Skip navigation
2015

I interviewed Robert Munro who discussed The Merits from Warehouse Investment in MHE vs. IT.

 

 

 

 

 

 

It’s good to speak with you today. I’m looking forward to hearing your views on the merits from the warehouse investment in MHE versus IT. My first question is: Can you provide a brief background of yourself?

 

Yes, I’m an engineer by education; my degree is in mathematics engineering. The first ten years was in heavy engineering production management and also managed chemical plants and furniture production, et cetera. Then I became a consultant with a company called AT Kearney, and at that time, most of Kearney’s work was in what’s called logistics, so I became a logistics consultant, which then went into supply chain. That was in the U.K. I did a lot of consulting work in the U.K. and Europe.

 

Then coming to the States, they wanted me to focus on warehousing. Since coming to America in 1986, for the past 30 years, I’ve focused on warehouse consulting. In addition, for the past five years, I also do supply chain recruiting. I’ve got two hats; I’m an executive supply chain recruiter, as well as supply chain IT, and I still do supply chain consulting, mainly in warehousing. I estimate I’ve been in about 700 warehouses in North America alone, and I still do work overseas as well.

 

What are the merits in terms of warehouse investment in MHE versus IT? Can you define what MHE and IT are?

 

Well, mechanical handling equipment covers everything from fork trucks to highly sophisticated ASAR systems, which is Automatic Storage and Retrieval Systems, and even in East Asia into robots, companies like Amazon getting well involved with robots. On the MHE side, almost every warehouse needs some form of MHE, usually fault trucks, pallet jacks, and, depending on the storage, they might need high-rise cranes that are called cherry pickers or order pickers. There’s always some degree of MHE required; there’s a question of degree.

 

There are so many warehouses getting involved with highly sophisticated and expensive sortation systems, massive amounts of conveyor, et cetera, et cetera. That all comes under the heading of MHE. The question is justifying the extensive use of MHE because conveyors are expensive. I’ve been in warehouses where they’ve got 14 miles of conveyor, and I know immediately there’s no way they can cover the costs of the equipment.

 

The problem I often find is that many people invest in MHE because they think automation automatically pays. Well, it doesn’t automatically pay; it depends on the extent to which you use it. For example, companies like FedEx, there’s no way FedEx can do what they do with heavy investment in mechanical handling equipment to do all the sortation of the packages, to handle the millions of packages they have to sort in a very short period of time. They have to, but, of course, their cheapest rate for a letter is something like $10.76 for a letter, whereas Uncle Sam can do it for 49 cents, and it doesn’t need the same level of investment. On MHE, it’s just a question of speed against cost and if you need that equipment in order to meet your throughput demands.

 

On the other hand, IT means the system that drives the warehouse. Here’s the point: Every warehouse needs a system. There is no way you can run a warehouse without a system. In the old days, it was an order-picking and a pay-per-picking system, but in the past 20 years or even longer, it’s now moved to an RF, radio frequency, where you scan barcodes. That all comes under the heading of an IT system.

 

Every warehouse needs a system; therefore, you may as well have the appropriate system. The trick is to look at the system first before you look at MHE, work out what system you need, do your cost comparisons on systems, do your ROI on system, and then put the appropriate system in. in warehouses, these go under the heading of WMS—warehouse-management systems—and the best WMSs integrate with a TMS, a transportation-management system, and they link within an ERP, such as an SAP or a nautical.

 

In these days, and in the past ten years, the starting point has to be your IT side, how it drives the whole system through the business. MHE is only then looked at to what extent you can get additional benefit from using the mechanical handling equipment, and that’s when it becomes almost very, very difficult to justify the additional benefit from the MHE, whereas the problem I often find going into warehouses, people have not gone through that logic. They haven’t optimized their IT, and they’re going straight to the MHE without looking at their IT first. That was a problem about 15 years ago, before the IT really got as sophisticated as it is today. That wasn’t a bad approach looking at MHE first, but these days you have to look at your IT first. I hope that answers your question.

 

Yes. Can you explain some of the reasons why? We were talking about the merits of warehouse investment, MHE versus IT.

 

Okay. The only cost that has come down, that reduces is the unit cost of handling data. Note: I’m not saying the total IT cost, but the unit cost of handling data. You can handle more data more cheaply with IT than you used to be able to. And it’s much easier and cheaper to manage all your sorting and your management and your planning on a computer than it is to try and manage it by sorting cases on expensive conveyors in the warehouse. It’s basically a cheaper way of planning and organizing your warehouse to use the IT. Of course, IT is much quicker.

 

Another benefit of going the IT route first is that the timeframe that’s open to the warehouse to get product out from receiving and shipping it out is constantly being cut back, cut back, cut back. E-commerce is driving what I call the dwell time in the warehouse down. Before, it was okay to get an order in in the morning and maybe have it shipped out in the afternoon or in the evening. A 24-hour turnaround 10 years ago was quite acceptable for a warehouse, but nowadays, retail warehouses—which are some of the most demanding e-commerce warehouses—they’re demanding something like two-hour turnaround times. The order cutoff, they want it to be as late as possible in the day—say, three o’clock, four o’clock—and you often find to get an overnight delivery, your outbound transportation wants to start leaving by five o’clock in the evening, so you often have two hours to respond.

 

If you look at the time from some of the MHE systems I’ve seen—I did one about six months ago where the time in the warehouse was 24 hours. It took them 24 hours to handle their product through their highly sophisticated, mechanized equipment. That, these days, is just not acceptable for an e-commerce business; they’re going to have to change whether they like it or not.

 

Do you have any final recommendations?

 

Yes, my final recommendations are: Always start with senior management who really do understand the business. One of the problems I often find is that senior management assume that warehousing is simple. What could be more simple? You bill it in, you receive it, you put it away, and you pick it and ship it. What could be more simple than that? Then they wonder why the warehouse is not performing as cost-effectively, providing the level of service that they require.

 

That’s because almost every order is different. It’s not like manufacturing, where you’re doing the same task over and over again. With most jobs in the warehouse, every order is different: a different SKU in the order, a different quantity by SKU, et cetera, et cetera. It’s a totally different animal that has to be managed. If you look at some of the WMSs which are out there and some of what I call tier-one WMSs, they are some of the most extremely well thought-through systems with extremely high algorithms in order to constantly and quickly take the order profile and manage it through the warehouse in the most cost-effective way.

 

You’ve got to start with senior management who really do understand what business they’re in, they can translate that business into a supply chain philosophy, and that supply chain philosophy breaks down into a transportation and warehouse philosophy. The whole thing has got to be integral. In this day and age, your supply chains are totally integrated from vendor through to the end user, and that requires extremely complex systems and that requires a high level of senior-management skill to understand that.

 

What often happens is that management don’t quite understand what’s going on, and they think the answer is to subcontract it out to third-party providers on the assumption that they’re the experts. This is not always was the case. Often they are putting out to a third party an expertise they should maintain in-house to provide a better level of service compared with their competitors. It starts with senior management who really understand the business, senior management who know how to use IT, and senior management who know how to translate the IT into the appropriate operations. It is only once you’ve done that that you look at your operation and decide what additional benefit you can get from MHE, and, often, at that stage, you just cannot justify it.

 

Thanks, Bob, for sharing today.

 

Okay, thank you very much indeed.

 

 

 

 

About Robert Munro


 

2abb465.jpg

Robert Munro


Management Consulting - Supply Chain, IT, International

 

LinkedIn Profile

I interviewed Dr. Jozo Acksteiner who discussed Geographic Analytics.

 

 

It’s nice to speak with you today, Jozo, and I’m looking forward today to hearing your views on the topic of Geographic Analytics. Can you first provide a brief background of yourself?

 

Sure, hello, my name is Jozo Acksteiner. I’m Founder & Managing Director of GeoLyx.com, a software firm in the area of Geographic Analytics, and I’m also an Adjunct Associate Professor at National University of Singapore. In total, I have about 20 years in supply chain management and business analytics experience. I previously worked for companies like TNT, DHL, and in consulting for Booz Allen Hamilton.

 

Thank you. What is Geographic Analytics?

