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Logistics and supply chain May 2015

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Logistics and supply chain May 2015

  1. 1. www.inboundlogistics.com THE MAGAZINE FOR DEMAND-DRIVEN LOGISTICS • May 2015 SMART BUILDING TODAY’S WAREHOUSE 2 SPECIAL SUPPLEMENTS RIDING THE RAILSGREAT INTERMODAL SITES A PALETTE OF PALLET CHOICES Switching on Technology • Managing a Diverse Workforce Powering Up the Right Equipment
  2. 2. DRIVE NEW VALUE INTO YOUR SUPPLY CHAIN. Inventory Location Management Order Fulfillment Stock Transfers Cost Optimization Transportation Planning Routing Order Consolidation Distance Optimization Control Tower Plan Optimize Deliver Carrier Integration Event Tracking Exception Management Eyefreight Mobile Freight Spend Management Rate Management Pre-Invoice Documentation Cost Allocation Invoice Matching Business Intelligence Custom Dashboards Interactive Reports OLAP Reports www.eyefreight.com Got 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  3. 3. Gain Control Tower Visibility • Simply integrate all transportation partner processes and systems • Receive real-time shipment status and exception updates Optimize Transport Plans • Automate transportation planning and carrier selection • Tender shipments electronically Manage Costs • Calculate accurate transport costs based on tariff sheets/rate cards • Identify and contest questionable transportation costs • Eliminate invoice reconciliation Analyze Performance • Instantly assess carrier performance • Make informed carrier selections • Gain leverage in vendor negotiations Solution: Results:Challenge: Companies Utilizing Eyefreight: • Reduce administration costs up to 20% • Reduce costs associated with unforeseen deviations to transport plans up to 15% • Reduce delayed and/or failed shipments up to 10% • Increase carrier negotiation power by up to 15% Some of the world’s top brands are putting Eyefreight’s SaaS TMS in place to boost shipping efficiencies. Utilizing Eyefreight’s patent-pending algorithms for optimizing inventory allocation and distribution planning, these companies are rapidly achieving as much as 30% reductions in net landed cost of goods without renegotiating carrier rates. Net Landed Cost of Goods, the total cost associated with getting goods into customers’ hands, consists of Cost of Distribution (CoD) and Cost of Manufacturing (CoM). For years, manufacturers and brands have worked to reduce CoM as the means to reducing their net landed cost of goods to compete and succeed in increasingly competitive market- places; as this strategy reaches its limits, companies increasingly turn to the often more rewarding yet complex opportunity to reduce CoD. Eyefreight reduces net landed cost of goods up to 30% and improves business margins. An accessible SaaS solution, Eyefreight deploys rapidly and integrates with existing transportation workflows. EYEFREIGHT SaaSTransportation Management System sales@eyefreight.com © Eyefreight Inc. 2015. All rights reserved. Got 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  4. 4. There’s no such thing as a routine call for the highly trained customer service specialists at Saia. Every time the phone rings, it’s personal. With centralized access to the latest data throughout our entire service network, our experts can answer your questions, address your needs, and resolve potential challenges — and 97% of requests are handled with a single call. So whether we’re proactively monitoring new accounts to ensure problem-free shipping or fostering long-term relationships with customers around the country, it’s easy to see Saia’s commitment to superior service. 1-800-765-7242 / www.saia.com SAI_0831 Superhero Ad_CSR_InboundLog.indd 1 3/10/15 11:30 AMsaia_ad0515.indd 1 4/30/15 10:10 AMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  5. 5. May 2015 • Inbound Logistics 1 May 2015 • Vol. 35 • No. 5 INDEPTH 42 Building a Smarter Warehouse Cloud computing, e-commerce, omnichannel management, and last-mile logistics are reshaping today’s warehouse. Make sure your facilities can make the grade. 48 The Changing Face of the Warehouse Workforce How does a warehouse manager transform a group of people with different backgrounds, outlooks, and abilities into a high-powered workforce? THE MAGAZINE FOR DEMAND-DRIVEN LOGISTICS INPRACTICE 12 READER PROFILE  Lori Harper: Running a Tight Ship Lori Harper, vice president, supply chain management at Ingalls Shipbuilding, is a natural leader who finds solutions to unexpected challenges. 89 IT TOOLKIT  Awake at the Wheel: Delivering Customer Satisfaction When Sleepy’s customers got tired of short notice and missed deliveries, the specialty mattress retailer brought in a technology partner and dreamed up a solution that put those problems to bed. INSIGHT 6 CHECKING IN The walls come tumbling down. 8 DIALOG The ongoing conversation. 10 10 TIPS Improving shipper/carrier relationships. 30 TIGHT MARKET FOR INDUSTRIAL REAL ESTATE MARKET IMPACTS SUPPLY CHAIN COSTS KnowledgeBase sponsored by WSI. 32 IMPROVING THE WAREHOUSE STARTUP PROCESS Thought Leader sponsored by Wagner Logistics. 34 THE DRIVER SHORTAGE— NOT JUST A CARRIER ISSUE Thought Leader sponsored by Saia. 36 IT MATTERS Finding an inventory solution that’s just right for your small business. 38 THE FINE PRINT How Amtrak’s Supreme Court case affects freight shippers. 40 VIEWPOINT Five ways to mitigate a truckload capacity crunch. 112 LAST MILE: THE CHOPPER DROPPER THE CHANGING FACE OF THE WAREHOUSE WORKFORCE page 48
  6. 6. May 2015 • Vol. 35 • No. 5 2  Inbound Logistics • May 2015 INDEPTH 59 SPONSORED CONTENT  Riding the Rails America’s great rail intermodal sites serve as vital hubs in the logistics landscape. 71 TMS Buyer’s Guide Inbound Logistics’ annual directory high­lights some leading TMS providers and solutions. 81 SPONSORED CONTENT  An Expanding Palette of Pallet Choices The seven trends you need to know before you choose your next pallet system. THE MAGAZINE FOR DEMAND-DRIVEN LOGISTICS INFOCUS 15 NOTED 19 TRENDS Martin Associates report points to the importance of continuing U.S. port investment; Freight Can’t Wait program encourages Congress to earmark funding exclusively for freight infrastructure projects; Henry Ford College introduces associates degree in supply chain management. 25 GLOBAL China and Pakistan pave way for new trade corridor; Trans Pacific Partnership nears resolution; Indonesia logistics industry fights new capital requirement regulation; European railroads partner around procurement. INFO 92 WEB_CITE CITY 98 WHITEPAPER DIGEST 100 IN BRIEF 104 CALENDAR 106 CLASSIFIED 108 RESOURCE CENTER RIDING THE RAILS page 59
  7. 7. “Ashley takes care of us, and she is always quick to respond to anything we send her—we know we are in good hands when we send something to her. She makes my job so much easier. Thanks to Ashley, we are loyal C.H. Robinson customers.” —C.H. Robinson chemical manufacturer customer Ashley W. Customer Account Manager Bloomington, IL REAL PEOPLE. REAL IMPACT. VOTE FOR C.H. ROBINSON AS YOUR #1 3PL We strive to do more than simply get the job done. We want to be an advantage to your company by doing our best, so your supply chain can be its best. Vote for C.H. Robinson in the Inbound Logistics Top 10 3PL Excellence Awards to support the real people making a real impact in your company’s supply chain. vote.chrobinson.com © 2015 C.H. Robinson Worldwide, Inc. All Rights Reserved. chrobinson_3pl_ad0515.indd 1 4/29/15 2:46 PMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  8. 8. 4  Inbound Logistics • May 2015 www.inboundlogistics.com QUICKBYTES 2015 LOGISTICS PLANNER Meet the leading logistics, transportation, and supply chain service providers; real estate developers; port authorities; materials handling equipment companies; technology providers; and more—all ready to help you enhance your supply chain, boost efficiency, cut costs, and better serve your customers. bit.ly/IL_2015Planner LOGISTICS SUPPLY CHAIN NEWS For up-to-the-minute information, bookmark the IL news page. Enjoy opinions, commentary, and links to the latest news to help you stay on top of your game. bit.ly/IL-News WEB_CITE CITY® The most comprehensive and clutter-free online directory of supply chain websites — organized by category, cross-referenced, and fully searchable. You can browse by category or search for companies by name. bit.ly/IL_WCC ONLINE EXCLUSIVES Communication is Key When Optimizing Logistics Networks  bit.ly/1EUtwhQ Jeff Vielhaber, Chief Operating Officer, TTS The goal of optimization is to reduce costs while becoming more efficient. But before you hire an analyst or invest in new technology to implement your optimization plan, don’t forget about communication. Improving Customer Satisfaction With Consumer Engagement Apps bit.ly/1c1fSMM Nate Henderson, Global Manager of BILT, SAP Offering products with an accompanying app that provides interactive, voice-guided assembly, repair, and installation instructions is a game changer for manufacturers, and leaves retailers with satisfied customers.  Manufacturing Skills Gap Calls for New Approaches to Talent Development  bit.ly/1PeJZm2 Russ Rasmus, Managing Director, Operations/Manufacturing (pictured) and David Smith, Senior Managing Director, Talent/Organization, Accenture Strategy Manufacturers that invest in developing skills of new and incumbent workers proactively position themselves to compete in today’s global economy. Here’s a four-step process to stoke your pipeline with the talent you need. 3PL RESOURCES 3PL Decision Support Tool  bit.ly/IL3PLDST Choose the services and capabilities you need from a provider and the Decision Support Tool will find matching companies. You can even contact companies directly through our linked RFP functionality. 3PL Request for Proposal  bit.ly/IL3PLRFP Describe your supply chain challenge, then browse the list of top 3PLs. Select specific companies to receive your RFP, and they’ll provide free, no-obligation advice to meet your logistics management needs. Keep up to date with the very latest:   facebook.com/InboundLogistics   @ILMagazine  linkedin.com/company/ inbound-logistics IMPROVING CUSTOMER SATISFACTION WITH CONSUMER ENGAGEMENT APPS bit.ly/1c1fSMM
