Lots of vendors will tell you their material handling equipment is ready to "plug and play." But the reality is, there will still be a need for systems integrators for a long time to come.
James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP?s Supply Chain Quarterly and a staff writer for DC Velocity.
When you go to buy a printer or a camera these days, you don't have to worry about getting it to work with your PC. You can plug it into your computer and—bingo!— it's ready to go.
Unfortunately, the ease of integration that we've come to expect with our consumer electronics doesn't translate into the material handling world. Although a lot of vendors market their equipment as ready to "plug and play," DC managers can't assume that the new devices they're installing will automatically be able to "talk" to other components of their material handling systems.
Most of the time, DCs find they have to bring in a systems integrator, a specialist that creates interfaces between electronic devices so that they can communicate with each other. Although industry experts say it's much easier to connect material handling equipment to computer systems today than it was 10 years ago, right now, plug and play is still more an ideal than a reality.
Making a connection
That's not to say that all of the plug-and-play claims made by vendors are pure hype. Though the equipment's capabilities are often oversold, there are some cases in which customers can install a new piece of equipment without the need for integration. But those instances are limited to very basic setups. If a warehouse or distribution center simply needs to move a box from storage to the loading dock via conveyor, then it's possible to "plug and play." Indeed, a number of manufacturers make transport-type conveyors that can be set up fairly easily. "The closest thing to plug and play in materials handling is the DC volt [motor] conveyor," says Robert Reinhartsen, an account executive with W&H Systems, a systems integrator based in Carlstadt, N.J.
But few installations are so simple. The typical distribution center today uses an array of sophisticated material handling equipment to get product in and out the door. That equipment runs the gamut from conveyors to pick-to-light systems, from print-and-apply bar-code labeling machines to voice-recognition systems. All of those devices receive their directions from a warehouse management system (WMS), a software application that coordinates the flow of product putaway, storage, and retrieval. "When you get into systems that do complex things, "says Reinhartsen, "you have to design and integrate the equipment."
Still, integration is not the chore it was 10 years ago. Back then, a systems integrator would have to write special interfaces between the WMS and a piece of material handling equipment so that the software could transmit instructions to the device. "A decade ago, it took 14 weeks to get the WMS up and running and another 36 weeks to get all the components connected," says Jack Kuchta, a consultant with Gross and Associates in Woodbridge, N.J. "What's changed is that there's now off-the-shelf middleware to handle the equipment interfaces to a major WMS."
In part, it's easier to connect software systems to automated conveyor and sortation equipment today because of the existence of network communications standards for industrial automation—such as the EtherNet Industrial Protocol (IP), Profibus (for process field bus), and DeviceNet networks. Those protocols enable devices like bar-code scanners, motors, and sensors to exchange information with programmable logic controllers (PLCs). "Every manufacturer used to have its own method for talking to PLCs," says Mike Brinkman, a controls sales manager for Bastian Material Handling in Indianapolis. "We now use standard protocols so it doesn't matter if you have a Siemens or a Dematic conveyor."
Along with these protocols, the industry has seen the emergence of a software application called a warehouse control system (WCS), which sits between the WMS and the material handling equipment. The WCS takes general instructions from the WMS about what products need to be moved and translates that information into specific instructions for a particular piece of equipment. In essence, says consultant Sam Flanders, president of 2wmc.com, a material handling consulting firm in Portsmouth, N.H., the WCS serves as an integration platform on which to connect the different kinds of equipment.
Everybody's unique
Despite these technological advances, the industry is still a long way from plug and play. Why is that? Experts in the field say that given the enormous variation from one DC operation to another, it would be impossible to create a one-size-fits-all software package. Some customization will always be required. "The backbone of the system is software, and there's no product that comes in a box all wrapped up in cellophane," says Steve Martyn, chief executive officer of GRSI, a systems integrator located outside Philadelphia.
Nowadays, it typically takes between eight and 12 weeks to install a piece of material handling equipment in a distribution center, says Martyn. As part of the project, a company has to develop a "functional document," a spec sheet that spells out what has to be done in terms of integration. Once the specs are written, Martyn says, an integrator can use existing software templates, but it still has to write specific coding instructions for at least 40 percent of the integration.