 

In essence, it’s a method to visualize data in order to analyze it on the map and to make supply chain decisions more effectively. It’s a big data topic, and for analytics projects with that method, you can increase the effectiveness of making supply chain decisions by more than 50 percent.

 

Why is that? We believe that a lot of the big data power that’s around for supply chain problems cannot really be unleashed because there are some obstacles: Gathering the data; cleaning the data; understanding the data; deriving the results, and interpreting those. Supply chain management problems often have some underlying framing conditions that are very difficult to model with a computer system. E.g. regulatory conditions or even physical infrastructure conditions.

 

For example, you want to find the best location for your distribution center in Europe. There are very good software solutions to help you: You provide data about all your inbound flows, all your outbound flows, all the cost information, what types of goods you’re shipping, and then you plug this into a software and it comes back with a result.

 

When you talk to experts who’ve been using such tools extensively, they often see challenges with these tools. First of all, it takes an awful lot of time to come to get all this data, and to prepare it for the software, before you can actually crunch the data. Secondly, the solution coming out of this black box is sometimes just not feasible.

 

An example: You want to find the best location for a distribution center in Europe. Imagine all flows are equally distributed over Europe and you want to find the one location, such a tool will probably come up with the center of Europe.

 

In this example, that could be Switzerland. Now, do you want to have a distribution center in Switzerland? Switzerland is the only country in Central Europe that has borders, free flow of goods is restricted. So, really, from a logistics perspective, it’s not the most advantageous place. After all this crunching of data, Switzerland would be ruled out because it wasn’t a feasible solution in the first place.

 

This is where Geographic Analytics can help. Instead of trying to get all the data together first, actually, you turn the approach around. You start with reducing the solution space. This means you try to reduce the number of feasible options first.

 

Step 1: Map some basic information and then discuss with subject-matter experts about potential solutions, excluding infeasible solutions. For example, in this case, Switzerland you want to rule out as an option. At the same time you carve out the ideas, building the intuition behind the problem. This is what we call computer-supported intuition. With this you often find approaches that you previously were not even thinking about.

 

Step 2: You deep dive into the analytics. In this way, you do not need to gather the data for infeasible solutions, and you are much more effective with your analysis. As a nice side effect, you’re much better aligned with the experts with whom you’re working because they’re included in the process from the start, and it’s not a black-box solution.

 

Interesting – so you have any other application examples than in Supply Chain Networks?

 

Yes. Generally, Geographic Analytics can be used for geographically related strategic decision-making in supply chain management. Another example is on customer segmentation – to find out where your customers are, and how to service them most effectively.

 

Even outside of Supply Chain Management we see a lot of application for Geographic Analytics. Take for example Marketing analytics – determining where you want to focus your marketing campaigns for example. Visualization of such data on maps and analyzing them on maps can be very valuable.

 

Can you explain some of the other benefits of Geographic Analytics?

 

One re-occurring topic in data analytics is the issue of incorrect or incomplete data. Such data can skew your analysis to the extent that it leads to wrong conclusions. Therefore, data cleaning & understanding is a very important and lengthy process within Data Analytics. We say that the data needs to be transformed from “thin” data – data that you cannot use – into to “thick” data – data that you understand and that you can use for analysis.

 

Spotting data errors in tables is very difficult – here is where the geographic map visualization can help. Let me give you an example: It might be useful to map your service network relative to your customers to determine if your services centers are located at the right spots. Often optimizer software finding the best service center for a customer do this by analyzing zip codes. If the zip code is incorrect, the software does not work correctly.

 

Maybe your software is set up to work with 5-digit numeric zip codes, which works well in the US. But in China you have 6-digit zip codes, and the software may fail as your 6-digit zip code might get truncated.

E.g. a zip code of 320000 gets truncated to 32000, which then would be interpreted in the software as 032000 – which could be at a complete different location.

 

In a sea of data it will be very difficult to spot such problem. But when you see such data on a map and you see a service center far away located from the customer – you immediately see there is something wrong.

 

In summary, the “time to insight” with Geographic Analytics approaches is just much faster than with traditional analytics approaches, particularly in Supply Chain management.

 

This is really exciting. Thank you for sharing today on this great topic.

 

Thanks very much; it was a pleasure.

 

 

About Dr. Jozo Acksteiner

 

 

 

32a2db3.jpg

 

Jozo Acksteiner

 

Manager Supply Chain - Business Analytics - Strategy, Adjunct Associate Professor, Founder

 

LinkedIn Profile

I interviewed Steve Hopper who discussed Improving Operations in the Distribution Center Through Performance Risk Mitigation.

 

 

 

 

 

 

It’s great to speak with you today, Steve, and I’m looking forward to hearing your views today on improving operations in the distribution center through performance risk mitigation. My first question is: Is supply chain risk mitigation new? This seems to have been talked about before. What does it mean to you?

 

Obviously, supply chain businesses have been facing risk for a long time. What’s somewhat new about it is that in recent years, it became a fairly well-known practice area within supply chain to do supply chain risk management. Most of that is focused at the network level, where we’re talking about sourcing and supply of materials to the network and sites within the network. Very little focus has been paid to what happens inside the distribution centers, warehouses, and the manufacturing facilities in the network, where the day-to-day blocking and tackling of warehousing and distribution and that sort of thing happens. That’s really what I’ve been focusing on quite a bit lately with clients who begin to realize this is really important stuff.

 

What areas of risk are we talking about?

 

That’s a good question. In some people’s minds, they may think of safety and that sort of thing. I don’t want to take anything away from safety, but that’s not really what I was referring to with distribution and warehouse risk management. What we’re really referring to with this type of analysis is performance risk management, which, summed up, it’s the ability to manage risks that prevent the facility from achieving its mission, which is typically to satisfy customers as it produces, packs, and ships product and making sure those shipments are not hindered by something that goes wrong inside the distribution or warehousing operation.

 

How do you determine what risk is worth documenting when you do an assessment?

 

First of all, risks themselves tend to occur in, I would say, four primary types of areas. The obvious one that most people think of first when they think of a modern-day warehouse or distribution center is in the area of information technology, the software that runs the operation—for example, the WMS or the WCS; these kinds of software manufacturing-execution systems that may run a manufacturing operation. That’s a big component of it.

 

Another area in these operations is equipment and automation. Again, most modern-day warehouses have some degree of automated equipment or at least mechanized equipment, and that could be anything from conveyor systems to sortation systems, to order-picking automation, to ASRFs, AGVs; it could be something as simple keeping them running.

 

The third major area is what I call facilities. What that really is is services to the production operation that come from the facility level. That would include things like electricity, power; things like compressed air, because a lot of the automation and mechanization depends on compressed air to be supplied to that equipment; sometimes other systems, such as refrigeration systems, cooling systems; sometimes even dealing with special gases, like argon gas, as an example, that has to be piped in for various purposes, and if they lose these facility services, they’re in a bind.

 

The last major area, which is certainly one of the most important, is the area of people. In the area of people, if the operation is so dependent on one person who is, for example, a functional expert in one area of the operation and that’s the only person who can do that function, then there’s a lot of risk there because something could happen to that person; they could leave the company, they could get hurt, I’ve heard of people just dropping dead on the job. As horrible as that is, it also is going to affect the operation when there’s no one else to turn to.

 

Those are the four areas: people, facilities, information systems and technology and software, and the mechanization and automation.

 

When you prioritize and mitigate the risks, what do you focus on?

 

Steve: The first thing you’ve got to do is determine which risks are the most important. You don’t want to major and minor, as I like to say. What we typically recommend is a scoring system for the risks. We’re typically looking for single pints of failure, so if something should happen, you would cripple the operation. If an operation has a lot of redundancy in some function—for example, if there are eight stretch wrappers in an operation; if one stretch wrapper goes down, you’ve still got seven to fall back on, so that’s not a critical concern. But if there’s a * (5:47—unclear) in the whole facility, obviously, that’s a single point of failure, and when that’s down there’s nothing else to fall back on.

 

We look for the things that are single points of failure, and then we score them in two main areas. One is in the likelihood of a failure, and the second is in the impact of a failure. The first one is: How likely is it that a failure could happen? There are types of failures. They could be scored differently, but the fact that a risk should manifest itself in the fireplace, that’s the likelihood.