  9. 9. Perform what-if analysis for prepaid-to-collect conversion on freight terms Explore alternate methods to maximize utilization of private or contract fleets Periodically realign static routes to minimize travel, accommodate variability and improve service levels Determine whether your network could improve service by altering facility sourcing policies TMS_Ad_PRINT_REV.indd 1 4/9/15 11:05 AM Manhattan Associates Ad-PLACED 0415.indd 1 4/9/15 12:13 PMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  10. 10. CHECKINGIN by Felecia Stratton | Editor Vol. 35, No. 5 May 2015 THE MAGAZINE FOR DEMAND-DRIVEN LOGISTICS www.inboundlogistics.com 6  Inbound Logistics • May 2015 STAFF PUBLISHER Keith G. Biondo publisher@inboundlogistics.com EDITOR Felecia J. Stratton editor@inboundlogistics.com MANAGING EDITOR Lauren Muskett lmuskett@inboundlogistics.com SENIOR WRITER Joseph O’Reilly joseph@inboundlogistics.com ASSOCIATE EDITOR Jason McDowell jmcdowell@inboundlogistics.com CONTRIBUTING EDITORS Merrill Douglas • Lisa Terry CREATIVE DIRECTOR Michael Murphy mmurphy@thomaspublishing.com ASSOC. ART DIRECTOR/ PRODUCTION MANAGER Sean Doyle sdoyle@inboundlogistics.com DIGITAL DESIGN MANAGER Amy Palmisano apalmisano@inboundlogistics.com PUBLICATION MANAGER Sonia Casiano sonia@inboundlogistics.com CIRCULATION DIRECTOR Carolyn Smolin SALES OFFICES PUBLISHER: Keith Biondo (212) 629-1560 • FAX: (212) 629-1565 publisher@inboundlogistics.com WEST/MIDWEST/SOUTHWEST: Harold L. Leddy (847) 446-8764 • FAX: (847) 305-5890 haroldleddy@inboundlogistics.com Marshall Leddy (612) 234-7436 • FAX: (847) 305-5890 marshall@inboundlogistics.com SOUTHEAST: Gordon H. Harper (404) 229-9691 • FAX: (404) 355-2036 south@inboundlogistics.com MIDWEST/ECONOMIC DEVELOPMENT: Jim Armstrong (314) 984-9007 • FAX: (314) 984-8878 jim@inboundlogistics.com MOBILE, AL: Peter Muller (251) 232-1920 • FAX: (251) 343-0541 petermuller@inboundlogistics.com NORTHEAST: Rachael Sprinz (212) 629-1560 • FAX: (212) 629-1565 rachael@inboundlogistics.com FREE SUBSCRIPTIONS www.inboundlogistics.com/free Inbound Logistics supports sustainable best practices. Our mission is rooted in helping companies match demand to supply, eliminating waste from the supply chain. This magazine is printed on paper sourced from fast growth renewable timber. Inbound Logistics welcomes comments and submissions. Contact us at 5 Penn Plaza, NY, NY 10001, (212) 629-1560, Fax (212) 629-1565, e-mail: editorial@inboundlogistics.com.Foradvertising,reprint,orsubscription information, call (212) 629-1560, or e-mail publisher@inboundlogistics. com. Inbound Logistics is distributed without cost to those qualified in North America. Interested readers must complete and return the qualification card published in this issue, or may subscribe online at www.inboundlogistics.com/free. Subscription price to others: in North America: $95 per year. Foreign subscriptions: $229. Single copy price: No. Amer. $10, foreign $19, back issues $15. Periodicals postage paid at New York, NY, and additional mailing offices. The Walls Come Tumbling Down I t might sound like two things I did this month—traveling to Phoenix for ISM’s annual conference and working on this Warehousing issue—have nothing in common. Ah, but they do. What happens in the warehouse, the orchestration of products coming in and going out to where they need to be, hinges on the convergence of many functions—purchasing, finance, transportation, logistics, and technology. And that convergence in the warehouse reflects what’s happening in the larger sense in enterprises all over the world. It’s also why the editor of a logistics/supply chain publication attended the Institute for Supply Management’s (ISM) annual conference. There, I observed purchasing, supply management, production, and inventory control professionals embracing cross-functional cooperation. For example, I met with the 30 Under 30 Rising Supply Chain Stars winners, many of whom say that if their responsibilities are broadened across the entire supply chain, they feel they have a better opportu- nity to contribute, make a difference, and beneficially impact enterprise operations. Driving this increase in cross-functional cooperation is a growing recognition that linking supply functions with demand will benefit overall enterprise performance. The industry organizations serving functions such as purchasing, production, and supply, which traditionally had little direct involvement in logistics operations, are recognizing this by starting to bring their members logistics information, research, and, in some cases, certification. At the conference, ISM CEO Tom Derry introduced the ISM Mastery Model, which outlines new global standards of excellence for the supply management profession. The free model outlines what it takes to be an exceptional supply management professional. “This was not an ivory tower exercise within ISM,” Derry says. “It was built on the knowledge provided by practitioners in the field.” What it now takes to succeed in supply management is far different from what it was decades ago. The Mastery Model’s new standards recognize that. But ISM is not the only association bringing more logistics and supply chain information to members. The recent merger between APICS and ASTL also illustrates how hard and fast barriers between functions are coming down in recognition of today’s global business realities. If industry associations support convergence by providing the right kind of tools, such as the Mastery Model, they will create new value by cross-pollinating each supply chain function. Behind this convergence and cooperation is understanding that you have to better match demand to supply to stay globally competitive. Industry associations are encouraging it, and providing tools such as the Mastery Model to help supply chain professionals excel in multi-disciplinary ways.  n
  11. 11. WHAT IF YOU COULD AVOID COSTLY ________ AND MAKE ________ MORE ATTRACTIVE TO CARRIERS? COSTLY ________ AND ACCESSORIAL MAKE ________ MORE YOUR COMPANY NAME Find out more at accelerateyouradvantage.com 800.323.7587 | solutions@chrobinson.com ACCELERATE YOUR ADVANTAGE ® © 2015 C.H. Robinson Worldwide, Inc. All Rights Reserved. chrobinson_truck_ad0515.indd 1 4/29/15 2:44 PMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  12. 12. DIALOGTHE ONGOING CONVERSATION Timothy LePage  @tplepage 13 APR 2015 Spotted a great @Staples program in @ILMagazine’s “Trends” during some light reading this weekend. bit.ly/1ciGslo Inbound Logistics  @ILMagazine 15 APR 2015 Traditional Supply Chain Models Will Be Extinct in 2025, Thanks to These 10 Disruptors – bit.ly/1yxmNRI VChain Solutions  @VChain Students looking to enter the field after graduating, this is the future of the supply chain. Will you be ready? Inbound Logistics @ILMagazine 27 APR 2015 Offshore vs. Outsource for Transportation Logistics— bit.ly/1Dsdvd3 Syed Qasim R Jafri @31Qasim When offshore, it’s logical and cost effective to outsource transport. Think globally, but act locally. Inbound Logistics  27 APR 2015 Top 100 Logistics IT Providers Market Research Survey: bit.ly/1ciKCK0 GT Nexus We are honored to be included on your list! Inbound Logistics 30 APR 2015 Time flies. Here’s a photo of our 2015 Top 100 Logistics IT Providers issue (left), with its counterpart from 1999, the first time we published a Top 100 Logistics IT Providers list. Believe it or not, a handful of IT companies had the staying power to be on both lists! Hot Topics | IL articles getting the most impressions on LinkedIn: Six Secrets to Controlling Supply Chain Costs Without Sacrificing Service: bit.ly/1uPBRi2 • Five Customs Compliance Tips for Aerospace Companies: bit.ly/1ciKhqu • What is Globalization Doing to the World of Logistics? bit.ly/1ACvSej • Top 100 Logistics IT Providers Market Research Survey: bit.ly/1ciKCK0 • Tracking Isn’t Just Tracking Anymore: bit.ly/1ciKEBs Inbound Logistics  @ILMagazine 14 APR 2015 What do these dudes have to do with logistics? Dematic scores ZZ Top for its September conference! www.mhlc.com Know a Worthy Supply Chain Student? Pass this along. Inbound Logistics and ASTL are now accepting applications for their third-annual Supply Chain Scholarship. As part of the application process, undergraduate students are asked to submit a 2,000- word essay on why they chose logistics/supply chain as their path of academic study, and how they envision a career in the industry impacting the company they work for, as well as the U.S. and global economy at large. The winning student receives a $2,500 scholarship. Inbound Logistics will announce the winner in our June 2015 issue. For more information and an application, email Laurie Denham at ldenham@astl.org Follow us:   facebook.com/InboundLogistics   twitter.com/ILMagazine   linkedin.com/company/inbound-logistics Drop us a line: editor@inboundlogistics.com or send snail mail to Dialog, c/o Inbound Logistics 5 Penn Plaza, NY, NY 10001 8  Inbound Logistics • May 2015
  13. 13. © 2015 Prudential Financial, Inc. and its related entities. Prudential Real Estate Investors is a unit of Prudential Investment Management, Inc., a registered investment adviser and a Prudential Financial company. Prudential, the Prudential logo, the Rock symbol, and PREI are registered service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. KESW-9SAKGM BRINGING A WORLD OF EXPERIENCE TO INDUSTRIAL REAL ESTATE. PRUDENTIAL REAL ESTATE INVESTORS PREI has been investing in Latin America for more than a decade, and today we are one of the largest international real estate investment managers in the region. Through Terrafina (BMV:TERRA13), a Mexican real estate investment trust, we provide advisory services for 31 million square feet of attractive, strategically located light manufacturing properties and other warehouses throughout the Central, Bajio and Northern regions of Mexico. Managed by highly qualified industry specialists, and supported by PREI’s global real estate platform, Terrafina aims to achieve successful performance of its industrial real estate and land reserves. PREI has invested in commercial real estate for more than 40 years. With investment and asset management professionals based in 20 locations across the Americas, Europe and Asia Pacific, we bring both global perspective and local market knowledge to real estate investment. For more information, please contact Julien Higuero at Julien.Higuero@prudential.com or visit prei.com. QUERETARO, MEXICO Mexico Ad_V2.indd 1 1/8/2015 10:59:30 AMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  14. 14. 10TIPS 10  Inbound Logistics • May 2015 Improving Shipper/Carrier Relationships F rom shippers, receivers, and pur- chasing agents to carriers and third-party logistics companies, everyone has an opinion on how to reduce trucking costs. But they all agree that to help save money, shippers should build strong relationships with their less-than- truckload (LTL) carriers. Mark Hamblin, vice president of sales, west, for LTL car- rier Saia, offers some advice on how to do just that. 1 Work for a win-win. Work with your carrier to determine which lanes and freight work best. Carriers no longer operate under the model of taking all the freight offered to them. With the increase of transportation management systems, tighter driver availability, and growing regulatory guidelines, it is essential to col- laborate with carriers to ensure you are adding profitable business to their network. This will solidify a long-term relationship that will save you from costly changeovers. 2 Follow through on commitments. If you intend to hold your carriers to their commitments, then you should honor your commitments to them. Carriers base their prices on the data you provide. Supplying inaccurate data or not shipping in the lanes and tonnages you commit to could lead to renegotiation and changing carriers sooner than you anticipated. 3 Provide data. Good data is impor- tant to carriers during the bid process. In addition to providing lane and ton- nage data, you also need to provide freight characteristic percentages and monthly volumes. That information helps carriers plan appropriately with regard to locations and any specific freight characteristics, as well as for seasonal changes in volume. 4 Share opportunities. When new opportunities arise, bring them to your partner carrier first. Everyone benefits if you can come to an equitable agreement. You benefit from a smooth transition and save the time and expense of a formal RFP. The carrier benefits by earning more of your business. 