a focus on the fundamentals: interview with Paul Marshall
Running a DC is a lot like managing a football team, says Paul Marshall of Limited Brands. You can have all the talent in the world, but if you don't do the basic blocking and tackling, you're not going to win.
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
Ask an executive to describe day-to-day operations at the DCs he runs for an $11 billion a year retailer, and you might expect to hear about cutting-edge technologies and revolutionary best practices. But when Paul Marshall talks about the DCs he oversees for Limited Brands, he steers the conversation to what could only be called the basics: keeping inventory as lean as possible, for example, and the challenge of accurately tracking goods throughout the distribution system. Today's dazzling new technologies provide managers with powerful tools to do their jobs faster and better, he acknowledges, but in the end, the fundamental values remain the same.
As vice president of distribution operations for Limited Brands Logistics Services, Marshall today ranks among the highest-profile executives in the business. But he got his start in the logistics profession on the other side of the fence.While in college, he worked part-time in a United Parcel Service (UPS) distribution center. After graduating, he was able to parlay that experience into a position with Limited Brands as a floor supervisor at one of its Columbus, Ohio, distribution centers. From there, he worked his way through a variety of corporate transportation, logistics, and distribution postings to his present position.
Marshall currently serves as the president of the Warehousing Education and Research Council (WERC) and is an active member of the Council of Supply Chain Management Professionals (CSCMP).He spoke last month with DC VELOCITY Editorial Director Mitch Mac Donald about his career, the value of professional associations, and what the future holds for supply chain management.
Q: Tell us a little bit about your current role and responsibilities.
A: I'm vice president of distribution operations for Limited Brands, Logistics Services, responsible for the Victoria's Secret, Limited, and Express stores. I am primarily responsible for distribution operations as well as the interface with many of the cross-functional departments within logistics and these brands, working with them to evaluate and execute the flow of product through the supply chain.
Q: Obviously a very big company. What are Limited Brands' annual sales?
A: About $11 billion.
Q: Given the size and scope of the operations you manage, your distribution system must be fairly far reaching in terms of geography. Could you give us the nickel tour of the logistics network and operations for Limited Brands?
A: We source from a number of countries around the globe. We are a large user of air freight, shipping thousands of tons annually from around the world, including direct flights to Columbus, Ohio. We're one of the larger ocean shippers as well, importing thousands of containers annually. In addition, we ship thousands of truckloads each year into our distribution centers from domestic suppliers and outbound to our stores.
We have seven distribution centers in Columbus, Ohio, and two third-party DCs, one on each coast. Our distribution centers are relatively sophisticated, with high-speed conveyors, paperless light-directed and RF picking systems, and shipping systems that can automatically sort about 90 percent of our product.We operate our distribution centers five to seven days a week.
Q: Columbus has really emerged as something of a logistics hub, hasn't it?
A: Yes, Columbus has turned out to be a great distribution hub. It is located at the crossroads of the highway system, which allows us to reach a large percentage of the U.S. population within one day's drive. We reach about 50 percent of our stores within a day.
Q: How many stores are we talking about just in the United States?
A: As of right now, about 3,700.
Q: Do you have stores outside the United States?
A: No, we do not.
Q: Let's shift gears and talk about your career path, if we may. How long have you been with Limited in various capacities?
A: I joined the Limited in 1989, so just over 17 years.
Q: Have you always been based in Columbus?
A: Yes. Limited Brands is headquartered in Columbus, and the majority of our distribution operations reside here as well. So, I have been fortunate to have a variety of different roles since joining the company without having to relocate.
Q: What was your first position with the company?
A: I began my career as an operations supervisor in one of the distribution centers.
Q: So you really have had a chance to experience the operation from the working end of the shovel, if you will.
A: Absolutely. It provided me with an opportunity to learn and to develop leadership and fundamental operations skills in a fast-paced environment. I enjoy the people, the pace, and the challenges that come with operations in the retail industry.
Q: How did your career progress from there? What sort of path did you follow through the Limited?
A: I spent my first eight years in various distribution operations positions and was fortunate enough to be promoted to director of one of our distribution facilities. Next, I was given the opportunity to lead our national shipping operations, which among other things, was my first experience managing third-party logistics service providers. I was director of domestic transportation for a couple of years and then served in a similar role leading our international transportation operation before moving into my current role.
Q: Prior to joining Limited, you worked for a time on the service provider side of the fence at United Parcel Service. Tell us a little bit about that, if you would.
A: It was a great start to a career in the logistics profession. That's really where I first learned that I enjoyed logistics and being a leader, and began thinking that this might be a career path for me. It was a job that I took in college working my way through school. I was a supervisor at UPS for a couple of years. It was very rewarding and a great learning experience for me.
Q: You have a bachelor's degree in business administration. Did you take any courses in transportation, distribution, or logistics while earning that degree?
A: It was really my work at UPS that gave me exposure to the profession. But while in school, I was able to do some independent study based on my work experience, which enabled me to better think through the leadership side of things. It wasn't a traditional logistics supply chain degree as we know it.
Q: Let's step back a bit and talk about the logistics and supply chain profession. What characteristics does it take to succeed in this field today?