 

The second scoring component is the impact. That assumes that this failure happened, now what impact is it going to have on business and the ability to ship the product, that sort of thing. That has to have a scoring associated with it as well.

 

To answer your question, once you evaluate each risk independently and you put an objective score in on the risk, it gives you a list of risks that you can sort by that criteria so that you’re looking for the risks that have the highest likelihood and the highest impact. Those, obviously, would be the risks you would start with as the most important ones to mitigate.

 

Can you talk about how you reduce the risk?

 

It’s really an extension of what I mentioned a minute ago about the likelihood and impact components. What you have to do is really analyze what controls you can put in place to reduce likelihood. An example might be there that we would put some redundancy in place. If it’s on the people side, we would have multiple who could do a function so that if one of them is not available, you still have the ability to perform that function with the other person.

 

Or if it’s a shipping-sortation system, you might have extra components put into the system, like backup lines and things like that you can use. If it’s a compressor system providing compressed air to an operation, you might put in a backup compressor that takes over when the first one stops working. That’s one way: controlling the likelihood of an event happening.

 

The other side of that, though, is another set of controls. Once an event, a failure, has happened, how do you reduce the impact of the failure? There are controls you can put in place that will lessen the magnitude of the impact. For example, if a motor in a heavily mechanized piece of machinery goes down and breaks and you have to replace the motor, you obviously have to make sure you have a spare motor in stock so you don’t have to have it shipped in from somewhere with a six-week wait time to use that piece of equipment again. That would be a good example of how you might reduce the impact.

 

Another really important way to reduce impact is to have standard operating procedures in place that all the people in the facility understand. When a breakdown of that type occurs, everyone knows how to follow the playbook, and everyone knows what to do, what the contingency plan is in that operation.

 

I’ll give you a concrete example. There was a client I had that had a very complex merge, a sawtooth merge in a high-speed conveyor system that is sort of the main artery coming into their main sorter. If that merge fails, they have a plan in place, and they can staff that merge with people so that people can literally manhandle the cartons and totes that come from the individual lines and put them on the main line. It’s a labor-intensive process but allows them to keep shipping product while the merge is being prepared. That’s a documented standard operating procedure they’ve put in place in the event that should happen. That’s what we’re looking for: ways to reduce the likelihood and ways to reduce the impact.

 

Thanks, Steve. Can you provide a brief background of yourself?

 

Sure. I am the founder and principal with Inviscid Consulting, based in Marietta, Georgia. We are a consulting firm whose mission is to help clients who manage distribution and warehousing operations reduce their cost, improve their customer service, to boost capacity, and, of course, to reduce risk so that the result is really a streamlined operation that provides the best value for their investment and distribution. That’s who we work with, those kinds of companies, and improving their operations.

 

Thank you, Steve, for sharing today.

 

Thank you, my pleasure.

 

 

 

 

 

 

 

About Steve Hopper


 

steve.jpg

Steve Hopper


Helping Businesses Plan & Streamline Warehousing, Logistics, & Distribution Operations (LION)

 

LinkedIn Profile

I interviewed Martin Keyser who discussed the issue of companies having information they need to improve but they don't use this information.

 

 

 

 

 

It’s great to speak with you again, Martin, and I’m looking forward to this new topic you have: companies that have information they need to improve, but they don’t use it. My first question is regarding this topic. Can you provide a brief background of yourself?


I’ve been a purchasing agent for about 20-some years. I’ve also have done sales for around 20 years. I feel that purchasing and sales are the same conversation, just at different ends of the telephone. I also have my own company, so I’m experienced pretty much in all aspects of running a small company.

 

Great. What kind of information do companies not use that they have? Do you have any examples?

 

Well, for starters, one example, I worked for a company who brought everything in from China. Every single time that they were about to ship something in, it would start from scratch and add up all the expenses—not only the expense of the merchandise, but the expense of shipping and estimating all the taxes and duties and fees. All they had to do was look at their last invoice, and they would see to the penny exactly what all of that cost, but after they paid the invoice, they filed it away and never looked at it again.

 

All the information was right there; they just never used it to their advantage. A second example is a company that I recently worked for, a car-rental company. They have printouts of the exact car that is reserved by the customer, and they know by the hour and by the day exactly how many of these cars are due to be rented, yet they don’t use this information to get the cars ready for the customers. The cars that are put on the lot are put on the lot purely randomly. Right now, the customer may get what he ordered and he may not. In my opinion, all they need to do is sort out the cars in general bunches by category so that the amount of cars that are going to be rented at that particular hour or that particular day could be pulled and cleaned by the cleaners. The drivers would automatically get the car to the branch—because that’s what they do, they only take clean cars—and then do it again the next hour.

 

Every hour that a customer is due to show up, they could have his car available. As an example of how bad this is—I do consider it bad—the customer-satisfaction metrics right now is at 50 percent, which I believe is failing. It would be so easy to change all that just by looking at what the customers want when they show up. This reminds me of a push system where we’re telling the customer what cars to rent. Another example of that is a few years back, when the Detroit car makers made big cars, and they told us we wanted gas guzzlers and cars with big fins, and, instead, we bought Japanese cars. Of course, you know what happened to Detroit.

 

What I’m suggesting is to make a pull system, which is, again, looking at what the customer orders, cleaning it, making it ready and available when the customer shows up. Just for an example too, I can’t help wondering what a customer would think if he ordered a steak and the waitress brought him a salad. Would he ever go to that restaurant again? A third example comes from the accounting department. Many years ago I worked for a company as its general manager, representing six Western states and serving four hundred customers. The rule from the controller was that any invoice that showed up in the 90-day column, the customer would go on credit hold. It was just my luck that while I was out of the office, this report came through, and my biggest customer had one invoice in the 90-day column. The order-desk girl put him on credit hold. Sure enough, he called up and was told that he was on hold. Here I am, risking the fact that I may end up losing my biggest customer over one invoice. When I walked in a few minutes later, she told me what had happened, and I knew in a minute that we were either looking at a lost invoice or an invoice that had to have a pending credit memo against it. When I looked at the old report, sure enough, there were 30 invoices that the customer had ordered merchandise, and the very next report—the current report—had only this one invoice hanging out there. The customer had paid all the invoices except this one. When I looked further, there was no pending credit memo, so I knew it was a missing invoice. When I called him up, the first thing I told him was that he’s not on credit hold, and I mentioned this invoice to him. Within a few minutes, they were able to find it, and they got it paid. What I did was instigated a new rule that a customer goes on credit hold when I say he’s on credit hold. The controller wasn’t happy about it, but when we passed it by the manager of the division, the manger agreed with me. Those are three examples of using information that you have in front of you instead of making a mistake or drawing the wrong conclusions.

 

What is the cause of this problem? Why does it exist?

 

I think the cause of the problem is either looking at information and not coming to the right conclusions or just ignoring the information you have in front of you. In my world I want to make business faster, easier, cheaper, better. How you do that is look at all the information. If the information is there, use it; that’s how you can solve this problem.

 

My last question is: How can it be done better? Where have you seen success?

 

Well, I worked at a company as a purchasing manager. At the time, we thought that we could only produce $700,000 worth of merchandise a month. One day at a production meeting, we were sitting around, and I was looking at the paperwork, the reports, and I said, “Does anybody notice this? On the report, the first two weeks of the month, you guys made five hundred thousand dollars’ worth of merchandise. Do you not see that if you just duplicate this, we’ll have our first million-dollar month?” When they looked at it, they agreed with me. They didn’t have to do anything new, different, better, cheaper, nothing. All they needed to do was duplicate what they just did and they did it. By setting goals and achieving the goals and then resetting goals, it wasn’t long before we were doing $2 million a month and, in some cases, $2.5 million a month. In short, they could always do it; they just didn’t know they could do it.

 

Thank you, Martin, for sharing today on this important topic.

 

I appreciate you calling and talking with me. I hope that more people use this information and make their companies faster, easier, cheaper, and better.