5 Treat drivers well. Anything you can do to make your facility more driver-friendly helps your carriers retain drivers, which reduces their operat- ing costs to save money. A long-term driver will know your business and your proce- dures, and makes the pickup and delivery process more efficient. 6 Mix it up. Talk to your carrier about operational changes you can make that won’t impact your operations. For instance, if you already run a weekend shift, why not offer weekend trailer swap options to your carrier? 7 Plan. When you begin a new part- nership, give the carrier time to get its system ready and trained to take on the new lanes and freight. Not doing so can get the relationship off to a costly, rocky start. 8 Communicate. Shippers should hold quarterly meetings with their carriers to review performance metrics, and new services and options, and to strengthen the relationship. Business review meetings should include discussions on high-cost drivers, so strategies can be implemented that reduce costs as opposed to raising rates. Working together prior to renegotiation will improve and solidify the partnership. 9 Use technology. Shippers expect carriers to provide real-time data on shipments, and carriers have gone to great expense to do so. In return, ship- pers should be willing to use programming options that provide a smooth, accurate transfer of data without requiring addi- tional manual work on either side. 10 Monitor interactions. Ensure you provide accurate information and that customers are treated with respect. A good relationship at all levels of the organization is the best way to ensure the shipper/carrier partnership is strong and healthy, which reduces costs and improves service. n STEP-BY-STEP SOLUTIONS
  15. 15. To maximize your efficiency, you need to minimize your vehicle’s downtime, including stops at the gas pump. With the superior fuel efficiency of its 2-stage turbocharged diesel engine, service intervals extended to 20,000 miles1 and legendary durability, the 2015 Sprinter will help keep your business ahead of the rest. Plus, new standard Crosswind Assist2 helps stabilize your Sprinter in strong, gusting crosswinds. The 2015 Sprinter—your hardest worker. www.freightlinersprinterusa.com THE 2015 SPRINTER ToTTT mmmaxaxaximiiimizizee yoyourur eeffifficcieiencncy,y,y yyouou nnnneeeee ddd THE 2015 SPRINTER 1 Driver is responsible for monitoring fluid levels and tire pressure between service visits. See Maintenance Booklet for details. 2 Crosswind Assist engages automatically when sensing dangerous wind gusts at highway speeds exceeding 50 mph. Performance is limited by wind severity and available traction, which snow, ice and other conditions can affect. Feature not available on 3500 models. ©2015 Daimler Vans USA LLC. All rights reserved. FTL_1P_Inbound Logistics_FLEET_7.875x10.75in_2014.indd 1 1/29/15 3:17 PM Got 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  16. 16. as told to Merrill Douglas R E A D E R PROFILE 12  Inbound Logistics • May 2015 Lori Harper: Running a Tight Ship T HE MAIN CHALLENGES I FACE IN MY WORK AT Ingalls Shipbuilding are probably the same ones faced by professionals in my role throughout the world: how to add value to your enterprise. Ingalls Shipbuilding builds war ships for the U.S. Navy and Coast Guard. Our most important goal is to give our war fighters the products they need. And we’re continually seeking to deliver those products more affordably. Ingalls Shipbuilding procures materials and components mainly from suppliers in the United States. We transport this prod- uct via ocean, air, rail, and truck to our manufacturing facility in Pascagoula. One current project I find exciting is an effort to improve material tracking. Tracking raw materials and loose parts in a ship yard is hard because there’s so much steel in the environment. That metal interferes with radio signals, making it difficult to implement a radio frequency identification system, as you would in a warehouse. I can’t give details on the solu- tion we’re developing, but if it’s successful, I believe it will be a game changer. A highlight of my career has been my work to support the construction and delivery of one of our amphibious assault ships, LHD 8. Not only did I take part in Lori Harperis vice president, supply chain managementat Ingalls Shipbuilding, a division of Huntington Ingalls Industries (HII), Pascagoula, Miss. HII was spun off from Northrop Grumman Corp. in 2011. Harper has served in this position since 2012. RESPONSIBILITIES Sourcing, procurement, receiving, warehousing, inventory, distribution, cost control, and analytics. EXPERIENCE Subcontract management specialist, material site manager—Gulfport operations, subcontracts section manager—DDX Program, manager—supply chain compliance, director—LHD 8 program material, director— LPD 17 program material, Northrop Grumman Shipbuilding. EDUCATION B.S., business administration, Southwestern Oklahoma State University, 1993; MBA, organization and operations management, William Carey College, 1997. RECENT HONOR Named one of the Top 10 Business Women of 2015 by Mississippi Business Journal. The Big Questions What one characteristic do you believe every leader should possess? To be an effective leader, you have to be willing to go against the flow when necessary. It takes courage to speak up professionally and respectfully, and then to act on it. If you could go back to school for fun and personal enrichment, what would you study? I’d love to learn a foreign language— probably Spanish. I would also like to study horticulture. What advice would you give to your 18-year-old self? Life will throw some challenges at you, but you will be OK. Just keep getting back up. What is your passion in life? My passion is helping people—in my community, and in my professional and personal environment. I’m on the executive board of the Boys and Girls Clubs of the Gulf Coast, and I’m the executive sponsor for an employee resource group at Ingalls called Women in Shipbuilding Enterprise.
  17. 17. procuring materials, but I practically lived on the ship for almost two years. I attended daily meetings there, and went out on the sea trials. We usually spent 16 or 17 hours daily on board. It was incredibly rewarding. Because this project was so important, we implemented some unusual strategies. For example, we stationed a supply chain tiger team at the waterfront to provide immediate support. Some of our suppliers established operations on site. When you’re testing a ship, inevitably some components will not function exactly as needed. So it’s critical to have suppliers there to help with repairs and provide parts. Throughout my career, I’ve had to learn to adjust, think on my feet, and figure out solutions to unexpected chal- lenges. One early lesson in dealing with the unexpected was when I served as the Mississippi lead on the construction of a petrochemical plant. I was the only woman on site for several months. In all the planning we did for that greenfield project, no one thought about providing a women’s restroom trailer. We ended up ordering a single-person unit for my use. That’s just an example of the things you have to consider as women start taking on leadership roles where we haven’t in the past. Being one of the first is a challenge, but it’s also a phenomenal opportunity to learn from others, and for the men I work with to learn from me. I also enjoy being able to open doors for other women. n As your comprehensive cross-border delivery partner, Holland has the experience, network and equipment to make supply chains – to and from Canada – run smoothly. We provide: • More next-day lanes • Greater second-day reach • Guaranteed service options (to select destinations) Holland also works with customs brokers for pre-arrival clearance, so goods are immediately accessible for customer delivery. Want to know more? Call 866.465.5263 or go to hollandregional.com for details! hollandregional.com/social 866.465.5263 ©2015 YRC Worldwide Inc. COMPLETE CANADA SERVICEFrom customs to customers. 15HOl023_HollandCanadaAd_HP_InboundLogistics.indd 1 5/4/15 4:01 PM
  18. 18. Learn more at nfiindustries.com ROM FOOD AND beverage to industrial and retail, NFI has the capabilities and expertise to manage your products throughout the entire supply chain. Since 1932, we’ve been delivering innovative services to the world’s biggest companies. Whether you need to import, transport, or warehouse your goods, NFI will work with you to engineer solutions that best address your supply chain goals. Your supply chain is complex and you’ll need a logistics partner you can count on. NFI is that partner. WHEREVER YOU NEED US, WE’RE THERE. F 22+M SQ. FT OF CONTRACT AND PUBLIC WAREHOUSING SPACE Trim Edge Warning-NFI.indd 1 5/4/15 9:11 AMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  19. 19. May 2015 • Inbound Logistics 15 NOTEDThe Supply Chain In Brief INFOCUS UP THE CHAIN Craig Marton is joining 3PL Sunset Transportation as president, and COO and founder Jim Williams will transition to chairman and CEO. Marton leads day-to-day business operations, strategic planning, and implementation, while Williams advises on strategic decisions and focuses on business development and acquisitions. GOOD WORKS Crowley Maritime provided shipping for a donated mobile health clinic from the Blood Alliance of Northeast Florida to Haiti. The mobile health clinic will serve more than three million people. Materials handling company The Raymond Corporation donated 16 pallets of nonperishable food and personal care items to the Addison Community Switchboard – an Addison, Ill.- based non-profit organization that provides emergency assistance to residents. Beverage supply chain management provider Satellite Logistics Group (SLG) purchased AnotherRound Apps (ARA), a cloud-based, mobile software provider. The companies worked together to integrate ARA’s KegID asset-tracking technology with SLG’s Kegspediter service to provide brewers and beverage distributors real-time visibility, which optimizes equipment use and improves accountability. Transportation logistics provider XPO Logistics will acquire logistics company Norbert Dentressangle SA. Norbert Dentressangle’s transportation and logistics services complement XPO’s contract logistics, freight brokerage, and global forwarding offerings. Software provider Llamasoft bought IBM’s LogicTools suite of strategic supply chain optimization software, which includes LogicNet Plus, the Inventory and Product Flow Analyst, and the Transportation Analyst. Third-party logistics provider Echo Global Logistics purchased Command Transportation LLC, a truckload broker and non-asset- based transportation provider. The transaction increases scale and adds density to Echo’s national footprint to better serve the truckload brokerage market. Automation solutions provider Swisslog acquired FORTE Industries, a warehouse automation systems integrator. FORTE’s conveyor systems, case and piece picking, and sortation solutions expertise will help strengthen Swisslog’s offering. Short-distance transportation provider Ninebot Limited and personal electronics transportation supplier Segway Inc. combined companies to focus on research and development, manufacturing, sales, and service in short-distance transportation. The goal is to promote rapid development and create mobile robotics solutions.
