When Grayling Industries needed a real-time view of inventory on both sides of the U.S.-Mexico border, it turned to rented software for help. Now, the mid-sized company knows exactly what's what?and where it's at.
Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.
There's something interesting about inventory visibility: Everybody wants it, many software vendors promise it, yet plenty of companies still don't have it. It isn't easy for any company to achieve, of course. But it's especially challenging for companies that have multiple suppliers, do business across borders, and cannot afford costly, time-consuming software implementations involving supply chain partners.
Grayling Industries fits all three of those categories, yet the manufacturer of asbestos-abatement supplies knows exactly what inventory is on hand at any given moment—not just in its own facilities but also in those of its top suppliers and its third-party logistics (3PL) partner. The mid-sized shipper was able to achieve this feat by getting its business partners to join it in using an on-demand inventory and warehouse management system (WMS) that makes it easy to share information across companies.
Cross-border confusion
Grayling Industries, headquartered in Alpharetta, Ga., sells protective liners for intermediate bulk containers (IBCs), bulk bags, and totes; disposal bags for asbestos; decontamination showers; and chemicals for asbestos and lead paint removal. About half of its $20 million in annual business involves custom orders, according to Carlos Rubio, Grayling's director of finance and operations.
The company serves customers from warehouses in Atlanta, Toronto, and Nijmegen, the Netherlands. Most of its products are assembled in a 60,000-square-foot, ISO-certified maquiladora in Juarez, Mexico, where more than 40 unique, custom-designed machines form polyethylene into liners, bags, and other items. About 5 percent of the polyethylene sheeting and other materials used in manufacturing comes from Asia and Europe, 15 percent is supplied from Mexico, and the balance comes from the United States, says Rubio. Materials for assembly are shipped in full trailers and ocean containers or by less-than-truckload transportation to Juarez. About 80 percent of the finished product is sold to customers in the United States, and on average, some 600 full trailer loads of finished goods cross the Rio Grande each year.
All of that back-and-forth across the border created some information gaps. One of those was a lack of real-time information on inbound shipments from suppliers. In the past, Grayling stored those shipments in its customs broker's warehouse, where shipment information was keyed in and updated only once a day. "If a truck came in later that night, we weren't aware of it until the end of the next day," Rubio says. "We were basing decisions on the inventory status at 5 p.m."
As a result, the plant sometimes did not know that material it urgently needed on the production lines was sitting in the broker's facility. Worse still, it sometimes ran out of inventory, forcing it to shut down a production line. That was bad news for a company that routinely has order backlogs and needs to keep its production lines humming. Making matters worse, purchase order and delivery information was slow to arrive, and more time was lost in rekeying and reconciling that information before Grayling's accounting system could pay suppliers.
The big switch
With responsibility for both operations and finance, Rubio understood the importance of keeping up with the pace of orders while optimizing the timing of supplier payments. To achieve both objectives, the company would need an up-to-the-minute view of inbound orders from suppliers and outbound shipments to Juarez. He decided to make two big changes in the way Grayling handled its cross-border business.
The first was to implement software that could handle several tasks, including informing suppliers of replenishment requirements; tracking inbound and outbound inventory; providing Grayling and its supply chain partners with real-time updates; and integrating with the shipper's enterprise resource planning (ERP) system. There were several software products that could fulfill Grayling's needs, but Rubio faced some constraints that narrowed the field of contenders. For one thing, the shipper could not afford a long, costly implementation. For another, the system would have to be affordable and easy for Grayling's supply chain partners—some of which were small, family-owned companies—to install and use.
The Inventory and Warehouse Management System from SmartTurn met all of Grayling's criteria. At a cost of just $500 per month and no limit on the number of users, the on-demand system was very affordable. As with other applications delivered over the Internet under the "software as a service" (SaaS) model, there would be no need for a long and costly installation, customization, or modifications to existing systems. Upgrades and maintenance would be handled at the source and become automatically available to all users at no extra cost. And because the license holder would be able to control what data external partners could access and modify, security would not be a concern.