 

 

 

About Martin Keyser


 

18d5d43.jpg

Martin Keyser


Buyer

 

LinkedIn Profile

I interviewed Tim Calie who discussed Improving Small & Medium Size Warehouse and Transport Operations.

 

 

 

 

 

 

It’s great to speak with you today, Tim. I’m looking forward to hearing your views on improving small- and medium-size warehouse and transport operations. Can you first provide a brief background of yourself?

 

Yes, certainly. I attended a college in northern New Jersey—William Paterson University. My major was business; my minors were Spanish and psychology. I started out in a warehouse and distribution wholesaler called Newman Distributors; they were the largest wholesaler in the Tristate Area. For 17 years, I worked as supervisor, manager, and, eventually, a director. We went from 26th to the 6th largest privately owned wholesaler in the country. The revenue went from $100 million to over $2.5 billion in sales.

 

I went through different areas of the warehouse and was able to see pockets of internal income not being acquired, whether it’s transportation costs, percentages, discounts, return-to-vendor programs, productivity benchmarks on the order-picking line, restructuring and streamlining the environment. Then I carried over those assets and skills to various other distribution and transportation firms and was able to streamline the existing environment and go in and look at the processes of the people and restructure and reorganize without any capital investment and reduce cost and improve service. In the process, I acquired two service awards from the largest retailers in their industries: Payless Shoe Source and Starbucks.

 

Great. Can you share your views on how you improve war house and transport operations that are small- and medium-size?

 

Yes, it’s basically going in and looking at the people and processes. There are two things in an environment, whether it’s a transportation terminal, warehouse, or distribution center. An even-treated sense of different businesses and entities. I’ve done consulting for a health spa, in my consulting environment. I’ve been doing consulting for the past five years, and I’ve worked in a health spa, in a restaurant…

 

In the warehouse, distribution, and transportation environments, it’s just two things in any business that exists: it’s people and processes. The main focus is to go in and look at the people, which means learn all their jobs, learn the people themselves, because the average person, as a supervisor, manager, director—in that environment, what they do is attain that position by attrition or seniority, and people don’t train them properly or they don’t give them the proper tools or support to do the position. It’s called employee suitability analysis, and it’s going in and learning the people, learning the jobs, as a leader, as an executive going in and engaging people, being highly open-minded and a communicator, and having a highly professional demeanor and showing that you care about them in general and you’re just there to help the process.

 

There’s a suitability factor of making sure their job descriptions are correct, because in most companies, the job descriptions haven’t been updated in years. They wait for a problem to happen. In what’s called crisis management, a company will put in a lot of procedures or people on a process, but the whole key is the root cause; what caused the issue is not resolved, so it’s looking at the root cause. That’s the people aspect of it.

 

As far as the procedures aspect of it, most procedures aren’t documented or updated, and there hasn’t been assigned accountability for each process in the procedures in processing the order throughout a transportation terminal, warehouse, or distribution center. The key is also establishing accountability, who’s responsible for what job, and not waiting for the crisis-management mode to come up.

 

Establish accountability, define job descriptions, make sure people are suitable for the job, support them in the job, have them sign off on the document, and hold them accountable in a very professional way. As far as the procedures follow-up goes, it’s looking at the procedures, knowing where they’re not updated, and then looking at how the whole operation works. Every single job has a leader; parts of the process has a leader.

 

The other aspect of it going forward, the next step besides people and processes is organizing the environment, which means most businesses small and medium size don’t have benchmarks in place for productivity and accountability as far as whether it’s drivers out on the road, a transportation firm, how many drivers are allocated on the road, how many people are in the order-picking line, how many people stock the warehouse.

 

If there’s no monitoring of the volume of the business and establishing what’s called benchmarks—whether it’s loading a truck, how many drivers to deliver X amount of goods, how many orders to pick—putting in basic benchmarks, taking the highs and lows of your analysis, and putting in a medium benchmark in and sharing the goals with the team and saying, “Here are the hours we have to accomplish in order to maintain and pay for our overhead and also to maintain a certain margin of profitability, which is critical.” On a higher level, once the benchmarks are established—they’re called KPIs, key performance indicators—and you put them in for quantity, productivity, and you put them in for quality.

 

On a higher note, once goals are reached, you can also put in incentive plans for the employees, whether it’s a bonus structure or it’s an hourly increase once a certain goal is met. Again, putting key performance indicators and parameters to structure the environment, what the average person should produce—productivity—and the higher goals are when we attain certain goals, what’re the incentives and rewards accepted. That’s kind of a basic structure as far as small- and medium-size businesses and what they most lack.

 

Can you share any successes that you’ve seen?

 

Yes, there was one environment I went into with a third-party logistics company called NDC/NFI Industries down in south Jersey. As a general manager, I had a regional warehouse. We were receiving a hundred truckloads of Ocean Spray juice from Bordentown, New Jersey, which is 20 minutes away, and the main facility was in Burlington, New Jersey. When I walked through the warehouse, we had over 20,000 cases of missing Ocean Spray juice in the inventory. It wasn’t stolen; it was just missing in the inventory. They had a WMS, which is a warehouse management system. Again, it was for processing out the procedures and lack of availability and properly structuring the environment.

 

After going in and analyzing the operation and maintaining and restructuring the proper procedures and redirecting the proper personnel suitability in certain job functions—which is the inventory-control area, which is the key to the environment—we were able to reduce a 20,000 missing-case inventory to 50 cases in 26 days and maintain a 50-case or less.

 

Another entity was in Teterboro, New Jersey, Sara Lee Coffee and Tea, which was not a 3PL as an asset-based environment. They had an order-picking error ratio of 14 percent. By restructuring the job descriptions, establishing accountability, and restructuring process and procedures, we were able to reduce the 14 percent error-pick ratio to 1 percent in approximately a month and a half.

 

Do you have any final recommendations?

 

Most small- to medium-size businesses, for some very obscure reason—I received two calls in the past two months; I’m establishing my own consulting firm, as well as a team of consultants, which we just started to do this—these two executive positions that people contacted me had the same thing in common. Both companies—one in Queens and one in Jersey City—said that the acquisitions or increase of sales and in the distribution centers. Again, the costs were going sky high; the costs were not being consistent. With the increase of growth in sales, the costs were still a lack of restructuring, lack of streamlining, and accountability. The only advice I’d give to people would be to get some leaders in such as myself on a limited bases. We would go in, streamline it; no capital investment, no increase as far as software or hardware, so no large money being put into the operation; have us restructure the environment, and we’ll be able to improve the existing operation.

 

Thank you, Tim, for sharing today.

 

Tim: You’re very welcome. I’m developing my own Web site and I’m on LinkedIn. My name is Tim Calie. The team of consultants I just established—we’re just putting out our Web site over the next month and a half—is Complete Supply Chain Systems. It’s www.CompleteSCS.com.

 

 

About Tim Calie

 

 

 

Tim Calie

 

Top 1% .Executive Manager/Consultant/

Entrepreneur operations/supply chain/distribution/transportation/

logistics/finance

 

LinkedIn Profile

 

 

Tim Calie has been called a Passionate , Results Oriented & Charismatic Supply Chain/Logistics/Transportation Executive then Consultant & now Entrepreneur with over 27 years of 100% success increasing profitability/reducing costs, improving customer service levels, acquiring higher sales revenue as well as promoting teamwork & morale in all assigned operations.

He has worked with various well established organizations such as Sara lee , Ocean Spray , Shop Rite , A & P , Barnes & Noble , Budweiser , Madison Square Garden , Dunkin Donuts & McDonald’s.

Tim has led teams that have been awarded customer service awards from companies such as Payless Shoesource (largest shoe retailer in North America) as most improved 3PL operation in the country as well as recognized by executive management for highest profitability in the history of an operation.

He has also been awarded by Starbucks (largest coffee retailer in North America) for best 3PL service to the New York City area.

Tim grew up in Northern New Jersey & attended William Paterson University in Wayne,N.J. He now resides in New York City.

He is a member of various supply chain organizations including CSCMP & APICS.

His main focus is mentoring/developing/analyzing teams & restructuring/reorganizing existing environments to surpass all company targeted goals for continued growth & opportunity for all as well as establishing/enhancing client relationships.