  20. 20. recognition Ocean carrier Evergreen Shipping Agency (America) Corporation named CN its 2014 Railroad Company of the Year. CN was recognized for its consistent high level of performance and excellent quality, service, and support. Kristy Knichel, president of Knichel Logistics, was presented the inaugural Distinguished Woman in Logistics award. Established by the Women in Trucking Association, the award promotes the achievements of women in transportation. APL Logistics VASCOR Automotive, a specialist provider of automotive logistics services in India, was presented with the Best Emerging Player award from the Indian Chamber of Commerce. The award recognizes APL for its multi- modal logistics solutions for the distribution of finished vehicles across India. Union Pacific Railroad received 2014 Logistics Excellence Awards in customer service and service performance from Toyota Logistics Services. The awards were based on the railroad’s commitment to service, ranging from customized logistics to reliable equipment. 16  Inbound Logistics • May 2015 INFOCUS NOTEDThe Supply Chain In Brief GREEN SEEDS The U.S. Environmental Protection Agency honored Penske Truck Leasing as a SmartWay Affiliate Challenge award winner for the third straight year. The award recognizes organizations that participate in SmartWay, and actively support sustainable transportation. UPS plans to build 15 compressed natural gas (CNG) fueling stations to support the deployment of 1,400 CNG vehicles over the next year. Twelve stations will be in new locations, and three will replace existing CNG stations with more robust, higher capacity equipment. SEALED DEALS Dental products manufacturer Sunstar selected warehouse technology provider Numina Group to provide a warehouse control system (WCS) for its new 300,000-square-foot manufacturing and distribution center. The WCS helps Sunstar control order fulfillment, pick and pack, and shipping processes. Reusable pallet supplier iGPS Logistics began providing Worley McCullough, a potato grower-shipper, with sustainable plastic pallets. Worley McCullough switched from wood to plastic pallets as part of its sustainability initiative. Jaguar Land Rover (JLR) automated its global priority warranty parts returns service in partnership with SEKO Logistics. SEKO organizes the transportation of priority parts returns from JLR’s global dealerships to the UK with full visibility from pre-shipment to delivery. Global 3PL OHL has renewed its license of Amber Road’s International Transportation Management solution. OHL uses the solution to manage international service contracts, service agreements, rate sheets, and variable carrier accessorials. Footwear retailer The Walking Company deployed software provider Epicor Software’s Retail CRM 7.0 and Retail Clienteling across its retail stores. The software solutions will help The Walking Company launch a loyalty program and support improved customer engagement. Grocery retailer Coop Denmark selected global logistics provider Damco as its logistics partner for inbound shipments from Asia. The partnership includes integrated supply chain management, advanced EDI connectivity, and improved freight control in key parts of Coop’s Asian supply chain.
  21. 21. DELAYS CAN COST YOU. That’s why Penske has truck leasing and logistics solutions to help put business problems behind you. So you can keep moving forward. Visit gopenske.com or call 844-868-0816 to learn more. © 2015 Penske. All Rights Reserved. 3721A0039_7.875x10.75_Flowers_Enterprise_1.indd penske_flowers_ad0515.indd 1 4/30/15 10:40 AMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  22. 22. WEB INTEGRATED NETWORK (WIN) WIN IS NOT A TMS – IT’S BETTER! No upfront costs - No maintenance fees - No transaction fees Easy-to-Use browser-based toolset Access your carrier network plus WIN’s carrier network plus Market-Leading Broker carrier networks Simple and quick ERP integration through partnership WHAT DOES WIN OFFER? Lower freight costs Single source for transportation management Optimum rate selection Additional capacity In-Transit Track and Trace Rating and Tendering Network visibility WIN is a product of Odyssey Logistics Technology Corporation. Gain capacity and access to the rates and resources of Odyssey’s nearly two billion-dollar transportation network of over 520,000 lanes and 2,700 carriers. Visit us at www.gowithwin.com or call 855-946-4739 Global Headquarters 39 Old Ridgebury Road Danbury, CT 06810 Toll Free: 855.946.4739 info@gowithwin.com© 2015 Odyssey Logistics Technology Corporation. All rights reserved. through partnership SCHEDULE A DEMO NOW! Transportation Management Simplified Odyssey_WIN_Inbound_Logistics_MAY.indd 1 4/23/15 2:35 PMOdyssey_win_ad0515.indd 1 5/4/15 9:36 AMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  23. 23. TRENDSSHAPING THE FUTURE OF LOGISTICS INFOCUS May 2015 • Inbound Logistics 19 by Joseph O’Reilly U.S. Ports Critical To Sustained Economic Growth Transportation budgeting at the state and federal levels has become a contentious battleground as politicians and private sector lobbyists search for new funding mechanisms to execute much- needed infrastructure upgrades. One point of consensus is that U.S. ports are key to sustained economic growth—and therefore should be a priority on a very long legislative to-do list. Martin Associates’ latest report, the 2014 National Economic Impact of the U.S. Coastal Port System, documents the contributions of America’s seaports to the nation’s economy over the past seven years. From 2007 to 2014, the total economic value that U.S. coastal ports provided in terms of rev- enue to businesses, personal income, and economic output rose 43 percent to $4.6 trillion. This accounts for 26 percent of the nation’s $17.4-trillion economy in 2014, up from 20 percent of its $16.1-trillion economy in 2007. Growth was robust in spite of the global recession, which damp- ened cargo volumes between 2008 and 2012.
  24. 24. INFOCUS TRENDSSHAPING THE FUTURE OF LOGISTICS Among other notable gains since 2007: ■■ Federal, state, and local tax revenues generated by the port sector and importer/ exporter revenues rose 51 percent to $321.1 billion. ■■ Jobs generated by port-related activity jumped 74 percent to 23.1 million. ■■ Personal wages and local consump- tion related to the port sector doubled to $1.5 billion, with the average annual salary of those directly employed by port-related businesses equaling $53,723. “The growth in jobs and economic importance of America’s seaports reflects the fact that the value of international cargo handled at these ports increased by $400 billion since 2007, reaching about $1.8 trillion in 2014,” says John Martin, president of the transportation consultancy. “It’s important to emphasize that the key growth in our international trade is in U.S. exports, which saw a 60-percent increase in value over the past seven years,” he adds. Each dollar increase in the value of export cargo supports significantly more jobs in the United States than does a dol- lar value of growth in imports. “The growth in the contributions of our ports to the nation’s economy underscores the need to invest in infrastructure and technology to support and foster good jobs, national security, international trade, and our standard of living,” adds Martin. To that end, the American Association of Port Authorities forecasts that ports need to invest upwards of $30 billion by 2025 to maintain U.S. competiveness on today’s global stage. CAGT: Freight Can’t Wait The U.S. transportation and logistics sector, and business interests in general, have long been challenged by a public sec- tor that continues to siphon transportation revenues for other purposes. While some states are cracking down on wandering funds and specifically earmarking capital for infrastructure projects, others remain mired in pork barrel wheeling and dealing, even as gas-tax revenues dry up. To raise awareness of this problem, the Washington, D.C.-based Coalition for America’s Gateways Trade Corridors (CAGT) has introduced a “Freight Can’t Wait” campaign to encourage Congress to pass a surface transportation law that con- tains a fully funded freight grant program. “Freight infrastructure needs dedicated funding. Establishing a competitive grant program with broad, multimodal project eligibility throughout the United States is a priority for our coalition, and should be for Henry Ford College Produces Supply Chain Professionals T he past decade has seen a renaissance in supply chain and logistics curriculum—a trend that continues today unabated. But as the manufacturing and supply chain sectors encounter a growing labor shortage, a widening gap is looming on the logistics frontline. Increasingly, there is a move to bring supply chain education and career development to high schools, vocational schools, and community colleges— introducing a new generation of students and workers to an industry brimming with job opportunities. Henry Ford College, a public two-year college in Dearborn, Mich., is seizing upon the legacy of its namesake to create an associate degree program in supply chain management, as well as a new SCM technician certificate through its business and computer technology division. The new curriculum will begin during the fall 2015 semester. True to its mission, the college has traditionally offered training and apprenticeship programs for students involved in skilled trades. The supply chain program will expand upon this foundation, as well as augment the scope of its career development offerings. “The purpose of this supply chain management program is to create job opportunities for our students,” says Henry Ford College business instructor Douglas Langs, a 22-year veteran of General Motors. “It prepares students to obtain a job once they graduate with either their associate degree or certificate.” Alternatively, it also provides a pathway for associate degree graduates to continue their supply chain education elsewhere. Case in point: Henry Ford College alumnus Ben Topping is currently studying supply chain management at Wayne State University. Topping’s interest was sparked by Langs’ capstone business course, which featured supply chain management. “During the first day of class, Professor Langs placed a small piece of chocolate in front of each student, and we spent the entire 90-minute class discussing where every ingredient of that chocolate—cacao, sugar, milk, aluminum for the wrapper, paper for the tag—originated, as well as how it arrived in Hershey, Pa.,” recalls Topping. “Because I was already familiar with the basics of logistics, purchasing, warehousing, and distribution, I was able to dive deeper into the field, enhancing my learning,” he adds. 20  Inbound Logistics • May 2015