A: I think a key ingredient in a logistics professional's skill set is the ability to attract and develop talent. It's very important to surround yourself with talented people. It's equally important to have a supportive leadership style that provides your team with an opportunity for continuous learning and innovation while coaching and remaining grounded in the fundamentals. Having a talented team that enjoys the freedom to be innovative, yet can execute the basics is a winning combination.
Another important requirement today is a fundamental understanding of the supply chain and the role of logistics from source to customer. I have had the opportunity to lead many different logistics functions. My experience has enabled me to better develop, evaluate, and articulate a big-picture view of supply chain capabilities, services, and associated costs.
Q: Is that the route you would recommend to a young person just starting out in this field?
A: Absolutely. Growing your career laterally enables one to get a broad view of the business and, in my opinion, increases the probability of success in the long run. If you have a solid understanding of the entire supply chain or of the role of logistics within the supply chain, you will be a much more effective leader. I would also encourage someone interested in this field to take advantage of the educational opportunities that are out there. A number of schools offer good operations, logistics, and supply chain programs. There are also several professional and trade associations that can be a great resource.
Q: I know you're the president of the Warehousing Education and Research Council and a member of the Council of Supply Chain Management Professionals, so you're clearly active in some of the industry's leading professional associations. I take it you'd recommend that to newcomers to the field as well?
A: Yes, I would. Continuous learning is important for career growth. The industry can change quickly and your ability to stay close to new technology, processes, and ideas not only benefits your company but also allows for your continued professional growth. One of the best ways of doing that is through these associations. They are a rich source of education and professional development, whether it's through seminars, conferences, or online learning.
Q: You just touched on how quickly and constantly things are changing within logistics. In your 20-plus years in the field, what has changed the most?
A: The first thing that comes to mind would be the recognition of the role that the supply chain and logistics play in today's business environment. It is not simply seen as the cost of doing business. It is widely viewed as a very real competitive advantage.
Q: In other words, logistics is no longer just a source of red ink. It's something that can be leveraged in an almost infinite variety of ways for business success?
A: When production decisions can be postponed until there's more certainty about what the customer wants because your logistics team can deliver product and information with speed and accuracy, it's a genuine competitive advantage. If inventory can be lean and costs can be driven out of the business because of the value that logistics can offer, that is a tremendous advantage. Today, in many cases, we are asked to take on additional expense in distribution operations because there is greater value derived elsewhere in the business. This may not have always been the case. Technology is an obvious catalyst of this change. Speed and accuracy of information continues to improve. The ability to share information across business functions— not only within your business, but also with your trading partners— continues to drive out costs and improve inventory deployment strategies. At the same time, warehouse management systems have improved labor planning, and paperless picking tools used by DC associates continue to make the operation more efficient.
Q: Are there any other changes over the past 20 years that come to mind?
A: The level of talent entering the field today from the different universities offering logistics-related degrees and the opportunities for continuous learning continue to help drive logistics performance.
Q: Do you think that's a reflection of logistics and supply chain management's growing stature?
A: I do. Senior leadership realizes the need for a sound logistics operation and places more demand on recruiting and developing talent to sustain and improve service. We recognize the value of growing logistics talent and building bench strength for long-term success.
Q: On the flip side, is there anything that hasn't really changed over the years despite the explosion in technology and the profession's rise in stature?
A: The importance of concentrating on the fundamentals remains unchanged. Basic activities like work methods, accurately picking orders, and good inventory management are essential. Technology has provided us with new tools that enable us to disseminate information more quickly, but the fundamental skills and the need to execute the basics remain the same.
To use a sports analogy, you can have the most talented football team in the world, but if you don't do the basic blocking and tackling, you're not going to win. Winning teams are those with talented players that execute the fundamentals.
Q: Speaking specifically to technology, what do you see as the next big thing? What's going to change the game in the next decade?
A: There are two big things that come to mind. One is the technology piece, and another is collaboration. Businesses will continue to seek technology that will provide more precise information about inventory availability and demand. Knowing the exact amount of inventory on hand, what is required in stores, and what's in transit will continue to enable businesses to run lean on inventory and also increase the value of a responsive, agile supply chain operation.
Q: What about the collaboration piece you mentioned?
A: Collaboration within businesses, with trading partners, and even among non-competing businesses will be invaluable in the future. Even as technology improves, we need to remain mindful of the fact that the technology is only a tool. Successful companies will be those that are highly integrated and can plan together through the use of technology. Future demands will require dynamic networks that will have the ability to fulfill customer demands from any point in the supply chain. Success will increasingly be determined by how well you can accelerate the movement of goods from any point in the supply chain to meet customer demand. The ability and willingness to share information with supply chain partners and even non-competing businesses that are willing to share resources can help you achieve greater capacity, higher speed, and lower costs.
Q: Any closing thoughts?
A: It is an exciting time to be in the logistics business. It is rewarding because of the growing recognition of supply chain management's value. A fast, flexible supply chain is truly a competitive advantage. Logistics and supply chain professionals can bring value not only to the bottom line by reducing expenses, but also to top-line sales by getting the right product to the right place at the right time.
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."