People are at the top of Tim’s list as the main driver for an organizations Success , Growth & Overall Long Term Prosperity

“STRIVE FOR PERFECTION & SETTLE FOR EXCELLENCE”

Tim is also very passionate about helping people in their life & career & has impacted many lives with volunteer assistance as a career development coach / motivator/mentor as well as helping people as an Executive & Consultant and now an Entrepreneur.

TimCalie6@hotmail.com
Cell – 718-431-3050

I interviewed Dan R Greening who discussed The Five Characteristics of all Sustainable Agile Methods.

 

 

 

 

 

 

It’s nice to speak with you today, Dan. I’m looking forward to hearing your views on the five characteristics of all sustainable, agile methods. Can you first provide a brief background of yourself?

 

I have a Ph.D. in computer science; I studied chaos theory and optimization techniques and parallelism back when I was a super nerd. More recently, I’ve been looking at the best ways to organize software-development organizations. As I did that, I realized that the overall organizational structure, too, had many opportunities available to it, so I started spreading out my focus to look at organizations as a whole and how they could more rapidly adapt to changing circumstances in the marketplace.

 

Just a little bit of background on that. I was the head of agile coaching for Skype. Before that, I was the head of agile coaching for Citrix Online, and I’ve worked with a bunch of other companies as well.

 

What are the five characteristics of all sustainable, agile methods?

 

Maybe one of the things we should ask is: What’s the purpose of agility? Agile companies or creative organizations or people all rapidly sense changes in their environment, which is usually a marketplace; sometimes it’s your teams. They adapt to that rapidly—so they change configuration, they change the types of products they offer—and then they create rapidly as well. When you can do all those things rapidly, you can usually beat the crap out of your competitors. That’s one of the reasons why, in one of the most fast-moving creative environments we have—which is software development, and, particularly, software development on the Web—we see agile practices adopted all over the place.

 

One of the challenges for me was that agile is done in field-specific ways. The software industry has practices like Scrum and XP, which are software-specific, but Toyota Motor Company also has an agile practice called the Toyota Production System, and fighter pilots have a thing called Ooda. Quality control has other practices as well.

 

When I started trying to characterize agile practices, I studied all of those things and tried to come up with basic principles that all of them share. This discussion is really about what defines agile regardless of what industry you’re working in. one of the things we wanted to eventually talk about is how this might relate to supply chain since that’s a specialty of yours.

 

Here’s what agile practices all do. The first thing that you need to have an agile organization is that you need to have clear metrics that relate to your economic progress. I use the term economic metrics to refer to the things that really drive your business. A nonprofit can have economic metrics, and those economic metrics are related to its mission. If it tries to save more people from malaria, then counting the number of people who’ve been saved from malaria by the organization is something that you would want to increase. That’s one of the metrics in your economy.

 

If you have an economy and you have metrics, that’s really great, but one of the issues you have is, you need to measure your progress against the economy. Here’s where you need leading indicators that you’re doing something that’s on the right path. You can’t use things like stock price to measure economic progress because it lags so far behind the actual work you’re doing that it doesn’t help you adapt fast. That’s the first principle that an agile organization has to have. If you don’t have that, you can’t build, the other patterns really build on that.

 

The second pattern is that agile entities adaptively experiment for improvement. They measure their progress but then they look at that progress and say, “What could we change in the way we do things, the things we’re producing that might increase the metrics that we think are relevant, the metrics in our economic progress?” When they’re experimenting, they might experiment on a long-time cycle. A big, behemoth company that has a lot of slow-moving parts, it might take a while for it to actually reinstrument or reconfigure its organization to try something new. Yet you can experiment—and good companies do experiment—but it might take them a while to get that experimentation done. We don’t have a situation quite yet if we just do the first two things to actually rapidly adapt to changing market conditions and create something new because it could take a long time to complete your experiment.

 

The third property is the thing that really gives us a minimal agility, and that is limiting work in progress. Limiting work in progress means that if we have a lot of inventory in our supply chain, that inventory is work in progress. It’s something that someone actually delivered to a distribution center, but then it’s just sitting there with asset value, I guess, but it’s not really being deployed right away, so that cash flow is locked up in that inventory.

 

DanGreening (1).png

 

 

This is one of the things that, of course, Toyota pioneered: this idea of reducing inventory, limiting work in progress by actually implementing just-in-time manufacturing. Toyota qualifies as an agile entity, and they did all of these three things. That’s pretty good. If you can do all those three things, you are agile.

 

One of the things that we’ve discovered in the software industry is that it’s really easy to lose agility. We have software developers, they’re very creative, people value them, and then executives may swoop in and take your most valuable contributor on a team and take that person away to work on some special project. When that happens, it can actually disrupt a team so much that it is no longer able to sense what’s happening. It might not be able to create something new because that disruption, which seemed almost innocent—“We needed this person to handle this important fire we were fighting”—it disrupts them so much that all the other team members really can’t do anything to create something new.

 

We see that sustainable agile in organizations adds a fourth property: this idea of embracing collective responsibility. This is pretty subtle and, I think, sort of philosophical and cultural for an organization. It says this: “When I join a team, I am implicitly signing a contract that says, ‘By joining a team, I agree that whatever this team produces, I will feel personally responsible for making sure that collective contribution works.’”

 

If I join a team and I know how to test software, for example, which I happen to know, and then the team also has developers on the team and one of the developers is out and, as a result, we’re not actually able to produce something of value, then my sense of collective responsibility will motivate me to learn what I can to make up for the fact that that person is missing. That sense of collective responsibility early drives learning in teams and organizations to make up for someone who’s missing; or if the market changes radically and we just don’t have anyone with the skills that we need on the team, my sense of collective responsibility will motivate me either to learn what I need to know to contribute in a way that’s needed or I will be motivated to help the team find someone to hire and bring into the team to make that work. That fourth thing really helps stabilize agility in a team or an organization.

 

One of the things that we find, however, is that these four things are not common in large organizations. It’s not common to have a sense of collective responsibility for the things that we produce. We have a role, a job description, and we follow the roles in the job description; we think that we’ve done what we needed to do. The rest of an organization can be hostile to agile practices: policies and procedures about compensation and performance evaluation. Even if you have an organization that doesn’t have a sense of collective responsibility and then you have a team full of people who feel that way, those team members become kind of vulnerable. What can happen is, if you have the blame culture in the organization and then you have a bunch of people volunteering that they will take responsibility for a problem and they start fixing it, they say, “Well, I could’ve done this, and I’m going to do that in future,” and then they start doing it, they’re very vulnerable to getting fired, unfortunately. It’s very sad.

 

In order to create an expansive agility, one that, in a sense, defends itself by bringing other people into the tent, we have a fifth pattern called solving problems systemically. There’s a whole collection of these things. Many people who are listening to this may be familiar with theory of constraints, which is a technique that people use in supply chains to identify the most constrained resource and focus the attention of available resources on fixing that constraint. That is a systemic problem-solving tool.

 

There’s another tool from Toyota called Five Whys, where we try to identify the cause of a problem and instead of just accepting the first superficial answer to the question “Why did this problem happen?” we actually dig very deeply into the causes of that, and we do that through a technique called Five Whys. You can take any agile practice, from Toyota Production System to lean manufacturing, even to a personal time-management technique called Getting Things Done. You can fit its practices into these particular patterns.

 

The nice thing about these patterns is, I can go to any company now and assess their agility. I can assess it at any level of the company. I can start asking questions. Do you measure economic progress? What are the metrics you use? How do those line up with the overall organization’s economy? Do you experiment? I just ask if you’re doing them and ask for the nuances of how you do them. Through these questions, you can discover what opportunities the organization has to improve, because when you improve any of these, you improve the agility of the company.

 

There you have it. As much as I can compress it, I’ve given you an overview of agility.

 

Thanks for sharing today. Do you have any final recommendations for supply chain executives or professionals?