  25. 25. Untitled-2 1 5/12/15 10:53 AMkenco_proof_ad0515.indd 1 5/12/15 11:26 AMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  26. 26. INFOCUS TRENDSSHAPING THE FUTURE OF LOGISTICS our country also,” explains Leslie Blakey, the coalition’s executive director. The campaign features 36 gateway and corridor projects of national significance that would improve freight hubs, and sea and land gateways, and augment roadway capacity to ease freight chokepoints. As part of this call to action, coalition members are voicing their support for the Economy in Motion: The National Multimodal and Sustainable Freight Infrastructure Act (H.R. 1308), a bill introduced by U.S. Rep. Alan Lowenthal (D-Calif.) that would dedicate $8 billion per year to freight-related infrastruc- ture projects. The legislation prioritizes multimodal projects, in addition to projects that help relieve bottlenecks in the freight transpor- tation system. 3D Printing Moving Fast—in 1D In the world of disruptive technology, 3D printing might be the most unsettling innovation to come down the pipe­line since radio-frequency identification—​unset- tling in the sense that industry is still debating how much and to what degree additive manufacturing will revolutionize supply chains. Like RFID, 3D printing has a lot of hype to live up to. Manufacturers are privately toying and tinkering with prototypes they believe will eventually change the way they do busi- ness. Many are keeping their progressions close to the vest. Intellectual property rights remain an unexplored minefield for this nascent technology. But as companies continue to proto- type 3D printing technology, some are discovering an unexpected and welcome benefit. They are learning how to engineer improved products, with different materials and less waste. For example, Fiat Chrysler Automobiles (FCA) is using 3D printing to better under- stand axle design and development. At the Chrysler Technology Center (CTC) in Auburn Hills, Mich., engineers are using additive manufacturing to print see- through plastic parts exclusively for test purposes. When evaluating oil flow inside axles, engineers traditionally had to cut out two-dimensional windows in compo- nents to visually inspect performance—but this process often provided unsatisfac- tory results. The CTC is the auto industry’s only headquarters where a vehicle design can go from a napkin sketch to production pro- totype to advertising campaign under one roof, according to FCA officials. “The Chrysler Technology Center is a key competitive advantage for FCA US,” says John Nigro, vice president, prod- uct development. “We have more than 14,000 people under one roof, including 7,900 engineers. That speeds the collab- orative process, which is the lifeblood of our business.” Chrysler’s example provides a good idea of how 3D printing is likely to make an initial step-change impact within the manufacturing supply chain—helping to hasten the process from design to the assembly line. McDonald’s Serves Up New Sustainable Sourcing Commitment F ood safety, quality, and accountability have long been a challenge for restaurant chains—especially those that prioritize economy. Increasing social media exposure, and the threat of product recalls and brand integrity, are shared risks. But some chains are addressing these issues head on to appeal to consumer tastes for sustainability and transparency. McDonald’s has long touted sustainable sourcing as a core principle within its supply chain. The Oak Brook, Ill.- headquartered restaurant chain recently upped the ante with a pledge to lessen its global impact on deforestation. The effort will cover all McDonald’s products with a specific focus on beef, fiber-based packaging, coffee, palm oil, and poultry. The company will continue working collaboratively with a broad range of stakeholders, including suppliers, governments, and NGO partners, to develop long-term solutions designed to combat deforestation around the world. As part of this commitment, McDonald’s will apply several guiding principles and practices across its supply chain: ■■ No deforestation of primary forests or areas of high conservation value. ■■ No development of high carbon stock forest areas. ■■ No development on peatlands, regardless of depth, and the utilization of best management practices for existing commodity production on peatlands. ■■ Respect human rights. ■■ Respect the right of all affected communities to give or withhold their free, prior, and informed consent for plantation developments on land they own legally, communally, or by custom. ■■ Resolve land rights disputes through a balanced and transparent dispute resolution process. ■■ Verify origin of raw material production. ■■ Support smallholders, farmers, plantation owners, and suppliers to comply with this commitment. 22  Inbound Logistics • May 2015
  27. 27. U.S. Trucking Industry: Keep the Change Change is accelerating within the U.S. trucking industry, says a new study from TMW Systems. The 2014 TMW Transportation Logistics Study cites improved asset utilization and financial per- formance among many carriers. Brokerage and non-asset service providers also find greater value leveraging developed carrier networks to achieve stronger gross margins. Among other insights: Driver Retention. Survey responses under­score the clear relationship between driver wages and retention. Length of haul and utilization are other important factors in driver turnover. Asset Utilization. Survey respondents are successfully leveraging new technol- ogy to achieve gains in utilization. As one example, dedicated fleets that utilize planning optimization experienced an average year-over-year increase of 142 rev- enue miles per seated truck per week. Rates. Truckload carriers averaged seven-percent net rate increases, a trend of interest for brokerage and third-party logis- tics providers, as well as shippers. Fleet Maintenance. There is greater difficulty gaining visibility into equipment maintenance metrics than any other func- tional area, and most respondents indicate they do not adequately track maintenance costs by equipment age group. Operating Ratios. A majority of par- ticipating asset-based businesses report operating ratios of 96 percent or lower, a healthy increase over 2013’s results. 10 20 30 40 Managing driver constraints Maximizing utilization Governmental regulations Upgrade Technology Mitigating maintenance costs Mitigating fuel costs Network management Economic downturn/demand concerns Other Congestion/infrastructure Environmental sustainability Concerns for Next Two Years Truckers will have to adapt operations to a variety of challenges. SOURCE: 2014 TMW Transportation Logistics Study May 2015 • Inbound Logistics 23 ©ChrisStarnesChrisStarnes R A I L R O A D PASSENGER | FREIGHT | REAL ESTATE YOUR TICKET TO GETTING IT DONE 800.321.6518AlaskaRailroad.comBE MOVED. Alaska Railroad’s Rail/Marine Service is one of the most affordable and efficient ways to transport resources, equipment and supplies. We can ship to and from anywhere in North America with no transloading, and no headaches. | EASY. AFFORDABLE. EFFICIENT. 14-ARRC-1271 FREIGHT-INBOUND-OCT-spawn ideas-3A_AB.indd 1 9/18/14 9:41 AM
  28. 28. We’re Going Deeper. See how. SCSPA.com In two years, the Port of Charleston increased its rail volume 50%. Combining daily intermodal rail service with a RapidRail dray system means a faster, more cost-competitive connection between ship and rail hubs across the Southeast, Gulf and Midwest. Couple this with the region’s deepest channels, and you now have the smartest and most efficient way to reach markets around Memphis, Atlanta, Birmingham, Nashville, Charlotte, Louisville, Huntsville, the new Inland Port in Greer, SC, and beyond. RAIL READY. FULLY LOADED. 9818-01-PORT-Rail_Ready-FP-4C-Inbound_Logisitics-FINAL.indd 1 9/18/14 5:03 PM south carolina ports_rail ready_ad0515.indd 1 5/4/15 10:55 AMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  29. 29. GLOBALTHE WORLD AT A GLANCE by Joseph O’Reilly China Picks Pakistan for Trade Corridor China’s “global diplomacy” holds few bounds. From Central and South America to Africa, the country has been aggressively asserting its influence and injecting capi- tal into new infrastructure developments that also pave the way for further commod- ity sourcing. But China’s impact in Asia is far greater, especially as it relates to intra-regional trade development. The country’s most recent quarry is Pakistan, where Chinese President Xi Jinping recently paid a visit. Pakistan is seeking Chinese investment (upwards of $46 billion) to help fund needed infrastructure projects—notably the Karakoram Highway connection to the southern port of Gwadar and a cross-border rail route between the two countries. Like others before, Pakistan believes Chinese money, clout, labor, and reputation for get- ting things done quickly will help spur and expedite development. The outlay China is willing to invest in Pakistan is more than twice the amount of all foreign direct investment the coun- try has received since 2008, according to BBC reporting. Such an immediate infu- sion of capital has Pakistan officials bullish on making the partnership work. Opening up a southwestern trade corridor similarly benefits China. As man- ufacturing moves westward, Pakistani ports provide a more efficient and eco- nomic means to move product. China is also looking to forge a new Silk Road that extends to the Middle East and Europe. Pakistan is the world’s sixth-largest country in terms of population. China may similarly see Pakistan’s tenuous and contentious relationship with India as an opportunity to make new inroads as competition between the two global jug- gernauts stiffens. Pakistan, for its part, will also benefit politically by having a closer ally in China. Still, the development plan is not with- out considerable roadblocks. Provincial politics in Pakistan, and the threat of sepa- ratist insurgency, have cast shade on the proposal. The Gwadar port is located in Balochistan, which is Pakistan’s poorest China is funding a construction project to renovate a stretch of the Karakoram Highway, which is currently the only overland connection between China and Pakistan. May 2015 • Inbound Logistics 25 INFOCUS
  30. 30. INFOCUS GLOBALTHE WORLD AT A GLANCE and most volatile province. Government is already steering corridor routing away from the area, which has only fueled criticism from Balochistan officials who argue the more affluent Punjab Province will invari- ably receive special privilege. Indonesian Logistics: What’s It All About, ALFI? Transportation in Indonesia is a fore- most challenge for shippers, given its unique geography as an archipelago comprising 18,000 islands. Keeping logis- tics costs in check has been a recurring problem that has beset Southeast Asia’s sec- ond-largest economy. Poor infrastructure and overreaching regulations have further conflated costs of doing business. While the country appeared to be mak- ing progress under the leadership of new President Joko Widodo—“A New Hope” as branded by Time magazine—optimism is beginning to wane. The commodity-driven economy has taken a big hit because of global oil price volatility. To make matters worse, a new govern- ment regulation has raised the minimum capital for logistics companies to oper- ate from US$15,000 to nearly $2 million, much to the consternation of local logis- tics service providers. Consequently, the Indonesian Logistics and Forwarders Association (ALFI) plans to file a lawsuit. “We previously proposed to the transpor- tation ministry an increase in minimum total assets from $15,000 to approximately $100,000,” says ALFI chairman Yukki Nugrahawan Hanafi. “We don’t under- stand the reason why the minister later decided to increase the capital require- ment to $2 million.” Because of its transportation constraints, and the costs therein, Indonesian eco- nomic development is highly dependent on the growth of its emerging logistics industry. ALFI contends such regulation would shut down many of the small and mid-sized forwarders and service providers that operate across the country, contribut- ing to thousands of lost jobs. It estimates that the transportation and logistics industry in Indonesia employs about 534,000 people. Moreover, such a draco- nian capital requirement would disrupt the flow of cargo moving through the country, while increasing costs. The government is committed to European railroads Bombardier Transportation, SNCF, and Deutsche Bahn are among the founding members of the Railsponsible initiative. European Railroads Partner Around Procurement European railroads have a one-track mind when it comes to growing sustainable supply chain best practices. A group of six carriers—Alstom Transport, Bombardier Transportation, Deutsche Bahn, Knorr-Bremse, Nederlandse Spoorwegen and SNCF—recently partnered to promote sustainable procurement in the railroad supply chain. The initiative, titled “Railsponsible,” endeavors to create more ethical, social, and environmental business practices among suppliers. The railroads will encourage supplier participation in assessment campaigns, as well as hold quarterly membership meetings to share best practices, analyze data, and identify opportunities for supply chain improvement. The group’s first priority is to promote supplier assessments, which will be conducted by EcoVadis, a Paris, France-based supply chain sustainability integrator. Partners will be required to submit one common questionnaire, and will have full control over who can see their information and assessment results. They can opt to share this information with any of the Railsponsible members who are their customers. 26  Inbound Logistics • May 2015