It's essential that a company define the transaction format—the method of exchanging data between the computer application and the equipment. Flanders says that the format will specify the information required for the equipment to do a task—an item's order number and quantity, at a minimum— and then determine what information the equipment will send back to the computer when the job is completed. "It's not like installing software on your computer," Flanders notes. "You have to define the transaction format. You have to get data into a format that's understood."
No industry consensus
Before plug and play can become a reality in the material handling world, the industry would first have to agree on a set of standards for data exchange—standards that software and equipment makers would be required to follow. That's not an impossible task; after all, players in the computer and electronics industry were able to agree on the Universal Serial Bus (USB) as a standard for interfacing devices with computers. But it's one that would require leadership. "The only way to have true plug and play is if you have a body of industry leaders that define a standard," says Daniel Ahrens, a client support manager at Fortna Inc., a material handling consulting firm and systems integrator based in West Reading, Pa. "This is the standard for WMS and will consist of this message type. Anyone who wants to participate would have to adhere to this standard."
But unlike the consumer electronics sector, the material handling industry has yet to show much interest in promoting common interface standards. "The trouble with standards is you have to get hundreds of companies to agree," says Flanders. "You have to have a driving force to make this happen. And nobody thinks it will result in extra revenue."
Although there's no pressure on the material handling industry to develop common standards right now, that could change. The ranks of warehouse management software providers are dwindling in the face of competition from enterprise resource planning (ERP) system vendors like SAP and Oracle. If the large software houses come to dominate the supply chain software market, they might take it upon themselves to set de facto standards that material handling vendors would be forced to meet. "The big ERP guys probably will eventually set standards," says Martyn.
But as long as companies want their DCs to be unique, companies installing sophisticated material handling equipment will still need the services of systems integrators. "For plug and play to work, it would have to start at the top," says Pratap Chakravarthy, a project manager with Accu-Sort Systems Inc. in Philadelphia. "Every customer would have to have a standard ERP, a standard WMS, and a standard WCS, and each industry would have to have standard operation, which is almost impossible. A lot of customers pride themselves on differentiation, and [they view their DCs' unique capabilities] as a competitive advantage."
Most of the apparel sold in North America is manufactured in Asia, meaning the finished goods travel long distances to reach end markets, with all the associated greenhouse gas emissions. On top of that, apparel manufacturing itself requires a significant amount of energy, water, and raw materials like cotton. Overall, the production of apparel is responsible for about 2% of the world’s total greenhouse gas emissions, according to a report titled
Taking Stock of Progress Against the Roadmap to Net Zeroby the Apparel Impact Institute. Founded in 2017, the Apparel Impact Institute is an organization dedicated to identifying, funding, and then scaling solutions aimed at reducing the carbon emissions and other environmental impacts of the apparel and textile industries.
The author of this annual study is researcher and consultant Michael Sadowski. He wrote the first report in 2021 as well as the latest edition, which was released earlier this year. Sadowski, who is also executive director of the environmental nonprofit
The Circulate Initiative, recently joined DC Velocity Group Editorial Director David Maloney on an episode of the “Logistics Matters” podcast to discuss the key findings of the research, what companies are doing to reduce emissions, and the progress they’ve made since the first report was issued.
A: While companies in the apparel industry can set their own sustainability targets, we realized there was a need to give them a blueprint for actually reducing emissions. And so, we produced the first report back in 2021, where we laid out the emissions from the sector, based on the best estimates [we could make using] data from various sources. It gives companies and the sector a blueprint for what we collectively need to do to drive toward the ambitious reduction [target] of staying within a 1.5 degrees Celsius pathway. That was the first report, and then we committed to refresh the analysis on an annual basis. The second report was published last year, and the third report came out in May of this year.
Q: What were some of the key findings of your research?
A: We found that about half of the emissions in the sector come from Tier Two, which is essentially textile production. That includes the knitting, weaving, dyeing, and finishing of fabric, which together account for over half of the total emissions. That was a really important finding, and it allows us to focus our attention on the interventions that can drive those emissions down.
Raw material production accounts for another quarter of emissions. That includes cotton farming, extracting gas and oil from the ground to make synthetics, and things like that. So we now have a really keen understanding of the source of our industry’s emissions.
Q: Your report mentions that the apparel industry is responsible for about 2% of global emissions. Is that an accurate statistic?
A: That’s our best estimate of the total emissions [generated by] the apparel sector. Some other reports on the industry have apparel at up to 8% of global emissions. And there is a commonly misquoted number in the media that it’s 10%. From my perspective, I think the best estimate is somewhere under 2%.