 

Supply chains, of course, involve everything from a manufacturer, all the way through to delivery to a store and, ultimately, a customer. That chain is a long dependency chain. Of course, Toyota Production System has something to say about that with just-in-time manufacturing and limiting inventory. When we look at organizations like that, when we look at systems like that, we’re looking for how long things take to get from the manufacturer to the customer, even from the point of the raw materials to the customer. Economic progress for a supply chain can take us up a level, in a sense. If we’re really trying to provide the best value possible to the customer, and if we’re some element of this supply chain, when we think systemically that bottom property on the list, we actually think not just about our little piece of the supply chain, but about the overall supply chain and how we might be able to improve that delivery rate.

 

What we see sometimes—Amazon does this and Overstock.com does this—they have these internal systems that they built for themselves to deliver. Amazon wanted to deliver books to customers, so it has all these distribution centers with warehouses and that sort of thing. Then they started saying, “The supply chain solutions that we provide for ourselves are things we can provide to customers as well,” and they started making those supply chain facilities available to others. Individuals who have extra books can actually ship them to Amazon, Amazon will do all the warehousing for them, and then, as people want to buy those books, Amazon’s able to fulfill them from the distribution center, but they’re actually used books that were contributed by someone working with Amazon, just an individual with a bunch of books.

 

Those kinds of innovations are really great, actually, and they create a better flow for all sorts of valuable commodities, in this case. Supply chain looks at problems systemically; that’s really awesome. Collective responsibility is also important, and you see this in ecosystems like Amazon and Overstock and others. Overstock, for example, looks at people who manufacture things, mom-and-pop manufacturers, and they want to provide a capability to these people to more rapidly ship things to customers so that the customers feel more satisfied. They created this system—I think they call it SOFS—where they integrate inventory control information with both the manufacturer and the warehouse all the way to the customer, and they can predict for the customer how long it will take to deliver that thing through the entire system. That’s very handy and that was a really nice example of collective responsibility, where Overstock said one of the problems for the manufacturers is getting this stuff to customers rapidly and also telling them when these things might be delivered. They took that responsibility on themselves to help with that.

 

Fast, just-in-time, supply chains of course limit work in progress. Experimentation for improvement, that does happen and it could happen more if you instrument your supply chain so you know where things are all the time and you aggregate all that data together into business intelligence reports. Then, of course, all supply chains measure economic progress in relationship to the time things spend in the system.

 

I actually think supply chain is a really good example of systems that could benefit from agility. We’ve certainly seen that some supply chains are not agile, actually. They have big warehouses; they don’t really have good order systems that make it easy for shipping to happen fast, and that’s our thing. I think that most supply chains that don’t fix their supply chain to being more agile are going to be roadkill in the future. Ultimately, you have these big companies that are taking this very, very seriously, and either a slower supply chain’s business will be disrupted by a company like Amazon that suddenly decides to go into their supply chain market or they’ll be disrupted by their own competitors, who decided they’re going to be agile. That’s what I got.

 

Great, thanks again for sharing today.

 

Sure, I hope it was entertaining.

 

 

 

 

About Dan R Greening


 

0e6b7b4.jpg

Dan R Greening


Managing Director at Senex Rex

 

LinkedIn Profile


Website

I interviewed Debby Clement who discussed How Supply Chains & Non-Profits Can Work Together.

 

 

 

 

 

 

How does what you do in your non profit world relate to the supply chain industry?  

 

As an ordinary human being on the planet these days –   I’m “downstream” of a number of industries in my daily work – pharmaceuticals, energy, agriculture, marine & shipping, energy, food, consumer packaging. Each of those industries has an impact on our oceans – and I see it all the sea is downstream from everything we do – and we use it as our sewer and our supermarket – so we have to look after it.

 

If I put that into a supply chain context - from where I’m sitting things look VERY challenging out there – both in sourcing and output terms - and not just from my ocean impact perspective. – in California right now the water crisis impacting farmers hugely in the USA, gotta be a problem for your mango and pecan nut buyers in supermarkets right?

 

The BP Gulf Spill destroyed local fishing economies and continues to impact stocks of shrimp and oysters in the Gulf. The plastic packaging in our oceans is now a global health threat and fish are actually ingesting unsustainable levels of microplastics.

 

Which problem do we solve?– with who – and how?


As an ordinary human being on the planet these days – I am sometimes overwhelmed and feel like I’m turning up to an earthquake with a dust pan and brush in trying to solve some of the problems. But luckily most of us are hard wired to being optimistic and we’ve never been so blessed with so much technology and collaborative tools to solve issues … connected people + collective power = force for good I wondered if any individuals in your supply chain network ever think to sit down with a specialist NGOs working in their area and discussed mutual challenges and opportunities? Would they? Could they?

 

Granted, these are gutsy conversations to have but that’s where I see huge opportunity. Corporations can connect with the ocean of opportunity that there is – come on in breath the disruptive air, break some rules, solve some real problems. And I believe we all want to solve a problem –and all we need is more dialogue and to brainstorm relevant issues and shared problems … and through that creative tension is where the real ideas and neat solutions will come from.

 

We have an enormous opportunity to synchronise the economy with the environment moving forward. A chance to disrupt and re-engineer some stuff and hack some of the usual silo’d thinking channels and try new collaborations outside of sustainability and marketing – what about R&D, product development... we’re not all beards and sandals you know…and some of us can actually see the commercialization opportunities, but its not in our mission remit to go after them – but if an organisation can help our mission, then they might benefit from that uncovered opportunity. And you may ask … why should we? its enough of a challenge in my day job with all the MRP challenges I’ve got on my desk …

 

What challenges does an NGO see in the future supply chain …

 

On the surface we appear to be living in a world of plenty but I wonder in 10 years time if that will be the case.

 

I wonder how many supply chain people out there have had a panic this year because the supply of a particular fish stock has been closed to them, or a rare earth metal has suddenly trebled in price or how many are bracing themselves for the next spike in oil price … And let’s not kid ourselves fossil fuels are getting harder and harder to extract, not to mention the consequences of how we’re extracting.


So I think collaborations and working on shared problems and mutual concerns now will get early insight into the bigger problems on the horizon. Which means you learn how to adapt your businesses to the future challenges – and that’s a real competitive advantage. Not to mention the commercial opportunities surfacing, and that’s OK we’re not against that. Remember what the Apollo space race did for the economy – and we wouldn’t have solar energy without that challenge.

 

How can the supply chain get involved – we already have the sustainability and green teams?


Well here’s my challenge for the Kinaxis forum innovation and collaborative partnerships are going to be increasingly important in the future.


Your competitors may not be who you think they are so organisations are going to need to look outside traditional dialogue channels to solve supply chain issues, so why not join up the dots today and work together. Well how about inviting in a specialist non profit or NGO and just brainstorm and explore over lunch the mutual challenges in a chatham house rules environment.

 

You might be surprised some of the ideas which might surface and sum of your combined strengths. We’re finding space and defence companies are really interested in our use of marine drones – which we use to collect the breath from whale below for analysis…    

 

But what does that collaboration look like?    

 

Many NGOs are the source of the data that drives regulatory change,  so why not get ahead of the curve in shaping products, services and processes? What if YOU have a question or suspicion during a product development that you need the answer to before or after going to market?

 

You might be concerned about a product impact – but don’t have the oceanic or laboratory expertise to explore the issues – well an NGO might what impact will nano particles have on our oceans? These are currently in use in more than 300 commercial products like sunscreen, washing machines, stain resistant clothing and we’re finding them in the oceans.


What do you want your corporate legacy to be? With more than 1 billion people eating from our oceans what if you could use our data to shape your products – and lead innovation in creating new products that don’t leave a legacy of toxins; products that people will buy that put you ahead of the competition.


I wish I could show you a picture of the average mouthful of contents from a baleen whale – do you think it would be just plankton or do you think it would also be

microplastic granules, like the ones you get in your every day facewash with microbeads? What if your plastic packaging technicians could have a 20% time allocation like google employees with an NGO partnership - What products would they be inspired to create – and repackage?


I know for example we have some brilliant scientists on our books who would love to work for good rather than just profit … and solve issues that we have flagged to them and they can see. Is there a RB or Unilever or P&G that has the courage and conscience to do that – how much good could be generated from it – for everyone?