  31. 31. Look at your world through fresh eyes. Think Young. You’ll see not just logistics as usual, but a flexible response to the unusual. Not just getting it there, but making sure nothing gets in the way. Not just the routine black and white, but all those gray areas in between. This is the world according to DF Young. Look to us for a century’s worth of sophistication, experience and excellence in international logistics. By sea, by land and by air. Think Young. Celebrating 100 years dfyoung.com global reach solution oriented fortune 500 clients forward vision 360-degree flexibility technology driven worlds of experience Got 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  32. 32. INFOCUS GLOBALTHE WORLD AT A GLANCE moving forward with the new regulation— a policy change that it believes will raise the quality and reliability of the country’s logistics sector. Companies will be given three years to comply. The regulation is currently with the Law and Human Rights Ministry for further assessment. Even with such a grace period for com- pliance, ALFI argues that most companies won’t be able to meet that requirement. Instead it has suggested that the govern- ment should classify logistics companies by size rather than applying one set of reg- ulations across the entire industry. U.S. Japan Near TPPing Point The United States and Japan are still at loggerheads over automobile and agri- culture export terms, which is delaying progress toward reaching a landmark Trans Pacific Partnership (TPP). But both sides indicate a deal is within reach, according to a recent Associated Press report. The talks between Japan and the United States are part of negotiations among 12 nations participating in the U.S.-led Trans Pacific Partnership. The goal of the part- nership is to create a free trade zone in the Asia-Pacific region. A hangup over increased exports of U.S. rice to Japan, and Japanese auto- mobiles and auto parts to the United States, appears to be nearing a resolution, although negotiations continue. In April 2015, U.S. lawmakers proposed new legislation that would allow President Barack Obama to negotiate trade accords for overall congressional review. This is helping to push forward negotiations, the Associated Press reports. Japan’s protectionist policies have long favored agricultural products—nota- bly rice. The country’s aging population and changing tastes have contributed to less rice consumption, which has created a surplus. [ ] Global Container Trade Floats on Optimism An uptick in ocean trade suggests that the global economy is showing positive and sustainable signs of recovery. But an enduring capacity imbalance still threatens steamship line profitability. Demand for container shipping is expected to grow upwards of five percent in 2015, even as freight rates continue to decline due to a surplus of capacity, according to Lars Mikael Jensen, chief executive of Maersk Line’s Asia Pacific region. As ships ordered several years ago are just now coming online, supply growth is anticipated at five to seven percent. The average revenue per TEU is dropping as rates vary in different trades, which is attributed to supply-demand imbalance. This places additional pressure on shipping lines to reduce costs on a per-box basis. “We are working in a scenario where there won’t be a massive upward return of the average revenue per box, so cost savings and efficiencies are important,” says Jensen. The recent financial results of most steamship lines suggest revenues and profit margins are under pressure, he adds, especially those generated from the east-west trades. Maersk needs to invest in new ships to keep up with global growth, and to replace older ships that are coming to the end of their efficient life span, notes Lars Mikael Jensen, chief executive of Maersk Line’s Asia Pacific region. 28  Inbound Logistics • May 2015
  33. 33. Stockton_ad0515.indd 1 5/12/15 10:46 AMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  34. 34. Rob Kriewaldt, Director of Client Solutions, WSI 920-831-3700 • InquiryIL@wsinc.com knowledgebase© L O G I S T I C S TightMarketforIndustrialRealEstate ImpactsSupplyChainCosts T he industrial real estate market is still recovering from the effects of the Great Recession of 2008-2009.The hangover from those years is now having a dramatic effect on the cost and availability of warehousing and distribution space in most key markets across the United States. Additional factors, such as positive demographic trends, expanding trade flows, inexpensive energy, and increased manufacturing activity are also having a negative effect on availability for industrial real estate. The United States is one of the few industrialized countries experiencing positive population growth. According to the United Nations Department of Economics and Social Affairs, between now and 2050, the U.S. population will increase from 320 million to more than 400 million people. On the positive side, these 80 million new consumers will provide not only an expanded market for goods and services, but at the same time require additional supply chain infrastructure to serve their needs. In addition to our population expansion, according to U.S. Census Bureau data there is also a shift in the U.S. population to concentrate in the south and east.This shift, coupled with ever-increasing urbanization, is putting additional strain on infrastructure in the affected markets. U.S. ports continue to move more freight than ever. In spite of the West Coast labor issues this past spring, overall port volumes may end the year up by as much as six percent over 2014, according to estimates from Piers.This increased freight volume is a contributing factor for the L.A. industrial real estate market’s current vacancy rate of less than two percent. The United States has some of the least expensive energy in the world. According to a Canadian government study, the price of natural gas in North America is currently one-third of the price in Europe, and one-quarter of the price in Japan.This inexpensive energy has led to an unprecedented expansion of the plastics industry inTexas and other energy-producing regions. It is estimated that more than 100,000 new jobs were added in Houston in 2014. The effects of inexpensive energy, a relatively stable regulatory environment, and skilled workforce has led many manufacturers to expand production in the United States or to“re-shore” production from other countries. For many goods, the total landed cost of production is now lower in the United States than China.Total landed cost takes into account not only the actual cost to make the product, but also the logistics costs to get the product to the end user. According to statistics published by the U.S. Bureau of Labor Statistics and the Federal Reserve, U.S. manufacturing output has increased by more than 50 percent the past 25 years. Finally, the post-recession period has seen a lack of new construction. According to data published by CBRE Econometric Advisors, new industrial real estate completions dropped from more than 200 million square feet nationwide in 2008 to less than 40 million square feet in 2010. CBRE is predicting that new construction will not meet demand until at least 2017. The foregoing factors have led to historic lows in industrial real estate availability in the United States–together with significant increases in rental rates. Overall vacancy rates nationwide are currently less than six percent, with net absorption (additional space being used) increasing to as much as 220 million square feet in 2015 from a low of negative 126 million square feet in 2009, according to estimates from Jones Lang LaSalle.This reduction in availability has led to an estimated 18-percent increase in leasing rates since 2012, with rates expected to increase an additional 15 percent by 2018. When setting future supply chain budgets, companies must take into account not only the increased cost of industrial real estate, but also longer lead times for new space in many markets. WSI delivers tailored, integrated, end-to-end logistics and supply chain solutions designed to maximize operational efficiency, ensure reliable performance, and minimize costs. For more information, go to www.wsinc.com. 30  Inbound Logistics • May 2015 Got 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  35. 35. ©2015 Verizon. All Rights Reserved. AD-N118 - 2/19/15 Verizon Networkfleet’s patented telematics solution delivers the data you need to improve your fleet’s performance. Route vehicles more efficiently. Control fuel costs. Streamline vehicle maintenance. When your goals include lowering costs and improving fleet performance, Verizon Networkfleet has the products and tools you need to help you reach your goals – starting at $1 per day, per vehicle. 866.869.1353 | networkfleet.com/Ilgps THE FUTURE OF FLEET IS HERE Telematics-AD-N118.indd 1 2/19/15 11:55 AMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  36. 36. Q THOUGHT LEADERS Q: What trends are you seeing with customers and their warehousing needs? A: We are seeing a larger number of existing and prospec- tive customers looking for space in short time frames. They might be looking to outsource their warehousing at the end of an existing lease or they may have short-term warehousing needs. Customers do not want to sacrifice visibility, even for a short time frame, to their invento- ries while transitioning to a new warehouse. They do not want to incur higher costs of labor to track the inventory during the transition period or have a manual process while their product is in a short-term warehouse space. Q: What are the challenges, costs, and time involved in traditional warehouse start-ups? A: Warehouses can traditionally take anywhere from 30 days to 60 days to get started from a radio frequency (RF) technology perspective. Challenges include: instal- lation of wiring, access points, switches and dedicated data lines. Dedicated data connectivity often takes the longest period of time (minimum of 15-20 days) depend- ing on the location and age of the warehouse even when using expedited solutions. The cost of expediting can vary greatly depending on the providers used and the amount of effort needed to install the circuit; especially with a new warehouse facility the provider has not pre- viously serviced. Product often needs to be moved to the new warehouse, prior to establishing all the technology connections, leading to manual efforts by the warehouse personnel to track the inbound and outbound inven- tory. The cost can add up quickly for a customer with the additional labor hours needed to track inventory and expedited technology solutions. Additionally, there tends to be a substantial sunken cost for the wiring that is often left behind for a temporary warehouse solution. Q: What alternatives are available to improve the warehouse start-up process? A: Recent improvements in wireless cellular technology and mesh networks are being used in a variety of indus- tries such as hospitals and remote construction facilities. These improvements now provide us with solutions that can be adapted for warehousing space. Wagner has recently deployed an “IT-in-a-Box” solution in multi- ple locations, which allows for a virtually wireless/mesh solution that can have a warehouse fully up and run- ning in 7-14 days. This solution provides customers with immediate tracking of inbound and outbound inventory using full RF technology and Warehouse Management Systems. In addition to the rapid start-up, the entire solu- tion can be quickly removed and reused for sites needing the space for only short periods of time during peak sea- sons. We typically see a savings of 20-30 percent based on the decreased amount of labor needed at time of start-up and the reduction in expediting costs. Wagner Logistics | 800-817-1264 marketing@wagnerlogistics.com | www.wagnerlogistics.com Improving the Warehouse Startup Process 32  Inbound Logistics • May 2015 JOE JohnsonDirector of Information Technology Wagner Logistics  Got 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  37. 