We know that globally, humankind needs to reduce emissions by roughly half by 2030 and reach net zero by 2050 to hit international goals. [Reaching that target will require the involvement of] every facet of the global economy and every aspect of the apparel sector—transportation, material production, manufacturing, cotton farming. Through our work and that of others, I think the apparel sector understands what has to happen. We have highlighted examples of how companies are taking action to reduce emissions in the roadmap reports.
Q: What are some of those actions the industry can take to reduce emissions?
A: I think one of the positive developments since we wrote the first report is that we’re seeing companies really focus on the most impactful areas. We see companies diving deep on thermal energy, for example. With respect to Tier Two, we [focus] a lot of attention on things like ocean freight versus air. There’s a rule of thumb I’ve heard that indicates air freight is about 10 times the cost [of ocean] and also produces 10 times more greenhouse gas emissions.
There is money available to invest in sustainability efforts. It’s really exciting to see the funding that’s coming through for AI [artificial intelligence] and to see that individual companies, such as H&M and Lululemon, are investing in real solutions in their supply chains. I think a lot of concrete actions are being taken.
And yet we know that reducing emissions by half on an absolute basis by 2030 is a monumental undertaking. So I don’t want to be overly optimistic, because I think we have a lot of work to do. But I do think we’ve got some amazing progress happening.
Q: You mentioned several companies that are starting to address their emissions. Is that a result of their being more aware of the emissions they generate? Have you seen progress made since the first report came out in 2021?
A: Yes. When we published the first roadmap back in 2021, our statistics showed that only about 12 companies had met the criteria [for setting] science-based targets. In 2024, the number of apparel, textile, and footwear companies that have set targets or have commitments to set targets is close to 500. It’s an enormous increase. I think they see the urgency more than other sectors do.
We have companies that have been working at sustainability for quite a long time. I think the apparel sector has developed a keen understanding of the impacts of climate change. You can see the impacts of flooding, drought, heat, and other things happening in places like Bangladesh and Pakistan and India. If you’re a brand or a manufacturer and you have operations and supply chains in these places, I think you understand what the future will look like if we don’t significantly reduce emissions.
Q: There are different categories of emission levels, depending on the role within the supply chain. Scope 1 are “direct” emissions under the reporting company’s control. For apparel, this might be the production of raw materials or the manufacturing of the finished product. Scope 2 covers “indirect” emissions from purchased energy, such as electricity used in these processes. Scope 3 emissions are harder to track, as they include emissions from supply chain partners both upstream and downstream.
Now companies are finding there are legislative efforts around the world that could soon require them to track and report on all these emissions, including emissions produced by their partners’ supply chains. Does this mean that companies now need to be more aware of not only what greenhouse gas emissions they produce, but also what their partners produce?
A: That’s right. Just to put this into context, if you’re a brand like an Adidas or a Gap, you still have to consider the Scope 3 emissions. In particular, there are the so-called “purchased goods and services,” which refers to all of the embedded emissions in your products, from farming cotton to knitting yarn to making fabric. Those “purchased goods and services” generally account for well above 80% of the total emissions associated with a product. It’s by far the most significant portion of your emissions.
Leading companies have begun measuring and taking action on Scope 3 emissions because of regulatory developments in Europe and, to some extent now, in California. I do think this is just a further tailwind for the work that the industry is doing.
I also think it will definitely ratchet up the quality requirements of Scope 3 data, which is not yet where we’d all like it to be. Companies are working to improve that data, but I think the regulatory push will make the quality side increasingly important.
Q: Overall, do you think the work being done by the Apparel Impact Institute will help reduce greenhouse gas emissions within the industry?
A: When we started this back in 2020, we were at a place where companies were setting targets and knew their intended destination, but what they needed was a blueprint for how to get there. And so, the roadmap [provided] this blueprint and identified six key things that the sector needed to do—from using more sustainable materials to deploying renewable electricity in the supply chain.
Decarbonizing any sector, whether it’s transportation, chemicals, or automotive, requires investment. The Apparel Impact Institute is bringing collective investment, which is so critical. I’m really optimistic about what they’re doing. They have taken a data-driven, evidence-based approach, so they know where the emissions are and they know what the needed interventions are. And they’ve got the industry behind them in doing that.
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.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."