What shipping companies could engage in innovation projects for measuring ocean acidification or generate and carry whale warning sounds using our acoustic whale recording library?


Could we look at how to repopulate a depleted ocean with plankton together and trial that in a poor sea area?

 

Can we generate a pollution heat map of the oceans to help you assess risk and understand downstream pollution impacts?

 

How do we de-toxify or deplasticize our oceans?

 

Can we re-engineer desalination plants to clean oceans of our pharmaceuticals?

 

So what if businesses could invest with NGOs together in research in the currency of the new economy – which is courage and conscience to put right, with transparency which generates trust?

 

Could you fund an exchange programme for example for us eg. Southampton university in the UK and Ocean Alliance in Boston – to look fund effective lobster farming off the coast of cornwall but uses the expertise of local displaced fisherman from the recent cod fish factory closure?

 

These are the kind of projects that can be done and the mix of corporate, NGO and STEAM (science technology engineering art & maths) can be breathtakingly impactful -

 

Why should supply chain get more involved with non-profits and NGOs?

 

Things are changing for you because of how your customer is feeling … Its important every corporate conscience thinks and acts about this now – Rachel Botsman talks about the collaborative economy – and that’s a threat to every global corporate organisation out there and I’d urge you to check out her ted talk. Its not enough to “make more stuff, make more profit” any more – your supply chain sourcing activities echo for a long time in your consumer’s conscience – seen the Tesco share price lately when you don’t get the balance right.

 

Consumers are now bypassing the big organisations and going back to local because they are losing trust in corporations who’s only value appears to be profit and who’s sustainability activities are actually designed just for improving return to shareholders. We’re in a demographic shift towards more values based caring economy. more socially aware and less materialistic generation. companies who get it right will benefit – Wholefoods in the USA for example – great leadership of a holistic approach internally and externally, a values based model that provides a good return for shareholders, staff and consumers.


How is your non profit collaborating?


We’re Challenging norms & innovating and connect dots and networks! We’ve been a thought catalyst for projects like Parley for the Oceans and Gstar Jeans and Bionic Yarn – unique collaborations that combine science, fashion and tech.

 

So I would encourage global organisations to be bolder and don’t just go for the corporate agenda low hanging fruit as far as deploying renewable energy on site, planting trees is all very nice but there are bigger opportunities to solve problems that your customers can identify with.

 

How could you work with a non-profit/ngo/partner to re-engineer the products in your supply chain and solve some real world problems?

 

You never know that competition you jointly launch with a non-profit might find that new innovation that saves your business.

 

What has influenced you ?

 

There are a few books and ted talks I’ve encountered in the last 6 months that have had a profound impact on my thoughts, activities and behaviours.


These are:


Jeremy Leggetts’ – The Energy of Nations

Jeremy Rifkin – The Third Industrial Revolution

Naomi Klein – This Changes Everything

Gary Hamel – What matters now

Rachel Botsman – the collaborative economy – the currency of the new economy is trust …

Robin Chase – Peers Inc - the sharing economy

 

If you look at the science of what’s happening on the earth today you would not be optimistic – and I see the raw data every day around what’s happening to our oceans and the fish within them … and we become what we eat …


But if you met some of the people in NGOs who are working to restore the earth then you can’t help fail to be inspired and motivated to do better for our planet and our people … so come and seek us out to generate ideas for solutions, there’s some willing foundations that will co fund projects with meaning.





About Debby Clement


 

debby.jpg

Debby Clement


Corporate Development - at OCEAN ALLIANCE, INC.

 

LinkedIn Profile

I interviewed Chris Armbruster who discussed Continuous Transformation.

 

 

 

 

 

 

It’s great to speak with you today, Chris. I’m looking forward to hearing your views on Continuous Transformation. Before we start can you first provide a brief background of yourself?

 

Chris Armbruster is a transformation catalyst that helps companies achieve their full operating potential by transforming supply chains, organizations, processes and technology.

 

What is continuous transformation?

 

The pace of disruptive innovation is now outpacing the rate of change in traditional business paradigms. Continuous transformation is a shift in the mindset of organizations from thinking of change in terms of projects to creating a culture and operating model that is continuously evolving.

 

How is it applied?

 

Continuous transformation is applied by implementing operating models that are explicitly designed to evolve. It means applying agile thinking and accelerating change time to implementation, adoption and value-realization. It's often applied by getting outside-help in areas that are not a core competency.

 

Where have you seen success?

 

Continuous transformation is still emergent, but there are great examples of it. Software-as-a-Service (SaaS) models, for example, allow organizations to quickly enable a new operating model. Old school approaches would involve multiyear waterfall methodologies, requiring design, development, testing, deployment and recurring maintenance. With SaaS models, the whole front end of this is already done and organizations can focus on rapid deployment.

 

Another example is third party logistics providers (3PLs). It's often easier and quicker to get into an emerging market by leveraging a 3PL for logistics that already has market-presence as opposed to building in-market distribution capabilities from scratch.

 

 

About Chris Armbruster


 

chris.jpg

Chris Armbruster


Supply Chain Executive | Business Transformation | Strategy | Technology

 

LinkedIn Profile

I interviewed Dean McNeely who discussed The Advantages that 3PLs Offer Both Shippers and Carriers.

 

 

 

 

 

 

Can you first provide a brief background of yourself?

 

Sure, and I appreciate the opportunity to share some of my thoughts in regard to the domestic service-rate supply chain community out there. My name is Dean McNeely. I’ve been in freight logistics—specifically LTL and truckload—for several years. I focus on the LTL and the full truckload.

 

Interestingly, I got my start in this a little different way, backing into it. I was a large customer of these carriers. I was an importer of Chinese ATVs, dirt bikes, and scooters for many years and did lots of volume with the truckload and LTL providers. I always wanted to get involved with this and thought there was a better way, specifically on the 3PL side, what we oftentimes call a single-source-solution platform. That’s a little high-level background of how I got into that in the areas of focus today.

 

What are the advantages that 3PLs offer?

 

Well, there are certainly lots of advantages. You could ask: What the benefits of a 3PL are? And for those who are new to the industry, a 3PL—third-party logistics company—as a general rule, that’s a nonasset-based company, as we are. We don’t own a truck, and we don’t own a driver. Another way—and we’ve coined this phrase—is, I am a single-source-solution platform, meaning I consolidate all the partner carriers into one location.

 

Back to specifically your question, what the advantages are, one thing could be: you’re going to make call, speaking to the customer. You’re going to make one call instead of multiple calls. You would make one call to a 3PL who has access to all the truckload brokers, all the LTL carriers instead of, say, ABC customer going carrier-direct, where they’re making multiple calls to multiple carriers.

 

There’s an enormous cost savings to that in terms of time. I also firmly believe that when a customer is going carrier-direct to many different carriers, he or she is just watering down their true spend.

 

Are there any challenges you have to overcome as a 3PL?

 

That’s another good question. Some people will say, there are all kinds of overcoming objections; it doesn’t matter if you’re a carrier or director of 3PL. one I often hear is: I don’t want to give up control. That’s one I get more often than not. You’re not giving up control; you’re basically using our tariffs, using our millions of dollars in customer spend, and we’re providing you the tariffs and the choice.

 

A lot of people think of 3PL as you’re going to use this carrier, and I’m going to save you this amount. No, no, no. You go in and you understand the customer, understand their needs, understand the supply chain, and, based on the customers’ needs, we basically hold hands, go to the table together, and interview these carriers to see what carrier best suits their needs. You’re actually gaining control by using 3PL when a lot of people think you’re losing control.

 

Where do you see the future headed for the 3PL business?

 

I’ve got to tell you, it’s… It was interesting. There was an old R+L rep who was in Houston—he’s since gone on to be with the Lord—and he told me years ago when he used to call on me when I was an import company, he said, “Dean, pretty soon the three-PLs are going to own it. Guys like me are going to be out of business.” The three-PL market share has increased exponentially year after year after year, and it’s taken away from these carrier-direct relationships and you see it.

