Larry Jones is vice president of operations at Fortna Inc., a provider of software, professional services and equipment for logistics and distribution systems.
It used to be that when you bought appurtenances for your distribution center, you bought equipment, or maybe services. Today, you often buy a "solution." "Solution," of course, is vendor talk for equipment, hardware, software and systems designed to address a specific operating or performance need. If buying solutions sounds harder than just picking out equipment, that's because it is: Not only do you have to choose the right stuff, but you also have to choose the right vendor.
When it comes to material handing equipment, the easiest to buy are the so-called "commodity" items. With commodities, whether it's conveyors or racks and shelving or motorized equipment, you can easily compare features—the roller size, bearing type, gauge of steel, type of paint, capacity. Once you've drawn up a list of products that meet your needs, it's a fairly simple matter to evaluate the vendors: Who will respond quicker to equipment issues? Will they deliver on time? Can I trust this company?
But when you make systems or "value-add" purchases—items requiring specialized engineering, software and software interfaces, or integration with other equipment and software—there are few measurable standards and features to fall back on. And that is not all. With a systems purchase, you're almost certainly entering a relationship of some duration with the vendor, which makes your choice of suppliers all the more critical. Usually anyone can supply equipment that will meet or exceed system capacity requirements. What counts is how well the engineering and technical staff plan, handle the installation, and implement and integrate the software and systems … and what kind of support they provide in the long term.
That's hard—so hard, in fact,that buyers typically retreat to familiar ground. They spend most of their time comparing the commodity parts of a proposed system, while attempting to quantify the basically unquantifiable "soft deliverables," such as support and training.
This is often their biggest mistake. When systems with a high degree of complexity fail, it's rarely related to any particular commodity item provided with that system. Problems with equipment are readily solved by replacing, repairing or adjusting components already on hand. Problems with poor engineering, project management, and software, however, are not so easily addressed.
Though due diligence may seem more like due drudgery, it's important to ask questions from the outset: Who will be responsible for project management? (Every vendor will tell you it provides project and site management, but who will actually perform these functions?) Does the salesman play this role and is he or she trained in these disciplines? Salesmen playing at project management can lead to poor team communication and forgotten functionality. What software is provided to communicate with all the material handling equipment and existing or future WMS packages? Is the software proven, stable and easy to configure? Who will be on site during training? Who is available to support the site and the software long after acceptance?
Then there's the matter of software specifications. Many times, vendors subcontract the spec'ing function to a third-party provider. But this raises the risk of miscommunication and may lead to limited site support . Usually a third-party provider's bid on a project includes a defined number of hours for on-site training and after-startup support. And all too often, the third-party's lack of involvement at the front end of the project, developing the proposal and detailed description of the operations, can cause confusion during delivery related to committed time on site, availability of remote support and missed software functionality.
A hard look at software vendors
Sooner or later, most DC managers will find themselves pulled into the systems purchase process—largely because they know their problems better than any IT staffer—or software vendor—does. Whether it's a warehouse management system (WMS), transportation management system (TMS) or a warehouse control system (WCS), the natural starting point for most buyers is to consider the software's ability to meet project and business requirements. Defining how the software will work may include conducting a detailed, scripted demonstration of the various systems under consideration using real data and simulated processes, or even a complete multi-week conference room pilot to actually test and demonstrate all of the software's capabilities. Spending the time in the beginning to fully understand the functionality reduces problems in the project implementation. And don't just ask whether the software can meet the requirements; ask how the requirements will be met .
Then you have to figure out who can deliver. To do that, you have to consider each software provider's capabilities and size and make some educated guesses as to how well it will work with your project team and organization. Check references, visit active client sites, and find out who will be working on the project as well as how the project will be supported in the long term. The individual people assigned to the project have a great impact on successful implementation. Find out whether vendors will provide detailed documentation on the base software and any special modifications. Ask if it's possible to obtain the source code for the software or whether the vendor will maintain an escrow account so that you have recourse in case of future problems. When discussing the software with references, ask about support and response time for problem resolution during implementation. The rule of thumb here is that every hour spent up front researching the vendors, their products, their personnel and their delivery models will save you three times that during commissioning.
When selecting the software vendor, be sure to include the people who will use and maintain the software. If you have no internal support capabilities, arrange to have the vendor provide this service and make sure this is included in all contracts. Keep in mind that the more support the vendor has to provide,the higher the ongoing maintenance costs will be. Support provided in-house helps ensure more rapid problem resolution and keeps the focus on moving product through the material handling system.
As with commodity items, many times software vendors will claim to make a product with the same capabilities as competitors' products; however, taking the time to "look under the covers" can often be the difference between a successful, on-time implementation and a long, drawn-out struggle. Depending on the type of software and the business requirements, most software solutions can eventually be jerry-rigged to work. But there is a major risk that while you're trying to make it work, customers unhappy over your execution may desert you. Software is not a commodity, and very often the difference between success and failure is as simple as asking how a process works and making sure adequate support is provided.
Not so easy picking
A company that's evaluating warehousing or transportation software generally has no illusions about being involved in a complicated systems purchase, but other cases may not be so clear cut. It's not unusual for buyers to be thrown off track by what appears to be a straight forward commodity purchase but is actually a more complex systems purchase. Take picking modules, for example. Whether rack, shelving, or mezzanine-supported, picking modules may appear to be a simple commodity. Exclusive of any powered equipment, they're static structures. They don't require software interfaces or I/O checkout. Most customers choose their picking modules based on the type of product to be stored or operational requirements (pallet flow, carton flow, or piece picking from shelving?). And they're quick to dive into the details: What type of rack upright, capacity, color and type of coating?
But by focusing on what they know—the individual components—they risk overlooking the systems aspect of a functioning module. Given their large number of pieces and components, picking modules are engineering intensive. And though stand-alone, static structures,they interface with operations and the people using them. Though it might not be evident initially, the buyer will undoubtedly face innumerable complex questions. For example, what type of flooring will you need? (Flooring requirements vary, based on the sprinkler requirements and the type of picking.) Or if operators will be picking to cart, what type of wheels do the carts need? Have the operations and engineering staff reviewed any conveyor interfaces related to replenishment, takeaway and trash removal? Where will pallet returns be installed? How many are needed? Are pallet slide rails required? Should pallet flow positions have safety bar grating under each pallet position? Should safety netting be used around stairs and outer walkways? Does the setup conform to government code and site requirements?
These are all things to ask the vendors who come in to bid. And while they're on site, find out whether they have in-house professional project managers, site managers and engineers. Focus on the delivery process of both the integrator and the manufacturer. Make sure the vendors understand the key tasks and the sequence in which they must be completed and verify that these "critical path" elements and their completion deadlines are reflected accurately on the project schedule. Interview the prospective key personnel from both the integrator and the manufacturer. Push for strong individuals with decision-making authority as project managers at the integrator and manufacturer levels. Place a like-minded individual within your organization as the primary contact and key decision maker.
And always, always ask to meet the engineering staff. The quality of the engineering affects not only the structural design but also the functionality. Engineers have to accommodate the client's demands within the limitations of both building and design constraints all the while dealing with the various issues that will touch on available storage and personnel access.
Though at this point, you might be tempted to beat a retreat to familiar ground and concentrate on the rack uprights, rollers and coatings, don't make that mistake. Look past the components; you're buying a relationship.
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."