David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
There was a time when warehouses were, well, sort of like big old warehouses. They were places to store things until a customer needed them. But those days are long gone. Today's warehouses have evolved into modern distribution centers that have become the center of the supply chain universe.
Inside these high-tech buildings, there's a lot more than storage taking place. The facilities house activities like cross-docking, sequencing, postponement, value-added services and same-day processing,to name just a few."Instead of being a depository of inventory, the distribution center is now used as a service center," says Bob Shaunnessey, executive director of the Warehousing Education and Research Council (WERC). "This requires facilities to be more flexible to respond to the different needs of the supply chain."
That need to remain nimble—to adapt easily to changing circumstances, customer needs, order profiles and products handled—is reflected in the design of today's DCs. Many, for example, feature new bolted racking that's made to be quickly disassembled and erected elsewhere as needs dictate.
Like the equipment, the buildings themselves may be configured for flexibility. This is particularly true of very large DCs, says Mike Ogle, senior director of technical and engineering services for the Material Handling Industry of America (MHIA). Ogle explains that it's not unusual among today's super-sized DCs—those that occupy more than 500,000 square feet—to be set up as "warehouses within the warehouse." "All product is under one roof," says Ogle, "but you have certain products clustered together." These items are placed into separate pick and pack areas that are duplicated throughout the building, he says. Each area operates as its own mini warehouse and may even have separate shipping doors. They are built for flexibility and to be reconfigured easily, with product re-slotted frequently as various areas grow.
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It's not just their layout and equipment that distinguishes today's DCs from the warehouse of the past. It's also the activities taking place within their walls. For example, DCs have taken over many tasks once relegated to the manufacturing center.
In the past, most products arrived at the DC as finished goods. But these days, it's not unusual for suppliers to ship partially finished goods to the DC and have the DC associates carry out the final steps. For example, DC workers might handle tasks like installing plugs and transformers on refrigerators to accommodate electrical outlets in the country of final sale.
That practice of delaying final manufacturing until the last possible moment, known as postponement, is gaining traction in a variety of industries. For example, clothing company Gear For Sports receives most of its shirts, sweatshirts and other college apparel as "blanks," that is, without team imprints or logos. Once it determines its order demand, the company sends the items to special areas within its Lenexa, Kansas, DC where designs are stitched or screened onto them.
Likewise, Siemens brings in basic DSL modems to its DCs and holds them until it receives an order. At that point, associates flash specific software needed by the customer onto the modems.
Third-party logistics service provider Menlo Worldwide provides a similar service for a customer that sells copy machines under four different brand names. The supplier ships a single copier model to Menlo's facilities. When an order is received for a particular brand, DC associates insert a name plate onto the copier through a window in the carton.
In addition to light manufacturing, DCs are performing a variety of other value-added services. These range from pre-ticketing items for specific stores to placing garments onto hangers, special packaging and labeling, and building end-of-aisle store displays.
Workers at Del Monte Foods' Lathrop, Calif., DC, for example, label the incoming cans of fruit and package them into store-ready multi-packs. Del Monte found this to be the most cost-effective approach to labeling. Labeling equipment is expensive. By installing the equipment at a single DC, the company eliminated the need to equip all of its fruit processing plants.
Many DCs also offer sequencing service, in which products are picked in a particular order to facilitate subsequent operations. For example, distributors picking parts that will be used in automobile assembly might pick them to match the sequence in which they'll be needed on the line. Other items might be sequenced to speed up put-away at the store level, with workers picking items destined for a particular aisle or area of a retail store into the same carton or tote.
Just passing through!
In some facilities, a large volume of product never enters storage at all. These facilities serve merely as cross-docking centers, where workers receive shipments, break them down, reassemble them and then send them on their way. Cross-docking requires the facility to be both information rich and highly flexible. Sophisticated conveyors and sorters are often employed to accept a pallet load of cases and then sort them to a multitude of destinations, each representing a customer, location or process. These facilities must also have plenty of space available to accumulate products until they are ready to be shipped.
In many instances, cross-docking is made possible by suppliers who perform value-added services before the products are shipped. Customers often ask their distributors to pre-label cartons for individual stores or their own select customers so that when the products arrive as a full truckload, workers at the receiving docks can quickly unload individual cartons and send them through sortation systems that read the individual bar-coded labels and then sort each carton to its designated shipping dock. Once there, the cartons are gathered with products from other suppliers into a load destined for the retail outlet or customer.
The Virtual DC
Customers who have their suppliers perform these functions are bound to ask an obvious question: If I'm already getting my supplier to pre-label and organize my receipts for me so that they can be cross-docked upon arrival, why do I even need a distribution center? Couldn't I save money simply by having my supplier ship the product directly to the store?
That is where the concept of the Virtual DC comes into play. Best Buy currently uses 34 different suppliers for electronic and appliance repair parts. National Parts, a subsidiary of third-party service provider Fidelitone, coordinates the supply chain for these parts and acts as a clearinghouse on behalf of Best Buy. But National Parts does not warehouse these parts. Nor do they pass through a Best Buy DC. Instead, National Parts has a virtual warehouse with a paper inventory only. Its stock bypasses the traditional warehouse and is shipped directly from suppliers to service repair locations on a consistent, predictable basis.
"It is designed to bring standardization for all their repair parts," explains Tom Giovingo, executive vice president of Fidelitone. Giovingo explains that this direct-ship arrangement, which eliminates the need for a DC to handle the parts, saves time and money, reduces transportation requirements, and minimizes the potential for damage caused by handling.
"It sometimes comes down to an economic decision," explains Giovingo. "Is it better to stock products or to pay freight directly from the supplier to the customer?"
Of course, no virtual warehouse can function without accurate and current information on what inventory is in the pipeline and where it's going. "It is just as important for us to provide clients with information as it is to ship their items," says Giovingo.
It is this explosion of information in recent years that has created the biggest opportunities for the distribution center. With its strategic role at the center of the supply chain, the DC is poised to be the point where much of the information is received, channeled, captured and filtered. In addition to serving as the main hub for order fulfillment, the DC is also the place where critical data is captured and distributed, notes John Fontanella, senior vice president of research at Aberdeen Group, a research and consulting company.
Software that provides real-time visibility into inventories, processes and location of products plays a pivotal role in allowing the DC to be the nerve center of information. Suppliers and customers alike can share in this information to track demand and orders or improve their own processes. "Visibility is a major element of typical RFPs [requests for proposals] today," notes Tim Feemster, director of operations for Menlo Worldwide. "In fact, a lot of people are outsourcing just to get that event management capability."
What will the role of the DC be in the future? Well, that depends on how much it transforms itself into a service center.
"The traditional reasons of having storage are declining," says John Langley, professor of supply chain management at Georgia Tech. "DCs of the future are those that add value in other ways."
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”