The second big change was to shift responsibility for the storage and handling of inbound and outbound shipments to a 3PL that could be more flexible and responsive than the customs broker. The manufacturer chose Prologistics, a small 3PL in El Paso, Texas, that specializes in U.S.-Mexico trade. Prologistics had been handling some of Grayling's shipments, and Rubio was pleased with the 3PL's service quality and fees. The one drawback was that the small business had no WMS and relied on paper documents and physical inspections. But once Prologistics agreed to use SmartTurn's system (a condition of getting Grayling's business), the relationship took off.
On time, every time
Within a couple of weeks, SmartTurn had completed planning, configuration, and deployment of the inventory and WMS system for both Prologistics and Grayling. The partners then brought Grayling's two largest suppliers into the loop at no cost to them, other than the time required for training.
Now, those suppliers are responsible for managing inventory; they can log into the system and see purchase order requirements as well as inventory in Prologistics' warehouse. Based on that information, they plan their production to ensure that the warehouse always has 90 days' worth of inventory on hand (the facility holds the material on a consignment basis). When the suppliers ship the consignment orders, they enter complete details directly into the system. Once the shipments arrive at the warehouse, Prologistics updates SmartTurn and holds the material until the assembly plant just across the border needs it. "When they request it, we pull out the orders for them," explains Luis Gijón, an operations agent for Prologistics. The 3PL updates the inventory status as soon as a trailer leaves the warehouse, so that the maquiladora and Grayling's headquarters both know exactly which items are en route.
That real-time information on exactly what is in the pipeline—and exactly where it is—has improved the cost and service picture for shipper, supplier, and 3PL alike. For example, Prologistics now can immediately respond to unanticipated situations. "If something is hot and [Grayling] needs it urgently ... as soon as it arrives, we put it in the system and they know immediately how many pallets and boxes, so they can do the customs paperwork right away," Gijón says. And there's no more searching through piles of papers when the customer has questions: "We can give them an answer in a couple of seconds," he reports. Prologistics also has been able to attract several new customers because it can use the software to manage their inventory at no additional cost to them.
From Rubio's perspective, one of the most important benefits of the new system is that materials needed in Juarez now arrive on a just-intime basis, yet the assembly line is never caught short. "The information is so accurate, we've been able to completely eliminate line stoppages. We have not had one this year," he says.
Rubio also reports that Grayling has been able to improve its cash flow. With the new software, he now has an accurate, up-to-the-minute view of exactly what was pulled and when—information that lets accounting determine the optimum time to pay suppliers.
Before the inventory and warehouse system was in place,Grayling paid its suppliers after weekly or monthly reports wended their way to accounts payable and were verified. Under the consignment arrangement with its top suppliers, the company pays only for what it pulls from the warehouse. "Now I have 90 days' inventory that's not on my books, plus an additional 45 days after it's pulled to pay, so I get 135 days before I have to pay," Rubio explains. What's in it for the suppliers? They can run 90 days' worth of products they custom manufacture for Grayling, rather than changing over production lines on short notice. That cut production costs so much that Grayling asked for—and got—price discounts, he notes.
For other suppliers, Grayling can now reconcile purchase orders and shipment bills of lading promptly, which allows it to take full advantage of early-payment discounts. This is no small matter: Before the system was in place, Grayling was missing out on about $40,000 a month in trade discounts, Rubio says. The manufacturer has also used the SmartTurn system to improve the timeliness and accuracy of its customs documentation for imports from Asia and Europe. These temporary imports are stored in bond in El Paso, and Grayling pays duties on them only when they reenter the United States as part of finished products. U.S. regulations set a limit of 180 days for the round trip; importers that miss the cutoff pay double duties. That's no longer a worry for Grayling, and the manufacturer can quickly produce audit-ready data if questions should arise.
Rubio is more than happy with the improvements the real-time system has produced for Grayling Industries, but he's equally pleased that his company's smallbusiness partners are sharing in the benefits. "Times are so tough," he says. "We wanted to know that we could reduce costs and make it a win-win for everyone."
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."