If you store high-value products, the question is not if you'll have a security breach, but when and how much you'll lose. Is there any way to prevent the vanishing act?
John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.
Jennifer Garner and Kiefer Sutherland probably won't be showing up at your distribution center any time soon. But some of the ultra-cool espionage-like technology used by secret agents on the hit TV shows "Alias" and "24" might. Desperate to stem inventory "shrinkage," companies that store high-value items like jewelry, electronics and pharmaceuticals are securing their premises by installing high-tech antitheft devices.
Time was when high security meant a chain link fence. But no longer. Barrier fences are still in use, but the new versions are gussied up with microphonic cable sensors that sound an alarm at the merest hint of vibration. Inside the facility, you're likely to find the latest access verification technologies like fingerprint scanners or biometric technologies. Biometric systems can recognize people based on a physiological or behavioral characteristic—whether it's facial features, fingerprints, hand geometry or handwriting or even a subject's iris, retina, veins or voice.
True, it's expensive. But protecting your inventory is cheaper than the alternative. Supply chain theft has been pegged at anywhere from a $10 billion to an $80 billion industry, reports security consultant Barry Brandman. One company Brandman's familiar with was absorbing annual losses that reached well into the seven figures before it finally signed on with his service. That's a lot of laptops or tennis bracelets.
The perpetrators? They could be strangers. But they could just as easily be the people you see every day. Theft is committed by employees, vendors and contractors, confirms Brandman, who is president of Danbee Investigations, based in Midland Park, N.J. They don't even have to be disgruntled employees, vendors and contractors. Many people view inventory and cargo theft as a victimless crime, explains John Tabor, director of security at National Retail Systems, a trucking and logistics services company that hauls products for most major retailers. "The theory is that people like retailers and importers are more than capable of incurring the losses and that they have the insurance to cover it."
Then there are the professionals. "Product theft truly represents an entire underground economy," Brandman says. "There are organized crime rings that specialize in distribution and logistics. They will plant workers in the system and they can be there for months before [striking]."
That type of operation can be insidiously difficult to detect . "Much of the theft in distribution centers today looks just like standard operating procedure; if you have people working in collusion, product can just vanish into thin air,"says Brandman, who is currently investigating a $1.4 million theft from a DC in the Southeast. "Unless you carry a product with little or no intrinsic value, it's got to be a concern. If you carry things like apparel, fragrances or computers, then you'd better be sure you are protecting those goods. Because it's not a question of if, but of when and how much."
Access denied
First Data Resources, which ships six million credit cards a month, is taking no chances. The company has made its warehouse in Omaha, Neb., virtually impenetrable from the outside (the facility, in fact, was built to withstand winds of over 200 miles per hour). Before an employee can even enter the warehouse, he or she must submit to a handscan. After employees have gained entrance, their movements are tracked by one of the 127 cameras in use throughout the facility.
But it's not enough just to turn the DC into a fortress. At some point, most—if not all—inventory becomes cargo. Goods are particularly vulnerable to theft when they're in transit. To keep closer tabs on trailers, many truckers are installing high-tech tracking systems. National Retail Systems recently began installing global positioning system (GPS) tracking devices on its trailer units. The location of each trailer is monitored on the Internet, and authorities are notified immediately if the truck is powered up when it shouldn't be or if the truck's seal is breached at an unauthorized time. The technology typically runs $1,000 per trailer, a hefty investment.
Will truckers shell out that kind of money? "Transportation companies work on such small margins that getting them to commit to new technologies is tough,"concedes Tabor, "but the industry leaders are starting to move in that direction. The GPS system has been a pretty easy sell from a security standpoint, but then you get the added benefit of being able to utilize the trailer better if you know its where abouts. You might have a trailer tied up now for three or four days, instead of sitting for weeks somewhere."
Ready for their close-ups?
Of course, not everybody is convinced that dazzling technology will bring dazzling results. Some companies swear by the virtues of vigilance: maintaining a strong management presence in the distribution center and making sure employees know that the company will take a tough stand on theft.
"We have a very good presence on the floor with supervision," says Bruce Mant z, director of operations for Automated Distribution Systems, a third-party provider that handles high-value items like footwear and apparel. "We have a lot of controls in place, and we cycle count the entire building every week so if something is going on we'll find it quickly. They might be able to conceal some small items, but they are not going to get any big items."
Mantz likes to keep things simple: "We have one door in, and one door out," he says. "We limit the way in and out of the building and when we do have penetrations at truck doors, everything is on 24-hour circuits. If there is an alarm, it goes out over the radio and within 30 seconds we have somebody within that location." And while they're at work, employees are watched at all times by very visible closed-circuit TV cameras. "We don't hide it, " Mantz says of his company's decision to use surveillance. "It's a deterrent."
Editor's note: The Department of Homeland Security's Web site offers more than just fresh uses for duct tape. It also provides a checklist of ways to secure warehouses from intruders—whether terrorists or thieves. To view the list, go to www.customs.ustreas.gov/xp/cgov/import/commercial_enforcement/ctpat.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!
Toyota Material Handling and its nationwide network of dealers showcased their commitment to improving their local communities during the company’s annual “Lift the Community Day.” Since 2021, Toyota associates have participated in an annual day-long philanthropic event held near Toyota’s Columbus, Indiana, headquarters. This year, the initiative expanded to include participation from Toyota’s dealers, increasing the impact on communities throughout the U.S. A total of 324 Toyota associates completed 2,300 hours of community service during this year’s event.
The PMMI Foundation, the charitable arm of PMMI, The Association for Packaging and Processing Technologies, awarded nearly $200,000 in scholarships to students pursuing careers in the packaging and processing industry. Each year, the PMMI Foundation provides academic scholarships to students studying packaging, food processing, and engineering to underscore its commitment to the future of the packaging and processing industry.
Truck leasing and fleet management services provider Fleet Advantage hosted its “Kids Around the Corner Foundation” back-to-school backpack drive in July. During the event, company associates assembled 200 backpacks filled with essential school supplies for high school-age students. The backpacks were then delivered to Henderson Behavioral Health’s Youth & Family Services location in Tamarac, Florida.
For the past seven years, third-party logistics service specialist ODW Logistics has provided logistics support for the Pelotonia Ride Weekend, a campaign to raise funds for cancer research at The Ohio State University’s Comprehensive Cancer Center–Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. As in the past, ODW provided inventory management services and transportation for the riders’ bicycles at this year’s event. In all, some 7,000 riders and 3,000 volunteers participated in the ride weekend.