA from James Madison University, a Master of Computer Science degree from the University of Virginia, and a Bachelor of Science in Electrical Engineering from North Carolina State University. He currently volunteers with the United Way of Greater Atlanta and previously served on its board of directors.
Q: How does the current economic situation affect our industry?
A: Obviously, governments around the world are looking to tame inflation and, in doing so, will slow down the world’s economy. It’s unclear yet what the ultimate outcome will be, but we are seeing many customers taking a more cautious approach. One effect will be a shift in investment from building capacity to building capability. What I mean by that is they may not invest for volume, but instead for productivity or velocity.
Our Lifecycle Performance Solutions group focuses on supporting operating facilities to keep them running optimally and provides solutions to increase capability in existing facilities.
Q: What do you feel is the current state of supply chains, and material handling in particular?
A: The situation across the global supply chain continues to accelerate toward increased use of technology to create operating leverage. The adoption of e-commerce continues to accelerate as a percentage of overall retail activity, and successful omnichannel capabilities require advanced automation.
In addition, as companies grow and look to consolidate brands, the complexity of operations geometrically increases with added requirements such as the need to provide greater variety, reduce shipping times, and expand business models, including “buy online/pick up in store” and “buy online/ship from store.” These changes require improved inventory slotting, picking, sorting, and consolidation models that drive lower cost per unit and increase throughput in the fulfillment centers. A third dimension is the need for increased resiliency to manage supply chain disruptions, leading to new network strategies.
Finally, the cost and scarcity of labor makes the case for automation even more attractive. All these challenges feed the need for intelligent software and automation solutions to ensure operational performance can outpace current and future demand.
Q: Fortna recently went through a rebranding that included combining the assets of MHS and Fortna under the Fortna banner. What synergies did this create for the market?
A: The combination of Fortna and MHS was driven by the independent growth trajectories of both companies converging and the belief that we will achieve our goals faster as a single entity than the companies would separately. Through the combination, we have assembled some of the brightest minds to solve the operational challenges of the full logistics value chain covering both parcel and distribution/fulfillment operations.
Fortna creates value at the intersection of operational challenges and solutions leveraging the full technology stack available to solve those operational challenges. Our software integrates with nearly every available industry technology, giving us full flexibility to solve the widest variety of problems in the most effective way for our customers. In addition, Fortna has the global scale and breadth to address any size challenge—from modifications or upgrades to the most complex distribution or parcel facilities. We provide our customers with peace of mind that they have a partner who cares as much about their business outcomes as they do.
Q: What are the advantages to Fortna of being part of the TH Lee portfolio, with industry brands like AutoStore,RightHand Robotics, and FourKites as sister companies?
A: TH Lee was an early entrant focusing investment in our industry and has expanded that investment potential through a dedicated automation fund across many industries. Each business in the TH Lee portfolio operates independently. Obviously, there are opportunities to meet and interact with the other portfolio entities, and we do so. Where there is business value to the two entities, such as our partnership with AutoStore, we enter into normal business relationships. We have a great partnership with AutoStore to the benefit of our customers.
Q: Many companies face long delays in getting their automation projects scheduled and completed. What are you telling your clients about the current situation?
A: It’s been an unprecedented situation since the world hit pause due to the pandemic. The global supply chain is an incredibly complicated system, and that pause caused enormous disruption. Our industry was not immune to that, and while most of the supply-related issues have been resolved, there are still several lingering effects, some of which have been further impacted by the situation in Ukraine and the energy challenges in Europe.
We are very transparent with our customers regarding where there are limitations, what alternatives exist, and what we can do to help them. Obviously, more time helps, but where there are time constraints, we use the flexibility we have in our supply partnerships to find the best answer.
Q: The need for automation continues to grow. What kinds of solutions are clients looking for, and what problems do they address?
A: We are fascinated by the amazing progress of robotics, advanced data processing, and the use of software to solve the various operating challenges our customers face. Some of these are ready for deployment, and some are in a more experimental phase.
These technology-forward solutions are solving challenges to offset a scarcity of labor or less-than-desirable operations in customers’ facilities. The advanced data processing and software solutions solve the complexity of operations and drive improved operating performance and resiliency. There are still so many exciting challenges to solve for our customers.
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 U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
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.