37. Joe Johnson is Director of Information Technology, Wagner Logistics, 800-817-1264 reddawayregional.com/social 888.420.8960 ©2015 YRC Worldwide Inc. Reddaway, the next-day delivery leader with the largest regional footprint in the West, ensures that your shipment will be delivered before you know it. A 21-time recipient of the Quest for Quality Award, we provide high on-time reliability and one of the lowest claim ratios in the region – from Seattle to Boise, Fontana to Reno. Get to know Reddaway. Call 888.420.8960 or visit reddawayregional.com/nextday today! Quest for Quality Award winner WE KNOW WHAT IT TAKES TO GET IT THERE NEXT-DAY. 15RED015_ad.indd 1 4/28/15 3:07 PMreddaway_ad0515.indd 1 4/30/15 11:39 AMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  38. 38. Q THOUGHT LEADERS The Driver Shortage—Not Just a Carrier Issue Q: The transportation industry’s nationwide driver shortage is getting worse. What is the cause? A: Tougher regulations, a lack of interest by younger workers, and the graying of today’s drivers are contrib- uting to the driver shortage. The problem will continue to grow over the next several years—especially as freight volumes increase. Despite the fact that carriers are implementing dock-to-driver programs, increasing pay, and offering hiring bonuses and better benefits to attract drivers, the American Trucking Associations recently reported that turnover at truckload carriers remained very high in the fourth quarter of 2014—an overall industry indicator of the driver shortage. Q: What new solutions can carriers implement to attract new drivers? A: Aside from the programs and incentives carriers are already implementing, another solution that is gaining traction is for carriers to work with their customers to make sure they are treating drivers like team members. Not only do drivers deserve to be treated with respect by their employers, they also want to be respected by their customers. Relationships matter more and more in today’s work environment. And, while many shippers might think the partnership with their carrier begins and ends with the corporate office or their sales representative, it is impera- tive they foster a relationship with their drivers. Shippers can help by making their facilities more driver-friendly, which, in turn, helps carriers retain drivers. Not only does it make the pickup and deliv- ery process more efficient for both parties, shippers can benefit from having a long-term driver who knows their business and procedures. It also reduces operating costs for both carriers and shippers. Additionally, Hours-of- Service regulations, along with electronic logging, make it more important than ever for drivers to get in and out of a facility quickly. Having a driver-friendly warehouse, office, or dock helps make that possible. Q: What else can shippers do to help ease the driver shortage? A: Another way shippers can help mitigate the driver shortage is to expand their pickup and delivery windows. Offering a delivery window that is convenient for their operations, as well as the carrier’s, would go a long way toward providing relief for trucking companies as they schedule their drivers and routes each day. Drivers are the backbone of the industry and its most valuable resource. Operating a commercial vehicle now- adays is more challenging and demanding than ever, and overcoming the driver shortage will take a concerted effort on the part of the transportation industry and ship- pers who depend on it to haul their products, and deliver them on-time and damage-free. Shippers making simple, but meaningful, changes can go a long way in helping carriers attract and retain drivers—now and in the future. Saia | 800-765-7242 customerservice@saia.com | www.saia.com 34  Inbound Logistics • May 2015   Marty ReadyVice President of Human Resources Saia Got 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  39. 39. Marty Ready is Vice President of Human Resources, Saia, 800-765-7242 Tim Curry | Transportation Logistics Group Head tim.curry@regions.com We created Regions Securities to provide small- to mid-cap companies with high-quality service and advice from talented, relationship-oriented bankers. That means your business gets our dedicated “A Team” every time. Our seasoned team of bankers understands your company’s desire for growth, and our capital markets experience enables you to receive creative, customized solutions tailored to meet your company’s strategic and financial objectives. From capital raising in the debt and equity markets to mergers and acquisitions advice, our bankers can set things in motion for your company. WALL STREET CAPABILITIES. MAIN STREET SENSIBILITIES. Corporate Banking | Capital Markets Advisory Services | Dedicated Industry Experience © 2015 Regions Securities LLC. Investment banking and business advisory services are offered through Regions Securities LLC, 1180 W. Peachtree St. NW, Suite 1400, Atlanta, GA 30309. Member FINRA and SIPC. Regions Securities LLC is an affiliate of Regions Bank. | Regions and the Regions logo are registered trademarks of Regions Bank. The LifeGreen color is a trademark of Regions Bank. Investment and Insurance Products: Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value Are Not Deposits | Are Not Insured by Any Federal Government Agency Are Not a Condition of Any Banking Activity Senior Secured Credit Facilities Joint Lead Arranger and Joint Bookrunner ------------------------ $550,000,000 Senior Secured Credit Facilities Joint Lead Arranger and Joint Bookrunner ------------------------ $43,600,000 ------------------------ $53,500,000 Senior Secured Credit Facility Joint Lead Arranger Got 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  40. 40. BY Brian Sutter Director of Marketing, Wasp Barcode Technologies bsutter@waspbarcode.com | 866-547-9277 IT MATTERS Finding an Inventory Solution That’s Just Right for Your Small Business I nventory management, put simply, is ensuring you have the right amount of product in the right place at the right time. It helps you determine which items sell well, and which do not, giving you the ability to adjust product levels accordingly. As such a crucial step in the supply chain, the importance of good inven- tory management seems obvious, but for small and medium-sized enterprises (SMEs), choosing the best inventory solution can seem daunting. How do you ensure that you’re purchasing the best inventory solution for your work- flow? Which inventory solution features are 100 percent required? Know What to Look For To help answer that question, find an inventory solution that includes these five important inventory-track- ing functions: 1. Automation. Using Excel spread- sheets for inventory management is outdated in today’s environment. Excel’s limitations in tracking inventory can cause your business to lose money and waste time. Avoid cumbersome manual pro- cesses by looking for an automated system. Employees who manually input data into a spreadsheet—or worse, who track using pen and paper—increase the potential for errors. Automating as much of your process as possible using bar codes and scanners eliminates signif- icant inventory mistakes. An automated system also helps you find critical data quickly and efficiently. 2. Small business accessible. Big businesses with big budgets have the money to invest in an enterprise-level solution, and the staff necessary to implement such a large-scale inven- tory system. Solutions aren’t often one-size-fits- all, so consider a software provider that has experience assisting small businesses with inventory needs. Resources such as guides, a help desk, and classes, should be readily available, as well as training that covers the initial software setup, and an overview of how employees need to use it. Your business should be able to quickly use the new solution to improve profitability and purchasing efficiency. 3. QuickBooks integration. Millions of small businesses use QuickBooks as their accounting software pack- age. Because of that popularity, find an option that allows customers to take advantage of integrated financial solu- tions, ensuring that data flows directly into accounting records. 4. Mobility. Being mobile lets you accomplish more throughout the day. Many wireless devices allow users to create, edit, move, or remove inven- tory items on the go, while updating inventory control software accordingly. Wireless communication enables real- time inventory data updates from your warehouse, stockroom, or supply closet, so you always know exactly what is in stock and where items are located. 5. Security. Data breaches can expose important organizational and consumer information. Your solution should help you maintain mission-crit- ical data by providing feature-based privileges that ensure data integrity. Feature-based security gives the soft- ware administrator the ability to create group privileges and assign the appropri- ate individuals to each group. Therefore, users only access the functions they need. In today’s fast-paced, omni-channel world, companies have to know where their products are at all times, and that can be stressful. But if you find a solution that covers these five areas, inventory management might not seem so intimidating. n 36  Inbound Logistics • May 2015
  41. 41. Efficiency, savings and insights–delivered. Today’s logistics do more than move items from Point A to Point B. They can provide ways to help differentiate and define your business. That’s why leading companies choose DLS Worldwide. Powered by RR Donnelley, our solutions, network and global operational expertise help you streamline workflows for cost efficiencies, provide greater transparency in your operations and simplify logistics management and distribution. Speed up your time-to-market, navigate complexity and increase your savings. Learn more by calling 1.877.744.3818 or by visiting dls-ww.com today. © 2015 R.R. Donnelley Sons Company, all rights reserved. RR Donnelley® is a trademark of R.R. Donnelley Sons Company. 1000 Windham Parkway, Bolingbrook, IL 60490 877.744.3818, dlswintl@rrd.com, dls-ww.com Licensed NVOCC IATA Certified 34366_RRD_Logistics_Pub_ad__nonbleed.indd 1 5/6/15 12:33 PM Untitled-7 1 5/6/15 12:42 PMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  42. 42. BY Kathryn C. Thomas Partner, Litigation Practice Group Transportation Team, Freeborn Peters LLP kthomas@freeborn.com | 312-360-6520 FINE PRINT THE How Amtrak’s Supreme Court Case Affects Freight Shippers T rack-sharing among railroads has long been a complicated issue. The U.S. Supreme Court recently reviewed a case determining whether Amtrak has the authority to regulate privately owned freight railroads with which it shares rail. The Rail Passenger Service Act of 1970 was supposed to reinvigorate a national passenger rail system. The leg- islation created Amtrak to “fully develop the potential modern rail service in meeting the nation’s intercity passen- ger transportation requirements.” The act also let railroad companies shed the obligation of intercity passenger service in exchange for allowing Amtrak to use their tracks and facilities. Today, freight railroads own nearly 97 percent of the track over which Amtrak runs service. Because of track coordination problems, Congress pre- scribed that, absent an emergency, Amtrak’s passenger rail takes preference over freight transportation. The Passenger Railroad Investment and Improvement Act of 2008 (PRIIA) addresses these coordination concerns. Section 207 of PRIIA requires the Federal Railroad Administration (FRA) and Amtrak to jointly develop stan- dards to evaluate the performance of Amtrak trains. In light of this mandate, the FRA and Amtrak issued on-time performance (OTP) metrics and stan- dards, the final version of which took effect in May 2010. Understanding the Lawsuit In 2011, the Association of American Railroads (AAR) filed suit on behalf of its Class I freight railroad members against the Department of Transportation and others, challenging the constitutionality of Section 207 of PRIIA and requesting that the court vacate the OTP metrics and standards. The AAR asserted that Section 207: ■■ Unconstitutionally delegates authority to Amtrak to regulate other private entities. ■■ Amtrak’s regulation of its competi- tors violates the Fifth Amendment’s Due Process clause. The District Court ruled in favor of the Department of Transportation, but the U.S. Court of Appeals reversed the District Court’s decision, finding that Amtrak was a private entity and thus, its regulatory authority was unconstitutional. The Department of Transportation appealed the decision and the U.S. Supreme Court granted certiorari. Where Are We Now? The Supreme Court, in a March 2015 decision, ultimately upheld Amtrak’s sta- tus as a governmental entity, overturning the Court of Appeals decision. The case was remanded to the Court of Appeals to decide three constitutional issues: 1. Whether appointing Amtrak’s pres- ident violates the law requiring election of governmental officials. 2. Whether PRIIA violates the Due Process clause by granting Amtrak power to control freight trains. 3. Whether the current arbitrator selection procedures for settling disputes over use of railroad facilities violate the constitutional rule that Congress cannot delegate its own legislative powers. Rail shippers should pay close atten- tion to these pending determinations. The outcome of DOT v. AAR will sig- nificantly impact the rights and power of Amtrak and/or the freight railroads going forward, and potentially impact the cargo those freight railroads carry.n Kathryn C. Thomas co-authors The Freeborn Dispatch Blog and has extensive business litigation experience in matters involving intellectual property, products liability, and general commercial litigation. 38  Inbound Logistics • May 2015