 

Even now there’s lots of pricing pressure in the market. Freight’s falling off the backs of these trucks. Some of these guys in upper-level management, these carriers I’ve talked to, they say, “You know, Dean, we haven’t made money in years. We’re going to make money now.” They say that when I say, “Are you going to recapitalize your equipment? Are you going to buy more trucks?” And they’re just not. There’s basically pricing pressure throughout the entire industry, and that’s what you’re seeing.

 

To that point again, the 3PL is here to stay. One caveat to that, there are lots and lots of 3PLs. I think the truckload-brokerage folks out there, there are thousands of them, but a true 3PL, a true partner, there aren’t a whole lot of us out there. I think the cream does rise to the top. You could probably go out there and say you’re a 3PL and get some blanket pricing with a few regional carriers, but it’s just impossible to go out there and engage some of these national carriers and to truly get a platform of blanket pricing spread throughout the nation. The barriers to entry are a little difficult right now, but in terms of your question about where the industry is headed—I know I’ve been a little wordy here—it’s just shooting to the moon and will continue to over the next several years.

 

Do you have any recommendations for shippers and carriers when looking at 3PLs?

 

Yes. I’ll keep it to 60 to 90 seconds here. You can manage all your freight expenses under one umbrella. There’s kind of automated sorting and filtering things, so you’re comparing individual tariffs in one platform. There are KPIs, key performance indicators. We really like dealing with a top-down approach, and CFOs truly understand this type of thing. There are quarterly reviews that 3PLs offer.

 

I like to boil it down—at least me personally and my team here in Houston—we answer the phone on the second or third ring. Days of 1-800 hold are over. There’s that customer service standpoint. When I go in to customers, the last thing I talk about is price. There’s the soft-cost savings; there’s the supply chain; there’s understanding their needs. Price is just one component to the overall picture.

 

Thank you, Dean, for sharing today on this topic of the advantages that 3PLs offer shippers and carriers.

 

It’s been a pleasure talking to you, and have a good evening.

 

 

 

For more information or how Dean McNeely can help companies like yours please contact email him below.

Dean McNeely: dean@ltlfreightcenter.com www.ltlfreightcenter.com

 

 

 

 

About Dean McNeely

 

 

1f95c0c.jpg

Dean McNeely


President BlueGrace Logistics Houston II CEO and Founder LTL Freight Center LLC - LTL & Full Truckload Shipping Expert

 

LinkedIn Profile

I interviewed Laura Patterson who discussed What Best in Class Marketers are Doing That Logistics People Should Know About.

 

 

 

 

 

 

It’s nice to speak with you today, Laura. This is going to be an interesting topic. I’m looking forward to hearing your views on what best-in-class marketers are doing that logistics people should know about. Can you first provide a brief background of yourself?

 

Thank you, Dustin, for having me be a part of your program and series. I’m really excited and delighted to be here with you guys. I have been in business for a very long time, and our company is 15 years old—VisionEdge Marketing. We came to start this company because we wanted to help our customers be able to make better fact-based decisions about the market, customers, and products.

 

My background is in technology—both semiconductors and software and computing—as well as financial services and health care. In our company we’ve had the privilege of working with firms in the logistics space, such as BAX Global, Agility Logistics, Southwest Airlines Cargo, Ryder, and other organizations. I think we’ll have a great conversation here.

 

It’s great to hear you have a good experience in the logistics industry. In your opinion, what’s most important in logistics?

 

I think what’s most important in logistics and any company is understanding your customer. As Peter Drucker once said, the purpose of business is to create a customer. In order to create a customer, you have to understand your market. The only organization inside the company that carries the name “market” in its title is marketing. It’s marketing’s job is to help any company—logistics companies and others—understand the customers’ wants and needs so that the companies—particularly, logistics companies—can provide the products that customers are going to buy through the channels that are most convenient for them with the functionality and feature set that will meet their requirements, give them satisfaction, and ultimately turn them into advocates and repeat, loyal customers.

 

How do you get to know your customers?

 

That’s an excellent question. If you’re not a very small company where your customers are all very local and you can get to know them face-to-face, like the local dry-cleaner or bakery, and if you’re a global company and your customers are global—there are many of them, particularly a B2B type of company, or even a B2C company, like Amazon, which I would put in the category of a logistics company—then you’re going to have to have good information and data. That means you’ll have to take the time to use data to do appropriate segmentation, persona development to understand buying preferences, voice of customer.

 

All of that takes a particular level of sophistication by marketers. One of the things we’ve been trying to understand is how well marketers have been performing in these areas for the companies they serve.

 

Can you talk about where you’ve seen some success or some findings?

 

Sure, that’s a great question, and I appreciate you asking because, Dustin, for the past 14 years, we’ve been doing an annual study on marketing’s ability to prove its value and contribution to the business, and we’re about to release the results from the 2015 study. There are only a few, one in five marketers does a really good job of being able to prove their contribution and value to the company.

 

They’re the only group that earns what we would call an A, which is a score of 90 or better from their leadership team for their ability to demonstrate their value and demonstrate their impact.

 

We can talk about what that group does, but what the other thing that’s shocking about the findings is that about half the marketers earn a C or a D; they earn very poor scores. We have about nearly four hundred people participate in this study, and that’s fairly typical over the past few years, about the same number. It’s a statistically valid study; it’s global, it’s in industries all over the world, of all sizes. It’s pretty fascinating findings.

 

Thank you, Laura, for sharing today on this topic. Where can the audience go to learn more about this, especially people in logistics, who may not be as familiar with marketing?

 

They can come to our Web site; we’ll have a copy of the report and survey on our Web site at VisionEdgeMarketing.com. I think one of the things that might be really important for these folks to know about what these best-in-class marketers do better and differently is that they’re known as value creators. They really focus on creating value for the customers as opposed to the other types of marketers, the middle-of-the-pack marketers, which are like sales enablers, really focused on supporting the sales team, and that bottom group of marketers, which are campaign producers, which really tend to be more focused on operating like an agency.

 

If you think about those value creators and their focus on creating value for the company and customer, they do that by really understanding the customer, and they do that through really excellent market segmentation and persona development and being able to really make the marketing mix and do the right kinds of analytics to understand customer behavior and capture information that will enable the company to serve those customers better, create a better customer experience, and grow customer share of wallet, which are important metrics these value creators focus on.

 

Thanks, Laura, for sharing.

 

My pleasure. I’m really glad to be here. If I can leave them with one thought. I do encourage them to understand the customer as much as they possibly can, to ask their marketing people to really develop and elevate their customer knowledge, and to be able to use data and analytics to inform them about their customers and to focus more on creating a customer-centric, outcome-based marketing as opposed to focusing on activities of marketing, such as producing campaigns, whether those are e-mail or offline campaigns or other types of production-oriented efforts. Dustin, do you have any last questions?

 

No, I think that’s good.

 

Thank you, I really appreciate being a part of your program.

 

 

 

 

About Laura Patterson


You might find the BAX Global and the SW Airlines Cargo case studies on our website of interest, www.visionedgemarketing.com. These can be found in the case studies section under resources. They are free with registration. The 2015 marketing performance management report and press release are also on our site if you become interested in learning more about what the top 20% of marketers do better and different to prove their value. Alan can help you with anything on our website.

These links will take you to articles that your audience might find of interest "Why You Need a Customer Engagement Metric" - this one talks about measuring customer engagement

And since logistics is often about getting the right product to the right customer in the preferred channel – this 3 part article series may be of interest too

CREATING CONTENT IS A WASTE OF TIME – UNTIL YOU’VE MAPPED THE BUYER JOURNEY PART 1: DEFINE THE BUYING JOURNEY

CREATING CONTENT IS A WASTE OF TIME – UNTIL YOU HAVE MAPPED THE BUYER JOURNEY PART 2: MAP THE CUSTOMER BUYING JOURNEY

CREATING CONTENT IS A WASTE OF TIME – UNTIL YOU HAVE MAPPED THE BUYER JOURNEY PART 3: MATCH AND MIX CONTENT, CHANNEL AND LIFECYCLE


 

3ddc229.jpg

Laura Patterson


President, VisionEdge Marketing- Improving Marketing Effectiveness and Creating Marketing Centers of Excellence

 

LinkedIn Profile