  43. 43. DISTRIBUTION • Public Warehousing • Inventory Management • Food Grade DC’s • Alcohol Permitted (ABC) • FDA ASI regulated • Separate Hazardous Material and Chemicals DC (NACD Members) • Extensive Retail/Import, Apparel Electronics experience TRANSPORTATION • In-house Drayage • Freight Consolidation • Direct Store Delivery (DSD) ON-SITE FULFILLMENT • Co-pack Packaging • UCC Labeling • Custom wrapping • Carton Packaging • Floor displays TECHNOLOGY BENEFITS • Client Specific Solutions • EDI Services • RF Inventory Systems • Web Based Reporting • E-Commerce • WMS You need Pacific Coast Warehouse Company. When safety, security, and compliance matter most, you need a reliable partner with a proven track record. www.pcwc.com | 909.545.8100 x237 | cma@pcwc.com TAILORED SERVICES DEDICATED CUSTOMER SERVICE FORTUNE 500 MANAGEMENT Pacific Coast Warehouse Company Moving Product to Market Better Since 1927 PCW provides chemical manufacturers with safe, secure, and compliant storage and transportation of products within the western U.S. As NACD members, PCW utilizes Responsible Distribution Processes (RDP) and industry best practices to warehouse, store and deliver a full range of chemicals, flammables, oxidizers, corrosives, gases, and non-regulated materials. PCWC Ad 0614-V4.indd 1 6/12/14 2:41 PMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  44. 44. BY Kevin Zweier Vice President of Transportation, Chainalytics kzweier@chainalytics.com | 770-450-6581 Five Ways to Mitigate A Truckload Capacity Crunch M any factors have led to increased costs for truckload services, and created challenges to the freight pricing status quo for shippers. In the wake of the disruptions caused by the current capacity crunch, many are asking: “Am I overpaying? And if I am, what can I do about it?” To avoid paying too much for truck- load services during periods of tight capacity, consider the following tactics to help you maintain your firm’s long- term equilibrium: 1. Know if you are overpaying and where opportunities exist in your network. Some shippers pay above market for truckload capacity; others pay below. Those who lack visibility into actual truckload market rates become likely targets for carrier overcharges, and often don’t recognize carriers that pro- vide great value at a great price. Industry benchmarks and services are available to help you understand the nuances on each of your lanes, and model market rates based on actual carrier rate data from hundreds of the world’s most active shippers. Developing a competency in the transportation mar- ket allows shippers to develop successful procurement strategies that can outlast a capacity crunch. 2. Conduct regular truckload capac- ity procurement events. Shippers often end up overpaying for truckload capac- ity simply by accepting annual rate increases from incumbent carriers over a number of years. Both shipper and car- rier networks change from year to year. Holding a well-timed procurement event each year should be part of a shipper’s transportation spend strategy. 3. Make your freight attractive to truckload carriers. When capac- ity tightens, truckload carriers become more selective about the shippers they choose. Become a carrier-friendly ship- per by driving efficiency and helping the carrier keep its trucks and drivers mov- ing and making money. Carriers need to turn freight quickly, so shippers with drop-and-hook programs gain preference over those using live unload freight. In addition, carriers view shippers who pro- vide driver perks that improve carrier productivity in a favorable light. 4. Institute reasonable truckload carrier payment terms. Many shippers push payments to carriers far beyond the typical 30-day payment term policy. But the primary costs carriers incur are driver salaries and fuel charges—costs that can’t wait 60 or 90 days to be paid. As a result, carriers often find themselves strapped for liquid cash. Reducing pay- ment times goes a long way toward fostering goodwill, and shippers who pay their bills the fastest often receive pref- erential treatment from carriers when capacity tightens. 5. Expand your truckload carrier base or reconsider your modal options. There are more than 100,000 North American truckload carriers. Modern transportation management systems are designed to help manage a large pool of carriers, so most shippers are equipped to effectively deal with a diverse base. Shippers who have not secured required truckload capacity from their incumbent carriers should waste no time in expand- ing their carrier pool. For shippers with enough freight vol- ume on competitive lanes, a private fleet can also be a viable alternative. Reconsidering your modal mix may also prove beneficial. Intermodal transporta- tion has become an appealing force on many lanes, and is worth exploring. In the end, passivity is a shipper’s worst enemy. A proactive transportation strategy pays dividends in all markets, but especially when capacity is tight. n 40  Inbound Logistics • May 2015
  45. 45. Discover GOLD in Freight Payment Audit Transform traditional FPA into a modern gold mine. Only RateLinx advanced software standardizes carrier invoice data in real-time. With this comprehensive look inside your transportation supply chain, you will discover the freight savings you’ve been looking for. (262) 565-6150 ratelinx.com/gold © RateLinx. All rights reserved. RateLinx_gold_ad0515.indd 1 5/12/15 10:42 AMGot 3PL challenges?  Get free expert solutions at inboundlogistics.com/3pl
  46. 46. 42  Inbound Logistics • May 2015 SMARTER BUILDING A W arehouse perceptions have changed considerably over the past two decades. It wasn’t long ago that users perceived the four walls as just that— a fixed, immovable force that served as the nexus for any distribution network. Today, such representations are increasingly obsolete largely because of forces beyond the four walls. Cloud computing, e-commerce, omnichan- nel management, big data, and last-mile logistics are reshaping today’s distribution facility. The warehouse is still core. But its role in the supply chain is much more fluid. The modern DC is molded by countless external pressures that are eroding convention and shaping invention. Technology and materials handling innovation have become important catalysts in the evolution of smarter warehouses. SMART BY DESIGN The intelligent warehouse features three crit- ical traits—visibility, mobility, and flexibility. Technology, ultimately, is the means to those ends. “Warehousing is no longer an unsophisticated business. Operators need to embrace technology and understand it,” says John Watkins, CEO of Manhattan Beach, Calif.-based cloud WMS solu- tions provider 3PL Central. “Two things come to mind when we talk about smart warehouses,” says Mike Howes, vice presi- dent, software engineering and services at Forte Industries, a Mason, Ohio-based materials handling
  47. 47. May 2015 • Inbound Logistics 43 engineering and systems integrator. “The first consideration is visibility into the operation. This includes the ability for users to get to information they need in an approachable and intuitive way. “Secondly, it’s not just about data,” he says. “The cornerstone of an intelligent warehouse is real-time actionable infor- mation. Traditional systems typically bring good data to the screen. But you have to use the secret decoder ring to figure out what it’s trying to tell you.” Real-time visibility is contingent on accessibility, which raises the importance of mobile solutions. There’s no shortage of rugged RF devices, smartphones, tablets, and wearable technology, as well as the req- uisite software and applications to support a more dynamic workflow and workforce. Gathering and vetting information is one thing. Users also need to be empow- ered to act on real-time data. The tactical pressures omnichannel places on a ware- house, whether a shipper facility or 3PL, cannot be minimized. “We’re not necessarily seeing a reliance on big data, but rather on systems talking to one another. This doesn’t naturally hap- pen,” says Steve Katz, vice president of sales and marketing at 3PL Central. That’s why the growth of e-commerce and the emergence of omnichannel management frame the importance of intuitive DCs. Change is the operative word in any B2C supply chain. Consumer proclivities are a moving needle. Inventory ebbs and flows. Managing exceptions is an expectation. All the while, SKU diver- sity and availability, customer service, and economy demands endure. “Omnichannel is the new normal,” says Chris Castaldi, director of business development at WH Systems, a mate- rials handling systems integrator based in Carlstadt, N.J. “There is a presumption that a retailer will always be in stock on the items the consumer wants to buy, and that product can be delivered quickly. “In the omnichannel world, retailers have a holistic view into inventory, allow- ing them to fulfill orders from any location or ship inventory to other locations where inventory is needed or sells better,” he adds. “The goal of omnichannel is to give retail- ers a 360-degree view of customers, orders, and inventory.” Whether consumers opt for same-day delivery, click and collect/return at store, shop and “showroom,” or even pick up e-commerce shipments at specified locations, order and inventory systems need to iden- tify demand variances and react. Warehouse optimization becomes paramount. While DC infrastructure is evolving, the level of functionality is consistent. “Conveyors are conveyors,” says Howes, who contends warehouses are looking more at technology, and less at equipment. “Users want adaptive architecture—a way to layer information technology over materials handling systems and automa- tion that allows them to optimize what they have now and moving forward,” he adds. GET OUT THE CRYSTAL BALL The rapidity of change is a challenge for businesses as they try and adapt exist- ing infrastructure and technology systems. Whether it’s identifying automation needs or picking the right warehouse manage- ment system (WMS), operators have to account for the future. Over the past few years, this has proven to be a real concern. Many businesses made educated warehouse technology buys to enhance their e-commerce operations only to see the omnichannel trend catch fire and change requirements. Inventory traditionally resides in the warehouse. But now companies are pulling and positioning product from countless different touch- points in the supply chain, whether it’s in a brick-and-mortar backroom, directly from the manufacturer, or from other DCs and depots. So technology and systems in the DC have to adapt. Cloud computing, omnichannel management, and big data are the questions. Can your warehouse supply the answers? WAREHOUSEBY JOSEPH O’REILLY

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